You are sitting there glued to the tape. Epoxie'd even. Because you know it is going down. You can see stocks that are the new stalwarts, the Workdays (WDAY) and the Oktas (OKTA) the Zoom Videos (ZM) and the Nvidias (NVDA) getting their heads handed to them. They're being driven into the ground by 400 pound shortselling lineman. Then you watch the biotechs just getting pummeled, with nary a ref around to stop them from being obliterated. The FAANGS are being de-fanged like a wide receiver's mouth sans mouth guard, defenseless after a dangerous crossing play.
And you say to yourself, get me out of here. Not only do I not want to be on field, not only do I not want to be on the hotseat, I don't want to be in the stands.
So why not leave? Why not give up your roster spot, let alone your season ticket?
Because if you do that you might not get back in, that's why. It's entirely possible that this moment, this game, will pass, and you will have found yourself like so many other people I know who got out at Dow 1000 when I started, Dow 1400 after '87, or any of the myriad millennial milestones from 2009 onward.
You can't afford to be what JP Morgan's brilliant Michael Cembalest, my favorite strategist, calls an "armageddonist " someone who makes the grand sweeping gesture to head to the parking lot to beat the traffic and, feeling fabulous that he missed the last part of that beatdown and made it home an hour earlier than the hapless fans who endured, declares that the fun is forever over. Yes, the early exiter, so excited about not being stuck in a bottleneck like the hapless fools behind him, now says the whole move was propped up by the Fed, or the president, or the momentum players, or the covering shortsellers or the algorithmic mindless buy programs.
If you feel it is heading lower, as it looks, if you are watching your screen and seeing Mr. Mayhem as he cuts his swath, why not leave before his grim reaping hands get to you?
Simple: October of 1987. The week before the crash, the one that took the stock market from Dow 2500 to Dow 1400 in a couple of days. Those who followed my performance back then recall that I had been shaking, watching stocks tumble like so many 0 and 12 teams, seemingly tanking to get the first draft choice, except there is no draft in this game. I got out alive, with just 100 puts on Johnson & Johnson (JNJ) , a bet against one of my favorite stocks that had really just been insurance against an existing position that I had blown out of because of my fear.
You know what? I was a wunderkind by Tuesday when the market had been virtually cut in half., In fact, the puts on Johnson & Johnson made it so I was one of the rarest of birds, an ornithologist's dream, someone who not only owned no stocks for the crash, but I had made a bet against America's greatest drug company and quintupled it overnight. Talk about unusual option activity!
Yet, those of you going all armageddonist, in pure homage to Cembalest, here's what you might not know.
There were probably about a half-dozen high-profile managers who were on TV and in all of the papers back then for calling the crash. They lived off of it, for weeks, then months -- then even years, as reporters are suckers for bears. Sometimes, they need them as props to support their own views, other times they just need them for dramatic effect. Ha.
Me?
I didn't know any better. I got back in. Slowly. In retrospect not fast enough. Any faster and I actually feared I would be known as a foolish dip buyer ahead of a recession the market was predicting -- a recession that never came. What can I say? I am a pragmatist, not a dogmatist. I saw things I like.
It was right. A year later, there were more bears than ever even as the market clawed back, clawed back to the point where if you had bought the most active stocks that Friday before Black Monday, you would have actually been up on the year.
So I need you to think about that before you decide you are brilliant and you want not only to beat the traffic but not renew your season tickets. Sure, the next game could be abysmal. Maybe the game after that. But the sport? It goes on with or without you and, believe me, once again it will be better with you than the other way around.
