If you don't stay with your winners, you are not going to be able to pay for the losers.”
The above quote could easily apply to today's market as it continues to defy what many call "all reason." But the stock market, comprised as it is of millions of individuals, has little in our view to do with reason.
From the book, Market Wizards, the above reminder, like most things, is probably a double edged blade. And it will remain that way until it no longer does.
Too many today are looking for black swans. To be sure, they're out there lurking somewhere just below the surface. But this market, as the above quote implies, is not done sucking more innocents into the game. Nearly everyone talks about markets being perverse creatures, often making fools of the greatest number, but when the market gets as perverse as it's been so far in 2014, the grumbling starts.
Those who planned to short bonds, buy growth and ride the macro tide to huge prosperity this year so far remain frustrated and foiled. Things haven't gone as they were suppose to, not what they seem. To quote Gilbert and Sullivan, it's so far been a year of "skim milk masquerading as whip cream."
With volatility 25% below its historical average, complacency still reigns. Like the alluring Sirens of mythology wooing unwary sailors to their doom, complacency can prove quite disturbing to those minds use to functioning within the limits of logic and rationality.
To quote Carl Jung "A symbol always stands for something more than its obvious and immediate meaning."
Until future books about the history of the stock market get written, only then will we fully learn complacency's true place in market annals and what role, if any, the inhabitants of the Eccles Building at 20th Street and Constitution Avenue played.
t. man hatter
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