BE CAFREFUL HOW YOU COURT

Who doesn't love predictability?

One of the things you learn in life about courting women--if you haven't learned this yet, you need to--most claim their looking for a reliable, dependable, predictable guy.

But that's like some of the market advice you hear, don't take it to heart, because as soon as you become too predictable, most will dump you like a pump and dump penny stock as boring and predictable.

Predictability in most cases is the antithesis of volatility. Too much of either can scare the hell out of folks. And that's why the stock market is getting a bit scary to many investors.  With the exception of the quick October decline, 2014 has been pretty much a predictable, reliable year. And ditto 2013.

Much of the upswing in the S&P 500 came from just a handful of stocks. Cyclical companies were carted off to the equity orphanage based to a large part on all the deflation fears. One of the major worries stems from the Fed's end to tapering as it became known and when is the next interest rate hike coming.

Sure the ECB and BoJ have picked up the gauntlet, but they're not backed by the for now steroid-laden U.S. greenback. So there's an element of doubt here, as in where did all the liquidity go? 

Liquidity is to predictable as mysterious is to successful courting. If everyone today knew what was going to happen next week in the market, how much liquidity do you think there would be and how boring and predictable would it get?

For most of the last couple years volatility was flatter than one of my old girl friend's chest before she discovered Beverly Hills.

If the Fed came out tomorrow and said:"We're definitely raising interest rates January 2, 2015," the market would probably tank based on predictability. The Fed would then come under fire for yelling fire in a crowded market venue.

The recent pick up in volatility, one of the things worrying investors, has its upside. Take, for example, as the WSJ  pointed out today, "Cheap Oil's Hidden Fee for Airlines," volatile and high fuel prices "can have some important benefits for the airline industry. They make airlines less certain about future costs, thereby making them more cautious about adding capacity.

They also prompt state-backed foreign airlines, which generally lack incentives to keep expansion plans in check, to behave more rationally. And expensive fuel also discourages new entrants, in part because it is harder to turn a profit with less-efficient used planes—often leased by startup airlines—and because lenders are less willing to provide funding.

We don't know about you, but that's sounds a lot like courting the ladies.

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