If you're an optimist, we'll, you're looking for what else--optimism.
If you're a contrarian investor you should be looking for pessimism. The late John Templeton, one of the better investors of all time, called it "maximum pessimism."
Templeton founded a group of funds in the 1930s which in his later life he sold to Franklin, the huge fund group in northern California investors now know as Franklin Templeton. Story has it that in 1939 after WWII broke out, with borrowed money he bought 100 shares of 104 stocks on the then New York Stock Exchange selling for $1 or less.
Thirty-four of the 104 companies were in bankruptcy at the time. A few years later when he took his profits, only four of the bankrupt firms were worthless. Now that's maximum pessimism. Templeton was a value guy.
Templeton wasn't the only successful mutual fund owner to sell his firm to Franklin. Michael Price, another value guy who is still very much around and whom the business school at the University of Oklahoma's named after, did the same in the 1990s.
If there's such a thing as a pantheon for astute investors both of these gentlemen should be there. So here's a question. Looking around today do you see any maximum pessimism and if so where?
Lipstick on your collar or pine tar on your neck. They're both tell tale signs.
Years ago a one-time business associate went home one night after partying with lipstick on his collar and more recently a noted Major League relief pitcher was dumb enough to get caught twice with pine tar, this time on his neck. Both in a fortnight and both times against the same team.
Cheating at the top is hardly novel. Call it fudging if it makes you feel better. In this building it's called central banking.
Leroy "Satchel" Paige one of the greatest Major League Baseball pitchers ever was noted for saying: "Never look back 'cause something might be gaining on you."
If you think of those living on a fixed income and the little guys of the world as the guy in the kayak and that huge shark as central bankers, politicians and Wall Street types, you'll appreciated this link.
http://www.marketwatch.com/story/whats-that-fishy-smell-the-feds-corrupt-policies-2014-04-23?link=MW_popular
You've no doubt heard this before. Bonds, especially the high yield kind, look bubbly. Things usually have a way of going on longer than most expect. Preceding the subprime mess there were lots of people calling attention to it. But it's about timing, itchy-sticky timing.
Most of these people were early, too early to get any attention because, like many things, the mess had a momentum all its own. Then one fine day.....the momentum changes and the only thing left is the mess.
http://www.cnbc.com/id/101604362
