Happy Days?

It is nice to know that I have not lost my mystical ability to move the markets at will.  I’m referring to the fact that I went on vacation last week, and the markets responded with a move toward new highs.  The same thing has happened before, most notably in March of 2009, when the Great Panic ended the day after I went on holiday.

My ability to single-handedly move markets, generating billions in profits for investors, including millions for our own clients, is both well-documented and entirely coincidental.

Now that we understand that I don’t actually deserve any credit for the strong advance in recent weeks, I will point out that we at TGS do deserve some credit for keeping our clients invested through the dark days of 2008 and 2009, and for remaining stubbornly over-weight stocks through the last two years, as Euro zone crises and Washington DC battles roiled the bourses.

From the market low almost four years ago, the S&P 500 is up more than 120%.  Finally, after a four-year recovery, we are beginning to see meaningful net inflows to stock mutual funds, and to hear more bullish voices.  (Dow 20,000, anyone?) Of course, both bullish sentiment and net stock flows are contrary indicators.  Investors are always most bullish at market highs, most bearish at market lows.

Now that the bullish case is beginning to gain broader credibility, we are becoming predictably more cautious.  I’ll offer some broader thoughts about the competing bull and bear cases in a future post.  For now, I’ll simply observe that few of today’s emerging bulls were buying stocks in fall of 2008 and spring of 2009, when we were backing up the truck and loading up on equities.

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