An
On-Line Publication of the Anonymous Anything Society
(Phil
is experiencing computer problems and has asked that this prescient
commentary from 2 years ago be reposted)
RED SKIES IN THE MORNING, SAILOR TAKE WARNING
I do not own one of the highly touted diagnostic tools available
for computers, that are supposed to tell the "day trader" when to buy or
sell any or all of the "products" available to the speculator today. The
really big traders have computers tied to the markets by optic fibers and
computer programmers constantly striving to fashion computer algorithms
(programs) that can provide microsecond advantages automatically. We
scufflers in the crowd do not stand a chance of prevailing in this robot
technology.
Once upon a time, I trusted in certain metrics: Just as the ancient
Polynesians who could sail a primitive outrigger canoe across thousands of
miles of ocean currents in all sorts of weather, I learned some of the
basics of forecasting major moves of prices that did not go far beyond
reading tea leaves. This faint insight was expensive.
It took me more than three-quarters of a century to learn some
rather simple axioms relative to the markets, the most important of which
is: Trees have yet to grow as high as the skies. Lesson Two: Fear trumps
greed Prices can fall in a matter of microseconds. the prime example
in my lifetime took place in the moments following the assassination of
President Kennedy. My radio station's office and studios were then in
downtown Tucson, a half-block away from a branch offices of one if the
world's major stock brokerage houses. It was there that I learned Lesson
Three:
The pivot from a Bull (ascending) market to a panic Bear (falling
price) market can be astounding. I happened to be returning from lunch on
November 22nd of 1963. The first intimation that something was amiss was
the pushing and shoving of grown men fighting and shoving at the entrance
of the brokerage house. At the time, the electronics connecting Tucson
with Wall Street was primitive. I soon learned of the shooting in Dallas
and the effect that it had on that place in Tucson where a few old men
usually gathered to smoke cigars and watch the profits made on the sale of
their grocery store in Ames, Iowa erode. Now the entire system that was
usually reflected in the movement of prices on a big screen on the wall
was seized up.
Market collapses are born out of overconfidence. A contrarian, I
warn those close to me to always beware of The Bear. As you read this,
know that the markets are making new highs, but each swing of the pendulum
indicates to me that on every up-tick, the market is losing what in real
life physics would be a pendulum that is losing kinetic energy. If you
wish to recognize the absolute red flag warning, study a chart formation
called "The Head and Shoulders Top." Since it appeared in 1925, it became
the bellwether for technical analysts, forecasting a drastic drop in
prices.
The financial markets are presently over-valued. Moreover, prices
and profits will not grow forever. At the least, Wall Street is overdue
for a major correction. Therefore, in a time of uncertainty, some months
ago I liquidated all of my holdings in the stock market, even in Warren
Buffet's beloved Coca Cola.
What more can I say? Oh yes, one final observation: Every stock
brokerage house one sees advertised on TV cannot be the best.
Phil Richardson, Observer of the Human Condition and Storyteller. "He goes
doddering on into his old age, making a public nuisance of
himself."—Joseph Menchen
Tommy Ross follows his older brothers to be an apprentice in the
hazardous trade of mining coal. It is doubly dangerous, for his
father has been sent to organize a local union in a "company
owned" coal camp. "The Prosperity Coal Company" is a novel based
on actual events that occurred all across the coal belt, when
America was on the cusp of the great depression, and union wars
raged.
