Chicks Dig Scars
By Jeff Clark
September 30, 2008
Trust is gone.
That's the problem with the stock market. Investors simply don't trust it anymore.
And why should they?
After all, they've been lied to by CEOs who claim business is great one day, then write off billions of dollars in bad debt the next. Management teams crow about how great the quarter is going, then issue earnings announcements below expectations. And accounting firms certify the accuracy of the balance sheet, then the numbers turn out to be fiction.
In other words, we can't trust the fundamentals.
The technical patterns aren't all that reliable either. It doesn't matter how good or bad a chart looks. It can change overnight. Maybe the government will ban short selling on all stocks. Or maybe it'll plunk a few hundred billion dollars into the market to prop it up.
Or... maybe it won't.
The stock market, right now, is a giant guessing game. Neither fundamental nor technical analysis is working. And investors doubt their faith.
It's like finding your spouse in bed with your priest. Two deep-rooted bonds are shattered at once.
So how do we get through this?
I can only offer you this advice (which Keanu Reeves shared in The Replacements, an otherwise forgettable football move)...
"Pain heals. Glory lasts forever. Chicks dig scars."
- Pain heals. We've been through this before. We survived the stock market crash of 1987 and the sequel in 1989. We endured the Asian currency crisis in the late 1990s and suffered through the Internet meltdown in 2000.
Today feels worse. But it's not. Investors have weathered all the other financial crises over the years. And we'll get through this one, too.
- Glory lasts forever. The ability to keep one's head while all others are losing theirs creates greatness. Warren Buffett earned his fortune by making smart decisions in a bear market. His investment prowess will live on forever in the minds of long-term value investors.
I'm certain that five or 10 years from now, we'll all look back at some of these debt-free stocks trading at less than eight times earnings, slap ourselves on the forehead, and wonder why we didn't buy more.
- Chicks dig scars. The battle-tested warrior gets more respect than the rookie just entering boot camp. Traders who've been in the trenches for decades have more followers than hedge-fund managers just out of business school.
Experience is valuable. And the best way to get through this storm is to copy what veteran Wall Street sailors are doing. Art Cashin of UBS, who appears frequently on CNBC, qualifies. Carl Icahn and Warren Buffett also fit the bill.
It's okay if your faith in the market has been shaken. Mine has too.
But just as the sanctity of marriage is much stronger than the indiscretions of one spouse, and faith is mightier than the actions of one priest... the free market and capitalism are much stronger than the shenanigans in Washington and Wall Street.
It's okay to doubt the authenticity of the stock market. Heck, you'd be crazy not to. But smart investors will remember when that authenticity came into question before. And they'll recognize the terrific opportunity.
All I'm saying is you should be getting ready to buy. I'm not buying yet, but I'm almost there.
Way back in February, I told you we entered a bear market. And now I'm telling you we're getting close to the end of it. It'll take a Herculean leap of faith to act when the time comes. But that's the action legends are made of.
Besides, chicks dig scars.
Best regards and good trading,
Jeff Clark
