Eye of the Storm

• 20% of mutual funds hold 75% of the assets. This means that trillions of dollars are controlled by about 1,000 individual portfolio managers.
• Through objective eyes, this is the most scared (of a 1000 point move either way on any given day) and confused market I have ever seen.
• This is the time to think of stocks where you would want to own the entire company…not the stock…the whole company…where you are the CEO…have all the products, services, locations, plants, technology, sales, profits, debt (if any) & competitors here...and abroad. Think of businesses that will not only survive this mess but thrive on the other side. I am working on my list for when we swing for the fences (definitely not yet).
• By definition, people will be most bearish or apathetic at the bottom. News will also be the worst near the bottom. I find it interesting that consumer confidence hit a record low of 38 in October…and the market rallied 890 points.
• Survival for portfolio mangers means trying to not lose so much and meeting redemptions by raising cash in downtrends…and then being forced to chase performance once an up trend starts. Can you imagine the pain of losing 45% during the worst 2 months in history…raising cash to be safe and then missing the rally once one starts? This natural law of performance anxiety both ways will never cease to exist.