I love the market. I love to see the Bears take it in the shorts. But most of all, I love to see those young boys and girls who are almost 27 years old and running big funds or portfolios, take it in their MBA ass. I also rejoice at the thought of those big fat investment banks, who are paying these kids $2-3 million a year, having a nice Monday morning chat with them about their bearish outlook last Monday when they took the Dow down 146.98 to 8917.64. This same Dow closed up 83.70 at 9147.07 today! It's bad enough getting lousy advice for free, but when someone is grossly overpaid to underperform, it's a disgrace both to their employers and the investors who get sucked in by hair-brained analysis and strategy.

What's happening? In the rush to be early with any new trend, many of these "great minds" seize upon the theory of the day and run with it. Their perspective seems to be limited to one day maximum. One day they're all talking about the Fed probably going to raise interest rates, and that Greenspan is finally going to take away the punch bowl! So the market dives. Now the intellectual Bears get on the financial news networks and predict the end of the Bull market. Maybe they should start a cult and predict the end of the world, with only a little less success.

Hey - look here! There's a new story a day or two later that maybe rates won't go up because of some good employment cost numbers. Great! The market takes off again. Gee, that's what makes the market great, folks. During all this, it seems that the small investor was by and large unaffected by such goings-on. They just kept investing, or at the least, held their positions. Not the Portfolio Punks. The youngsters dumped their shares on Monday and ended the week scrambling to re-establish their positions.

When the market is gyrating, it's important for you to keep your perspective, as well as your investment objective. If you're in for the long haul, don't pay attention to these flighty pundits. When the market goes down, they're sure we're going broke. When the market goes up, they're sure we're going to get rich.. It is neither. The market is a fluctuating mechanism, so don't get caught up in the hysteria. Know what you're buying and how much is reasonable to pay based on your expectations. As long as you have low inflation and low interest rates and generally increasing profits, you're going to have a good market. Yes, someday there will be a big correction. It will come when at least one of these basic factors changes, and not when Portfolio Punks, who aren’t too many years away from their last full diapers, say it is. Stay tuned.

The Market Pro - May 1, 1998