THE REACTION AMONGST INVESTORS TO GOLDMAN’S MEGA-BULLISH CALL IS AN EYE OPENER
I read a brief report with respect to the Goldman generational bullish call on equities this morning. Whether all of the data, charts and figures end up culminating in a bull market that is going to make money rain down from the heavens like we're all dancing on a silver pole is just a sideshow. This report will be forgotten in a matter of weeks as a new flood of information captures the attention of investors.
The most interesting aspect of the report is the reaction to it. The immediate reaction is exactly what you would figure: distrust, suspicion and trickery. Why would an investment bank that has been directly or indirectly had a hand in all of the economic ills of the past decade want to create wealth for the muppets that happen to hold an account there let alone those of us who do not?
This level of skepticism with regards to Wall Street reminds me very much of what I saw in the late 90's and early 2000's in the equity markets. Only now it has been thrown on its head and reversed.
You see in 1999 whenever any analyst would publish a bearish report on a stock the sentiment was that they are trying to get me out of my position. They want my shares. They don't see the light. Bearishness was met with outrage, which was followed up by all kinds of facts and figures with respect to the power of the internet platform and B2B commerce and revenues from vast optics infrastructure being built in the ocean and the power of buying any brand of pet food with the click of a button.
The same passionate skepticism that embraced any bearish argument in 1999 is only matched by the skepticism that greets anything long-term bullish now. Facts and figures are immediately dragged out to refute bullish claims. The analysts want my cash is the sentiment now as opposed to my shares which was the sentiment then.
Now investors want to protect their precious cash that is yielding 2%. 12 years ago they wanted to protect their shares that were promised gains of 100%. Now investors want to drag out bearish data that has been seasoned and cooked on the market grilling of recent memory. 12 years ago they were dragging out bullish data that was lathered and washed in the most bullish period in a generation.
The conditioning that investors have experienced over the past 12 years has had a profound effect on the ability to think openly and rationally about the potential of the equity markets, especially those of developed economies. It is only when equities are back to inspiring greed and wide-eyed optimism that investors will realize how incorrect the current mode of thinking has become.
