Yes, it is nice to be home. I've taken very few two-week vacations in my life, and I'm still not a fan of them. My endurance and patience for "chilling out" and seeing the sites tends to run about one week, or maybe if you push it, 9 days. So, I've been itching to get back in the saddle.
This week our Fed Chairman that is catching all of this political and crowd heat is meeting with his committee for an extended 2-day meeting to "flesh out" all the solutions. This is good news, my friends. This Bernanke is a superior student of history, and he learns those lessons well as he listens and formulates plans based on what history has taught.
Our entire investment philospohy is based on unemotional indicators that we find produce future joy or grief, and as Mark explained last week, they are not what you would think. You learn from the tough times, and that produces bull markets. You get greedy in the happy times, and that produces bear markets. I know you are getting a little weary of these trips to the tool shed, we are to, but the market will know when the lessons have been learned and the new disciplines are in place to start that evolution to happiness once again. Today, our Asset Allocation Model is telling us we are making very good progress.
It is always interesting to me to pay attention to the dates in which each gauge made its latest change, and in what direction the change was made. For instance, on May 23rd of this year, the Monetary Composite started to tell us that more liquidity was being produced and that was heralding the bad economic news that was starting to evolve. This "bad news"/increase in liquidity tends to make strategists more bearish, but you really need to get more excited when this occurs. The historical record is phenomenal when Monetary is in the M1 condition, and in every one of those cases, the prevailing moods are not optimistic. That is what produces more liquidity.
There is a reason that the U.S. stock market is acting so much better than the stock markets in many other countries this year. It is based on the expectation that once again, we will learn from our occasional trips to the woodshed.
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