Monday, August 1, 2016

Timing Is Everything

Last week, I wrote that the stock market would continue dancing as long as the band keeps playing the music -- meaning there are few worrisome near-term danger signals to the stock market from either the economic or valuation standpoint, as long as the Fed remains "accommodative."

A friend and faithful reader told me that was inconsistent with my oft-stated concerns about the debt level causing a "black swan event."  By definition, timing such an event is unknowable.  I still expect a "black swan event" or a "Minsky Moment" when there will be a sudden financial collapse . . . but not in the foreseeable future.  The only defense against the unknowable is acting fast when it starts.  And, how do you know when it starts?  When derivatives start defaulting . . .

There has never been a day in American history when there was not an upcoming recession.  There is always a recession out there somewhere . . . but not today.

In the meantime, may I have this dance?