Legends of Fall (Reprise)

I wrote the below piece from a hospital bed one year ago today.  It was the day of my release from a near-death experience and the beginning of a new chapter for me personally and professionally.  I came out of that sonofabitch hospital room ready to eat the world alive.  And the plan was to start spitting fire from this blog everyday, telling the truth and strangling market myths until their eyes rolled back into their heads.

Here’s where it all began, enjoy!

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Firstly, I apologize for my recent absence from the site this week, I was temporarily struck down by a digestive attack that required 4 days of hospitalization and stomach pumping.  But I’m out and about and starting to make some new health changes… Josh Brown 2.0.  For example, Josh Brown 2.0 will probably not be rolling up pizza slices and wedging them into his face like “Italian Spring Rolls”.  Josh Brown 2.0 will also not be taking escalators instead of stairs or putting butter in his coffee.

OK, back to the regularly scheduled programming.  Let’s start with the Sept/October/Fall market meme…

I see that the “September is the Cruelest Month” linkbaiting posts have already been arriving in droves.  I’ll shred them to pieces real quick typing with one hand and only about a tenth of my common sense.

Let’s start here with a bit from Minyanville:

The month of September gives equity investors a sinking feeling and for good reason: Historically, this has proven a bad month for the stock market.

Oy vey, when it starts like that, you already know you’re reading filler.  Allow me to deconstruct the genre of “month/season/timeframe” articles and posts so that you never waste your time on another one again:

1.  Timing – designed to coincide within a few days of the beginning of the new time frame (September in this case, post date on this example is Aug 30th)

2.  Post Title – The title will mention the month and within a descriptor or two attempt to scare you into to clicking on it.  It will work, you will click, because we were all conditioned by the same commercials as kids when Duck Tales came on after school.  Cereal was purchased, let’s keep it real.

3.  Data – They will steal all the data from either the Bespoke Investment Group or Ned Davis Research so just set your feedreader to grab both of those for the raw numbers minus the ex-banner ad salesman’s “contextualization”.

4.  But wait! – About halfway through the post which has just given you all the historical reasons you should just blow your brains out rather than be invested, a White Knight shall come galloping up over the crest of the hill, banners aflutter, with a reason to live, dammit!  The White Knight will be the Chief Investment whatever at an asset-gathering operation whose prima facie mission is to keep you invested, read his commentary accordingly.

5.  The non-conclusion – the last sentence will be exactly the evidence you need to tell you that you’ve just read something with almost zero value to anyone other than Scottrade, who have had the 1 minute-and-15 second opportunity to flash banner ads at you like a 42nd Street vagrant.

The point is this, it’s all unprecedented.  What the markets did in September over the last 11 years or 6 years matters as much as the hair styles of this year’s top ten American Idol competitors.  The variables are too large, too unknown and too unbound from historical calculation.  The context is always different also, especially now in our era of roadside attraction-sized superlatives.

Investors should try to incorporate historical quantitative stuff in their search for probable outcomes, but should never live and die by it.  Monthly market machinations make for good headlines but stupid fodder for helpful forward thought.

Originally published here:

http://thereformedbroker.com/2010/08/31/legends-of-the-fall/