The Russia thing just grows . . . and makes that little $5 novel I mentioned Tuesday even juicier. About how Russia rigged an American election.

Enjoy.


Harder to enjoy, because it’s shelved in the non-fiction section, is whatever has led us to a consistently pro-Putin president.

A president whose Commerce Secretary co-chairs, with an oligarch, a Cyprus bank known for laundering Russian money; whose Attorney General lied to Congress about meeting with Putin’s ambassador during the campaign; whose National Security Advisor resigned after lying about his conversations with that that same ambassador; whose campaign manager seems to have been all but Putin-picked; whose Secretary of State Putin awarded Russia’s Order of Friendship  . . . and on and on.

It seems to be widely accepted by people buying stocks at record highs that the economy is going to boom as this administration — barely out of the gate yet already functioning like a “fine-tuned machine” — does all the things its “stupid, stupid” predecessor never thought to do.  “Massive” middle class tax cuts; major business tax cuts; a big ramp up in defense spending; better, cheaper health care (of course!  just make it better and cheaper! why didn’t we think of that!); a giant infrastructure bill that will produce so many good jobs you could almost call it the American Jobs Act.

But I would be cautious here.  “They don’t ring a bell at market tops,” to be sure, and the market may just continue to go straight up from here.  There has never been a more business-friendly, billionaire-dominated administration.

But what will happen if the Republican Congress, facing an explosion of the National Debt like the one Republicans Reagan/Bush handed Democrat Clinton (who gradually turned deficits into the surplus that he handed Bush) . . . or the one Republican Bush handed Democrat Obama (who averted a depression and handed Republican Trump a National Debt once again, finally, shrinking relative to the size of the economy) . . .

. . . what will happen if, in that context, Congress says no?

Sure the stock market expects some of that.  Some further awkwardness from the Russia stuff.  Some reluctance on the part of Mexico to pay for the wall.  (And zero economic benefit, should it ever get built, from the wall.)  A lot of skepticism is already baked in.  But there’s also this: as my friend John Hook notes, the current bull market is “the second longest cyclical bull market since 1900. The only longer, 1921-1929, was only one month longer. A cyclical bear market (-20% or more) is overdue.”

He goes on: “The trailing P/E of the Wilshire 5000 is 25.8 — very high. The 4Q trailing operating earnings P/E of the S&P 500 is 24.8, very high—only higher in 1895 and 1999-2000 (and 2002 with EPS depressed in a crash). The Shiller CAPE P/E of 28.66 is third highest ever.  The only higher were 1929 and 2000, both huge crashes.”

He backs up his concerns with reams more data, but this simple summary: “Buy low. Sell high. Now is high.”


“Timing the market” successfully is all but impossible as a long-term strategy.  In a taxable account especially, even fortuitous timing won’t make up for the drag of the taxes and transacti0n costs.

But if right now you’re in the market more deeply than you can truly afford, what a great time to cut back!

If you’re someone who, having seen her portfolio decimated, would finally throw in the towel in despair and disgust — to salvage something — why not sell now instead and salvage everything?  (Not to say sell everything; but salvage everything from what you do sell.)


If you can picture your stocks dropping sharply without your losing sleep or heart — hang on.  At least to much of what you own.  It could be years before a correction starts*, and at least so far in America, corrections have always been followed by recovery to much higher heights.

Have a great weekend.

*Or hours.

 

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