If the market seemed overvalued last year, wary analysts are eyeing the exit signs now that the individual investor is back into equities. Have we reached a market top? Philip Roth, who accurately predicted the end of the last bull market in 2007, is still long on stocks, according to today's Wall Street Journal. (See page C4, "Bull Market is Weary, but Few Signs Point to Exhaustion" by E. S. Browning).
Roth, now eighty and retired from novel writing, has pursued an alternative career in stockpicking, hints of which surface in the Zuckerman novels and in "American Pastoral." Interviewed about current market conditions he sounded cautious. "There's nothing that I see now that says imminent demise," he says, acknowledging the danger signals: new market highs, overpriced stocks, and a tremendous amount of headline risk. "The Ukraine, Syria, Egypt, Venezuela, Boko Haram (Nigeria) -- and you can't blame it on Israel and the US."
Except for these trouble spots, and the vengeance of nature whose most potent weapon is the weather, Phil sees smooth sailing ahead for the bull. "Most tops are made with high interest rates, rising inflation, and rising stock prices," Roth says. "Two out of three are missing right now, and two out of three ain't bad."
So how much room does have the bull have left to run? "It depends on how you define bull," Roth says. "Not only the metric you use but the ontological status of bull. Let us not overlook the fact that bull is short for bullshit, and if you served in World War II and weren't singing 'Don't Sit Under the Apple Tree (with anyone else but me),' you know that everything is bullshit.
"Hell, some writers made a career of it," the retired novelist added. "But let's not go there." Roth refused to comment on the following other subjects I brought up in our conversation: Woody Allen, the Oscars, the new biography of Philip Roth by someone with Roth in her name who is no relation, the Olympics, Bob Dyland, and the disrespect shown him by envious writers and irate feminists.
Roth grew animated when the subject turned to "Investors Intelligence," a widely followed survey of newsletter writers, which indicates that 60% of market newsletters were bullish in January. This unusually high figure sent a bearish signal, and January saw a sell-off. "But people were buying on the dip in February," Roth said. "And the cycle continues. Now comes March like a hungry lion, proud if alone. The ides are not a soothsayer's fantasy for nothing. Then April, and the poets with the hats walk under the trees on college campuses. The old mantra is 'sell in May and go away,' but June is "busting out all over.' July, August, Summertime, and the slow slog of the marshes. And then, like the unfurling of a matador's cape, September. Oy. September. November. And these few precious days I'll give to you."
-- David Lehman
Originally posted March 3, 2014