Papale’s Market Pep Talk

By Steve Papale

I’m not much of a golf fan and even less of a golfer but I do take some time to watch the majors.  Today the Masters kicks off so, like during the first few days of the NCAA Basketball Tourney, I will have a TV going in the background and tuned in.  My favorite Masters moment?  No, it was not watching Tiger over the years or Nicklaus winning at age 46.  Those are nice but for me it Carl Spackler, former greens keeper, holing out from 195 yards out with a eight iron to become Masters Champion.

I don’t normally watch CNBC but the other day they had on a panel and they were trying to dissect Fed minutes, minimum wage increase, potential rate hike, global trade, the political landscape, rebounding oil prices and who knows what else and trying to form an opinion on where the market is headed over the next months.  I had to chuckle a bit first as a former economist, I know how hard it is to come up with reliable forecasts based on economic data.

Second, the backdrop of the day was the continuing news on Valeant Pharmaceuticals.  Of course by now most people involved in the market know that stock got cut in half in mid March from close to $70 to $33.  Last October it was around $250.  The smartest of the smart money, Bill Ackman is a large holder of the stock.  Lots of head scratching by everyone and firms like Morgan Stanley remain bullish as they have been since the stock was in the mid $200 range.   The takeaway from watching all this for me was akin to shuffling chairs on a rudderless ship.  No one knows really where it’s headed but by focusing on the chairs we can fill our time and have something to talk about until we get there.

When I was on the trading floor during the last century, I still remember a few things.  First, most guys traded the market, not the news.  That means we were focused on what we could control – risk and participating in orders that came in.  Guys who were doing well weren’t advertising it to the world.  If they had an edge they for the most part kept it to themselves.  The financial heads out there may be well educated and very smart but they are largely salesman and entertainers.   At the end of the day in this business it comes down to the P and L.  If what you are doing works – keep doing it.  When it doesn’t get out.  Admit when  you’re wrong and move on (you listening Morgan Stanley).  And finally know when to turn off CNBC and, at least this week,  turn on the Golf Channel.

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