One thing I foolishly ignored this week, telling y'all not to worry about the stock market, is that our stock market does not just serve us.
If you're an Arab sheikh, a Russian oligarch, a Chinese factory owner, a Latin mine owner or maybe even a Texas oilman, your banker this year moved you from the category of honored customer to that of "S.O.B. who owes us money."
The closing of Al-Jazeera in the U.S., and the announcement that Saudi Aramco may do an IPO, speak volumes to the fact that the losers in the global economy are having to scramble for cash. They're being liquidated, and since our markets are the most liquid on the planet they are being sold out here.
The good news is that there is an answer to the Arabs' problem, and to the Russians' problem. Peace would pay enormous dividends. The Arab Kingdoms find themselves in a hot war with Yemen, a cold one with Iran, a proxy war with Syria, and an internal conflict between the ideals of Wahhabism and the reality of modern life. If they can get their act together they can cut their oil production, convince others to cut theirs, and the price of oil will rise. If they choose to bring the temple down over their heads the price will skyrocket. Low gas prices, unlike falling solar energy costs [such as with First Solar (NASDAQ:FSLR)], are unreliable.
If you saw this week's action and panicked, you may be blaming me for your losses, despite the fact I specifically said not to panic, and that the chance others may panic is a good reason to hold cash. But, no, I didn't prepare you for this Polar Bear market, and while it won't satisfy you I am holding losses, too.
It is possible that you can still sell some things and buy them back cheaper, a week or a month from now, after things have calmed down. I am still waiting for a quiet day in the markets for that, a morning when the averages move barely at all, and I'm willing to miss out on a snapback rally in order to do that before bargain hunting. When bears are prowling I avoid bear traps.
I wrote that Apple (NASDAQ:AAPL) and Disney (NYSE:DIS) would look good below $100, and they do. But now I may be able to get back that Amazon.Com (NASDAQ:AMZN) I stupidly sold months ago near where I sold it, which was $537. I may be able to pick up more Google (NASDAQ:GOOGL) (NASDAQ:GOOG) with a 6-handle before it announces earnings, which would be nice.
It is important to know that, outside the oil states, there is still nothing fundamentally wrong with the U.S. economy. Markets we dominated at Christmas we still dominate. Bargains we saw at Christmas are still there. There are plenty of analogs to the present action that did not result in recession - 2011 comes most immediately to mind. A lot of wealth has disappeared, more is likely to, and some of it has my name on it, but since I don't need that money right now - unlike our Arab friends - I think it's best to sit tight.
Now, y'all can call me an idiot. If you use the discussion thread below for that I won't argue the point. The difference between a professional advisor and an amateur is we amateurs can admit when we screw up. This bear's gonna eat, but unless you sell he's not really eating you.
Disclosure: I am/we are long AMZN, GOOGL, AAPL, DIS.
I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.