A Moment Of Hesitation

Apr. 04, 2021 11:52 PM ET26 Comments

Mark J. Grant

6.42K Followers

Summary

It is my opinion that gambling has become quite prevalent in the markets now, and when this occurs, which I have seen before, it is a time to stop, look, listen, think and hesitate.
Holding on to your money is a whole lot easier than making new money, and keeping what you have is my call now, as "irrational exuberance" can quickly lead to "rational corrections."
You may decide that it is a decent time to lock up some profits or take some losses before the profits diminish and the losses widen. Reflection is one of the mantras for investing.

Grant's Rules for Investing:

Preservation of Capital

Make Money

When a company is under federal investigation for fraud - Sell

When a company gets a "going concern" from its auditors - Sell

You will note, these rules are meant for "investing." These are not rules for casino betting. Consequently, when it becomes apparent that a significant number of market participants are clearly "betting" far more than they are "investing," then a moment for "hesitation" is clearly and absolutely called for by me. I am a long-time player of the "great game," and I am sharing my perspective today with you. Take it or leave it.

Bitcoin, GameStop, Reddit, inflated P/E multiples, our "borrower's paradise" of very cheap money, paying to lend money to sovereign nations for the privilege of doing so and speculating on negative interest rates, manipulated stock tips in hosts of social media websites... and the list continues on unabated. It is my opinion that gambling has become quite prevalent in the markets now, and when this occurs, which I have seen before, it is a time to stop, look, listen, think and "hesitate."

In the past, there have been times of "irrational exuberance." To be perfectly honest, it is my opinion that we are in such a time once again, and perhaps in a multiplied moment of it. The casino doors are wide open, in my view, which is why I am providing a note of caution today.

"Irrational exuberance is the psychological basis of a speculative bubble. I define a speculative bubble as a situation in which news of price increases spurs investor enthusiasm, which spreads by psychological contagion from person to person, in the process amplifying stories that might justify the price increases, and bringing in a larger and larger class of investors who, despite doubts about the real value of an investment, are drawn to it partly by envy of others' successes and partly through a gamblers' excitement."- Robert J. Shiller

So, grab a cup of coffee - this is not a Grand Marnier moment - print out your portfolio, and sit down quietly and stare at it. The focus is on what makes sense and what does not, with the sub focus being on what made sense and what no longer makes sense. Holding on to your money is a whole lot easier than making new money, and keeping what you have is my call now, as "irrational exuberance" can quickly lead to "rational corrections," and I am not that fond of looking at anyone and saying, "I told you so."

Maybe at the end of the examination of your portfolio you do nothing. Perhaps everything is sane and in order. Even then, you will be happy that you took the time, as you will feel more confident of your current position.

Some of you, however, may find that you have swung too far out on the limb. You may decide that it is a decent time to lock up some profits or take some losses before the profits diminish and the losses widen. "Reflection" is one of the mantras for investing, especially when the markets feel and smell like a smoke-filled casino.

I issue my warning.

Original Source: Author

Editor's Note: The summary bullets for this article were chosen by Seeking Alpha editors.

This article was written by

Mark J. Grant

6.42K Followers

Mark J. Grant is the Chief Global Strategist at Colliers Securities, LLC. The highlights of a 48-year career in the financial services industry include positions as President of an investment bank, head of Capital Markets for four investment banks, and serving on the Board of Directors of four investment banks. He has been designated as a Bloomberg Prophet, one of only 15 globally. Mark is one of the longest serving guests on CNBC’s “Squawk Box”, is frequently interviewed on Fox Business and Bloomberg TV, and is regularly quoted in the Wall Street Journal, Barron’s, MarketWatch and other business publications. His commentary, “Out of the Box,” is subscribed to by over 5,000 money managers and financial institutions in more than 46 countries. He is also the author of a book titled “Out of the Box and onto Wall Street.” While Mark’s institutional clients include some of the largest money managers in the world, he also works with high-net worth individual investors. His unique investment strategy is especially useful for people who need yield and monthly cash flows. He employs carefully chosen closed-end funds and exchange traded funds and notes to produce monthly income for his clients, currently he is able to provide yields are 10%+, however current performance is no guarantee of future results. For additional information, email Mark at Markjgrant@Bloomberg.net.

Summary

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