Dear fellow investors,
The beginning to 2022 has been dark to say the least. The year has begun with losses in the index with much deeper red ink spilled across many recently exciting investments. The ominous feeling of the moment reminds me of the suspense I first felt watching The Silence of the Lambs. It was creepy, dark and intellectually intriguing to figure out what would transpire next. Allegorically, the final scene of that movie is like the first week of stock trading in 2022.
(Agent Starling picks up the phone) Agent Starling: Starling Hannibal Lecter: Well Clarice…Have the lambs stop screaming? Agent Starling: Dr. Lecter Hannibal Lecter: Don’t bother with a trace. I won’t be on long enough. Agent Starling: Where are you Dr. Lecter? Hannibal Lecter: I have no plans to call on you, Clarice. The world’s more interesting with you in it. So you take care now to extend me the same courtesy. Agent Starling: You know I can’t make that promise. Hannibal Lecter: I do wish we could chat longer, but…I’m having an old friend for dinner. Bye.
Wall Street is agent Starling. They are trying to catch this serial killer, Dr. Hannibal Lecter, much like they are trying to predict anything else on Wall Street. While Starling wants to know where Dr. Lecter is, she was scared by the thought of him as she peered around the corner that was across the room looking for him. Dr. Lecter is indicative of vicious bear markets that are inevitable to Wall Street and stock investing.
By the end of bad markets, the investors (lambs) that are led astray scream until there is awkward silence. They lose the ability to respond, or they die off. Many of these lambs impair their personal capital to a point of not being able to participate, as they did prior, or they never trust the equity markets again. Wall Street, while fearful of these killers like agent Starling is, has a special relationship with these bad markets. As Lecter said, he (bad markets) believed that the world is a better place with agent Starling (Wall Street) in it. Wall Street survives, but many victims do not.
Like Dr. Lecter said, there’s no need to trace him as he won’t be long. Bear markets are normal. They are regular, but historically they don’t last as long as positive stock markets. Starling knew the elusiveness of Hannibal’s brevity would do nothing to help her. It leaves her in suspense like it does Wall Street and all investors each time.