Schadenfreude: is pleasure derived from the misfortune of others.

A man has rigged up a turkey trap with a trail of corn leading into a big box with a hinged door. The man holds a long piece of twine connected to the door, which he can use to pull the door shut once enough turkeys have wandered into the box. However...

“Hey Jeff,” an emailer wrote on Friday as we arrived in Quebec City from Cape Cod to have dinner with some family and Institutional friends, “I thought you said it would not be until mid/late-September before a point of vulnerability would arrive! Today is merely September 9, what gives?”

As we dig out from Hurricane Hermine, where residents of Cedar Key experienced a nine-foot sea surge and consequently were looking for dry land, investors too have been seeking “dry land” for the past few months.

"The zebra can lie down with the lions, but had better keep one eye open." . . . Anonymous

Dear Ben, I recently read an article that suggested a lower earnings yield may explain why the stock market can continue to go up even though the economy and the S&P 500’s earnings remain sluggish. Moreover, how would you explain the Equity Risk Premium to an investor without a finance degree?

So, last week I gathered up Harry Katica (Director of the Equity Advisory Group) and Nick Lacy (Chief Portfolio Strategist of AMS) and left for a tour of the Northeast corridor.

So I traveled to Orlando last week to see Orlando, in this case it wasn’t Orlando the city, but Phil Orlando the esteemed portfolio manager for Federated Funds. I have known Phil for years and have always found his insights to be net-worth changing. In fact, a few weeks ago I spent an hour with Phil and his boss Stephen Auth, arguably the smartest guy on Wall Street, but I digress.

I got an email last week that read, “What do I do now?” I replied, “I don’t know what you mean.” She wrote back, “I didn’t buy the February lows that your model told us to buy and I didn’t buy any of the stocks on your ‘buy list’ the Monday following the Brexit Bashing. So what do I do now?” I told her I continue to think we remain in the same secular bull market that began in March of 2009 and I think it has a lot farther to go.

For me, last week began on Sunday night at Michael Jordon’s restaurant in Grand Central Station with some portfolio managers (PMs). The conversation was informative as were the investment ideas exchanged (more on those ideas after I have had time to study them). It was more of the same at breakfast the next day with another PM. Around 11:00 a.m., my colleague (Andrew Adams) arrived to accompany me to Jersey City for a three-hour stint with PMs at the venerable firm of Lord Abbett.

I have been very lucky in my career in terms of the people I have met. Working in New York City in the early 1970s I was fortunate to meet icons like Larry Tisch, Barton Biggs, Marty Zweig, Ace Greenberg, etc. Regrettably, I have lost, and am losing, many of those icons. While working in Washington DC I used to have high tea at the Hay Adams with Jean Kirkpatrick; and at a black tie affair I talked with a gentleman I would have never thought I would like. He was from Massachusetts and was pretty left of center. I talked to him for over an hour and was struck by his witty brilliance. I told him he should run for President and a few years later he did. His name was Paul Tsongas.

Now let’s reflect on a few quips we’ve heard this year. Somewhere near the February “lows” a couple of bulge-bracket investment banks told investors to dramatically reduce their exposure to stocks; and one foreign-based investment bank actually said to “sell everything.” Certainly such advice is at odds with Shad’s wisdom. While there are many other examples of such disingenuous market advice, fast forward to the Friday morning following the Brexit vote. Hereto, in their “rush to instantly inform,” many pundits gave disingenuous and even wrong advice. Our advice was to take a deep breath and do nothing that Friday.

Rudyard Kipling was one of the most popular writers in the United Kingdom in the late 19th and early 20th centuries. Accordingly, today’s quote from him seems appropriate given the U.K.’s vote to secede from the European Union (EU) accompanied by the trouncing of the world’s equity markets Friday morning. That market action brought about instant comments from Wall Street’s gurus about the winners and losers from said vote, as well as instant opinions as to what it all means. I find such a “rush to inform” to be disingenuous and advised folks to sit back and take a breath (a deep breath).

I did a number of media “hits” last week, yet the question was always the same, “What’s going to happen with the Brexit vote?” As often stated in these missives, “When everyone is asking the same question it is usually the wrong question.” Moreover, I am indeed tired of hearing about the damn Brexit.

The year was 1964 when Reprise Records released the song “Baby Don’t Go.” Written by Sonny Bono, and recorded by Sonny & Cher (Cherilyn “Cher” Sarkisian), the song became a smash hit and set the duo’s career in motion. The repeating lyric in said song is “Baby don’t go, pretty baby please don’t go.” And that’s the song playing in the various streets of the European Union (EU) as the Brits contemplate leaving the coalition on June 23 (Brexit).

Many of you know the way that I construct portfolios. I typically begin with a base of mutual funds, but not just any mutual fund. I tend to invest in mutual funds where I know the portfolio manager (PM) and like his or her investment style. Then, because I talk to these PMs, I hear lots of good ideas.

“Nothin’ from nothin’ leaves nothin’ (Billy Preston)” . . . is the first line from Billy Preston’s hit song “Nothing From Nothing” recorded in 1974 on the album “The Kids & Me.” It was a song one of my bands used to play in an era long gone by. I recalled the tune while reading one market maven’s letter last Tuesday where the author commented that, “Monday was perhaps the nothingest of nothing days.”

As many of you know, last week I traveled throughout Mississippi and Alabama presenting to our financial advisors and their clients. My message was upbeat, yet many of those investors think the equity markets are in a “bubble.”

The day after the market crashed on October 19, people began to worry that the market was GOING to crash. It has already crashed and we’d survived it (in spite of our not having predicted it), and now we were petrified there’d be a replay. Those who got out of the market to ensure that they wouldn’t be fooled the next time as they had been the last time were fooled again as the market went up.

The erudite professor goes on to note that while the differences between 3.5% growth and 2% may seem small, the resultant consequences are large. For example, by 2008 Americans were three times better off than they were in 1952. He writes, “Real GDP per person rose from $16,000 [per year] to $49,000.” However, if growth in the 1950 to 2000 timeframe was only 2%, instead of 3.5%, the per capita income metrics for that same timeframe would have been just $23,000, not $49,000.

Last Thursday was session 53 in the “buying stampede” and it was going along swimmingly. Well, I guess the surprise “no stimulus” announcement out of Japan caused an early morning stutter-step, but the equity markets seemed to stabilize after a somewhat weak opening. In fact it caused one market wizard to comment, “I love this market. Bad earnings can't take it down. Remember, the move most people least expect is the DJIA going right through all of that overhead supply and making all-time new highs. I'm in the minority camp, expecting major new highs. Buy in May and don't go away!”

One of the most successful investors in history received the only A+ from Professor Benjamin Graham (of Graham and Dodd “Security Analysis” fame) at Columbia: the chairman and chief executive officer at Berkshire Hathaway, Inc., which traded as low as $38 per share in the early 1970s and now trades around $219,000 per share. If you haven’t guessed who by now, it’s Warren Buffett. How does he do it?

For years, when I was living in Virginia, I attended the annual Shad Planking. This morning, however, I am not referring to Virginia’s “Shad Planking,” but rather my friend Frederick “Shad” Rowe, captain of the Dallas-based money management firm Greenbrier Partners. Back in the 1970s/1980s I used to read Shad’s sage comments in Forbes Magazine, but regrettably he is no longer a contributor. He now writes an insightful letter to investors in his partnership every month, which I very much look forward to. This month’s letter was no exception.

“Never on a Friday” is one of the mantras that has served me well over the years. Long time readers of these letters know its meaning. To wit, when the equity markets are involved in a pullback attempt they rarely bottom on a Friday. Nope, they tend to give participants time over the weekend to brood about their losses, tell their wives they can no longer buy the new Mercedes Benz (which makes for a pretty tense weekend), and consequently return to The Street of Dreams on Monday/Tuesday in “sell mode.” That sequence typically leads to the phrase “Turning Tuesday” implying the market bottoms either late in Monday’s trading session, or early the next day.

Most of the time when I drudge up “The Philosophy of Tops” it is to warn of a pending market “top.” The operative line from Justin’s quip is, “One rule about tops is not that they provide this or that signal, but that they come before anyone is ready.” Manifestly, “[tops] come before anyone is ready!” But, currently EVERYONE is ready, either calling for a market “top,” or a continuation of the trading range market. I see very few of us who are suggesting that we remain in a secular bull market, and in bull markets most of the surprises come on the upside.

The markets (any market) are seldom surprised by shocking events. But during those rare instances when the market is caught by a surprise a panic may result. My own definition of a panic is this: A panic is a collapse (triggered by fear and unforeseen circumstances) which causes the price of the item to fall precipitously within a short span of time. That’s a loose definition but it will do.

“When times get tough, economic nationalism and protectionism tends to rise because it is always easier to blame someone else for self-inflicted problems.”. . . Ian McAvity

Last week, we watched a 2012 interview with Jeff Bezos, Amazon’s chief executive. Bezos noted that he was frequently asked what he thought was going to change in the next ten years. His response was that the more important question would be “What is not going to change in the next ten years?”

When Herb Stein, chairman of the Council of Economic Advisers in the Gerald Ford administration, was admonished by his boss not to use the word "recession" to describe a recession, he complied, reluctantly. "From now on," he told a group of economic reporters, "I won't use the word recession. I'll say 'banana.' When I say banana, think 'recession'. I think we must be wary of the risks of a banana."

A man lived by the side of the road and sold hot dogs. He was hard of hearing, so he had no radio. He had trouble with his eyes, so he had no newspapers, but he sold hot dogs. He put up a sign on the highway, telling how good they were. He stood by the side of the road and cried, ‘Buy a hot dog, mister’ and people bought.

Come with me, and Mr. Peabody, in the “Wabac Machine” (Wabac) to a place from a time long ago and galaxy far, far away. It was during the Great Depression in this country (1929 – 1939) when Lawsonomy was proposed by Alfred Lawson. I recalled Lawsonomy while listening to Bernie Sanders over the weekend, who sounds amazingly like Alfred Lawson. Lawson (1869 – 1954) was a man who believed in giving everything in the world to everybody.

Maybe instead of titling this morning’s report “Dune” I should have titled it “Doom” because it has been the worst stock market start to a new year EVER (Chart 1). The 31 session “selling stampede” (as of last Thursday) has fostered fear among investors. Fear we are headed for a recession. Fear because it is indeed the worst start of the year ever. Fear because there was no Santa Rally.

“The year ahead will be one of ‘episodic volatility’ – rather than wildly veering highs and lows – an environment that will create opportunities for astute investors.” . . . Simon Ho, Triple 3 Partners

Given the unmerciful “selling stampede” ushered in with the new year, I thought it would be appropriate to republish one of my strategy reports from a few years ago, because its advice is timeless. Indeed, after 45 years in this business, I have seen a number of cycles and developed a long-term perspective, much like Richard Russell wrote about in “Rich Man, Poor Man.”

“Saved by the Bell” except in this case we are not referring to the late-1980s TV sitcom that focused on a group of high school teens and their principal, but last Wednesday’s closing bell on the floor of the New York Stock Exchange (NYSE). The day began well enough with the preopening S&P futures only off about 9 points when I slid into my trading turret around 5:30 a.m. From there, however, things got pretty ugly as the D-J Industrial Average (INDU/16093.51) went into a minicrash that would see the senior index shed some 567 points and in the process break below its August 25, 2015 clo

It was a few weeks ago that I resurrected a line used in my September 10, 2001 missive from the movie Star Wars that read, “I felt a great disturbance in the force . . . as if millions of voices suddenly cried out in terror and were suddenly silenced. I fear something terrible has happened.”

“We can’t solve problems by using the same kind of thinking we used when we created them.” . . . Albert Einstein I thought about Einstein’s quote, “We can’t solve problems by using the same kind of thinking we used when we created them” when the Chinese abandoned their stock market circuit breakers system on Thursday (1-7-16) at 9:30 a.m. (EST) after just putting them in place on Monday (1-4-16). Said system halted stock trading for 15 minutes when the Chinese stock market declined 5% last Monday and after the quarter of an hour halt stocks reopened.

This is how the stock market works: “Once upon a time in a village, a man appeared and announced to the villagers that he would buy monkeys for $10 each. The villagers, seeing that there were many monkeys around, went out to the forest and started catching them. The man bought thousands at $10, and as supply started to diminish, the villagers stopped their effort. He further announced that he would now buy at $20. This renewed the efforts of the villagers and they started catching monkeys again. Soon the supply diminished even further, and people started going back to their farms...

Charles “Boss” Kettering was an American automotive engineer, businessman, inventor, and the holder of 186 patents who was the head of research at General Motors. My father met Kettering during the late 1940s and often reminded me of the aforementioned quote. I recalled the quote when I received a pretty nasty email from someone I don’t even know about my call for a “rip your face off rally.” The phrase he kept using was “you failed!”

It was September 10, 2001 when I slid into my trading turret around 5:00 a.m. to write that day’s strategy report. The stock market should have been rallying for the previous few weeks, but that was not happening.

Many of you know that around this time of year I journey to New York City for the Christmas tree lighting and the Friends of Fermentation (FOF) Christmas party; this year was no exception. However, it sure did not feel much like Christmas in Manhattan. The temperatures were in the 50s and 60s, so the top coat I brought was never used. Such warm climes brought about thoughts of the much discussed topic, “global warming.”

A schizophrenic week, indeed, with a ~10 point loss for the S&P 500 (SPX/2091.69) on Monday followed by a 22 point pop on Tuesday and then 23 point decline on Wednesday and 30 point loss on Thursday, capped by Friday’s 42 point rally.

A couple of weeks ago I wrote a strategy report titled “Friends.” In that report I scribed, “Regrettably, too many of my friends’, and stock market icons’, stories have been lost forever. One of the best writers I ever knew on the Street of Dreams was my friend Barton Biggs (Morgan Stanley). . . . Other deceased notables include: Alan “Ace” Greenberg (Bear Stearns), Henry Singleton (Teledyne), Muriel Siebert, Marty Zweig . . . well, you get the idea.” Today, it is with great sadness that I report another icon passed away last week when Dow Theorist Richard Russell left us.

“Friends” . . . except in this case I am not referring to the 1994 TV sitcom, but the true friends I have met over the past 45 years in this business. I thought about this theme two weeks ago as I was sitting in Bobby Van’s, across from the NYSE, listening to great stories from my friend Art Cashin and Eric Kaufman (captain of the sagacious VE Capital), and other members of Friends of Fermentation (FOF). As I listened to Arthur, I could not shake the feeling that these classic Wall Street stories need to be scribed lest they be lost forever.

I first met Minyanville’s Todd Harrison more than 10 years ago. Subsequently the first “Minyans in the Mountains” confab was held in Crested Butte, Colorado. Todd’s Minyanville idea was to create a financial community whose participants would bond over the years and share investment themes, strategy, and investment ideas. Minyanville also tried to advance the financial education of children. The “glue” that seemed to tether everyone together was dubbed “The Buzz and Banter” where all of us could contribute to the ongoing financial blog.

This morning we revisit the “big W,” except in this case we are referring to the big “W”-shaped chart pattern left by the bottoming process often discussed in these missives.

Obviously we are back, back from two weeks in Tuscany with 32 of our best and dearest friends. The group included industrialists, the heads of European operations for two of the largest clothing/shoe companies in the world, an L.A.-based reality TV producer, tax attorneys, the CEO of a large title insurance company . . . well, you get the idea.

On Wednesday of this week (10/21/15), residents of Hill Valley, California are warned to be on the lookout for a flying DeLorean driven by a guy in a white lab coat with crazy hair, and a squeaky-voiced “teen” wearing several layers of out-of-style clothes. If these two are spotted, it is HIGHLY advised that you do not interact with them at all, as doing so could ultimately unravel the very fabric of the space-time continuum. More specifically, whatever you do, please refrain from relinquishing any copy of the Gray’s Sports Almanac (1950-2000 Edition) that you may possess.

Mass layoffs are being announced. The U.S., Central America, South American countries, etc. are all economic disasters. Major currencies are falling and raw materials companies are seeing huge order reductions around the world. Plant production has been reduced to 66% in the first half of 2015; there are fields of idle construction equipment that China is not buying. Look for Korea to dump products into the U.S. Wholesale raw sugar prices dropped from $0.36/pound to $0.11/pound leaving Brazilian sugar cane companies ready to file for Chapter 11.