"Nobody on the road, nobody on the beach..."
“Nobody on the road
Nobody on the beach
I feel it in the air
The summer’s out of reach
The sun goes down alone”
Don Henley & Mike Campbell wrote this song released in October 1984. The context in this song refers to aging and the past rather than a more common reference to baseball. What does all of this have to with the US stock market?
In the summer of 1984, I returned from training in New York City at Dean Witter Reynolds, a name long left by the side of the road by the Wall Street crew. I just knew something good was about to happen! Armed with a legal pad and a phone, I had a spot in the “bullpen” with my fellow trainees. We were unleashed upon the general population with little knowledge of how the markets worked and what they actually represented. There a couple of that 18 “new hires” still in the business 35 years later, and some have passed. Dean Witter, owned by massive retailer Sears, was a part of their effort to bring Wall Street to main street. DWR, All-State, and Coldwell Banker were going to revolutionize the financial services business, providing everything financial in one-stop at your local Sears store.
Things have changed? Today, Amazon will do it at your fingertips, in your home? Here’s the catch. The markets still behave in an outwardly looking bizarre way. Today, tariffs.
In 1984, we had the Savings and Loan crisis, and Penn Square bank’s failure. So many things to disrupt the economy and the markets. How could they possibly continue higher? That summer the selloff came and went. We began a secular bull market that ended in March of 2000.
Each summer we see sell-offs. Often these see-offs are exacerbated by the absence of the real “boys of summer”, the traders on Wall Street, in New York City. These “boys of summer” escape “the city”, by going to the Hamptons. Jeffrey Saut, former strategist with Raymond James, and probably the best strategist I have seen in my 35 years in the business, suggested that the main objective left with the young guns who were in charge while the senior traders were gone, “Just don’t lose the firms’ capital.” This tells us that many of the market moves during the summer are done so with thinly traded markets. That can mean more dramatic, volatility.
Volatility has a purpose, and of it’s own, is not bad. It’s purpose is to move stocks from weaker hands to stronger buyers. Today, many are surprised when the market becomes volatile during the summer. This is usual. It is our view that opportunities will be uncovered.
Be patient. Be disciplined. Warren Buffet of Berkshire Hathaway fame says, “stock market investing should be disciplined, therefore repeatable.” Vista Investment Partners will follow our discipline and endeavor to follow history as it repeats itself.
“Out on the road today
I saw a Deadhead sticker on a Cadillac
A little voice inside my head said,
“Don’t look back, you can never look back”.
I thought I knew what love was, what did I know?
Those days are gone forever
I should just let them go but…”
Don was making a political statement about the Upper middle-class American driving a symbolic Cadillac Seville when he saw the “Deadhead” sticker on it. I think we are more similar than different. And I think looking back may lead us to understanding of the future. There will be opportunities, be patient, be disciplined. After all, 1984 was beginning of the greatest Bull Market, and now I own the firm.