Someone hand me my crystal ball. And be quick about it.
I need the damn thing to advise me whether the long-running bull market in stocks – already the third most durable in history – is now finally and irrevocably over, or whether yesterday’s free-fall in the financial markets, inevitably dubbed Black Monday by the press, is just a late-summer hiccup.
I’d call my investment manager on Wall Street and ask him, but I can anticipate his opinion. It will be a perfectly sound opinion, no better or worse than that of a dozen other so-called experts; those same experts whose commentaries I’ve been reading of late and who seem, on the question of what happens next, more or less evenly divided. What he’ll say in conclusion, as he always does, is that I have a balanced portfolio, as befits my station and age, and that it’s calibrated for long-term benefits, not short-term windfalls, blah, blah, blah. And he’ll be perfectly correct by the sensible standards we apply to such matters.
The last time the market turned south seriously enough to send the bulls dashing for cover, the vexing catalyst was the future of the Euro. The Greek ‘settlement’ resolved that – at least for the time being. We shall see. I have my doubts. Now the culprit is China’s long-running economic ‘miracle’. That, the bears insist, is a threat of an altogether different magnitude.
The received wisdom is that China’s industrial engine has run out of steam and that it will take some time – or an unimaginable infusion of money from the Chinese government – to power it up again. It’s an Asian variation of the old adage that when America sneezes the world catches cold. Will it lead to pneumonia?
In short, is China’s problem maintaining growth a global economic catastrophe in the making, or does it merely offer a convenient excuse for investment managers to lighten up over-bought portfolios by dumping shares that have run ahead of sensible valuations?
Damned if I know. But then nobody else seems to, either.
Natural pessimists have been predicting a major stock market correction for months, some of them for years. Their arguments always sounded plausible, and often compelling. And they were bound to be right eventually, but is this the moment they have long been projecting?
Born optimists, on the other hand, will insist that a short-term correction of modest proportions is no more than a natural and necessary pause in the market’s upward progress. Normal service – a rising market – will be resumed shortly, they’ll be telling us, with just as much conviction as the bears have deployed in the opposite direction.
The division between bulls and bears is as old as markets. It’s what allows them to function.
Me, I’m neither bull nor bear. Call me chicken. The big beasts can go at it, red in tooth and claw (or hoof). All I can do is scratch around in the yard making plaintive clucking sounds.
We live in such troubled times, and on so many levels, that madness beckons – perhaps Armageddon, too. I’ll be putting my head in the sand, and my money, if there’s any left, on the resolution of the crisis, probably by means that I (a former financial journalist) will scarcely be able to comprehend.
And if I’m dead wrong, my troubles, and the world’s, are only just beginning.
Now, where the hell is that damned crystal ball?
Oh, and a stiff glass of Irish while you’re at it.