Last weekend as I was mowing, I noticed the leaves of our young plum tree yellowing. The tree, planted about two summers ago, produced a couple of plums this year, but it is still trying to get its footing.
The most likely culprit is water deprivation, and while we have had some decent rainfall this summer, it was clear from the dryness of the ground, a good soaking would offer some welcome respite. I watered it a little and a downpour eventually came one afternoon a few days later. The tree looks better, though a little thinner, having shed the leaves the tree sacrificed out of its sense of self preservation. It's future is hopeful, but uncertainty remains.
I thought about my plum tree as I have seen and heard, more than once this week, "experts" express opinion about the ending of this market cycle. From economists, to wall street watchers to the always vocal market pundits and investment professionals with their own vested interests, they all seem to warn that a bear market is nigh.
Here is the thing about "expert" opinion. It sounds expertly and it always includes some bit of logic that resonates with the "non-expert". "Bear markets' sounds scary. It motivates people to feel the need to do something. Anything. Wall Street loves it when people have this feeling. So some will change their investment strategy, others leave the market entirely. In doing this they feel they have regained control. But this is an illusion.
The truth is no one knows when a market cycle ends, at least not until we have the benefit of hindsight, and as you can gather from the term itself, once you have hindsight, it is too late. We want foresight, but foresight, at least as it comes to markets, is just expertly sounding guesses. No one knows. No one.
After seeing my tree, I pulled up my weather app on my phone. The week called for greater than 60% chance of rain everyday this week, with some days approaching 80%. Despite the concensus forecast, saying there was a greater than even chance of rain everyday, I watered. It only rained once.
I guess what I am trying to say, is read the plum leaves and do what you can do but don't get caught up in predictions. If the leaves are yellow, water. If it rains, great, but if it doesn't you have done what you can do.
Somethings are beyond our control. Bear markets are one of them. We could be in the throes of a bear market by autumn. Which year however, no one knows. Just because there are clouds in the sky and the experts say there is a 60% chance of rain doesn't mean your tree gets watered. The future is hopeful though never without uncertainties.