I just got back from a week in New York City and here’s what I see: The winners keep winning, the losers keep losing, things keep getting better and people think they’re getting worse. I like that combination.
When I was 18 years old I moved to the New York area and spent a total of 15 years out there, most of which was in the financial space surrounded by entrepreneurs, traders, investors, analysts, fintech, traditional media and the biggest names in financial social media.
For the past 3 year’s I’ve lived in beautiful Sonoma Valley, CA in what some might describe as something of a bubble. I don’t watch financial television. I’m not ‘in the know’ about the daily gossip except for what I see on twitter. And even then, I don’t consume nearly as much of it as most people. I’m not at the Hunt & Fish club once a week, I don’t attend every book party in New York and I’m not surrounded by financial journalists every day. I’m out.
This can be a good thing or a bad thing. I worry about what some of the negative implications are from this strategy. That’s how I think: Risk Management. “How is this wrong?” is my concern. Why don’t other people live this way? Am I the weird one or are they the ones doing it wrong? As Jay-Z said, “If everybody’s crazy, you’re the one that’s insane”.
So I ripped through my 5000 charts, as I do every week, hosted our monthly conference call, and left to New York. Why? To shut up and listen.
I got engaged to the love of my life this past December, so her and I went out east to do some wedding planning and then I spent Monday through Friday meeting with the smartest and hardest working people I know in New York. I’m really proud of some of my friends and colleagues. They’re building some amazing things. On the other hand, I am somewhat disappointed in others, who I maybe had higher expectations for but are instead still spinning their wheels and haven’t found direction. I hope they get there.
The point of this exercise was to ask questions. I know what I think. I am confident in my current outlook, because I know how much work is behind it. I trust the process and fortunately that has worked really well for me. But what is the current sentiment coming from the capital of the world: New York City, where I lived for 15 years?
I’ve been in California since 2015 and have escaped from the day to day hustle of that city. I love New York so much. It’s truly amazing what goes on there. I’m lucky that I have a long list of friends who have become almost family over the years. I have an extensive network of customers, colleagues and partners that I met with this week, as well as two weeks ago at the CMT Association’s annual symposium.
Between the two trips to New York I can now sit down and piece it all together. After a few hundred conversations, sentiment seems much more clear to me. It’s impossible to quantify, of course, but I think I see it. My answer?
The hustlers are hustling. The ones winning are not complaining. Their heads are down and they’re focused.
The losers keep losing. And most of them mean well. Most are very nice people. But they’re not making the right changes to keep up with the world that’s evolving right in front of them. It amazes me that they are literally in the center of the universe and are missing what seems impossible to miss. It’s almost like if they are just so close that they’re blinded by it. Maybe they need to take a step back and look at it from further away. Or maybe they just don’t care enough.
The unhappiness and lack of success seems to come from those who are afraid, or unable to make the right changes. The angry people are deteriorating into nothing. I’m seeing it most on the buy side, sell side and financial media. If you’re an asshole, people know it. You can’t hide it any more. I would chalk that up as a win for all of us.
I’ve also noticed a high correlation between elevated stress levels and high doses of news consumption. The most angry people are included in this group. They’re in the hustle every day, consuming the daily gossip and missing the bigger picture. The happiest people I see are in their own world, eyes on the ball and focused. In one case, the most important person I wanted to see didn’t even make it into the city. He was busy building his thing, exercising and spending time with family. I took note of that.
The most successful people I’m seeing have the blinders on. One thing that caught my attention was that my friends winning the most right now are actually consuming even less traditional media than they did before. I noticed that in several conversations and meetings. In most of those cases, they are actually creating their own content. They are controlling the narrative, not handcuffed to it.
I wasn’t out there for this purpose but it was impossible for me to ignore. I root for all of my friends, colleagues, partners and customers to do well. This isn’t a zero sum game. There’s enough out there for all of us. But after this many conversations over coffee, cocktails, lunches, dinners and events, it’s clear why some are winning and why others are not.
My main purpose this week was to gauge market sentiment. I can’t help myself. This is what I do and how I think. I wanted to see what ‘they’ thought about things. My conclusion? For the most part, things keep getting better but the consensus is that they’re getting worse.
Even some of my historically more bullish friends are bearish, or at least not bullish. With few exceptions, the crowd is neutral to bearish, leaning bearish and some are very bearish. The rare exceptions are the bullish ones and almost nobody is very bullish. I thought the best summary of current sentiment I got came to me Friday morning via text:
A text I got this AM from one of the smart guys:
“Good… about time Odell realizes he ain’t god!
Been buying some calls on iwm… sentiment so bearish!
Everyone I talk to nervous
I can’t find a bull… ur the only one!”
— J.C. Parets (@allstarcharts) April 27, 2018
We all have our human contrarian indicators. I can’t mention these people specifically by name and I certainly can’t tell them who they are because then I lose the data. The guys usually wrong at the wrong time are currently bearish stocks. Several who are usually on the exact same page as me are also bearish equities, which I thought was interesting.
I have customers in most of the biggest banks and hedge funds in New York. Combined, they speak with everybody. So either directly or indirectly I’m lucky that I get access to everyone’s opinion, everyone who matters anyway. The consensus is clear.
Some are still complaining about the current political environment, using that as an excuse to be bearish of stocks. Even though allowing their political opinions to irresponsibly impact their portfolio decision making has hurt them tremendously, they still haven’t learned.
Some got the past couple years right, and now they think we’ve seen enough.
Some are more tactical and change their minds often. Those guys are skeptical too.
Long-term bulls who I feel are always bullish, still are, but “cautious near-term”.
With very few exceptions, I’m just not seeing the type of optimism that normally comes near key turning points. I worked and lived in that concrete jungle during some of the most historic times in market history. I know what goes on. I know who to talk to. I know how many cocktails they need to start opening up. I know who to ignore. I know how this works.
If I don’t use those contacts and skills to my advantage then what the hell am I doing? I get access to all of this data, if and when I’m willing to go out there get it. This was the week for me to do that. I can’t name any names, of course, but take my word for it. I hustled, asked the right questions with the right people and for the right reasons.
I was quiet on the blog because I didn’t have much to say. My position is clear. You guys know how I feel. So I felt it was time to dig deep, tap into my network and figure out what the rest of world thinks right now.
The current bearish sentiment is consistent with higher stock market prices. And when I say higher, I don’t just means little bit higher. I think we go a lot higher. This bull market in stocks is just getting going. In my opinion, we are much closer to the beginning than any sort of end.
I think if there is any sort of intermediate to long term time horizon involved, we need to be buying stocks very very aggressively.