Talking Heads
At lunchtime today, I was watching a financial news station and they had five “talking heads” on the show. All were discussing the possible ROTATION away from the glamour stocks to other areas of the market. I had to chuckle. My last blog (posted 7/16/20) was entitled “The Rotation Play” and hinted at the possibility that such a shift was occurring at that time. But I am not here to brag about a good market call. Rather, I want to go back to an old theme of mine, and more specifically a statement I share with folks when the markets seem a little zany: “The markets don’t have to make sense.”
A long time ago in a former life I was running a branch for Legg Mason* when a reporter called. He asked for a comment or statement that I would share, or a piece of advice that I had recently been giving to clients. That was easy. We were in the midst of heightened volatility and the mood was panicky. News outlets were screaming with headlines about losses here, there and everywhere. Observers were decrying the leveraged nature of many public companies and even some countries, and yet the market as a whole was working through the noise to find equilibrium. The pain was being absorbed and businesses were adjusting, wisely in many cases, to a somewhat unpredictable environment. Hence my pithy comment to the reporter: “Markets don’t have to make sense”. He ran the story and my quote was the lead. Boy did that feel good.
But let’s talk about the real Talking Heads, the superb rock band formed by four friends from the Rhode Island School of Design (yes, real artists). Their songs have been in my mind lately. Why? If you know this band and their legendary history as musicians and agents of change, you will recall some of their song titles. “Burning Down the House” was a great song in 1983. It came to mind when I watched news reports from Minneapolis and Portland, Oregon a few months ago. “Wild, Wild Life” came to mind as I watched trading in Eastman Kodak for the past two weeks. And then there is the song that has been playing the most in my mind since this pandemic started – “Once in A Lifetime”. Let’s hope this is the only global pandemic we have to experience in our lifetime.
And lest we forget, “Stop Making Sense” was their live album (and movie) which stayed on the charts longer than any other Talking Heads album. It's certainly one of the best live albums ever made, a treasured recording of one of the era's best bands who took their art and music to another level.
Speaking of another level, I would tell you “stop trying to make sense” is a solid piece of advice to investors who remain puzzled by this market. By the time you get it figured out, it will change.
Ralph McDevitt August 10, 2020
*RIP: the last stand-alone piece of Legg Mason was just swallowed up by an investment firm.
Any opinions are those of Ralph McDevitt and not necessarily those of Raymond James.
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