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Between Awful and Worse

MONDAY, MARCH 9, 2009
UP AND DOWN WALL STREET

Between Awful and Worse
By ALAN ABELSON

OBAMA THE ORACLE?

The president last week took a break from the arduous task of carrying the world on his slender shoulders to offer a prophecy that could only warm the cockles of Wall Street's heart (and we're taking it strictly on faith that it has one). He ventured that this was a good time to buy stocks.

Some old Street hand obviously tutored him on the art of stock-market forecasting because he immediately qualified the recommendation by stressing it was being rendered strictly for the long term. And like the most seasoned strategist, he sedulously neglected to define "long term."

If he meant 10 years, we can't quarrel too much, provided that anybody acting on the advice makes sure to have an ample stash of painkillers to see him through until 2019. It could be that President Obama, a scholarly soul, was eager to emulate one of his predecessors, Ronald Reagan, who early in his administration -- when the market was more or less supine after a nasty fall -- declared it was time to turn the bull loose.

Of course, Mr. Reagan offered his cheerful exhortation on a visit to the New York Stock Exchange, and it's conceivable that, gregarious to a fault, he was merely trying to buck up the assembled traders, brokers and assorted and sordid hangers-on. It could be, too, that Bill Casey, then head of the Central Intelligence Agency, who was a notorious and compulsive speculator (it got so that folks began to think that CIA stood for "Casey's Investing Again"), had prevailed upon his chief to give the market a thumbs-up.

To be sure, Rahm Emanuel, Mr. Obama's chief of staff, was in the investment business. Exactly what he did is hard to say, but, to be fair, he must have done something, or why in the world would anyone pay him $18 million for his two-year stint? In any case, he worked (or whatever) for a hedge fund, so he couldn't have been much help in prepping his current boss on even the bare rudiments of investing.

While, at least publicly, the president's remarks last week represented his initial fling as a stock-market prognosticator, he's now automatically eligible for the coveted Jesse Livermore Award, created by Bill King, who puts out the sharp-toned King Report. It's to be conferred, Bill explains, on the soothsayer who calls the greatest number of bottoms before this poor market actually hits bottom, if it ever does.

The competition among prominent investment pros to snare the honor of No. 1 bottom-caller, as you might expect, is hot and heavy. (We feel obligated to report with some sorrow that the ranks of the contestants have been steadily thinned, as those foolish enough to act on their own perception have been carried out.)

We think that Mr. Obama, now that he's into bottom-spotting, has a good shot at snaring the award, if only because nary a day goes by that he isn't on TV or radio or at a rally of one sort or another, which endows him with an endless number of opportunities to proclaim still another bottom to this wicked bear market. Hey -- they don't call the post he occupies the bully pulpit for nothing.

AS A POSTSCRIPT TO THE ABOVE, IT'S WORTH noting that Bill King takes strenuous issue with the notion, which is virtually epidemic among bottom fishers, that stocks are begging to be bought because they've come down so far. "Buying all the way down in a secular bear market," he acerbically observes, is the surest way to lose money, and lots of it.

And forget at your peril, he warns, that we're up against not just any old secular bear market, bad as that might be, but a much more pernicious "super-bear market."

We hear you, Bill, loud and clear.