WSJ columnist excerpt Andy Kessler - former Morgan Stanley exec
There still seems to be excess to wring out of the system—in stocks, crypto, real estate and banks. As credit tightens and the economy slows or recedes, the next phase will be earnings disappointments. Drip, drip, drip, every day another miss, another round of layoffs (this month more Amazon and Facebook workers were let go). It could take six months, a year or, with policy failures, 10 to 15 years. Despite some ups and downs, the Dow Jones Industrial Average effectively went sideways from 1966 until 1982.
It’s often darkest before dawn. One night in January 1991, I was dreading Morgan Stanley’s morning meeting because I had a buy on Intel’s stock and the company completely missed its earnings estimates. The world economy was frozen after Iraq’s invasion of Kuwait. But Operation Desert Storm began that night—we all watched on CNN. By morning, Intel was up huge, launching a 19-year bull run.
The more 500-point market drops due to bank-failure fears, recessions, Russia and China, or concern over our pending AI overlords, the closer we are to wringing all the positive sentiment out of investors. No one rings a bell at the bottom (or top) of markets. When the news is bad, people capitulate and swear off stocks forever.
Then, get your butterfly net ready to scoop up the next wave of innovative companies that got thrown out with the bath water—a stock picker’s paradise.
Beats leaving your money in a bank.
Write to kessler@wsj.com.
