Enjoy Yourself, It's Later than You Think

07/17/2010 06:52 pm ET | Updated May 25, 2011

You don't need an Einstein IQ to figure it out. The facts speak for themselves. Bad news at the bottom line, sinking consumer sentiment, slowing retail sales, excessive debt, high unemployment, ballooning budget deficit and skidding demand for new housing.

It looks even worse if you tack on sharp cutbacks in bank lending, falling spending by well-heeled households (which represent about 40% of all consumer spending), global instability, the end of the stimulus and near certain political gridlock after the mid-term elections.

Wait, there's more, such as increasing regulation, which decimated the Roman and Chinese empires, and the advent of higher taxes later this year and more in 2011.

Any way you look at it, these are not the makings of a sustained economic recovery, no matter what the White House and various self-proclaimed financial experts tell us.

Relating all of this to the stock market, it conjures up a famous proverb -- "A fool and his money are soon parted" -- penned by Thomas Tesser, an English writer, in 1557

Today, 453 years later, the nation's stock investors might well heed that proverb, given the unfortunate rash of risky equity buying that took place the past two weeks during an impressive 680-point surge in the Dow Industrials in seven consecutive winning sessions.

That sharp rise assumed what a steady parade of so-called financial experts on the TV business shows has been pounding home again and again -- namely, that the economic drubbing is all but over.

Sounds good and we all wish it were so, but alas, the experts have been marching in the wrong direction. Friday's vicious loss in the Dow of 261 points and about $336 billion in market capitalization, as measured by the Wilshire index -- plus the reasons behind it -- hardly supports any buoyancy.

Those reasons for the stiff decline: disappointing results from such corporate giants as Citigroup, Bank of America and General Electric, a major drop in consumer sentiment and a slowdown in manufacturing activity in New York and Philadelphia.

In the face of all these bum tidings, TV's business touts have been beating the drums for a bunch of stocks that you simply have to own. Clearly, they viewed Friday's steep market decline as an invitation to buy and capitalize on all the big gains that they see in the offing. More appropriately, in the interest of aiding the beleaguered investor, they should have singled out vulnerable stocks that ought to be sold in a market rife with a slew of ongoing risks.

For some thoughts, I rang up San Francisco money manager Gary Wollin, a veritable unknown, who has made a series of canny up and down market calls in recent years. I last caught up with him about 4 ½ months ago with the Dow trading at the time at around 10,500. "It's time for investors to take a snooze; we're looking at a flat market," he told me then.

With the Down now at a shade under 10,100, it was another example of solid market timing, the kind of consistency you might expect but rarely get from the alleged experts on the TV business networks.

So what now? More of the same, says Wollin, who manages a little more than $100 million of assets under the banner, Gary Wollin & Co. The horror of this market, as he sees it, is there is no clear direction. Likewise, he sees a tug of war, with a lot of near term concerns confronting us in the face of improving corporate earnings, which means, he says, "we're in limbo."

Accordingly, Wollin, looking ahead to the next three months, describes himself as leery and highly cautious. "Going to sleep and doing nothing is the best strategy," he says. "Just continue to call me Rip Van Wollin,"

Laying out the basis for his near term concern, he cites the following:

--A worsening housing picture, meaning a lot more mortgage delinquencies, foreclosures and lower price.

--With unemployment so high, we could see another dive in consumer spending and a horrid Christmas.

--Europe could still be lousy, which suggests many countries may have trouble repaying their debt.

--Conflicting views among market gurus over inflation and deflation expectations, which could add to market uncertainty.

--A slowdown in China even though it's growing faster than everyone else.

--Growing public disenchantment with Barack Obama, who is looking more and more like a one-term President, another area of market uncertainty.

Wollin's wrapup: "Visibility is getting foggier by the day, he observes, "and in a fog you get lost or you go nowhere."

What does it all mean? The obvious: More economic hell and much more stock bashing. So don't forget what Mr. Tesser said.

What do you think? E-mail me at