Drizzly, Dark, Dreary - But Not for Stocks

We've had lots of drizzly, dark, and dreary days lately. Occasionally the sun peaks out, sometime for a whole day. But not complaining: The alternative to drizzly has been drenching rain and wind.

In between, we did have a spot of snow, covered with icy rain, during the recent deep freeze, causing lots of slippery sidewalk patches, despite our assiduous shoveling and spreading our "Safe Paw" to melt the ice. 

Of course, other parts of the country had much more snow, much lower temps, even so-called "dangerous" cold.

We did have a night or two where "dangerous" was touted by our weatherpersons. But, really, what does this mean? That you go outside in your underwear and might freeze to death? Don't folks know to dress warmly when it's really, really cold? Maybe not.

Wouldn't surprise me, if that's the case. Can't remember how many times I've tried to urge family to dress sufficiently warmly when they're driving somewhere. You know how that goes. You figure you're driving so you're not so focused on what you should be wearing as you would if you were walking. And because so many of us live in "driving" mode most of the time, walking has become a rarity (unless you walk, jog, or run for exercise - which is not relevant here). 

Does anyone listen to my counsel? Nah. Frustrating. 

You really need to dress in anticipation of your car breaking down and you having to either sit it out or walk outside in the cold. Hasn't this ever happened to you? It has to me on more than one occasion. It's even happened when I had a car load of our children, youngsters at the time. That was a bit scary.

I learned the dressing for a breakdown thing from a work colleague who was a sales guy at a consumer products company years ago. He lived in Nebraska and told me about all the stuff he kept in his car when he hit the road for the day. (Sales calls were typically at long distances way out there.) I spoke to him from my warm, protected desk in Manhattan, but paid close attention. The lesson never left me.

Such people, who know the true dangers that weather can present when not prepared, can teach us much about the stock market. O, maybe not directly. But what they do is a form of risk management. And with stocks going ever-higher, with the financial pundits exclaiming a new and quite spectacular Bull Market, with FOMO (Fear Of Missing Out) in full force, with the traditional Greed nosing out Fear in the markets, and with the AAII Sentiment Index sporting near record "Bullish" %'s in recent months (a more or less reliable contrary indicator), along with...well, we'll skip all the other data that's waving yellow if not red flags out there. It would take too long for a short, sweet post like this.

Anyway, with all that, you'd think the idea of hedging your bets - more formally managing your risk - would have emerged in some quarters. Of course, it has, but those quarters are the little hidden neighborhoods reserved for intelligent analysts with decent track records who charge for their advice - not something most folks read, hear or in any way pay attention to. 

Ah, risk management: There's another drizzly, dark, and dreary item to be sure. It's decidedly not exciting, certainly not sexy. It makes no promises, does not incite animal spirits or any of the other emotional triggers that typically play havoc with humans both in our investing decisions and in our daily lives. 

Then again, when you consider how much does play havoc with us, how so many of us live in a kind of faux dramatic theater of our own creation, you might consider risk management as a kind of anchor to reality that frees us from the lures of the world, the flesh, and the devil.

Yes indeed. The stock market can indeed reflect the emotional yo-yos that drive so much of human behavior. Do we really want to be attached to that string and spend our lives up and down, up and down?

Come to think of it, if risk management is one of a kind with the drizzly, dark and dreary, perhaps it's time to embrace, even celebrate these days of winter, post-Christmas, that notoriously put many of us into a bit of a funk. Bring on the drizzly, dark, and dreary. It's a much saner atmosphere for many of us in so many ways. Unless, of course, reality isn't your thing.