Wednesday, October 08, 2008

Pizza and beer capitulation

When markets are gripped by fear the rendering of men and women to headless chickens is a painful sight to behold. As the stock market reels the inevitable capitulation spawns a new day. From those ashes a new bull market grows.

After the market's slide toward 5-year lows and perhaps threatening negative returns on the decade before all is said and done, investors are left looking for signs of complete capitulation. A broker friend tells me a key signal is post-work day alcohol consumption by brokers at their local watering hole. When the days are at their darkest expect the libations to flow freely. An even more telling signal is when branch managers start bringing in pizza and beer to the offices. In any case, according to this grizzled veteran, if either of these signals is flaring in your parts, it's time to check your gonads and buy, buy, buy.
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