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Wednesday, August 10, 2011

Bizarro World

It feels like we are living in Bizarro World.  In case you don't know, Bizarro World is the fictional planet where Superman's evil opposite lives.  The motto  of Bizarro World is  "Us do opposite of all Earthly things!"  Here is Wikipedia's entry for Bizarro World.  (Most of us remember Bizarro World from the famous Seinfeld episode).  Here's a quick rundown of recent Bizarro events:

- Last week, our government solved the debt crisis by...... agreeing to appoint a commission.
- Over the weekend, S&P, those same geniuses who rated subprime mortgages AAA, decided to downgrade Uncle Sam.
- On Monday, in reaction to this downgrade, investors decided to sell shares of companies that make profits and buy U.S. Treasuries - the exact things that were downgraded.
- On Tuesday, the Chairman of the Fed said that the economy is weaker than previously thought, and the stock market surged 4%.


What the heck is a rational investor supposed to do when living on Bizarro World?  I guess one answer is to jump right in, and start acting Bizarro - buy, no sell, no buy.....(I call this this the Jim Cramer answer).  A better response is to sit back and enjoy the weather, knowing that an appropriate asset allocation plan is in place which will help us reach our long term goals (I call this the Frank Bond answer).

Please note that my intention is not to make a joke of or to minimize the real structural challenges facing the global economy, or the fact that our clients have real money invested in the stock market.  It's just that, over the past two decades, I have learned that when it feels like we are living in Bizarro World, it really is best to sit tight until the dust settles.