YOU have to chuckle at Mr Market, the old blighter, for doing his best to make monkeys of us all. On Wednesday, it was impossible to find a talking head willing to see any light ahead, but by Friday — after two nicely positive moves on the S&P500 (and the JSE) everyone’s back to holding thumbs. It was just a correction, they said.

A welcome blip downwards that pulled valuations out of what had begun to look like a frothy parabola. In the case of the South African market, we have seen a steady drip lower since July. This month’s uglier bear moves might well have been a well-earned bout of profit-taking.

There I go again. Dooming myself to being on the wrong side of a tragic swing on Monday. It is fun to speculate on price movements, but I would not want to bet money on any particular opinion.

Am I making a bullish case? Probably, but what the heck do I know? Last week, as an interested party by virtue of Allan Gray being my retirement fund manager, I expressed some fear about its stock holdings should the bear market play out.

My favourite asset manager, The Fly, has been hilariously schizophrenic as stock prices whipsawed. He refuses to go short, having been burned by freakish bull runs.

Instead, he opts for extreme defence: cash, long-dated bonds and utilities stocks. He reckons listed companies that deliver water, electricity and gas are far less likely to plunge in price if the market goes south.

So far, given the collapse in some tech and resources sectors, The Fly has been proven right. If the market shows signs of turning up, however, those same trades will look pedestrian.

For now he remains cautious but optimistic: “Corrections are always accompanied by a distinct sense of doom that infects the minds of investors. More often than not, the market is not in a bear market. These corrections pass, and stocks are judged by their earnings, not by some idiot on the TV raking in the tea leaves with a shovel.”

We are barely into earnings season in the US. Google and Netflix made pots of money, yet their results disappointed analysts. Sooner or later, reality will bite, and investors will see the obvious value that top US companies are delivering.

Am I making a bullish case? Probably, but what the heck do I know? Last week, as an interested party by virtue of Allan Gray being my retirement fund manager, I expressed some fear about its stock holdings should the bear market play out.

Financial planner Dauphin, posting at themarketsbarandgrill.co.za, correctly noted there was no need for panic: “[Allan Gray] doesn’t have to stay in long-only stocks — [it] can switch to hedged, largely market-neutral equity positions” using the firm’s local and global Optimal funds.

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