Martin Balsam Is Gone, but Allardyce T. Meriweather Lives On!

After my religion period, I took up with a swindler: Allardyce Meriweather.
Jack Crabbe, Little Big Man

I promise the immortal Meriweather may have something to do with the market. Just have patience.

Allardyce Meriweather is a character in Thomas Berger’s novel Little Big Man, which centers around the adventures of Jack Crabbe, the only white survivor of The Little Big Horn. In the film version, Jack is played by Dustin Hoffman, and Martin Balsam portrays Meriweather.

Allardyce is a con artist, a four-flushing, thimblerigging flim-flam man -- a direct descendant of Mark Twain’s King and Duke. He makes a living via his wits and the gullibility of his fellow man. As he puts it:

Men will believe anything, the more preposterous the better: Whales speak French at the bottom of the sea. The horses of Arabia have silver wings. Pygmies mate with elephants in darkest Africa. I have sold all those propositions.

Crabbe encounters him from time to time, and can’t help but notice that there seems to be less of Meriweather each time they meet:

Meriweather was one of the smartest men I ever knowed, but he tended to lose parts of himself. When I joined him, his left hand and his left ear were already gone. During my years with Meriweather, he lost an eye as a result of a fifth ace dropping out his sleeve in a poker game.

It didn't faze him, though. Deception was his life's blood, even if it caused him to get whittled down kind of gradual like.

When their paths cross for the last time, Jack admonishes him: You don’t know when you’re licked! To which Allardyce replies: Licked? I’m not licked. I’m tarred and feathered, that’s all.

On that note, I give you the graphic below:

It’s a chart of the S&P 500’s ascent since 2012, with predictions about its future course. The quotes may not be legible, but here’s a sample[1]:

7/31/12The real crash is dead ahead. Paul B. Farrell
11/13/12Prepare for massive market meltdown. Marc Faber 1/10/13Crash in Q3 2013 and continuing for a year and a half. Harry Dent
9/26/13Decent chance stocks will crash 30% in next year. Henry Blodget
10/15/131929 parallel warns of crash, it’s preordained.  Tom DeMark
7/29/14Stocks are in a bubble and will crash.  Ron Paul
9/5/15100% risk of a 50% crash if Trump wins nomination. Paul B. Farrel
1/11/16Sell everything, brace for a cataclysmic year. RBS
8/9/16Can easily give back 5 yrs. of gains to 1100.  Marc Faber
11/9/16Very probably looking at a global recession, with no end in sight. Paul Krugman
6/24/17epic decline ahead, stocks to plummet 40%. Marc Faber.
1/18/18The data is clear, 50% unemployment, a 90% stock market drop, and 100% annual inflation starting as soon as next year. Robert Weidemer
10/25/18French-speaking whales have heard from the silver-winged horses of Arabia that a black swan is flying in from Armageddon. Sell Everything! Dr. A. Meriweather
(Just checking to see if you’re paying attention)

It is remarkable that the business news will continue to quote these perpetually bearish broken watches no matter how preposterous their predictions. It’s “preordained?” When is anything in the market preordained? “100% risk of a 50% crash?” I guess that’s a more precisely convincing way of saying “preordained.” “The data is clear, 50% unemployment, a 90% stock market drop, and 100% annual inflation starting as soon as next year?” You better have some mighty powerful data to predict the mother of all Depressions! On a positive note, at least Henry Blodget had the humility to say “decent chance.”

Now, I don’t mean to suggest that any of these talking heads engage in premediated swindling, a la the indefatigable Meriweather. Reading their minds is beyond my mortal powers. I also don’t mean to imply that our current market correction could absolutely not be the start of a major bear market. But what I can say for sure is that, unlike Meriweather, they never seem to get a piece taken out of them. Their reputations remain intact no matter how much harm their snake oil inflicts. They are never licked, never tarred and feathered, never run out of town on a rail. The news media knows that there will always be a market for their silver-winged Arabian horses. Just make sure you don’t buy into that market!

Since there is always a possibility that we are on the cusp of a major bear market, I’ll post before the end of the week with an update on my leading indicators, and what they’re saying about the odds of a significant market decline.

Don Harrison
President, CIS
Br Mgr, RJFS

Opinions expressed in the attached article are those of Don Harrison, and are not necessarily those of Raymond James. All opinions are as of this date and are subject to change without notice. This information is not a complete summary or statement of all available data necessary for making an investment decision and does not constitute a recommendation. Links are being provided for information purposes only. Past performance is not indicative of future results. Investing always involves risk and you may incur a profit or loss. No investment strategy can guarantee success. There is no assurance any of the trends mentioned will continue or forecasts will occur. The information has been obtained from sources considered to be reliable, but Raymond James does not guarantee that the foregoing material is accurate or complete. Raymond James is not affiliated with and does not endorse the opinions or services of independent third parties named. The S&P 500 is an unmanaged index of 500 widely held stocks that is generally considered representative of the U.S. stock market. Keep in mind that individuals cannot invest directly in any index, and index performance does not include transaction costs or other fees, which will affect actual investment performance. Individual investor’s results will vary.