Let Me Teach You How to Be 'Dougie' In This Market

"Aye! Aye!
Teach me how to dougie (aye! )

They be like smoove (what?)
Can u teach me how to dougie?
You know why?
'Cause all da girls love me (aye! )
All I need is a beat that's super bumpin'
And for you, you, you to back it up and dump it!
Put your arms out front, lean side to side
They gon' be on you when they see you hit dat dougie right?"

--Cali Swag District, "Teach Me How to Dougie"

"Teach Me How To Dougie" was a song released in 2010 that refers to the Dougie dance, which originated in Dallas, Texas, with similar moves by 1980s rapper Doug E. Fresh. Originally gaining popularity by Lil' Wil's "My Dougie," released in 2007, it was recorded two years later by American hip-hop group Cali Swag District. It was their debut album and the song was a commercial success, reaching No. 1 on Billboard's Hot R&B/Hip-Hop Songs and shortly went platinum.

Subsequently, "the Dougie" has been performed by numerous athletes and celebrities, including Justin Bieber, Wolf Blitzer, Nate Robinson, Jeremy Lin, Reggie Bush, Dez Bryant, DeMarcus Cousins, Glen Davis, Gael Monfils and Michelle Obama. When she won the 2012 Olympics trials, Gabby Douglas performed the Dougie, and 2012 Summer Olympics gymnastics team gold winner McKayla Maroney taught George Bush's daughter Jenna Hager to do the Dougie while the U.S. team was touring England on a bus. Rugby players such as Juan de Jongh, Julian Savea and Lelia Masaga have been doing the Dougie. And Penny and Mitch tried it! 

Even Spongebob sings and does the Dougie" --  though Mikey (BadGolfer), I prefer Kate Upton's version! 

So let's lighten it up this morning and let me teach ya how to Dougie in a world of political, economic and profit uncertainty, heightened volatility and, arguably, overvaluation:

The Markets Should Grow More Volatile: Investors and traders with a short-term price objective should be opportunistic but recognize that the volatility will be more difficult to navigate. So, reduce the number of trades unless you want to be sent into financial oblivion. Longer-term investors may consider buying protection, which still is historically inexpensive, by purchasing VIX calls, S&P puts or inverse ETFs.

The Markets, on Nearly Every Metric, Are Overvalued: Maintain above-average levels of cash and lower your equity commitments. Do not be sucked into the self-confident and glib business media's masquerade that every dip is a buy. It no longer may be. Reward versus risk (upside versus downside) may have turned negative, perhaps materially so.

Prepare for an Increasingly Likely Black or Orange Swan: Black swans have occurred with greater frequency over the last decade. This trend likely will continue over the next five to 10 years. As written last week (and please take all of this quite seriously going forward):

For the last year or more I have been preoccupied and concerned with the answers to three simple questions:

*     In a paperless and cloudy world, are investors and citizens as safe as the markets assume we are?

*     In a flat, networked and interconnected world, is it even possible for America to be an "oasis of prosperity" and a driver or engine of global economic growth?

*     With the G-8's geopolitical coordination at an all-time low, how slow and inept will the reaction be if the wheels do come off?

Today, I want to add four additional questions to the three above -- the answers to which concern me as an investor:

*      Remember when the big argument in favor of President Trump was that he was a dealmaker who knew how to get things done? That was when he was doing real estate deals. Now he has to deal with 535 other politically partisan legislators in Congress -- on their own real estate turf.

*      Does the administration have the depth of experience, understand the extent of the legwork and organization required for passing legislation or have a coherent idea or shared vision of what it wants to achieve and what problems it means to solve?

*      If President Trump can't easily put through a health-care package -- what does that mean for the more-difficult regulatory reforms, tax- and fiscal-policy agenda?

*      President Trump took credit for the stock market's advance since his election victory. Will he take responsibility for Tuesday's correction -- and possibly a further correction? Is it a slippery slope for an administration to use the S&P 500 as a barometer of success? And is a pro-business and anti-domestic programs (in education, the arts, etc.) agenda going to benefit those -- in the lower and middle class (largely his base) -- who have suffered the most over the last decade?

--Donald Trump Will Make Volatility and Uncertainty Great Again

Reduce Your Portfolio's Value at Risk: Pare down volatile, high-beta stocks. Keep speculative exposure to a minimum. Reduce VAR.

Lower Your Bond Exposure: Though the domestic economic recovery is fragile, policy errors could lead to danger ahead in fixed-income markets.

Stay American: Despite calls that European and other non-U.S. markets are cheap (they are for a reason!), a growing U.S. nationalism and political risks abroad could stall European Union growth prospects. Indeed, the EU road has run out of asphalt -- Grexit and Italeave may lie ahead and many peripheral country banks are insolvent. Asia is a potential powder keg politically, militarily and financially (leveraged shadow banking issues). Stick with the transparency brought by listed companies that operate in America.

Maintain a Diversified Portfolio: Against a confusing policy and uncertain economic backdrop, individual stocks are exposed to sudden surprises. Be diversified, now more than ever.

Avoid or Minimize Trading in Commodities and Currencies: Though some prominent talking heads and newsletter writers are into this game, their poor records clearly indicate how hard the commodities and currencies terrain is to trade. There is just too much damn uncertainty.

Be Skeptical of New Paradigms: Like the phrase "animal spirits," as it could have a brief half-life.

Pay Less Attention to the Federal Reserve: Though Fed debate fills up space in our business news platforms, the Fed's role over the next few years will be greatly diminished and have little impact on the capital markets.

Do More Homework on Individual Stock Ideas, not Less! And stick with companies that have plenty of net cash and, like Blanche DuBois in "A Street Car Named Desire," don't rely on the kindness of strangers (the capital markets) to raise debt and capital.

Go, Dougie E. Fresh

And study this Doug E. Fresh video so you, too, can learn how to Dougie. 

Hey, Gary "US" Bonds, can you do the Dougie?