Let's Be Careful Out There, Because Everything Old Is New Again

"When trumpets were mellow
And every gal only had one fellow
No need to remember when
'Cause everything old is new again...

When trumpets were mellow
And every gal only had one fellow
No need to remember when
'Cause everything old is new again."

--Peter Allen, "Everything Old is New Again" 

I am immersed in nostalgic this morning.

It all started yesterday when Greenlight Capital's thoughtful David Einhorn proposed to distribute on a tax-free basis a second class of General Motors (GM) common stock called "dividend shares" in order to have two classes of stocks. As seen in the pop-up chart below, the other class would be entitled to all earnings after the dividends are paid.

This GM-D proposal brought me back to the old days when I remember we had GM, GM-E and GM-H.

I am reminded of the Chicago Cubs, a baseball team that won the World Series after more than a century of failures, proving you gotta have heart. (Gwen Verdon, Ray Walston, Jean Stapleton and Tab Hunter -- such nostalgia). 

"When the odds are saying you'll never win

That's when the grin should start."
--Damn Yankees, "Heart"

You want some more nostalgia? Bob Hope was born today (in 1903) and he and Bing Crosby always hit it straight down the middle as a renowned entertainer and investor.

And it reminded me of other eras of "animal spirits" that led to the emergence of speculative outcomes that ended badly, such as the dot.com bubble in early 2000 and the period before The Great Recession in mid-2007. Yes, as a short seller, I am nostalgic for those good old days.

It also reminded me of something F.A. Hayek wrote around 73 years ago as if it were about the world's political state today -- policies (Democratic and Republican) that are designed to sound noble, compassionate and fair to all, yet may yield the opposite result:

"Although the beliefs must be chosen for the people and imposed upon them, they must become their beliefs, a generally accepted creed which makes the individuals as far as possible act spontaneously in the way the planner wants. If the feeling of oppression in totalitarian countries is in general much less acute than most people in liberal countries imagine, this is because the totalitarian governments succeed to a high degree in making people think as they want them to... The word "truth" itself ceases to have its old meaning... it becomes something to be laid down by authority, something which has to be believed in the interest of the unity of the organized effort and which may have to be altered as the exigencies of this organized effort require it."

Odd parallels, maybe ... or maybe not.

Check out my opening missive from Wednesday and try to answer the first three questions I raise that concern me about our investment well-being and then the four additional ones I have begun to ask myself. 

Think about that history and how the contour of history hurt our markets while many of the market participants were looking the other way, often ridiculing the skeptics and dancing away because the music was still playing -- though they were not doing "the Dougie" back then:

"When the music stops, in terms of liquidity, things will be complicated. But as long as the music is playing, you've got to get up and dance. We're still dancing."

--Chuck Prince, Citigroup

So, let me teach you how to Dougie, by being ever more conscious of risk, well- diversified and protected by higher-than-normal cash reserves

Above all, after four decades of investing and trading, I have learned what we have learned from history is that we haven't learned from history.

Be forewarned, stay alert and (more nostalgia), remembering what Sgt. Phil Esterhaus (MIchael Conrad) said in Hill Street Blues:

"Hey, let's be careful out there." 

'Cause everything old is new again.