Ali Spoke Frankly, But the Bulls' B.S. Is Rising Fast
"The contemporary proliferation of bull---- also has deeper sources, in various forms of skepticism which deny that we can have any reliable access to an objective reality and which therefore reject the possibility of knowing how things truly are." -- Harry Frankfurt, Princeton University
I relayed my fond memories of the late Muhammad Ali over the weekend to my sons, recounting how I loved boxing as a kid when the sport's popularity was at its height during the tumultuous 1960s.
I vividly recall listening to the second Ali/Sonny Liston fight on my transistor radio in 1965. Forget Ralph Branca's pitch to Bobby Thomson in 1951, Ali's punch was the "shot heard 'round the world" that night!
Nine years later, I attended the second Ali/Joe Frazier fight at Madison Square Garden, where Ali won by a unanimous decision. My friend and I didn't have much money, so we landed two inexpensive last-row tickets at the Garden -- the boxing world's temple and mecca. We had to bring binoculars, and my recollection is that I spent a lot of time using them to watch the luminaries in the front row (Frank Sinatra, Ted Williams, Ted Kennedy, etc.).
I also remember going a few years later to the Salty Dog Restaurant in Sag Harbor, N.Y., to watch the second Ali/Leon Spinks fight on pay per view. And, like millions of others, I'll never forget Ali lighting the Olympic torch in 1996 at the opening ceremonies in Atlanta.
"I'm the greatest thing that ever lived! I'm the king of the world! I'm a bad man. I'm the prettiest thing that ever lived." -- Muhammad Ali
As Ali biographer David Kindred once wrote: "Rainbows are born out of thunderstorms -- and Ali was both." In the ring, he fused speed, strength and agility unlike any heavyweight champion before.
Ali truly was the greatest fighter ever to appear in the square circle. He became the most-recognized athlete in the world, and perhaps the most-recognized athlete ever. In 1999, he became the first fighter placed on a Wheaties Box, and then he rang the opening bell at the New York Stock Exchange on Dec. 31, 1999, to mark the Millennium's end.
"We should cherish the memory of Ali as a warrior and as a gleaming symbol of defiance against an unjust social order when he was young." -- Thomas Hauser, The Lost Legacy of Muhammad Ali
Though Parkinson's Disease slowly took Ali's life, he never lost his sunny disposition and childhood innocence. And he never deviated from his beliefs.
Outside of the ring, Ali had unmatched wit and principles. He was an outlier and an outsider, and when the fighter converted to Islam, that unpopular decision likely caused him financial losses.
So did Ali's decision to refuse induction into the military at a time when the Vietnam War was pulling America apart. (The boxer famously said: "I ain't got no quarrel with them Viet Cong.")
The champ was stripped of his title and banned from boxing for more than three years, losing out on millions of dollars of endorsements and purses. The U.S. Supreme Court agreed years later with Ali's plea to be viewed as a conscientious objector, allowing him to return to the ring.
But Ali's beliefs were steadfast and unwavering in the interim. No athlete has ever been so sincere, brutally honest or willing to risk material benefits to stand by his principles. This struck a chord with many of us who shared his antiwar sentiments in that chaotic decade.
A Straight Talker in a World of B.S.
I thought over the weekend about Ali's straightforward, bold views and beliefs -- and about his surprising and sometimes outrageous predictions. (Ali would often forecast exact which round he'd knock an opponent out.)
Compare that to the often-disingenuous sound bytes than we hear these days from politicians, Federal Reserve member and business TV's "talking heads." B.S. permeates our society these days.
Case in point, Wall Street's "perma-bull cabal," which hasn't met a market it didn't like (regardless of the facts).
When speaking on business TV, these talking heads refuse to address the fundamental issue that central bankers have negated natural price discovery. Nor do they address why seven years of continued monetary largesse have failed to produce "escape velocity" and sustaining U.S. or global economic growth.
And when they do in the rare instances express concerns, the market ignores them. Consider how Wall Street brushed off Wharton's Dr. Jeremy Siegel saying that his principal fear is the 10-year Treasury yield staying low, signaling tepid economic growth and weak corporate profits. (Rates hit a cycle low last week, while the yield curve's slope hit a multiyear low and nearly 60% of non-U.S. sovereign debt carries negative interest rates.)
Don't Brush Off May's Jobs Debacle
"You know I think there's gonna be history books written about this period that rational people will read at some point, and I think just one of many idiocies that will stand out will be this irrationality in the market place. They are gonna ask this question of economic historians with complete bewilderment in their voice.
'Professor Jones, did investors really invest in bonds of basically bankrupt countries that printed money to make interest payments and to buy bonds they just issued in failing currencies, which allowed for more bond issuance due to more spending and debt issuance? And not only did they not get interest for doing so, but paid said governments for the right to do so? Did this really happen?? Did they really invest a million only to get back 975,000 10 years later? Sir, I just can't believe that. Were investors really that stupid? Where did they teach this?'"
-- Doug's Daily Diary, Apple in Wonderland: What's Up with AAPL (and the Fed)? (April 27, 2016)
Such optimism, ignorance and indifference towards reality put many investors and traders deep financial pain when we entered the Great Recession. And like Ali's opponents, may still have bear the scars.
But I heard echoes of the misplaced optimism in the wayward analysis out Friday following the U.S. Labor Department's release of the deeply disappointing May jobs report.
By contrast, my friend David Rosenberg fretted over the jobs report's shortfall -- and more importantly, the possible economic and investment ramifications -- in his column yesterday in Business Insider, writing:
"You can see why I was gagging when I heard some of the pundits on 'bubblevision' tell the anchors this morning that the Fed will look through one number. Dude -- this isn't one number. It is a pattern of softness that has been in effect for the past four months and counting. ...
We were always skeptical over all this rate-hike chatter of late, which seems to have just come out of nowhere, but for the Fed to tighten policy in the face of this extremely sluggish job market backdrop would be more than just a touch bizarre. ... This is a game-changer."
-- David Rosenberg, I Don't Want to Alarm Anyone, But ..., Business Insider (June 5, 2016)
David gets most things right -- he was appropriately bearish, then bullish. So, please read the above column closely.
Recession risks are intensifying, but don't expect to hear this out of the mouths of the "talking heads" this week. That sort of complacency is what I was referring to in my give-and-take with Jim "El Capitan" Cramer last week.
We're seeing complacency not in retail outflows from U.S. equity funds, or in sentiment-survey results. We're seeing it in the growing belief -- coincident with rising stock prices -- that we're in a normal, nonthreatening economic cycle that has little or no chance of morphing into much risk for global equities.
How to Be a Champ on Wall Street
Fortunately, there's always substantial value to holding contrarian opinions, as I wrote back in February.
Ali once said: "In the jungle, lions are with lions and tigers with tigers." But beware of the dogmatic consensus. As John Maynard Keynes famously said: "When the facts change, I change my mind. What do you do, sir?"
The consensus might be as clueless today as it was some 10 years ago as we were heading into the Great Recession. So, if you want to "float like a butterfly and sting like a bee" in your investment portfolio (as Ali might say), my advice is to act accordingly.
And as "The Greatest" would often say: "That's no jive."