In reaction to my blog post yesterday about the state of the market (“Where’s that bottom everyone’s talking about?), a friend commented after reading it on Facebook by asking:
Well, I don’t know. But I do know two things: 1. Horses in a herd almost always gallop in the same direction; and 2. The thrum of positive news – primarily in the stock and housing markets – has become increasingly loud.
Consider what happened at art auctions over the last couple of weeks. As the New York Times reported, sales volume was down, confidence was up and buyers were not bidding frantically for anything that had paint on a canvas. Wrote Carol Vogel:
While prices for the best works seemed high and bidding was often deep, the volume of sales — nearly $600 million between the two companies — was vastly diminished from a year ago, when Sotheby’s and Christie’s sold a combined $729 million or two years ago when the market peaked at $1.6 billion. But the relief that prices are crawling back up was palpable.
“A year ago people were distracted and primarily assessing their own net worth,” said Marc Porter, president of Christie’s in the Americas. “Now that the worst of the financial crisis seems to be over, people are once again focusing on collecting.”
Substitute the housing market or the stock market for the art market, and maybe there’s a trend. Not all exuberance is irrational, but it’s sure hard to know whether the renewed froth at the auction houses that we are witnessing suggests a solid grip on reality.
My own view of reality keeps changing. . . After months of dropping my brokerage statements into a file folder unopened, I finally screwed up the courage to look at them this week. Since I give my stock broker discretion to buy and sell without my permission, I really didn’t know how I was doing. So, I was surprised to see that I had bled only a little without having been wounded fatally.
At the same time, my portfolio does not reflect growth related to the recent bull market. One reason is that I’m about half in cash, thanks to my seasoned broker’s conservatism, which, after all, saved me from slitting my wrists after the collapse of Lehman Brothers.
In a phone call yesterday, he confessed that the current market baffles him and that he is deeply concerned about the future. Although I don’t quite agree, I can’t say that I asked my broker to change his strategy: I’d rather be secure than spend sleepless nights.
Though I’ve been writing that the bottom of the housing market is here or near, I’m not ready to revise my thinking about it. At least not yet.
Licensed Associate Real Estate Broker
Senior Vice President
Charles Rutenberg Realty
127 E. 56th Street
New York, NY 10022