Curse that Saddam Hussein! Barely two months after the Dow Jones indus-trials, the S&P 500 and the New York Stock Exchange composite all soared to record heights, the mood in Wall Street has collapsed, and analysts are racing to outdo one another with pessimistic predictions. The overriding question is whether this is just a severe correction in an ongoing bull market, or the start of a major bear market.
Well, when people are losing money, they are understandably less concerned with general labels than with the cruel, personal details, but it seems to me in any case that the traditional preoccupation with bulls vs. bears doesn't fully explain what's going on today. For that, we need a much larger menagerie.This is, for example, a chicken market. Many investors, large and small, who are clucking gloomily about the future are nonetheless holding on to a lot of their stocks. They're scared that, as has so often been true over the past decade, temporary panic will soon be replaced by a continuing uptrend. So they don't really even have the courage of their clucking.
On the other hand, they're certainly too chicken to step up and start buying. As a result, the volume of trading is so slow that the once-haughty registered-representative roosters are running short of chicken feed themselves.
It's also a frightened rabbit market, cowering in the bushes fearing some unexpected noise - and then scurrying away whenever it hears one. It is thus plainly no longer a pig market, which behaves exactly in reverse - reacting to every new noise with delighted grunts of greed, and excited trips to the buying trough.
But it's also, in part, a hippopotamus market, subject to being trampled underfoot by huge, slow-thinking institutional program traders, who don't care whom they take underwater with them. "The computer made me do it," they alibi, as they roll ponderously into the river.
And, at the other end of the size chart, it's been a bit of a chameleon market, not just recently but for the past year, showing one color for the blue chips and an array of others for the lesser hues - which failed to match the 1990 record-setters - even before most Americans knew Iraq from Iran. Even now, when most of the equity chips are falling into the same dark spectrum, the chameleon continues to show happier colors for anything that gives off the faintest scent of petroleum.
For most of the technicians, though, it continues to be a monkey market - as in "monkey see, monkey do." When prices are going up, they tend to be bullish; when prices are dropping, they tend to be bearish. (Always, however, they knew it all the time - after the fact; just read paragraph 17 on page 3 Feb. 17, 1988, where they said quite clearly that, by golly, anything might happen next.) Monkey business, indeed.
It's also something of a giraffe market. While the oldest rule in investing is "buy low, sell high," most investors can't bring themselves to do it. Otherwise they'd be scurrying now to pick up the stocks that made them salivate earlier this year, at much higher prices.
Instead of seeking bargains, though, most current investors, if they do any buying at all, seek to nibble like giraffes on the highest leaves of the equities tree: the few stocks that are going up while others are going down. Never mind that this is often an excellent technique for getting it in the neck.
But not in the trunk - for this is, most definitely, not an elephant market. An elephant, it is alleged, never forgets, whereas these jumpy traders are scarcely able to remember what they were trumpeting even yesterday. (Tusk, tusk.)
In the short run, then, we would seem to have a swallow market, heading south with the birds as summer ends. After a while, the aardvarks will be seen, feeding on small objects (which used to be much larger), and then the owls will come into their own - armed with the wisdom that this too will pass - and the race will eventually be won, as usual, by the slow-but-steady tortoises that kept the faith. Meanwhile, however, Wall Street is strictly for the birds.