Written Proof ! ! ! Perpetual Worry Is a Loser’s Game

Someone once said, “There is never a good time to invest.”

Meaning, there is always something that has just happened, or something that is expected to happen tomorrow, or something that is expected to happen next February, that provides a very compelling excuse to avoid putting your money into stocks or other serious investments.

“There is never a good time to invest.”

TINAGTTI, for short.

“I’ll just wait till everything is right,” is the more hopeful refrain of investors who often wait, and wait, and wait.

I was reminded of TINAGTTI this week while cleaning out 10 years of paper files here at The Times, in preparation for a move to a new desk (or “work station,” I guess we’re supposed to call it now).

Why would I save old market newsletters, stock research reports, economic studies, etc.? Some of it was classic stuff within its narrow genre--great prose, or an idea or market thesis I hadn’t read before, or a prediction that seemed outrageously optimistic, or pessimistic.

Also, much of what I had in those files was from the pre-Internet era, when you actually did have to pull out a piece of paper to find information, as opposed to clicking a mouse.

But the main reason I saved much of it was because . . . there were file drawers able to hold it. Nature abhors a vacuum, especially in file cabinets.

If you were looking in the early 1990s for reasons not to invest in the stock market, you might have latched onto pronouncements such as these, which I found in my files:

* From the Wall Street Journal, June 7, 1990: “In 15-Year Pattern, 1990 Aligns With 1929.” The upshot of the story under this headline was a Salomon Bros. analyst’s contention that the market’s pattern since the late ‘70s (as measured by the Dow Jones industrial average) eerily traced its pattern in the 1910s and 1920s--that is, if you aligned 1915 with 1976.

So 1990, this analyst argued, would see the final lunge of the ‘80s bull market, just as 1929 was the peak of that era’s bull market.

Actually, he was right--the ‘80s bear market did end in 1990, with the Gulf War. And the analyst, Michael Belkin, insisted he wasn’t predicting a 1930s-style depression in the ‘90s.

But just the idea of linking 1990 with 1929 certainly would have been enough to keep many potential investors from putting money to work. For some, the article would have been enough to inspire thoughts of climbing out to the window ledge.

As it turned out, when the Dow fell 21% between July and October of 1990, bottoming at 2,365 on Oct. 11, it was the greatest buying opportunity we’ve seen since.

* On Oct. 9, 1991, analyst Robert LaMorte--who was bold enough to name a new market analysis technique for himself, calling it the LaMorte Unit Theory--declared that the Dow, at 3,060, had reached its peak.

Pointing to a “serious credit crunch” in the economy, and the “notable overvaluation of the three main measures of security valuation”--price-to-earnings ratio, price-to-book ratio and dividend yield--LaMorte said the market had been thusly overvalued only at three other points in history: 1929, 1937 and 1973-’74.

In other words, it was a very bad time to invest.

There was, in fact, a credit crunch in 1991. And many people beside LaMorte were worried about stock valuations.

But by the end of 1991 the Dow stood at 3,168. By the end of 1993, it was at 3,754. I never heard from LaMorte again.

* Nothing gets a journalist’s attention in press releases like the use of multiple exclamation points--mostly because we assume there must be a good laugh therein.

Hence, I saved this release from market newsletter publisher Jerry Favors in Columbus, Ohio, dated June 11, 1992: “The Bull Market Ended on June 2, 1992!!!”

I had to give him credit, because he wasn’t interested in hedging his bet. This guy truly believed in his forecasting abilities.

“The bull market which began in August 1982 has been the longest bull market in equity prices in 200 years,” Favors began. But the game was over, he insisted. And “unlike every other pullback in the Dow for the past 10 years, this will not just be a short-lived correction with the Dow snapping back to new highs, but the early stages of a long bear market that should ultimately see the Dow reach the 1,600 to 1,700 area within one year or less,” Favors said.

The Dow, which stood at 3,435 when Favors made his market call, was about 70 points higher a year later. And as even some preschoolers today are aware, the bull market did not end on June 2, 1992. (The Dow’s close on Friday: 10,614.06.)

* You didn’t need to see a blustering bear-market declaration to be afraid in the ‘90s. The danger to the stock market, and the bond market, was all around.

“Exploding Money Supply Means Higher Interest Rates and Higher Gold Prices” warned Special Situation Report, a Rochester, N.Y.-based newsletter, in November 1993.

The writer, a savvy analyst named Charles LaLoggia whose true calling was (and still is) picking potential corporate takeover targets, correctly foresaw that the surging money supply would be one reason the Federal Reserve would soon begin to tighten credit.

But the implication was that investors would flee stocks and run to gold. The Fed did tighten, all right, and the broad market struggled in 1994. But gold wasn’t what people wanted: Its price was barely higher a year after LaLoggia’s report.

Meanwhile, the stock market was setting up for a spectacular multiyear run-up that would begin as soon as the calendar turned to 1995. Gold, on the other hand, has been a massive bust since 1995.

* As I leafed through my files, I found reports that included “The Coming Plateau in Corporate Earnings” (written by a respected Wall Street analyst in 1996), which was dead wrong; “The Coming Crisis in Social Security,” another 1996 report; and a newsletter expressing shock that investors had put $24 billion in net new money into stock mutual funds in one month in the mid-1990s, which the writer contended surely must be a sign of a market peak.

In the first four months of this year, investors put an average of $42 billion a month into stock funds. How could that not be a sign of a market peak, at long last?

My point here isn’t to mock the people behind these projections and forecasts. (Well, OK, I mocked them a little.) Anyone in this business, including me, has plenty of their own work to look back upon and wonder what they were thinking, or drinking, at the time.

If the stock market over the next five years collapses on itself like some supernova-turned-black-hole, everyone who ever uttered a bearish word will say, “I told you so.”

But what if, despite everything there is to worry about today, the market somehow pulls another rabbit out of its hat?

Good investing ultimately amounts to an educated gamble. You can’t know for sure. You have to take a chance. You’ll win sometimes, and you’ll lose sometimes, but if you don’t play the game at all, you won’t know what it’s like to win.

*

Tom Petruno can be reached at tom.petruno@latimes.com