All this week, CNBC has been interviewing fund managers from the Morningstar conference, and of course they all have this or that rationale for buying this or that stock. Some like commodities. Some like consumer durables. Some like defence plays. Some thing stocks are cheap. Some thing stocks have “gotten ahead of themselves.”
And on and on it goes.
But it’s actually a big lie. This hasn’t been a “stock-picker’s market” in a long time, and there’s a reason why everyone is trying to brush up on the meaning of the bid-to-cover ratio (Wikipedia explanation) at a government bond auction. We’re pretty sure we never once heard the term on CNBC before three months ago. Now we hear it all the time. (And it coincides of course with the rise of Rick Santelli.)
Bottom line is, it’s all about the government now, which is, of course, the predictable result of transferring so much of the private sector liabilities over to the public sector. When it appears that the Fed is in control, we’re good. When it looks as though DC has lost the plot, then it’s freak-out time for stocks.
Hopefully, the crisis will abate and the government will be able to extricate itself from business, and at that point it might be a stock-picker’s market again. But in the meantime, all these Five-Star Morningstar fund managers are just fooling themselves.