A financially astute nursery rhyme if ever we heard one. Many mice are afoot in the market and in government, scurrying when trouble arises. Like the mouse in the nursery rhyme, they fret and stall for time, hoping the crisis will subside and at the strike of the clock, escape.
The Financial Countdown
The nursery rhyme reveals the mindset of a horde of investors. Financial organizations also tick off the minutes through a “hickory, dickery, dock” ploy. When the market is doing well, investment companies stress their market performance. More recently, ad’s refer to “trusted advisors” and other bland promises that show they are stalling. An Internet search shows that the words “trusted advisor” are used together in advertisements, Linked-in postings, job titles and job descriptions of every large investing organization. In E-Trade’s ad’s, a talking baby outsmarts adults. Cute, but this tiny Warren Buffett does not promise to beat the market either. And no one is earning money “the old fashioned way” any more.
The only aggressive investment ad’s push gold. But these vestigal boasts come from a time when gold really was a hedge, before its monumental slide.
The sharp volatility and low returns of recent years ended; stocks and bonds find themselves in favor. Investors remain as wary and watchful as the mouse at the top of the clock, looking for alternatives to generate a Comstock Lode. In terms of the myth as reflected in the ad’s and the actions of investors, the emphasis on trust and advising offers a holding pattern. When the bad news ends, at the strike of one, the mouse [investor] runs proudly down the clock to claim his bonanza.
Timing is Critical
The mouse and the investor share good reason for the wait, the cat for one. volatility and squatty yields for the other. At the 2012-2013 strike of one, investors shifted out of gold. Over three years of the recession, $150 billion came out of stocks. Returns shifted in early 2013 and $16 billion shuttled back into stocks in a three week period. More recently, nearly $5 billion leaked out of bonds, particularly existing junk bonds. So, fast and furious investors move when the time is right. Like the mouse, the clock must strike, signaling the start of the race. The question of when the clock should strike falls into the orb of the trusted advisors who beat the market. Possibly the little boy in the E-Trade commercial?
Government Witnesses Live By the Nursery Rhyme
The IRS scandal also shows the wisdom of the nursery rhyme. Gone are the days of Estes Kefauver and his tough questions for mobsters. Today’s mice focus on the clean getaway and form part of the fabric of government. Public employees take the fifth amendment when testifying before Congress, a practice once expected of mobsters. The witness takes the oath, says nothing and stalls for time by means of a severe case of amnesia. The questions end; members of Congress grumble and shake their heads. As in the nursery rhyme, the clock strikes the hour. The witness scampers, enters the mousehole and never returns.
Let’s give the subpoena recipients credit for their cleverness. They do not sit at that intimidating low table, looking up at their inquisitors, sweating and ill prepared. Well dressed, carrying expensive briefcases, they walk in confidently after weeks rehearsing with a team of lawyers. Blandness and banality replace the flash points in the Kennedy-Hoffa confrontations. The witnesses resemble George Clooney playing a witness – and expecting another Oscar. Their interrogators, armed with stacks of printouts with a team aides sitting nearby, appear like actors playing members of Congress – and far less likely to win an academy award than the witnesses.
Public employees learned a good deal from the nursery rhyme. They soaked up the skill to avoid the fate of witnesses from a previous era whose plight is told in another nursery rhyme:
- There was a crooked man and he walked a crooked mile,
- He found a crooked sixpence upon a crooked stile. He bought a crooked cat, which caught a crooked mouse.
- And they all lived together in a little crooked house.
The ubiquitous, “On the advice of my attorney…” pays dividends because the witnesses do not want to go to that crooked house, you know, the one that is supposed to have tennis courts and cable TV. Nor do they want to wind up between the teeth of the crooked cat, the one who will blow the whistle in return for no sentence. Curiously, Jon Corzine, a former Senator himself, did not learn this lesson.
And they say this is a riddle for children! So far the mouse has proven himself quite wary, surrounded as he is by so many trusted advisors , looking like a symbol for Smart Markets. He must feel a bit like the groundhog on Groundhog Day. This myth holds up well. Next month, another tantalizing myth will be explored.