That's great but aren't you worried about ....

There is always a reason to worry -- I learned this by way of my natural optimism during the 1980's and 1990's. The media are filled with stories about the issue of the day and how this has to end our good fortune.

Its compelling -- and that is what is necessary to gain an audience as a media company. We are now at 25 years and counting with only 2 recessions -- unheard of in modern times. My natural optimism and long time horizon keeps me invested despite the worries. I used to tell people in the 90's that there were only 2 periods in our history where you didn't want to own stocks -- the 1930's and the late 1960's through the 1970's. Why? because those were times when your odds of a permanent loss of capital was greatest.

In the first, due to the 90% decline from peak to trough from 1929 to 1932, as the excesses of the great 20's bull market were removed amid disasterous policy mistakes by government leaders -- many stocks never recovered. In the second, because again -- too many one decision stocks (dot com like fad of the period) never recovered after achieving valuation heights that were eerily similar to what the growth stocks reached in 2000.

Funny, I was right in the 90's except for not being quick enough to recognize that 2000 was another one of those times when permanent loss of capital was at hand. Knew my history and what to look for but the easy gains were too intoxicating. lost more than I should have during that bust.

Who cares about a so called bear market that lasts several months or so and takes stocks down 20-30% but then recovers quickly to new highs over the next several months -- check the charts and other than the 3 periods mentioned that's what you see -- what looked scary at the time now looks like small blips in an ever rising long term trend.

So we just have to be on the watch for large imbalances -- periods where certain stocks or the whole market becomes wildly overvalued -- where the valuations are built on unsustainable economics. Do we have that now? Some are arguing that the liquidity boom that is driving strong growth in private equity deals is creating imbalances that will prove very ugly when they are unwound in the next downturn.

I disagree -- its true that PE is very strong and the main players have raised billions but our public markets are measured in trillions -- PE is bigger than ever but still a small number in total. Now some investors will get hurt no doubt -- I would not want to be an owner of high yield bonds now.

Some argue that stocks valuations are very high if you normalize for corporate margins -- which are at record levels. Its true that margins are higher than in the past but we have different kinds of companies now than in the past -- the capital intensive wealth reducing pigs of the past have been replaced by low capital businesses with high barriers to entry that allow them to earn higher margins -- i.e. we have better businesses now -- Microsoft, Google, Apple, etc are superior to Ford, GM, International Harvestor, etc.

Housing -- many people talk incessantly about how big the subprime mortgages of the last couple of years were -- hundreds of billions representing 30? 40? or even 50% of annual new mortgage volumes -- and how these mortgages are all going to default and the drop in home prices will hurt consumer spending, etc. Keep in mind that our total housing stock and even the mortgage industry as a whole is measured in trillions.

if you believe, we are about to start having more recessions and that imbalances have built up that will lead to many stocks and investors losing permanent value then by all means sell -- take money off the table. I can see a correction but not the collapse -- seems hard to imagine it could happen again so soon after 2000.