Have you ever been on a roller coaster ride? My son Nathan and I are the only people in our family who would and did ride roller coasters, we are both in the money management business so I guess we like the thrill of the ride of a roller coaster and the markets. Nathan and I had the last ride on a wooden roller coaster at a park in Scranton PA. The next ride it broke and they closed the ride and the park.
If you have ever ridden a coaster, you know that you start out level and then you start to climb. The climb gets steeper and steeper until you reach the top. For one split second you are to the crest and stop and then you start to move forward over the top. You look down and all you see is the straight drop to the bottom. Your eyes are fixed at the bottom of the ride; you cannot see the next uphill move coming. As you continue to fall to the bottom, you gain speed and you are sure you are going to die.
The Fed Chairman said in a recent speech in London that he expected low short-term interest rates to be around for an extended period. While he did not say specifically how long I suspect he was thinking longer than five and one-half months. When people finally come to grips that a low level of short-term interest rates will be with us for a long time they will look for a ticket to ride on the up side of the roller coaster and buy something other than 90-day T-Bills. Right now, there is no waiting line to buy equities. However, as with everything else everyone will want on the ride when it is too late. The serious money in common stocks will be made by those who have the confidence to get on when the ride is flat. So, consider buying some roller coaster ride tickets today.