Each day we get profoundly bad news. 10's of thousands of layoffs announced, major corporations losing money and missing on earnings, record rate of decline in housing prices (of average $3,500 per house per month), record low in consumer sentiment, record low in builder sentiment, unemployment rapidly heading towards 10% by the end of '09. Yet the markets go up!
Could the Fed be succeeding? Are they re-inflating the equity market bubble? Is this game too rigged to win at?
Obviously the government's interventions and stimulus are working. Why do all you have to be so negative. I'm sorry BBBY is going up but things are turning upward for the entire economy.
Just to be clear. The interventions aren't working which is why we keep needing more of them. It's like diet books --- their constant predominance on bestseller lists disproves their effectiveness.
Sometimes things deserve to fail and if they fail, it is a good thing.
The body needs rest. Why can't the same be said for society? Does it always have to be running full bore? Here we are, stretched out on the gurney and the Fed/Treasury is readying a syringe filled with adrenaline. They are going to inject it straight into the heart (no time to lose) and then release the patient in the nearest mall with a brand new credit card.
Truthfully, I want these shennagins to fail. It's a false view of life, a denial of the natural rhythms which need to unfold.
Every once in awhile we need a recession. Let it unfold.
This has been going on for over a year now. I'm referring to the markets rallying on the back of some very stupid development, usually a new bailout, or like today, a new version of the old SIV concept. Let's create a bad bank and put all the crap in there, then the good banks can live happily everafter.
All you can do is grin and bear it. It's like sitting through a magic trick. The first time it's "Gee, how did they do that?" but after the second or third viewing, you can spot the sleight-of-hand and realize you're being duped. The public keeps falling for this stuff the first time around, but eventually they see that a con game is afoot and DOWN GO THE MARKETS.
Washington has tapped into a new tankful of trust when Obama got elected. Everybody's saying "Give the guy a chance" and "We want him to succeed". I'm on board for those sentiments, but it will soon be apparent the problems are still intractable and Obama can't make bad debts disappear despite the high quality of his bedside manner.
Bang on, flying. I never thought of the new vault of trust with Obama as related to the FDIC statements etc. in that manner, good insight. I assumed folks would realize it's the same old financial infrastructure and trust level would not change.
These dumb rallies are a good reason to always try to have some dry powder.
BTW I had a similar experience with RTH... my put returns weren't as great as I had hoped because of a few pillars holding up the index. Really frustrating. Also I found it hard to find liquid options on many retail names, so wound up sucking it up and paying big spreads for ANN, BBY, ETH etc. Luckily, it all worked out!
C'mon suck it up homeboy! Don't be weak! Day to day fooling means nothing. Just a balloon deflating that periodically bounces back.
Look as the markets since Jan 1st... what with the Jan effect and all hohoho