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American Capital Agency Corp. Message Board

  • reits_r_us reits_r_us Nov 3, 2012 2:24 PM Flag

    Fascinating ....the Uncertainty!

    Hi Crew,

    Well, many of us predicted this incredible sense of, "I don't know!", and "Oh #$%$, the bottom is dropping out!". Two more trading days and we'll know. Then what happens? The traders line up on both sides....the debt people hedging on the side of more QE and the mReit, BDC's and CEF folks on the other side. Who wins?

    Neither, IMO, because uncertainty will still reign. This uncertainty is not over whose fiscal policy will be better or make a dent in the " impossible to heal" federal debt. The winners will be those who bet on the right side of "Perception". The crowd will decide whose fiscal policy is best. It will have nothing to do with better or worse. It will have all to do with how things are perceived.

    I think it will be Y2K all over again. We'll wake up with a slight hangover and party on again the next week with the realization that it just doesn't matter. Those in the market will continue trading and those not in the market will continue with their dire warnings of impending economic collapse. The Ray's will continue accumulating their high yielding stocks , and myself and others will trade in and out beside them on the dividend runs.

    Fiscal cliff, my #$%$. Dec 31st, 1999....the world will end...all computers will fail. No commerce will be able to be conducted. Save up water and batteries for when the lights go out. Yep, Nov 6th, 2012, the world will end....all computers.....uh, huh.....

    Keep trading. Best to all,


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    • So Doc, do you feel that all the issues directly associated with the fiscal cliff will be resolved before the end of the year? Or are you saying that if things are left unresolved it will have no effect on the markets?

      • 2 Replies to eagledragon1
      • Hi Eagle,

        Exactly! I believe the answer to your first question is 'yes" only if Romney is elected. I believe the answer to your second question is "yes" also, meaning that it doesn't matter if it gets resolved or not.

        Again we may have a slight reaction in the market(the hangover), but life should sail on, and on, and on...because the majority of folks will still want yield in the face of 1% CD's or TIPS, and after they realize this non-event is exactly that(remember Y2K), they will continue on as if nothing has happened.

        Look at the DOW on Dec 31, 1999, before the lights were supposed to go out the next day...about 11,500.... We did OK down to Jan OPEX of 2000, after that other events pulled the market down, until 2006.

        My point here is that Y2K did nothing to the market in January.

        You'd think Sept, 01, 2001 would impact the market, no? Three weeks later we were down 17%, fairly significant...two months later we were right back pre 9/11. My main point is that there are many exogenous events that influence perception. The market is resilient, though, in weathering these storms and bouncing back to pre-perception status.

        Trying to gauge perception is the business of politicians and teenagers. Realizing that these momentary blips on the radar screen are opportunities for profit should be ours.



      • I sense what he is saying is that it is a crapshoot

        Sentiment: Strong Buy

    • Uncertainty is keeping money on the sidelines right now. Certainty, no matter the flavor, would rally the markets because we're desperate for any semblance of progress from Washington after so much gridlock.

      The lame duck congress will get a tax bill passed before year end (one is already past the house and sitting in the Senate), but I don't see them fixing the sequestration. So, we'll get a one year patch on the tax side with no resolution on the spending side. Maybe a slight rally when the tax bill passes as hopes rise again, but I think the last two months of the year will be turbulent as the market slowly realizes Washington will not provide the desired certainty.

      Insanity will continue its reign.

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