What if?
by Tony on Nov.26, 2009, under The Gooch
I’m sure all the bears will be feasting on this recent financial crisis in the Middle East that produced nearly a 5% plunge on the German stock market and a 2.5% decline in S&P futures. Tomorrow, the market could bounce off these levels, but please take this warning seriously: there is much more downside risk than upside risk in the market. I’d much rather be out of the market than in at this point. I’ve followed the market for a while and have realized that intelligent investors/traders must read between the lines. For example, the Fed pleased the stock market by maintaining a 0% interest rate. Yes, money is cheap, but things must still be pretty bad if the Fed is still giving money away for free at 0%. If I was Helicopter Ben and thougt this recovery was sustainable, I’d raise rates to at least 1%. Then again, that would create a rally in the dollar and hurt US exports. The Fed has your savings rate set at 0% to suck you into the market and hence recapitalize the ponzi scheme. Does anybody remember what happened after the Fed reduced rates in 2001?
I am not saying we are headed into another Great Depression, but it is worth noting that sovereign debt exposure was one of the main reasons the global economy went into a depression in the 30s. There could be a number of systemic black swan events in the future. What if investors began to reconsider their risk appetite for U.S. treasuries? What if investors began to doubt Japan’s ability to repay their debt which is 200% DEBT/GDP? What if people began talking about the amount of exposure European banks have with E. Euro, Baltic and emerging markets? What if unemployment continues to rise? What if there is a geopolitical crisis that results in a dollar rally and commodity burst? What if?
The moral of the story is that you can’t listen to Cramer, politicians, the president or anybody who would be fired or lose money if they told the truth.
On Wednesday, I noticed some peculiarities in the market: financial stocks, the Russell and GS could not catch a bid and traded weak all day. Normally, when GS pukes, so goes the market. I think an inside group of people knew about the Dubai debt crisis and this is why the market traded so strange.
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March 17th, 2010 on 5:23 pm
5% decline in S&P futures. Tomorrow, the market could bounce off these levels, but please take this warning seriously: there is much more downside risk [……
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Между нами говоря, я бы попытался сам решить эту проблему….
5% decline in S&P futures. Tomorrow, the market could bounce off these levels, but please take this warning seriously: there is much more downside risk [……
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