Wednesday, April 8, 2009

So maybe I'm not crazy

I realize I've been a bit quiet lately. Sometimes you just have to step back, take a deep breath, and examine the parade of data marching past your desk.

Honestly, I'd been wondering if I'd lost my touch. I mean, what had everyone cheering on the stock market see that I was missing? Don't get me wrong, I'm good with short-term trading, taking advantage of technicals, making money without making a long-term investment. Ask Schwab - I'm guilty of day trading my IRA on occasion.

But come on folks... the bulls were acting like the entire economic crisis was a figment of my imagination. I have my delusional moments, but even I can't keep it up for months at a time. Bad economic numbers? BUY BUY BUY. Bad earnings? BUY BUY BUY. Piffle.

So today we hear that the Fed sees no glimmer of hope for a recovery until next year. That's pretty pessimistic. Last Friday we got horrible employment numbers (8.5% unemployment rate) which many have shrugged off as a lagging indicator that doesn't matter. Okay, may not matter to you, but to retailers and the consumers themselves, it's still a bit on the important side. Maybe that's why consumer credit dropped by a huge amount, although I continue to believe that it was only partially voluntary... more likely driven by encouragement (euphemism for pressure) from the card companies themselves. And can you imagine my joy when George Soros even joined me in the bear camp?

I truly get that the market rebounds prior to the economy showing signs of life. But just because the freefall stops doesn't that 1) there's a bounce back up to the prior highs (actually physics and calculus tell us that is pretty much impossible) or 2) the ball can't bounce once or twice then fall into another hole in the floor. And since we've got all sorts of rot in our economic foundation right now, expecting that there won't be any more holes is pretty naive.

By the way, did anyone see the NY Times article today talking about how Moody's put ALL municipalities on negative credit watch? All of them. Something about systematic problems in the economy.

You know, sometimes reality sucks. This might be one of those times.

1 comment:

lmauzy said...


I think you are well anchored to reality, and that's why I read your posts, but I wonder what economic data you would need to see to turn first, neutral, and second, positive on stocks. Just play a little game with me, a what if scenario. I'm not looking for a forecast, just a few signposts that you would like to see emerging.