Obama may have inserted his foot into his mouth last night. He defiantly proclaimed that “Anyone claiming that America’s economy is in decline is peddling fiction.”
The timing of this comment cannot be any worse. We are at a very critical juncture in the stock market right here right now. In fact, while many think we will bottom soon for a bounce, there is a chance that this market stays oversold and bottoms at much lower prices. This is OPEX week and when we had the melt down in August it was during OPEX as well. In 1929 right before the market took a tremendous cliff dive Irving Fisher, then a renowned economist, said “Stocks have reached a permanently high plateau.” In the video below you will see him describe why stocks crashed a few weeks after his famous comments. The backdrop then was that a great deflation had taken hold. Commodities had already collapsed in the summer and the economy was rolling over. His comment was in response to critics that were pointing out how stocks were in a precarious spot due to the weakening economy. Could this be Obama’s Irving Fisher moment? Maybe…I am not suggesting we crash here although I am positioned for it. If you are not short I would not suggest getting short here. If you are long then God speed and good luck.
On Friday at the close last week I added a crash put and shorted Valeant in addition to my other positions. Why did I do that? We are extremely left translated and I had already banked a ton of profits from my Volatility Grinch bet. Its a 50/50 shot that we bottom tomorrow or just continue to free fall. And after all, I am a little bit crazy like Stephen the Mad Irishman from Braveheart. Any rallies we get IMHO should be sold.
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