The hardest part about being wrong is compounding errors with more errors. For example: I’ve been long and wrong over the past two weeks, wiping out all of my YTD gains. I could very easily hit the reset button by selling it all, in an attempt to salvage my year through precision picks. However, I run the risk of missing out on the biggest and baddest rally the world has ever seen.
Like it or not, the Europeans will eventually print euros. When they announce this plan, the market will soar by at least 400 on day one, then another 600 over the next two weeks. By selling out at the lows, stopping the bleeding, I may sink my ship by missing out on the wondrous one day snap back rally for the ages. This is why we haven’t seen a 2008 flush out yet, despite the horrific news.
When we do rally, I expect everything to trade higher, especially gold and silver. Whatever QE deal is announced, it will be viewed as inflationary, which in turn will bolster the euro and sink the dollar. Gold and Silver are the best barometers of risk and currency diversification in the world. Secondly, I know commodity related stocks will rip tits and the banks will offer insufferable short squeezes for the bears.
It will be a joyous occasion, as Wall Street celebrates the splendour of equities, while drinking copious amounts of spiked eggnog.
Over the weekend, there have been encouraging tidbits of news coming out of Europe, with regards to the creation of a Euro Stability Union and Federal Reserve bailout of Europe. Remember, it is the job of the ECB to promote price stability. If prices are dropping precipitously, as the olde continent drifts into deflation, the ECB must act to bolster prices. It is not a question of if they will do this, but when.
In other news, Black Friday sales came in well ahead of estimates at +6.6%. More impressive were online sales +26%, with amazing results coming out of AMZN. 2010 online sales were +9%. In a normal environment, this sort of news would serve as a jump off point for much, much higher retail stock prices.If you enjoy the content at iBankCoin, please follow us on Twitter