I am watching this thing you call the market, unravel in front of my eyes–amazed by its simplicity. I know exactly what should happen; but I’ve been trained to expect government to intervene and paper over this problem. If you are betting against government, opting for the “this time is different” attitude, I wish you good luck. I cannot get myself to sell short anything because we are at a cross-roads. The news might come from the Fed or even the IMF. But rest assured, it will come.
On paper, this market should be sold. There is nothing that could be done to save Greece and Spain/Italy/Portugal are next. Precious metals are not even close to a safe haven and the dollar/treasuries reign supreme. This is exactly what the good gent from across the pond, Hugh Hendry, has been predicting.
BEHOLD THE DEFLATIONARY VORTEX.
However, some things just don’t add up. Like why is LEN and RYL at new 52 week highs? If the housing market is in shambles, clearly these stocks would reflect that.
The reality is not as grim as everyone thinks. The economy is doing good, save the armies of people on food stamps. Aside from the unskilled, America’s productivity has never been higher. Our balance sheets are great and companies are expanding overseas, catering to a burgeoning middle class in China, who needs basic necessities as we did 120 years ago. A middle class is being formed and KMB stands to do a lot of business.
But none of that matters during market panics. We are intently fixed on the worst case scenario because, at the end of the day, we’re all pessimists, subject to decay and extinction. Exactly 11 years ago, I wiped out my personal trading account due to greed and fear. I will elaborate on this subject later on today.
Look at the bright side and put yourself in a position to withstand the worst case sceanrio.
My positions in PEP, KMB, LNCE, WM, WNR and YELP are up.