Happy, Merry, Shitty….

Hope you are partaking in all the joy that the holiday season offers. You know, traffic, travel delays, school vacation, family, colds & the flu, etc., and those are just the normal fun and festivities. This year we also have a new government showdown and the crushing psychic misery of hurricanes and mass murder. All in all, there have been better overall holiday seasons.

But regardless of the current situation, we must continue to search out the positives, the optimistic, the opportunity ahead. Plus we must accurately forecast the twists and turns of our Centrally Managed Marketplace. It is certainly not an easy thing to do.

These past months were historic as it became the year of the tacit admission that markets live and die based on free money dictum’s instituted by the policy makers who work for the government. It is a sobering reality especially after going through life thinking that no entity is bigger than markets. And markets, as measured by the major indices, have been remarkably stable, maintaining important technical levels that encourage those who follow price to maintain a bullish posture. Even the government knows how important the techincal picture of the markets are. God forbid the 200 day is ever broken for more than one day! In fact, everyone seems to be waiting for the break in which to buy. It has been the layup trade since 2009.

So, here we are, with markets just a short distance from all time highs. Stocks move in years worth of gains or losses in minutes depending on their trend or news. But individual stock moves don’t matter much, just look at Apple. It swung to a $200 billion gain to a equal loss. Yet the major indices remains locked in its range as there is little that can shake the trillions of dollars locked in the equity index-dominated investment world.  The environment created is one of “no alternatives” for capital.

Knowing what we do about the structure and state of the investment world, it is only natural for anyone with any sense of history to tread lightly when it comes to putting the full faith into the capital markets system. Again, based on history and reality, the major indices shouldn’t be anywhere near here. Yet here they are and no news or event has been able to change that fact.

So what is an investor supposed to do? Say fuck it, buy everything and throw caution to the wind because the market won’t go down? Take it all, buy gold & silver coins and be a survivalist? Cower in the corner while watching cable news? Do absolutely nothing? Well, it depends on your circumstances. In reality, just being aware of reality is enough to keep you cautious and treading lightly. In my mind, there are few ideas that could be called “cheap”. There is literally nowhere liquid to go with your money as bonds are too expensive, commodities are too expensive, most stocks are too expensive and real estate is an illiquid falsehood with the government the only marketmaker.

And remember that everyone brought in to talk about markets in the media have their own to protect or are operating on “busted” assumptions of how markets should interrelate. When interest rates are controlled, the rest of the equasion should be considered null & void.

Look, everyone in the investment world wants to buy the dip. That is why there has been no dip since Europe began to print trillions last summer. And the dip before that was just before the last trillion dollars printed by the FED. The powers that be will not stop printing to support the last/best policy tool of the stock markets of the world. There is no choice, period.

But now that the cat is officially out of the bag, all this money printing should have a lessening impact on keeping prices forever rising. Eventually, probably in 2013, gravity may actually overtake the rising market and it will require more and more capital just to keep the market in place. Like a Junkie needs more heroin just to not feel sick. This is my sole prediction for 2013; an epic slow-motion train wreck filled with greenbacks. And no amount of innovation, financial or otherwise, can change the great reset that will eventually come. We are Japan and there is only one difference between us and them; their equity market has been quartered and ours is near all time highs.

 

 

 

 

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