The whole world is now currency trading experts, apparently. When we have politicians investigating short position speculators in the Euro, its pretty much a done deal that the move is over.
If GM is too big to fail, don’t you think that Greece, which has been around a little longer than GM, is also too big to fail? After 2000 years did you really think that Greece somehow wouldn’t pull through this? Have we all been watching too many re-runs of Mad Max?
If I see one more reporter changing his verbal diaper after discussing Greece and its woes, I am going to go out and buy a Gyros, just to spite his/ her overblown negativity.
So people sold the euro thinking it would potentially collapse. If it does, Greece will just be the catalyst to push it over the edge. The ground work for the failure of the euro was laid from its inception.
Did anyone ever stop and think why for thousands of years the separate countries of Europe have been periodically going to war with one another? Suddenly we’ve entered into a brave new world where generation upon generation of nationalistic feelings would be suddenly laid aside?
Did anyone ever stop and think whey Europe never had “one” common currency before, save of course gold/ or silver?
Its because these countries/people really don’t want to get along. The euro concept seemed like a good idea to simplify and streamline and therefore make everyone, what? More Money…. If that isn’t’ the case, the euro will go the way of the dodo, but not because the Greeks don’t pay their taxes…That’s just an explanation for the third grade mentality which the financial press has to boil the world down to in order to keep their viewers tuned in to ads for Volkswagen cars and cialis… Remember, its info-tainment. Not a graduate level course on economics at the London School of Economics.
Real analysis is boring, multi-faceted, and boring. Did I say boring?… There’s a reason its known as the ‘dismal science’. Dismal science is no way to keep viewers riveted about economic developments… But cover economics like a Soccer Match or a tsunami or earthquake? That produces viewers with staying power through the commercials…
So back to politicians being key indicators to fade….
Similar to when Maxine Waters stood up and told the Chairmen of Exxon and Gulf that she was all for nationalizing the oil industry in the US, Ala her commie/hero dictator friend and idol, Hugo Chavez. I’m sure if Maxine ever in some alternate universe got herself elected President, she would immediately suspend the constitution and make herself dictator for life. Its a fact that all great minds think alike.
In any event, around the time we had 150 dollar a barrel oil, and the world was pissed and ‘investigating who was long crude and manipulating it higher’ and around the time you had Hillary Clinton talking about a windfall profits tax on the US oil companies for being “greedy, greedy, greedy”, that pretty much was the top of the move. Maxine Water’s comment about nationalizing the oil industry was the cherry on top of the move. It is always a sure sign to fade bureaucrats when they start speculating on markets.
A case in point was the Treasuries hesitancy to sell their citi stock. The Tarp could have sold their position in Citi for a fat profit at 5.00. They hesitated because it looked like it was going higher. Classic fade. They then watched C break almost 2 dollars in their face. Now they are the prudent buy and hold strategists because why? They got their big egg heads all fired up, started thinking and watched their “profit” evaporate in front of their eyes. I wonder why they didn’t investigate who ever got short C at 5.00 there. Was it some vast conspiracy to make sure the American people didn’t get the TARP funds paid back with a handsome profit. Not very likely. Just another case of MBA’s jawing with PHD’s (piled higher and deeper), and deciding that since they were so smart to squeeze the position for an even juicer move.
To bring us full circle, the point to this rant is this. Always, Always Always fade politicians. Politicians appeal to the base emotions of the masses. When was the last time the base emotions of the crowd produced anything other than 1) soccer riots, 2) NBA championship celebrations in winning cities that didn’t turn into riots, 3) or similar such mistakes.
And no group is immune. The kiss of death to the Stock market Rally, as far as I am concerned, was when those on the Right started talking about privatizing social security, and letting everyone participate by investing that money into and index fund of some kind. After all, the markets were so alluring at the time, why not dump the collective savings of the social security fund into ‘the best performing asset of the last xxxx years”. That suggestion alone should have been an indication to the savvy trader that it was time to start looking for the exits.
That’s why I am cautiously bullish stock indexes right now. Simply put, no one wants to own stocks. Ever again. Real estate is a close second. No one in his right mind is looking for single family houses to invest in or rent. Maybe no one will ever again. Where is that goof Carleton Sheets on late night TV talking about a real estate money machine now? Where is that screaming crazy Asian Tom Fu, with the yacht and the 4 hot bunnies on his boat, screaming to me to come join his real estate team? Where are the TV shows about flip this house?
We therefore, I believe, have to be within 12 months of the bottom. It just can’t get anymore dismal our there in the real estate world than it is now. Unless, of course we have a breakdown in the commercial real estate world.
I don’t know about you, but within 5 square miles of me, there are probably 15 strip malls sitting half empty. 1/3 of the buildings in previously vibrant shopping corridors are quietly vacant.
I was in the eye doctor the other day, and a real estate broker was handing out fliers, trying to get the eye doctor to come take over space in his partially vacant strip mall. On the way out, I asked him about the space. It was a fully furnished and appointed Quiznos that the owner had walked out on. He asked me if I knew anyone who wanted to run their own sandwich shop. No rent, just a piece of the profits…
That to me smells like either the end of the world, or the bottom of bottoms.
I am still enough of an optimist to believe its the latter.
As always, trade small. Use your stops. Check your ego. If you don’t the result is self inflicted pain. Pure and simple.