We no longer have free markets responding to fundamentals, such as EARNINGS.

Once, if a company posted losses, it’s stock would go down. Now it will go up based on losses, if the losses are not as bad as expected. The condition of the markets today is not just government manipulation or manipulation by the big players (GS?), it is a combination of manipulation, greed, investors being afraid they are going to miss the next big turnaround, etc. A lot of the manipulation by the big players is because they know what the government and Fed are really doing and they have no consequences to fear. Much of the market behavior is a result of a media that is bent on supporting the administration and the big players at all cost instead of just reporting the news.

One of the first things that I was taught in Martial Arts, oh those many years ago, was that you never under-estimate your opponent and you never over-estimate yourself. The Govt. and the Fed have under-estimated how bad things are and how much worse they can become. At the same time they have over-estimated their power and ability to turn things around.

If you get a bunch of people (Realtors, brokers, analysts, etc.) together whose livelihood depends on the economy turning around soon, it’s a good bet if asked that they will respond that; “sure things are going to get better soon.” In law that is considered a self-serving statement and isn’t given much weight, if any. And yet the media does that every day.

This economy is NOT going to turn around soon. This economy never fully recovered from the Tech Bubble bursting, and now the Real Estate bubble burst on top of that.

We really are in deep excrement, but the ruling class is fiddling while the economy burns.

Related Posts:

• Grantham: Stocks expensive
• Citi to separate out financials.
• Some quick P/E calculations for Bank of America(BAC)
• The VIX Index: Buy When High, Go When Low
• Why investors are paying more attention to Washington than earnings.

Leave a comment