Too Much Loose Money
There's nothing I hate more about gambling on stocks in my SEP than being clever enough to short the market at the right time and then losing my shirt because all the other stock punters don't agree:-) Yesterday my UltraShort QQQ ProShares was up nearly 4% in the morning and flat by closing. It's staring to remind me of the NASDAQ bubble when the boys and girls on CNBC were cheering the stocks on like sports every day.
Can it make 3,000?
Can it make 4,000?
Can it make 5,000?
It's a new world. Blah, blah, blah.
There's just too much loose money floating around the world, and as bad as stocks look to the pessimist, everything else looks worse. Leaves us with a 4% return on Fed money that isn't even keeping up with real inflation, or maybe buying land in Canada. Being right in your bones isn't an investing technique when the prices of stocks may as well be the prices of artwork.
Remember when stock valuations were supposed to be about earnings? When the earnings come in light, and it's supposed to be about future earnings, and by golly, what a great time to buy stocks. When the earnings come in heavy, obviously, by golly, what a great reason to buy stocks. When is it not a great time to buy stocks? Never, if you buy that logic. And don't even talk to me about the original reason to buy stocks, dividends.
I suppose in the end, it depends whether you're more comfortable losing money with a crowd or alone. Going against the crowd always means you'll lose when other people are winning, and you won't necessarily recoup those losses when the other people lose. Going with the crowd turns you into part of the problem, an inflater of bubbles. Like our friend, Mr. Bernanke, who is expected to cut rates again today, even as the EU considers a raise.
Can it make 3,000?
Can it make 4,000?
Can it make 5,000?
It's a new world. Blah, blah, blah.
There's just too much loose money floating around the world, and as bad as stocks look to the pessimist, everything else looks worse. Leaves us with a 4% return on Fed money that isn't even keeping up with real inflation, or maybe buying land in Canada. Being right in your bones isn't an investing technique when the prices of stocks may as well be the prices of artwork.
Remember when stock valuations were supposed to be about earnings? When the earnings come in light, and it's supposed to be about future earnings, and by golly, what a great time to buy stocks. When the earnings come in heavy, obviously, by golly, what a great reason to buy stocks. When is it not a great time to buy stocks? Never, if you buy that logic. And don't even talk to me about the original reason to buy stocks, dividends.
I suppose in the end, it depends whether you're more comfortable losing money with a crowd or alone. Going against the crowd always means you'll lose when other people are winning, and you won't necessarily recoup those losses when the other people lose. Going with the crowd turns you into part of the problem, an inflater of bubbles. Like our friend, Mr. Bernanke, who is expected to cut rates again today, even as the EU considers a raise.
posted by Morris Rosenthal | 12:57 PM
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