So… Every body else has it backwards.
The American people (and, possibly, thus global citizenry) some how believe President Barack Obama, his Cabinet and the House and Senate can set the United States economy aright with “programs” that people will abide by with “group think” relief.
What this really means is people believe the Stock Market will throttle-up into over-drive, and we can start printing money again.
At least not for the next six or seven months.
Most pundits also believed the DOW’s “floor” was 7200 because that was where institutional players were told support (algorithmic formulas designed to intercede with World Bank and other reserves) for key stocks would kick-in.
But, few understood that the institutions themselves have lost faith in the system.
I believe what many people instinctively know; but, don’t necessarily acknowledge, is that the Stock Market is based on insider information and deal-making.
They had (or have) a plan.
Analysts and pundits decide which stocks will perform and how they will perform (remember when Apple was dropping like a stone on mortgage industry news?). Look at how many tech stocks traded way beyond generally accepted valuations. Many stocks were more often than not sustained by both hype and the very will of the American people, whom, let’s be real clear about this – cannot tolerate any thing other than progress. These inside “decision-makers” count on citizens (and, maybe pensions) to support their sandbox strategies.
But, almost over night, the citizens lost their ability to, unwittingly, support the insiders. Many did not sell-off (as the institutions did) because market-makers, analysts and other institutional types were telling them to sit tight and ride out the storm (to buy time for guys they went to school with to get out instead). The citizens also lost their nerve, cash reserves, and home equity at, precisely, the wrong time.
Then, when a stock did make a run north, the A.D.D. addled day-traders got involved and squirreled the markets. NOTE: Short selling was designed to enable asset-rich insiders to take advantage of citizens. But, without even the ability to cheat (albeit it with delicious irony), the system broke down – and, the institutional side lost it’s nerve.
Now you have both sides waiting for the other to make the first move. And, as poor corporate forecasts continue to flood the news, stock valuations continue to drop. Analysts know that companies have been over-valued for a long time. They also fear the day traders that are lurking out there unchecked. And, there are no patsy citizens standing by with money they don’t really have to shore up over-hyped stocks.
The DOW could easily hit 4500.
The question: Could that be it’s actual value (for now)?
That is not necessarily bad news. Especially if you have resources or a good business poised to take advantage of reduced competition. There is loads to recommend that.
Laws of natural Selection prevail. Companies with lousy products, services and leadership are dying off. There is loads to recommend that as well.
About a week ago, President Barack Obama actually said it was a great time to buy stocks. However, nobody really listened, and the market ended on a seven year low.
So much for executive orders – eh?
Was this based on insider information? Or, does President Obama really think he can invoke some manner of stimulus by a simple force of will?
In any event… Getting back to my thoughts around Natural Selection – there is some good news.
On my Business Blog – The Human Capital Blog, I touted a story recently run in The Wall Street Journal around letting poorly run large companies with questionable products and services die-off. The writer posited that this might be a new era for true entrepreneurs with clear thinking around new, vital and innovative products that will create new opportunities and wealth along a more (American) pioneering spirit. There is tons to recommend that.
I have a hunch 2009 is going to be awful for A LOT of people. But, I also feel that it will be great for those that can can convert on good opportunities. So, I think I share many “insiders” views that 2010 will be very good for the United States economy.
I wonder if this has been “the plan” all along?
Evolution or Revolution?
Let’s listen to some Linkin Park and “In The End”.
But, also, “Society” by Eddie Vedder.
Peace be to my Brothers and Sisters.
Brian Patrick Cork