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Saturday, August 17, 2013


I won't make any friends with that blog title.  But it's been my experience with every market run up; the phones stop ringing, annual reviews are postponed, & Jim Cramer is a hero again as his disciples forget how much of their money he lost, now that he has them "back to even".
Happily, there are exceptions.  Finally the public is realizing the illusory nature of the market run-up, cognizant that their own household micro-economy has not followed suit.  Could it be the approximate $100 billion in funny money per month that the Federal Reserve (Fed) is pumping into the markets?  Probably.  And the best evidence yet that this is the case is the recent market drop due to falling unemployment rates.  Yes, you read that right.
Usually falling unemployment means higher consumer disposable income and therefore higher spending which in turn buoys corporate earnings, causing stock values to rise.  So why are they falling instead??  Because Wall Street fears the Fed will back off on its Monopoly money stimulus as the jobs picture "improves" (It's not improving, not really.  They're just measuring it differently.).  Less money chasing the same securities will cause stock prices to fall.  Hence the defensive sell off now.
Wall Street's mantra is "You don't want to miss the best days of the market, so keep fully invested".  My mantra is, "It is far more important to avoid the worst days!"

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