Blatant Insouciance

March 29th, 2008
1920 hrs

The meme of blatant insouciance is being kept alive
by CNBC and its many commentators, the predominant
hackneyed query being, "Do you think we have hit
bottom?". Almost like a trader hoping for his losing
XYZ stock that he/she wants to hold on to by asking
someone else what they think of it. I don't quite
understand how the knowledge that we're in a
recession or not, hit bottom or not, helps one to
make money or trade better. Deeply perplexed.

Now, one more random fact spewed by many people, and
used as a buttress to an answer in the affirmative
to the question above is the fact that sentiment
surveys are mostly negative. Ever wonder if such
a thing as a sentiment survey might pretty much be
useless in the face of a deluge of news that serves
to increase the cardinality of the set of bad news
if you are a bull?

Wall Street analysts are smart as they know the
general landscape of a particular industry well and
there is much information that can be garnered
from them. It blows my mind that stocks like Lehman
and Goldman rally, taking the whole market with it
in the face of earnings that was more than 50%
below last year. And the smart people attribute
it post action : all because we were over sold
and numbers were better than forecast. Now since when
did we just change course and give analysts' number
any credence? I'm beginning to really believe a quote
about the markets : "There is nothing intellectual
about the market. It's as intellectual as a boxing
match - you just jab and run."

And, of course, the main act on the glittering, but
fickle financial proscenium is the US Federal
Reserve. In short order, they will own the biggdest
SIV on the planet. It'll be a repository of choice
for all the bad paper that is backed by assets that
continue to decline in value. Sure, it has value!
Pigs also fly.

Earlier in the week, I was sent two papers - one by
T2 Partners about the housing mess and another by
the Economists at Goldman Sachs that talked about the
amount of leveraged losses we might see. Rest
assured, they were both fascinating reads as they
seemed to be bounded in gloomy reality (a novel
concept these days).

How things might play out, I don't know and I don't
really care. You can't lose money buying all kinds
of financial stocks - there won't be a liquidity-driven
meltdown as its now being backstopped by the Federal
Reserve. Hell, the only bad thing that might transpire
here is that if you ever take a jaunt to Europe again
you'll pay more for Pastis. Between gulps you might
realize that the Euro is way past 1.60 and is heading
higher. Of course you can take comfort in statements
made by the current president that our economy has
weakened slightly a'la "Mission Accomplished" and
order yourself another Pastis! The Fed will just
keep printing money so you can drink more to remain
in a state of inebriety...by paying more.

It's a perfect world!

Tch...tch..tch.

I'm headed off on a Safari to Botswana next week and
will miss all the action. Sigh!