Wednesday, November 12, 2008


OK, so I really have a hard time watching this Booyahhead, but I really have a harder time listening to utter nonsense. The notion that we should prop up home prices and that will solve everything is up there with anything else nonsensical the guy has said. First off, you can't keep a market up that is overpriced for very long. It's never happened, and never will. You can artificially prop it up, as the Fed has tried to do time and again, but it won't work for very long, as we've seen time and again. Part of the reason the depression lasted as long as it did was the government tried to assert it's will on the markets. This just delays the inevitable, which is what will happen with GM if and when they prop them up. Secondly, part of the problem is the obsession with a rising stock market. If there was an honest discourse people would understand that having their entire 401K's in the market, which many do, is LUDICROUS. In my new book, Rule Your Freakin' Retirement, I recommend you have AT MOST 15% in the markets, and thats if you are younger than 30s. Right now I wouldn't have 1% in the market on the long side, as I've been clear about. People have been sold on this notion that if you can wait it out you should be in the market. This notion is fatally flawed, and when we are south of 5000 on the DOW and south of 800 on Nasdaq, that will become very clear. The housing market should be allowed to bottom on its own, same as the stock market. GM should be allowed to fail, so should F and so should Chrysler. That's why they have bankruptcy laws. Government intervention only works if its based on something that is tangible, something that can last. The markets, all of them, are still vastly overvalued. Until there are realistic expectations. Over the years I've seen this a few times and each time the market VASTLY underestimates the pain that is inflicted in a bear market, and this is the mother of bear markets, folks. But, there I go again, repeating-repeating myself. Do not try to bottom pick this market, look at all these stocks that "experts" say are so cheap. FCX, X, CLF, POT, DE, C, MSFT, etc, etc. All such good deals. I've heard this all before, its a bad recurring nightmare and the only way to wake up is to realize that reality is lower and you'll know when we can buy, but it ain't now and it ain't anytime soon. We will get a tradeable bounce soon, perhaps next week. We'll play that, but the notion that we will get a multimonth rally anytime soon is highly unlikely. Not impossible, but highly highly unlikely. I'm just not sure where we can go to the upside. Normally that would be a contrarian indicator, but like I've said time and again, this Bear market is special in a bad way, and it doesn't act like most Bears. As bearish as I am, even I didn't think we'd get taken down this far this fast. That's meaningful because it means there are other factors here that we have to account for. I've never seen so many put buyers be right. The option volumes are giving such huge tells, we have to heed them. Watch the rails now, I think them and the credit cards are next to fall. The wisdom has been that they are immune, I don't think so. We'll see. I'm going to bed now, but I had to discuss this knuckle booyahhead. Call your local rep, tell them to stop the bailouts before we dig ourselves an even deeper hole. Before its too late. Waxie

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