Deep Market Thoughts…Inflection Point

• Posted by Howard
• on February 17th, 2009

Very few people are making money now. I have almost stopped trying.

The lunatics are running the assylum. Donald Trump is a business god with books galore, but he has lost more common shareolder value for Americans than 99 percent of the population could dream of. One hundred time gold medalist is not just dumb anymore, he’s a villain for smoking dope. The guy who snuck his picture is making 500k/year now at The National Enquirer. Our banks are worthless, but you can’t get a license to start one from scratch (at least I can’t). The government would prefer to give old bankers TARP money for useless condo propping.

Despite the headlines, shorting is not as easy as it was in the fall. Going long is a crap shoot. Day Trading 3x leverage ETF’s is the new stock market phenomenon.

None of this nonsense will last forever. Every yutz bear in the world is out with Dow 4,000 predictions. Those same people were bearish when the Dow was 8,000 on the way to 14,000 so trust me when I say, predictions are idiotic. The bears are all in love with themselves because the ‘doom and gloom’ headlines are just rolling in. If you are still long and on leverage, you are a crackhead and any monies you had were likely inherited or ill gotten. The market could bottom and star a 20 year bull market tomorrow or a stealth 6 month rally, but there is no reason to be fully battling for ‘bottom’ bragging rights.

Learning to read prices, while avoiding top and bottom calling will make you wealthy over time.

To do that best, you must step back, especially when he noise is at epic levels. Take a look at the S&P chart. There is not a noise line, but if there were, it would be OFF the CHART. You would expect the S&P to be much lower based on the headlines the last 5 months…no?

Here is why we are not lower. To catch the HUGE move, you should have been short while the noise was all gaga over Dow 14,000 on CNBC:

For all the negativity and end of America talk, I present to you this chart:

Other than 1929, we are at some historic levels for a 12 month rolling average for the Dow. There is no reason to think the markets wont get as bad as they did in the depression and that is why I am mostly cash with some index shorts, but looking out the other side you will notice the sick returns that follow these low periods. I want to keep my head clear and wallet full for the good times.

The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.

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