Sunday, December 7, 2008
A W Market
I am on the road again this week. Will be on here sporadically at best. It is becoming more and more clear to me that we are going to see this massive rally I have been alluding to. The market action from a bullish perspective was tremendous on Friday. Horrific news that was bought with vigor. Combine the mortgage rates going down and investors hoping that will save the banking system with Obama's new infrastructure plan combined with the huge bearishness of investors and I think you are set for a massive explosive move higher. I am moving into the camp that we are going to see a W economy. The government is creating gigantic superficial demand. Those who think it won't help I don't think realize the size of the numbers being around. My issue is what happens once it is gone? Once the government is forced to pull back. You have the second down move in the W and it will be worst then the first. Market economic manipulation can work, for a time. I don't where in history it actually worked to solve the problem. The hope is we will grow ourselves out of this mess and the government intervention gives us time. Maybe, I am skeptical. From an investing standpoint I don't know anything harder than to be betting on the government's investment size, duration, and ultimate success. It continues to be prudent to stay small.