No Fear

S&P500 June 1999 to June 2008



One might think that the chart above would give the usual cheerleaders some pause.

One would be wrong.

WSJ: "The good news is stocks typically snap back from a bear market in relatively short order."

Apparently, good news is good, bad news is good – its all good!

That seems to be the philosophical approach some people are taking
to the market’s turmoil. When things are going swimmingly, you
should be a buyer because (of course) markets tend to go up over time. When things
are ugly, well that apparently is also a buy signal. 

A brief look at the papers this morning has the usual suspects talking up what a buying opportunity this market is. Consider:

Snatching Bargains From Bear’s Jaws (WSJ)

Market Update: For Stocks, the Worst Is Over (Kiplingers cover via NYT)   

Bear Market Guide: Relax, make money (Money Magazine)

What to Do to Survive This Market: "It’s hard to time the market, so stay in and benefit from the inevitable turnaround" (WSJ)

Have Swaps Overdone the Gloom? (WSJ) 

To those of use who have
spent decades studying contrary indicators, this stuff is laughable –
and quite dangerous. At least Barron’s has an interview with Peter Schiff — as penance for their disastrous June 2nd 2008 "Buy GM" cover story a month ago.

S&P500 investors are on the verge of experiencing something not
seen for a very long time — a losing decade. If markets continue
their losing streak for a few more months, that is a realistic
possibility. The S&P500 is now down 4.8% since June of 1999. To hit the decade mark, the SPX would need to be below the 1998 close of 1,229 — less than 50 points below Friday’s close of 1278.38 come December 31st. This has not occurred since the 1930s.

As we noted twice this week, the VIX is not showing the sorts of fear typically associated with either tradable lows or lasting reversals.

Most people assume that 1929 was when all the damage was done; it
wasn’t — the rally and subsequent collapse was the most dangerous
period. Trying to buy cheaply all-the-way-down is where nearly all the
pain came from…


Category: Financial Press, Markets, Psychology

Louise Yamada: Dow 10,000, SPX 1,175, Nasdaq 2,000

where the market goes next, with Louise Yamada, managing director of Louise
Yamada Technical Research Advisors:

click for Video



Category: Technical Analysis, Video

Fun With PhotoShop: Financial Experts Reassure Nervous Investors

Category: Psychology

Read It Here First: VIX Says No Panic — Yet

Category: Contrary Indicators, Financial Press, Psychology, Technical Analysis

Reserves and Off Balance Sheet Securities Lending

Category: Credit, Federal Reserve

Consumer Sentiment Drops to 28 Year Low

Category: Consumer Spending, Inflation, Psychology

How I Spent My Stimulus Dot Com

Category: Economy, Taxes and Policy

The IRS & Inflation Angst

Category: Commodities, Economy, Inflation, Markets, Psychology

Bill Gross on Inflation & Recession

The Fed is walking a tightrope between inflation and a recession, hoping to find its way to neutral. Bill Gross, of PIMCO, shares their insight.

click for video


"There’s a lot of stress in the
financial markets. Let’s face it, this economy, the US economy and
even the global economy is delevering, and when an economy delevers there are
substantial problems and substantial risks.

"We’ve seen a lot of that. We’ve
seen writeoffs in the hundreds of billions of dollars with more to come. But
yeah, there’s a lot of tenuous action in the financial markets these days and I
expect more of it."

Gross: Fed Will Hold Steady for Rest of Year | 25 Jun 2008 | 03:20 PM ET

Category: Economy, Federal Reserve, Inflation, Video

What Was THAT?

Category: Markets, Psychology, Trading