"You know what the news is-- in a minute, you're going to hear the rest of the story"- Paul Harvey
Whenever any crisis (economic or otherwise) becomes the hot topic on the nightly talk shows, you know you are near the end of the crisis.
The topic for last nights Jay Walking segment was...Wall Street Terms. One of the questions asked was;
"What two animals signify the Stock Market? "
A young female adult answered, "The Snake and the Mouse; And We're the Mouse."
While this was not the correct answer, I have to admit that she was probably more right than we think. The Bull & Bear symbol is not an accurate depiction of Wall Street, the Snake and Mouse are.
Since the beginning of the financial markets, the Wall Street Gang have always been the "Snake" and investors have always been the "Mouse".
See, the snakes try to get you to buy at 14,000 by appealing to your sense of greed using words like;
-Goldilocks Economy
-Soft Landing
-The Resilient Consumer
-"Points above new all-time high" on your TV screen.
-Valuation models suggest stocks are too cheap to pass up at these levels.
Now that the Wall Street snake has got you tightly grasped in its jaws, they appeal to your sense of fear by using words like;
-Is Your Money Safe?
-Wall Street Crisis
-America's Energy Crisis (not anymore?)
-Protecting Your Wealth
-Toxic Bank Debt
-The Great Depression
No one knows for sure what will happen in any bull or bear (snake) market, or whether an economic crisis will end quickly, or be prolonged. What we can do is look for signs that have ended and began bull & bear markets in the past.
Some believe it will take a catalyst to end the current bear trend. I don't agree. Past Bear market trends have ended abruptly when no one expected a turn. The buying spree came out of nowhere, and without warning.
Bull markets have ended as abruptly as well. One example is the 1987 market crash. Another example is the NASDAQ market crash that occurred in March of 2000. There were no catalysts or occurrences, and no news items that sparked the massive sell off. It just happened.
Someone, some group, some powerful force has the ability push a few buttons and create massive sell offs as well as massive rallies.
For example. Some blame the mutual funds and pension funds for the NASDAQ crash in 2000. This is impossible for these reasons;
1) Every mutual fund and pension fund had to, in concert, agree to sell at the same time on the same day. There is no way this happened.
2) Mutual funds and pension funds took massive losses during the decline.
So, if the mutual funds and pension funds were not the ones responsible for the massive sell-off during the NASDAQ crash---WHO WAS???
Some believe it is the President's Working Group on Financial Markets- aka- "The Plunge Protection Team". Some believe there is a more powerful force than that.
President Woodrow Wilson once said...
Since I entered politics, I have chiefly had mens views confided to me privately. Some of the biggest men in the United States-in fields of commerce and manufacturing-are afraid of somebody. They know that their is power somewhere so organized, so subtle, so watchful, so interlocked, so complete, so perverse, that they had better not speak of condemnation of it."
And, Franklin Roosevelt said in a letter...
"A financial element in the large centers has owned the government since the days of Andrew Jackson".
I'm not smart enough to know when this market crisis will end. One thing I am convinced of is there is a force out there that can make it happen.
So now that the snake is the new symbol of Wall Street, I suggest you become a cat and not a mouse. Cats are very nimble, and while they may not kill a snake, they pester them enough to make them go away.
The Market
Yesterday, selling in the markets accelerated after Fed Chairman Ben Bernanke said that an economic recovery will "not happen right away." In addition, the Fed's Beige Book showed a broad slowdown in economic activity in September.
Keep in mind that the massive government intervention of cash will eventually help thaw out the credit markets. When this happens investors will get their confidence back and return to the market.
The VIX Index (CBOE Volatility Index) rose to 69.25, just shy of the number reached last Friday at 70, indicating fear and panic. Yesterday's sell-off was on low volume which indicates investors are waiting on the sidelines as hedge funds continue to sell at any price.
Clearly, we are seeing a retest of last weeks lows, and if successful, the lows for this cycle may be in.
Oil prices closed below $75 a barrel for the first time in more than a year, and gasoline prices fell to February 2007 levels. The relief at the gas pumps will help the gloomy mood that investors have felt over the past 20 months.
