Now what? Well, you don't need me to rehash the events of the past weekend. Aside from Eli coming of age it was a lousy time for investors.
I love how the pundits are coming out with their "sit tight" and "don't do anything" and "stay the course for the long-term" advice. Yep, that seems to be working right about now - not. Yes, in a few year the stock market is probably going to be higher than it is now but don't you think it might have been a good idea to reduce a little risk and take some money off the table? After all, if the market is creating such bargains we do need a little cash to buy some of them.
That's all I'll say about the stock market directly in this post. Gotta save the good stuff for paying subscribers, you know.
But what I can address is the futility of the Fed and the double futility of the vocal analysts and commentators calling for even more rate cuts while at the same time blasting the Fed for being late. The cat's out of the bag. The cow is out of the barn. Pandora's box is open. Getting my drift? The environment that kicked off the excesses of last year was years in the making and it will not end with a few rate cuts. In fact, I think the rate cuts will end up making it worse. The market was doing its self purging - which everyone agrees is healthy - but apparently those now getting hurt do not like taking responsibility for their own actions.
This process must hurt otherwise we won't learn. We will overleverage questionable businesses and credits. We will throw money at any whacko with a website that promises outrageous returns just so we can beat the benchmark S&P 500. We will sucker the public into financial deals, including housing, that is waaaaay over their heads. Boring old municpal bonds look pretty good in hindsight, don't they? In fact, one of the local muni houses around here just bought the lot next door and is expanding. Business will only get better as people decide risk, or at least too much risk, is not really that great.
So give me my $600 or whatever Dubya wants me to have and I'll pay a bill I already owe. Or maybe I'll just be able to buy a few tanks of gas and a Happy Meal. In any case, it is not going to make a dent in my life but the country will be billions poorer for the effort.
Go ahead, lower interest rates some more. Hey, why not take them to zero like they did in Japan? That worked, didn't it? Oh wait, that kicked of the yen carry trade that got this mess snowballing.
Pushing on a string.
Oh, as for the George Burns reference, he said late in his career that chasing after a young lady at his age would be like trying to play pool with a rope. I figured it was better not to lead a markets blog with a blue joke, albeit tame by modern standards.