Friday, April 13, 2012

Yay Liberal Arts Education!

I went to a four year liberal arts college and even though one of my majors was physics (better known as fizzix by my brethren) I got a Bachelor of Arts degree, not a Bachelor of Science. The reason was that we had to take courses from every other discipline. I have to admit, I felt educated when I graduated.

Continuing that learning feeling, I decided one day years later to read a book I felt I should read. Why that was escapes me now but I decided to get Love in the Time of Cholera. It seemed like that is what smart people should read, especially since it was originally written in Spanish. Culture, you know.

I got about five pages in before losing my interest and possibly my will to live. But I did get something from it - the title would be useful to me some 30 years later in this blog.

Love in the Time of Cholera. Investing in the Time of Bailouts. Not much different to me.

In the book, I know now from Wikipedia, one main character was "committed to the eradication of cholera and to the promotion of public works."   Hmmm. A government do-gooder with noble intentions. Forget he cheated on his wife.

That is probably all the similarity to a bailout nation (kudos Ritholtz) but don't forget I did not actually read the book.

Bringing this stream of thought to today, how is the average investor to deal with free money and tax breaks for some and not for others? How can we analyze the value of a company - fundie or technical - when one bad feeling by the Fed results in more money printing and rising prices. Or when the free market is brought to its knees with too much meddling.

The answer might be like the whole global warming debate - which I will not praise or criticize here. One of the points is that warming may actually be a normal cycle of the planet. How about investment distress being a normal condition of a secular bear market?

Another argument is that humans are making the planet worse. Hmmm, zero percent interest rates are making Grandma's fixed income worse. 

I was not of age in the previous secular bear of the 70s, although I do remember waiting on gas lines. But my bet is that it was just as hard to make money back then as it is now. The only difference is that we did not see 1.5% daily market swings every third trading day.

It was a lot calmer and mistakes were just mistakes. Today, they are magnified to become disasters in a hurry. True, the Fed is making it worse with its financial vibrio cholerae but perhaps it is indeed just delaying the inevitable.

Take some antibiotics, drink lots of water and perhaps it is time to step away for a while. May is right around the corner, you know.


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