Jun

9

Sholem Aleichem has a good short story on Yom Kippur. The gist is that all the meanest merchants, worst cheats, and most deceptive partners go to each other’s houses and beg forgiveness for their sins on this day. I feel like I should do the same to our readers, since I've been so busy trading I've been remiss in updating the site.

Battling the market during last week's avalanche was like playing tennis against Laver, checkers against Wiswell or Tinsley, or chess against Capablanca in chess, or baseball against Honus Wagner, who could play all nine positions perfectly. What days, what cyclopean moves! A thirty-five point range, almost the entire range of the year, in one day on Thursday, and a complete recap of the February 27 decline in three days from Wednesday to Friday.

There was total bad faith in the evil self-interest of the big bond fund player who can make money only by manipulating the public into doing the wrong thing, like an undertaker's praying for plague in order to prosper or the Sage's hyping the 100% certainty of another disaster so he can raise insurance rates.

But amidst it all, what a healthy day it was Friday, with bonds up 1.5 points from low, oil down three percent, the dollar up a few percent, and the trend followers all in on the dollar and the bonds. And even some of them, those with any money left, barreling in on the short side of stocks.

What a healthy day for the Popperian refutation of a hypothesis. stocks can’t go up when bonds are down. How bullish this refutation is for the future! And when will someone get up and say that all this hawkish talk about the threat of inflation is bullish for bonds, as it beats down expectations, prevents succumbing to short term solutions, and keeps the lid on any bad policy actions?

Apologies again for all my inadvertent lapses this week. They were legion.

Alan Weissberger remarks:

 I think you have the wrong hypothesis: stocks can’t go up when bonds are down. It should be: bonds can't go down if stocks are down big, because there will be a "flight to quality." Of course, this has been true only for the last five or six years. In the 70s, 80s, and early 90s bonds stayed down when stocks went down.

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