Jul

25

 Even amid acknowledgment by US leaders of the need to reassure jittery investors, world markets fell and both fell with the Aug 2 deadline to raise the gov borrowing limit fast approaching. What a joke. We can now see yet another function of the stock market aside from its benchmark for how costly it is to raise funds, and a source of liquidity and enabler of all to participate in the returns from enterprise, and its main function of transferring resources from the people at the bottom of the feeding chain to those at the top while paying for the vast infrastructure needed to provide the above functions.

It's function is to provide a signaling mechanism and excuse for service revenues to be increased and for the geese to be plucked with the least amount of hissing by appeal to the terrible things that would happen if it were left to its own courses and it went down were spending not to be maintained, and service revenues from those who have more than the common man to be putatively increased.

Jack Tierney, President of the Old Speculator's Club, writes: 

I'm not sure if we're all looking at the same markets. I just checked out the 12-month performance for all the major averages. All relatively close to their 12-month highs. If these results are due to "jittery investors" then I confidently predict that the DJ average will crack (or come close to cracking - within 200 pts.) its all-time high by the end of '11 if ANY debt ceiling settlement is reached.

Fear-mongering seems to be at an all-time high. Curiously, leaders of the world's major religions are criticized by some who claim their structures are built through fear utilizing the sweat-labor of gullible peasants. Well, this very sane, quantifiable, transparent capitalist structure we call "the market" appears to operate in much the same manner. Yet it is lauded by many of those same individuals.

Jack

P.S.

To put some conviction behind my surmise, I just purchased some DDM at 65.35. Check back with me next January. 


Comments

Name

Email

Website

Speak your mind

3 Comments so far

  1. Tom on July 25, 2011 2:42 pm

    “Fear-mongering seems to be at an all-time high.”

    Would it be a disaster if the S&P was made to fall to the 1280 area within the next two weeks? I would suggest not, we would still be in a bull market, and likely to take new highs. However, such a sharp move with a “fundamental” reason given for it would be an excellent opportunity for the strong to take the chips from the weak - first by accumulating what nervous investors (including slow moving institutions) dump at 1280 and secondly by forcing them to pay up for it again somewhere north of 1375. Even better if the herd were too fearful to participate for several months at sat out until we took the 2007 highs. If the public are responsive to the fearmongering, a quick move down within a few weeks would have them sell out when a more gradual decline or a decline not accompanied by doomsday predictions from the press would have them hold on. Where so much can be achieved by flexions, perhaps we should expect the political outcome to facilitate this a la the bailout votes in 2008.

    I realised how the media was being used in late 2007 to shore up confidence in the herd so the flexions could dump the soon to be worthless financial stocks, and then towards the end of 2008 when bailout talks / “rescue packages” and certain Congress votes were used to gyrate the markets to the cost of nearly everyone except the expert and the insiders. The Chair makes an excellent if depressing point - every time I find myself thinking in these terms I am reminded of Jeff Watson’s admonishment not to be cynical. I do not wish to harbour ill feelings about the marketplace, which I engage with for upwards of 10 hours a day and which pays my bills. Nor do I wish to think too much about conspiracies or powerful interests as this can bring my ego in and make me adopt a confrontational (or even resentful) approach. I know from prior burns that this would be disastrous to my bottom line. In fact, I’ve only been in this business a few years and looking back on past errors I wonder how I survived.

    None of the game is rotton - nobody forces investors to pay attention to news or become jittery. If an investor is forced out of fundamentally sound investments (investments, not trades) due to the need to pay attention to the talking heads on the goggle box this is not our fault. If we are offered an opportunity to ride the coattails of those who are causing the gyrations which seperate the herd from their chips, this is nothing to feel guilty about.

    Perhaps in times like these, rather than focusing on the corrupt system which we cannot change, lets focus on the good work we can do with our proceeds, and be thankful also for the intellectual and personal freedom given to those who are able to make a career in speculation.

  2. Bill Fallon on July 26, 2011 5:56 pm

    Apropos of nothing except entertainment is one of the best movies you’ve never heard of. I highly reccomend the movie “Let it Ride” with Richard Dreyfuss, Teri Garr and a fantastic supporting cast as well as some of the wittiest one liners I’ve heard. Its a movie about horse-racing and life that brought tears of laughter. On DVD.

  3. douglas roberts dimick on August 1, 2011 9:53 pm

    Crony or Family Capitalism

    Have not the bond markets become systematic or emblematic of crony capitalism, such as alluded to here a la “signal mechanism”?

    As with top-down governments, family capitalism shares similar elements of rise and fall.

    An article in the Economist about an article by a Princeton professor (H. James) indicate how both (top-down) political and corporate models perpetuate integrated cycles in the “creation and destruction” of value. See…

    http://www.economist.com/blogs/schumpeter/2011/08/family-capitalism

    http://www.project-syndicate.org/commentary/james57/English

    dr

Archives

Resources & Links

Search