Fast Money, Vast Money, Crevassed Money

By Woody Dorsey  JAN 26, 2009 12:45 PM

Treasuries are finally telling the truth.


Most market participants concern themselves with price rather than time. Price is supposed to be the value of an asset, at any given time. However, the future path of prices is determined by time. There is a synthesis of these 2, which may be called the "market phase."

Time and price are dependent on, and describe, the market phase. Equities are now in a compound "hope and reprieve" phase, according to market semiotics. Thus, some hopeful, albeit temporary, improvement in financial culture is due. No matter how investors may rationalize the price of an asset, markets take time to unfold. Mr. Market may have a 7-year, 7% solution. We have postulated that in 7 years, the Dow will be at 7,000 and 10-year Treasuries will be at 7%. There's a time for everything - this is the time to trade.

Recycling Takes Time

Recycling is a market phenomenon in which time and price experience a psychological pause and a market may be reborn. Tiger Woods had knee surgery last year. Since he's such an amazing physical specimen, so mentally tough and such a competitor, why didn’t his knee heal relatively quickly? What happened to the global economy? Well, it's having a time out. It needs much more time to recycle. No person, no market is immune to the process of time. But that doesn’t mean there isn’t any fun in financial culture.

TARP Talk, Bright Boys and Mr. Market

Hasn’t all the talk about TARP grown boring? Everyone seems to be either explaining or demonizing economic acronyms to death. Meanwhile, as they say in Hollywood: “Nobody knows nothing.”

I call the current economic team the "Obama Lamasery." They're like a bunch of well-intentioned, intelligent, monetary monks laboring over their arcane spreadsheets. During World War II, Churchill sent what were known as the “Bright Boys” to Bletchley Park outside London where they furiously worked on decoding the Nazis enigma machine. The White House now houses a similar coterie of Bright Boys who are trying to decode the current economic enigma. Well, it won’t be easy for them. But, you can be sure that they'll be providing plenty of answers - over and over again. Mr. Market told them to just chill and wait it out. He'll clear the markets…all in good time. But, as usual, no one is listening to Mr. Market.

Psyche Is Selling Premium

There's no way to fix the financial crisis. Markets are always irrational. We're all at the mercy of market psychology because psychology never explains itself. Mr. Market has a mistress and her name is Psyche. Psyche is simply still just holding a big position in gold. She's buying breaks in oil and financials and selling premium on all of it, both ways. Yes - she can be a bit polymorphously perverse, but she does have the ear of Mr. Market. Many investors have been squeezed by her as well.

Incidentally, the 800-pound gorilla has gone the way of buy and hold. He was just too slow.

Fast Money, Vast Money, Crevassed Money

Eavesdropping in the green room. Treasuries are finally telling the truth. Gold has gotten real too. Do you need to have it explained? Too bad. Psyche doesn’t do that. The fast money may not be the vast money, but most money is still crevassed money. Investors are stuck. They're jammed between 2 walls of ice -- time and price -- and they're both slippery slopes.

There is only one way out of their dilemma but one seems to have enough time to wait. There is an old saying: "Time wounds all heels." But, there is this parallel saying: "Time heals all wounds." Just you wait and see. Life is really just a near death experience. So, trade this market and sell volatility at every turn. That is how Psyche is getting her jollies. The world is ending and no one is lending. This too shall pass. Om Shanti, Shanti Om.

No positions in stocks mentioned.

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