The Road Less Traveled
Don't let big picture concerns interfere with making money now.
"Where are you going now my love? Where will you be tomorrow?"
Mark Twain once said that facts are stubborn things but statistics are more pliable. If he were alive today, he would likely opine that our current truth is stranger than fiction.
The path of maximum frustration arrived this week when, on the heels of the rescue package, global markets melted lower. It was the worst of all possible worlds-$700 billion of taxpayer money passed by politicians that voted against the wishes of their constituency as credit markets remained frozen.
To the casual observer, the point of recognition arrived like a clap of thunder. While seeds have been sowing under the seemingly calm financial surface for years, the masses awoke to the notion that there were serious problems at precisely the same time.
There are no easy answers for what ails us, only alternative paths to the ultimate destination of debt destruction. Therein lies the risk and reward-the trick and the treat-of preparing yourself with the insight necessary to make intelligent financial decisions.
Entering September, we offered that one of two scenarios would play out. Either the markets would suffer from credit cancer that chewed through our patience or we would experience a car crash that seized the system. The government, by passing this bill, attempted to buy the cancer and sell the car crash.
As the process of price discovery permeates and equity markets enter the abyss, I've adopted a more constructive stance on a trading basis. While Minyanville has been steadfastly bearish since last October, we swam against the tide several times this year-on March 17th and July 16th-in an attempt to make hay while the sun shines.
There are a few catalysts for the shift in my stylistic approach. First, the VXO ticked near 70 on Monday, which has been my capitulatory angst target.
Second, I've been deluged with emails and phone calls from frantic folks warning of the imminent Depression, many of whom dismissed longstanding warnings suggesting the same.
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