Cash the Only Thing Worth Holding
Buying strictly for the disciplined and the professional.
My good friend Guy Adami is fond of saying "people lie; stocks don't." Markets can, and often are, irrational for brief or even extended periods. That said, we have bank CEOs telling us they're "too big to fail" with the implicit approval of the government. In mute rebuttal we have Citigroup (C), Wells Fargo (WFC) and Bank of America (BAC) down between 15% and 20% today, and more than 40% for this shortened Presidents' Day Week.
I've stated in both long form and short that I believe stocks -- not including those deemed "too big to fail" -- are telling us the truth. Not only are American financials perfectly capable of failing, they're failing before our very eyes.
I continue to beat this dead horse not because I think the failure of much of our banking system is news to Minyanville readers; you folks get it, I know. What makes me flog this point endlessly is that I'm almost desperately enraged at damage being done to America as a direct result of the ongoing ineptitude of our government in explaining this crisis, let alone finding a solution.
"Too big to fail" is an idea of indefensible ignorance. When such a notion is the official -- or at the very least, implicit -- stance of the government, and the businesses we vow to defend at all costs inevitably fail, the populous selling equities is not irrational. Congress claiming we can't live without Citigroup is utterly asinine - particularly when Citi is trading under $2. Stocks are falling because equity owners bought the notion that the banks needed to be saved to secure the market's survival. The bank equities are obviously failing; as a result, equities of all sort have been sold all week.
Shareholders are panicked because our government told them to do so, if the banks collapsed. That's what "too big to fail" means: Abandon hope, should Citigroup collapse. This is a demonstrably asinine idea, but it's what we were collectively sold.
As it turns out, America existed before Citigroup. We'll exist after Citi's gone, regardless of how hideous the unveiling of the "toxic assets" is. We've wasted billions trying to save companies that defined both financial and moral bankruptcy.
More discouragingly, the new administration has thrown away its credibility by not using the one form of ammunition the government has that can't be printed or created by lawyers. President Obama failed to lead by not using his honeymoon period and charisma to shout down the buffoonery of what can and can't be allowed to fail.
The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.
Copyright 2011 Minyanville Media, Inc. All Rights Reserved.
Daily Recap Newsletter