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2012 Oscars Mirror Wall Street's Nostalgia for a Simpler Past


The 2012 Academy Awards were all about nostalgia, something Wall Street would like to emulate.


The theme of last night's 84th Academy Awards was nostalgia.

Billy Crystal came back to host after last year's James Franco-led train wreck.

The big winners, The Artist and Hugo, which each took home five Oscars, were set in Hollywood's Golden Age in the 1920s and 1930s.

War Horse took place in World War 1.

The Help brought us to Jackson, Mississippi, back in 1963.

Midnight in Paris? Modern day, but with a time warp back 1920s Paris.

And finally, Tree of Life was set in Waco, Texas, during the 1950s.

Only three of nine Best Picture nominees -- Moneyball, The Descendants, and Extremely Loud and Incredibly Close took place in modern times.

Hollywood is all about escapism, and the Academy went all-in on that idea last night by taking us out of the present day.

So how does this connect to Wall Street?

Well, if Minyanville's done anything right, it's been connecting the financial markets to the social mood.

And it appears that in 2012, Hollywood and Wall Street are mirroring each other.

After all, if there's something traders and investors want to do in 2012, it's to escape the madnes of a world that is increasingly difficult to understand, let alone profitably navigate.

Think about it.

The days of "GE (GE) guided up so the market's going up" are dead, replaced by a landscape filled with the following:

1. Central bankers have gone wild, and are currently pushing a "let's put a gun to the saver's head and force him into the casino" strategy.

2. Supercomputers are running ever-advanced high-frequency trading algorithms and managing ever more esoteric leveraged ETFs, the effects of which are largely uncertain. (See Leveraged ETF Ban Spreading Like a Virus.)

3. Financial TV shows regularly run stories about Greek-bond haircuts and sovereign CDS spreads.

4. The S&P 500 (^GSPC) has confidently stomped through a litany of significant macroeconomic obstacles.

5. A presidential candidate, Ron Paul, wants to end the Federal Reserve -- and is being taken quite seriously by many voters.

6. The gold bugs have been right and making a damn fortune.

7. To add insult to injury, we found out that insider trading for Congress was legal. (See Insider Trading Laws Do Not Apply to Members of Congress.)

Conclusion? It's a mad, mad, mad, mad world.

Furthermore, for those actually in the industry, it's getting harder and harder to make money.

Firms like Goldman Sachs (GS) and Citigroup (C) are not only cutting staff, but reducing the pay of those lucky enough to keep their jobs.

Hedge funds -- a.k.a. what used to be widely considered as the smart money -- aren't performing well. The private-equity players are terrified that their carried interest tax advantage is set to get wiped out as populism bubbles up even among Republicans. (See Who Said It Newt Gingrich or MIchael Moore? [QUIZ])

Now there seems to be an incredible amount of frustration among traders and investors because the Dow Jones Industrlal Average (^DJI) just marched up 24% off its October low in the face of the EU debt crisis, skyrocketing oil prices, exploding US deficits, heightened geopolitical tensions in the Middle East, and a slowdown in China.

I noted last week on Minyanville's Buzz & Banter (click here for a free two-week trial) that a lot of folks seemed a little too eager to scream "ROUBINI TOP!!!" after Dr. Doom came out bullish on equities, and to call the end of the Apple (AAPL) bubble on February 15 when the stock hit that all-time high of $526.29 before reversing to finish below $500.

It's as if everyone wanted the market to go down simply because it seemed like that's what the market was supposed to do, or would have done in the simpler times of the past.

So let's circle back to the word "nostalgia."

I believe the main source of investor frustration today is the latent, deep-down fear that one's skill's, experience, and knowledge are obsolete in today's bizarro-world.

For some, that fear is a metaphor for mortality, of being passed by in the grand scheme of evolution.

For others, it drives worries of not being able to make a living, put kids through college, and get through old age in dignity.

People just want things to go back to the way they used to be, and that means they're in danger of falling into the trap of succumbing to fear when what they really need is a change in philosophy.

To what?

Well, for starters, we have to throw the word "should" out the windows and accept things as they are. We have to trade the market we're given rather than hope for normalcy, whatever the hell that means.

We should respect, but also detach, economic and financial realities from price action as the ability to harness momentum increasingly drives P&L.

And perhaps most of all, we should remain open to the idea that everything really could work itself out, because losing the ability to see both sides of any given situation could be the biggest failure of all.

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