A couple years ago, when everybody was losing their a$$ets, it was a good year for me. There was a head and shoulders chart pattern in the dow and all the signs pointed to a recession. No reason at all to be long. So, I went short and made some money off it. I suppose people would resent that, buy you don't win them all, and if you lose them all, you won't be around for long.
But 2009 wasn't so good. I kept going short, but the market kept rallying. I had to drop out awhile and figure it out because it didn't make sense. Finally, a key piece fell into place. It was quantitative easing. I couldn't believe that people would buy into a free lunch as sound economic policy. But that is just what they did. This is why I couldn't see the rally and why I couldn't accept it when it continued.
Now we got a rally going again. This is consistent with the quantitative easing being restarted. As you may know, quantitative easing was discontinued sometime in the spring. And so the market languished until now. Like a trained monkey, the buyers are back on Wall Street buying up stocks with all the funny money. Well, I ain't buying a bit of it. I won't buy into something that I don't believe in, and I damn sure don't believe in that.
But gold is doing well again today. Oil is up, the dollar is down. I won't bet on oil, because this economy won't have enough steam to push oil back up to the heights we saw in 2008. The dollar? I think that the race to the bottom is on. Any attempt to weaken the dollar will meet with parallel attempts by other central banks which will be necessary in order preserve their respective countries' trade competitiveness. Quantitative easing may appear to work, but in the end, all that is being accomplished is a debasement of the currency. Of course, the conclusion should be obvious, don't you think? Apparently not to Wall Street.
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