Let’s just take a quick look at some of the headlines and try to piece together precisely what is going on in the United States economy. Wells Fargo reports billions in quarterly profits beating estimates while Citigroup misses badly. France’s triple a credit rating goes by the boards and our own government lawmakers pushed new spending of $1 Trillion last year. Iran continues to threaten the supply chain of oil through the straits of Hormuz and we continue to block the Keystone XL pipeline preferring to purchase our oil from Venezuela and Brazil rather than Canada.
The Bank of America and Morgan Stanley are going to report earnings on Thursday while Goldman Sachs reports later today. The co-founder of Yahoo is history and Mitt Romney continues to lead Newt Gingrich although Newt scored big in the last debate in South Carolina. Sarah Palin says Newt needs to win just to keep the contest going or it’s a Romney anointing.
One would think given the nature and the tone of all of the handwringing that the markets would be tanking; that is not the case. While it is true that the market is hardly flying; it isn’t crashing either. The salient point in all of this is that traversing the stock market today is tantamount to the proverbial mine field. Yesterday’s hemlock is today’s nectar. If that weren’t true, explain Netflix to me. Depending on which side of the transaction you were on, you either got run over by a bus or bought the bus, sold it for a ton and now ride in limousines.
Volatility remains the name of the game, and the Vix is at 22. It wasn’t that long ago that it surged past 40 and it is not out of the question that it could visit those lofty heights yet again. I, for one, continue to pray for boredom. I want the markets to gently trend sideways until it makes up its mind. Clearly, it is not ready to resume a full blown bull cycle rising twenty to fifty percent over the next year. Nor, is it ready to flex its bear claws declining twenty percent quickly. No, give me a five percent move up followed by a three percent decline and color me happy.
For those of you who think this to be heresy thinking I should be rooting for the 20-50 percent up move; I offer the following from Albert Einstein:
“Wisdom is not a product of schooling, but of the lifelong attempt to acquire it.”
After 25 years tracking markets, I must tell you that this kind of volatility is a harbinger of desperate swings either way. That is why I long for stability because desperation, when it comes to money, makes cowards of us all.
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