Thursday, September 3, 2009

We've Suspended Our Suspension of Disbelief

"According to the theory, suspension of disbelief is a quid pro quo: the audience tacitly agrees to provisionally suspend their judgment in exchange for the promise of entertainment."

The last few months have certainly been entertaining. Stocks catapulting 50% off of their lows (this still leaves them down 30% from 2007 highs I remind you), GSEs comprising 30% of the trading volume with losers like AIG soaring 300% in a month, and talk of a jobless recovery spurring global optimism have certainly seemed at the far ends of reality. But with gold bumping its head on $1K again, abysmal retail sales even in a back-to-school month, Obama's ratings plummeting, and the S&P hopscotching over 1000 as well, investors don't seem quite as convinced all of a sudden.

Congrats to my current state, Florida, on having the highest muni-bond default rate in the country! With property values plunging and people leaving in higher numbers than they're coming in, revenue is down, way down. While I'll take the reduction in property tax, I'm waiting on an assessment to make up for all of the delinquent HOA members I've been carrying. But fear not. Your state may be next if you live in Ohio, Cali, Indiana, Michigan....

The rest of September is cloudy. When data points like flat ISM surveys and jobless claims hovering in the 600K range fail to spark a rally, perhaps reality, and even worse, fear of a second collapse may return. In the meantime, it's time to stay hedged in financials for the next few weeks and hope that you held onto/added some GLD or physical gold.

1 comment:

Tiger Coach said...


I believe the temporary suspension of disbelief refers to the mindset needed in fictional stories... and while the market has been in a fantasy world just like Disney Land, no one wants to leave, it has been too much fun... But remember, the park will close at some time... Maybe when the unemployed run out of checks to spend...

All that glitters is not gold as SLV may well be a bigger percentage winner as of late. I do hold common shares... and let's face it my friend profit is profit.

UNG is interesting. However, connections inside the natural gas industry remind me of the continued glut from over-production. I believe it makes D which specializes in delivery a long-term winner.

Let's think strategy plays as I am in agreement with you on FXI as well.