Friday, May 18, 2012
A Fortnight to Savor
A&G hates Investors.. Hates them!
Not 'Mom & Pop' investors (small i) or people who have investments tied into pensions and other bulk instruments.. No, we don't hate you..
We Hate capital I Investors; those with hundreds of millions if not billions of dollars tied into global markets, making excessive profit daily while global leaders construct fiscal policy to always cater to their needs.
You know the type of which we speak
So we take a lot of joy at what's been going on in the past 14 trading days..
On May 1st, the Dow closed at 13,279.. Yay "Recovery"..
Today May 18th, the Dow closed at 12,369
So that's a loss of.. um.. let's see.. take the one.. carry it over.. um..
A loss of 910 pts in 14 trading days. A 6.9% drop...
'That's Terrible!' some will proclaim.. but Really, is it?
See beyond the Fed injection of capital to make what amounts to a dying quail look like a shimmering swan, the professional Investors have intentionally and purposely ignored anything negative out of Europe for many months if not years.
And because US Investors didn't care about Europe's problems, much like they don't care about Europe itself other than a nice place to vacation, the US stock market continued going up, up, up based on illusions and 'follow the leader' investment strategies.
We wish we could be proverbial 'flies on the wall' observing Investors and traders in panic mode as we quietly sip on some delicious Oolong tea and simply savor it all...
In other words, the numbers are inflated
Or think of it like this: An item sells at a store for $100. The store has a 'sale'-- 20% off. The item is $80, so you buy.. But the item cost the store owner $10 and should be selling for $20. So the 20% really wasn't that big a deal, was it?
Think of the Dow in those terms and you will understand its a joke.
And since our audience is global and far reaching, here's the comparisons of various national stock markets May 1st vs today the 18th:
Great Britain- FTSE
May 1st: 5,812
May 18th: 5,267
Drop of 545 pts - 9.4%
May 2nd: 6,710
May 18th: 6,271
Drop of 439 pts - 6.6%
May 1st: 9,350
May 18th: 8,611
Drop of 739 pts - 8%
China- Hang Seng
May 2nd: 21,309
May 18th: 18,951
Drop of 2,358 pts - 11.1%
Well, come Monday expect the global markets to spike upward.
Not for any true reason mind you.. its just how it works.. Capital-I Investor rats always 'Buy on the Dip'
After a 1-2 day dead-cat bounce mini-rally, expect the carnage to continue..
So sit back, relax and have some tea