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Governments panic. Well Governments might say the Feds are independent and it is the Feds who are panicking. Maybe in normal times Governments and Feds don’t talk a lot but these are far from normal times. And in any case I am not convinced they don’t talk, period.
And I also smell the governments slick salesman. I am getting sold. And I am really suspicious about all these handouts and the printing of all this spondulicks. And I know I definitely don’t want my tax money spent on all manner of bailouts.
The smart money, represented by unprecedented quantum’s of global cash, sits on the sidelines. We smell blood. We smell panic. We know this continuing panic is going to rock markets further and send them lower. As investors we are holding out on our governments knowing that governments will just panic more. Scratch their head and panic more. Give us more lollies until one day we know there are not many lollies left in the cupboard. Of course we know the cupboard is getting bare, but not yet.
But some investors are saying the end is already here. The cupboard is bare. Take the lollies now. Take the cheap stocks now.
I would be very careful about doing that. It appears there could be the potential for a rally but it will be limited. And it is possible it will be just the calm before the next storm.
These are not normal times. The usual formulae don’t work. Overnight OPEC cuts back oil production for the third time in a matter of weeks to shore up prices and oil falls 8%. OPEC clearly didn’t read TTN a few weeks ago. It is a very different world OPEC. A new paradigm.
So as the ‘annus horribilis’ draws to an end I also scratch my head and ask where is the bottom of this almighty pit. I still don’t know yet and will try to tell you when it is roughly here. But for the moment I reckon it is prudent to stand aside. I always ask the question: ‘what if I am wrong?’
I have been wrong before. But in this case I don’t think we have to second guess the markets or panicking governments or confused Feds. There will be plenty of time to get on board this next rally. But in the meantime don’t turn your back on the market. And if you are looking for real movement, uncertainty and volatility and money to be made, take a look at currencies – but only if you are qualified!
Yes another year has flown and memorable by the destructive path it has left behind. I genuinely hope that for you it is a healthy and more prosperous 2009 and that you have a wonderful Christmas and break.
Enjoy the ride
Tom Scollon
Chief Analyst
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