Crisis News Abounds

I have a couple of positive topics I am interested in writing about today or over the next few days. However, the severe negativity surrounding the stock and real estate markets and now consumer confidence makes writing positive stories feel Pollyannaish. In my opinion, irrationality abounds, first entire sectors of the market were being driven down, now it appears that entire stock markets in most countries are feeding on the fear of a massive global economic slowdown. Yet oil prices keep going up as though a massive global economic slowdown would not reduce energy consumption! At this point, I am going to throw out a few random thoughts and get back to more specific topics later.

First, I do truly get entertained with the comments on articles concerning bad economic news. MarketWatch allows comments, and the disaster whiners (DW’s) just love a negative story. You got to wonder if any of them ever owned or will own a stock, mutual fund or home. My favorites are the ones predicting a multi-decade economic disaster. If you really believe that, why are you even reading financial news?

On bubbles:

• Tulips were a investment bubble. (If you do not understand the reference, stay away from investing)
• Japanese stocks were an investment bubble.
• The Dot.com stocks were a investment bubble.
• Housing prices were a bubble.
• Fertilizer is not a bubble and prices and stocks will keep rising at 100% per year for at least 5 more years!

I find the stocks I own to be better values now than when I bought them, so at this point I see no option besides sitting tight. The up coming earnings reports should reveal whether these companies are truly in a slow down scenario (which I doubt) or the market has over reacted and many companies are still doing fine in regards to revenues and profits (my hope and belief).

Finally my favorite reason, or maybe its a pair of reasons, the markets are “collapsing” is either the mismanagement of 8 years of Republican leadership or the pending election of a Democrat President and his desires to raise taxes. So it is both the Republicans and the Democrats fault! I guess there really is no hope.

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Comment by Michael Field-Dodgson

2008-06-24 17:30:57

Thanks for that Tim, a breath of fresh air;some rationality amongst the chicken lickens of the world.

We all talk about the behaviour of the “market”, which at the end of the day is really controlled by the real estate between our ears - human beings at times can be quite irrational!

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