I'm BACK!!!
Back in the H-town. I was met by great weather and excited friends and family. Have to say, I had a GREAT time...my last nite in town was an unforgettable one. Knockout Presentation, Helluva Happy Hour, Awesome Dinner, Lovely Ladyfriend. Almost hated to leave, and still have fond memories of the Summer, but know it's back to business. Hopefully, the friendships that blossomed this Summer will continue to thrive...
I'm back to the Southside!
Gamblers Fallacy
What's happening in the markets? As I peek from under the training blanket, I'm noticing a few things that are affecting banking, the consumer, global economics, etc. It's almost reminiscent of the late 90s eBust when I lost a shitload of money on some dot com companies fresh outta college. I was a victim of
Gambler's Fallacy. My take on this "liquidity crisis" stemming from sub-prime lending is this: The Fed printed way too much money to postpone recession after 2001. Interest rates fell so low that buying real estate became casino-esque, with credit democratization allowing suspect entrants to participate. Though this sent the economy back into growth mode, it only postponed the inevitable. Consumer confidence, corporate profits, tax revenues all temporarily increased because of the money flood. Inflation has been denied as a possibility but it exists. It has since oil crossed $60 and gold hit $650. On top of that, the dollar is getting crushed. What the hell are these experts thinking? We can't postpone it, we can't print our way out of market downturns.
Not meaning to be a bear, but as a believer in free markets, I understand that two components spurn cycles. Basic emotions of fear and greed. We've all witnessed them at the blackjack and craps table. When the chips get low, something kicks in and we end up having to go back to the ATM to print money. When they get high, we get greedy and end up getting back into a personal recession anyway. Smart gamblers accept their losses at certain points and pull in the winnings at predetermined points. It's obvious that our educated money theorist can not decide when to hold and fold.
