Tuesday, June 17, 2008

Inexplicable market outlook

It seems that uncertainty in the financial markets is reaching extreme levels. It may be that most of us are just experiencing the status quo of traders, and the fact is that most of us favor investing based on presumed long term trends, however naively, that we adjust from time to time. We have no interest in living the life of a trader, but now we worry about our 401K allocations, our balanced mutual funds, our broker recommended bonds, and those can't miss long term holds with dividends like GE, MSFT, JNJ, and JPM. There appears to be no certainty.

We know all of the market variables. The dollar is challenged, exports benefit and we risk inflation at some point. Gas, oil, and food prices do not benefit from this in many ways, and these prices are very very seriously taxing consumers. Almost everyone gulps, ugh, when they fill up the tank. There is the so-called mortgage crisis, and crisis it is for a segment of U.S. consumers, and the impact on the securitization markets has been severe, limiting credit pass-ons in the securities markets to only the best credits, those that are more or less beside the point. Financial institutions are faced with accommodating mark to market accounting rules that seem to favor short sellers, who talk down the L-3's that have no liquidity at any given moment. Bad accounting that was promulgated by our society's strict rules driven mentality, what seems to be extreme right meets extreme left economic rigidities, may continue to crush financial services firms until, until...

The uncertainty is well founded, and only the professionals with money to lose or gain can play this game it seems. When a turning point comes, or a new lower plateau arrives, is difficult to guess even for most mutual fund managers if their results are any indicator. Me, I'm in there scrapping away, holding my own maybe but certainly making some mistakes. Winners, losers, I got my share, but regardless of the outcome this has not been a worthwhile experience. The lesson that some want to be delivered, if that would happen, could take down a deserving few who crossed the line but may devastate the rest of us. Time to buy, time to hide???

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