Today's 133 point drop in the Dow Jones Industrial Average (DJIA) is no surprise to hardcore bears like myself. What's more surprising is that the DJIA rose 128 points the day before. Now, explanations for this (deviant) behavior can be offered:(1) Bottom-picking: Those bargain-hunters who were looking for bargains seem to have reversed their (inscrutable) logic the day after. Honestly, the bottom hasn't fallen out of the sky just yet. A sustained drive below 10,000 or worse on the Dow looks quite likely, given that maybe only true believers of Cheneynomics are still under the illusion that this is the best economy of our lifetimes. Hallucinogens are such wonderful investment aids--as long as you're not interested in making money.
(2) False expectations: Again, some people are prone to taking a few positive signals and concluding that everything's going to be alright. So what if GM had another round of miserable earnings. They were coming to terms with the UAW, dammit. So what if Intel didn't see things looking so profitable going forward. Oil prices were falling, dammit. People have an almost endless capacity for self-delusion. Too bad that the next day, Ford decided to do a GM and report losses together with additional layoffs. On top of that, Pfizer got Mercked into reporting underwhelming sales. Even the rather useless and inaccurate Conference Board leading economic indicator index fell by 0.7%. All is not well in Greenspan's Bubbleland, and things are bound to get worse once he abdicates his throne and the lemmings start worrying.
(3) Faith-based investing: Don't worry, Mr. Investor. The "Chosen One" Bush will pump prime the economy after Wilma naturally juices all the oranges in Florida. Don't be so damn negative; spend all you've got and everything will be alright. You can have your cake and eat it too. To paraphrase Kennedy, why save for tomorrow what you can spend today? It's no pain, all gain in this rosy Bushworld. Reality is such a nuisance.
Posted by Emmanuel | 
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