Feb

Market Mayhem Part II – the Forest

A picture is worth a thousand words. This particular chart is the monthly S&P 500 for the last 12 years, since 1997. Any rational person who has money in the stock market should look at this chart at least once a month. I find that recently I look at it almost daily. Sometimes I stare at it from across the room and try to visualize how the pattern will manifest itself into the future. I can’t figure out if it looks like a giant "M" or a picture of my cats ears, the devils horns, or one of those space invaders.

Maybe the M stands for Microsoft from way back in 1997 when the whole M started. At this point many might say it stands for Monumental Mess, Maybe it Means Mayhem or Manipulation. Maybe the M stands for Mass Misrepresentation Manifested Mostly in Misery I suppose. Perhaps Mismanaged Mismanagement ? Market just got Murdered? Maalox Moment…

We never trusted "buy and hold" from the beginning, but if you find a way to travel back in time, let us know so we can tag along.

By the way…if you are reading this now and did not see the very first post this blog from last July, it is required reading "Is this an M in the Making ?"

We characterize the current market environment as the "Twilight Zone". Recent events in my opinion have removed a certain level of confidence in the overall stock market for the near future. It is not outside the realm of possibility that we get a fantastic rally here at some point but that is not relevant here. Maybe a huge Bear Market rally to suck in any remaining money that has not already evaporated in this last leg down. Imagine the buying panic if say GE announced Monday Morning it would split into 7 companies spinning off 7 separate stocks, burying the financial one. At NINE BUCKS A SHARE would you throw some lottery ticket money at it? Actually, dwelling on the radical possibilities in this Twilight Zone Market nothing seems totally implausible, even a full blown CRASH at some point.

By the way in the chart above we see the effect of the 50% fib retracement from the top but is it out of the question we see 61.8% ? Ouch…

Speaking of weird stuff, how about a tax on buying and selling stocks ? If they suddenly change the game rules in a casino a number of players will simply cash in their chips and walk away.

When we ponder the monthly chart it gives in-depth perspective as we are most interested in the next 12 years. I am not going to go into all that just yet. This post is a follow-up and shows a great snapshot in time. Subsequent analysis will contain mock-up of several possibilities. What keeps us playing is the 50/50 chance everyday that the market goes up or down and the fact that we can bet it either way. It is all speculation as far as we are concerned and the ultimate irony is that we are playing with Monopoly Money anyway. Haha…when you are in the casino you can get everything you need with the chips.

Last order of business. Bookmark this blog and when you have some "heavy reading" time look over there to the right and you will see the "Blogroll". I personally spent over two hours working on the blogroll, clicking every link, making sure that there is good/great content behind it. I think is a good "knowledge base" of resources. I must warn you that some of what you will find is scarier than any horror movie and might keep you up at night, but sometimes you gotta opt for the blue pill rather than the red one.

The More I read, the More I learn and the More scared I am about the future. Maybe the Mayans were right? (just trying to wrap it up with the M theme)