05/07/10 Baltimore, Maryland – Whammo!
Is our ‘Crash Alert’ flag still flying? It is? Great.
The Dow got whacked hard yesterday. It was down a few hundred points. And then, somehow, the computer programs triggered the sell signal from hell. It lost another 500 points in just a few minutes.
Then, the computers must have reconsidered. They went into buy mode.
All very strange…
Was it just a mistake? Something weird? Was it a genuine panic…and a phony bounce? Or a phony panic and a genuine bounce? The story last night was that the sell-off was a mistake…that someone hit the wrong button and added a zero. We don’t believe it. Traders must add zeros by mistake all the time. This is the first time it triggered a 998-point drop. As for the recovery, it’s suspicious too…maybe some kind of automatic reaction – perhaps from ‘buy the dip’ program trading, maybe from the mysterious “plunge protection” machinery of the US government.
We don’t know. But what this tells us is what we’ve been telling you: this is a dangerous market. It is no place for widows, orphans, nuns, priests, republicans, democrats, window-washers, bungee jumpers…
…it’s a good market for gamblers. And if you were long the VIX yesterday, you made a killing.
Everyone else got killed.
But it was fun for us. You see, you start out life full of expectations and confidence. Then, you become more cautious. Then, you become more realistic. And then, you become discouraged and hopeless. Finally, after you’ve given up all hope of ever making the world a better place, you become amused by it; you realize that there’s no reason to change it. It’s funny enough the way it is.
That’s the way we felt yesterday, watching the market go wild in the afternoon.
“Hey, Dad…you seem to be enjoying this,” said Jules. “But you must be losing money along with everyone else.”
“Maybe…but it’s worth it.”
We don’t own US stocks. But we have some from emerging market shares. They went down with everything else. And we wouldn’t be surprised if they went down a lot more.
Why?
…Because China is going to blow up. It’s on a ‘treadmill to hell,’ says short-seller Jim Chanos.
…Because the US economy is not really recovering. The latest numbers show retail spending sinking again. Bankruptcies are rising. Housing and unemployment remain in the dumps…
…Because the US stock market has been in a decline – in real terms – since January 2000. This move to the downside won’t really end until stocks are cheap again.
…Because there’s more bad new coming from Europe too…
Bill Bonner
for The Daily Reckoning
Bill Bonner
Since founding Agora Inc. in 1979, Bill Bonner has found success and garnered camaraderie in numerous communities and industries. A man of many talents, his entrepreneurial savvy, unique writings, philanthropic undertakings, and preservationist activities have all been recognized and awarded by some of America's most respected authorities. Along with Addison Wiggin, his friend and colleague, Bill has written two New York Times best-selling books, Financial Reckoning Day and Empire of Debt. Both works have been critically acclaimed internationally. With political journalist Lila Rajiva, he wrote his third New York Times best-selling book, Mobs, Messiahs and Markets, which offers concrete advice on how to avoid the public spectacle of modern finance. Since 1999, Bill has been a daily contributor and the driving force behind The Daily Reckoning. Dice Have No Memory: Big Bets & Bad Economics from Paris to the Pampas, the newest book from Bill Bonner, is the definitive compendium of Bill’s daily reckonings from more than a decade: 1999-2010.
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You can hit a computer, but you can’t send it to jail. However, behind the computers in this case are some bona-fide market manipulators, with flesh, bones, and blood (mostly cold).
Beware.
You Right, It’s a fake, only fog in the air, like mistakes of fat fingers, oil spill, bombs in time square, terrorism.
manipulators, spinners, crooks, good doers, are sending thick fog of confusion over common men which is practically lost
right now he is making decisions mostly based on fear; how easy is to loose hope for better future…