How is it that the Dow can fall 400 points on such threatening news such as the president could get tough with banks? Are hundreds of thousands of investors like you and me calling our brokers demanding to sell, sell, sell because we are worried that the big banks might be reined in a bit? Of course not. But these big swings are not all that irrational. The really big money managers, the ones managing the trading for pension funds, mutual funds and large corporations know that any little bit of “bad news” is a perfect opportunity to do two things. Go short on some futures and then dump huge volumes of stock into the market. The first in can sweep the profits out from under everyone else. Then it’s a matter of deft timing to start buying back at bargain prices to start the cycle all over again. Other than the thrill of the game, what else do they get out of it? They get bonuses based on the money they made on the way down and the money they made on the way up, with a little pocket change thrown in from fees on each trade. In the meantime, what happens to your pension fund, 501k or IRA? Ah c’mon, get serious, who cares?
At the same time there are authentic trends at work that are influenced by real corporate profits, employment, weather, global economic conditions and the like. The problem for you and me is telling the difference, trying to stay focussed on the fundamentals, and investing our funds through people we can really trust. Who to turn to? Well not me, that’s for sure. Just because I write on this stuff now and then doesn’t mean I know what I’m talking abut. I offer my commentary with no more competency than Glen Beck (I can’t think of anyone with less competency than Beck. When it comes to blithering idiocy, he’s my idol). I have a couple of trustee responsibilities, which means that I have had to find the people I think I can trust. I feel comfortable with what I’ve done and hope you can feel that way too. Good luck.