Something Smells Fishy

Everything is being sold. It seems like belief hysteria.

It's not just the babies and the bathwater at this point. They're selling the bathtubs, bathmats, bathrobes, and the bathhouses too.

The long-term deflationists should want long-term treasuries. Nope. That was sold.

The long-term inflationists should want long-term silver. Nope. That was sold.

How can you have an environment that displeases both the long-term inflationists AND the long-term deflationists?

I have but one answer. Short-term thinking abounds.

The long-term risk takers should want long-term stocks. Nope. That was sold.

The long-term safety seekers should want long-term TIPS. Nope. That was sold.

How can you have an environment that displeases both the long-term risk takers AND the long-term safety seekers?

I have but one answer. Short-term thinking abounds.

Cash is currently king. Load up on 0.18% three-month treasury bills? What if we run out of trees to make the paper? No way! Stuff the mattresses! Bury it in the backyard! It's not worth taking the risk for a mere 0.18%! (I say somewhat tongue-in-cheek.)

I now resume my previous activity. I'm rolling in all this short-term paper sidelines money. It feels really, really good. I think I'm starting to fall in love with it. I just licked the $5 bill! And don't it feel good!! *heavy sarcasm*



Should the helicopters arrive and drop even more paper money I plan to marry even more of it! Oops. Did I say marry? I meant bury! Freudian slip there I guess. As long as I have the fiat paper in my hands I simply can't lose though! That seems to be the thinking right now.

That being said, kudos to those who are on the sidelines in cash right now. Well done. I'd suggest not overstaying the welcome too long though. Something smells extremely fishy to me, if only from a value standpoint. In my opinion, money is just paper these days and it is backed by a belief system centered on the very same government that got us into this mess in the first place.

I guess that means I'm "still" a long-term stagflationist. It is certainly not easy these days though.

As a side note, I asked my girlfriend Thursday night what she thought the market would do on Friday. She pointed her thumb down. I said that I could see it tank in the morning as a continuation of Thursday's crash. However, I could also see it rally by the end of the day and end positive. That would be an encouraging sign.

To me, what happened was the worst of all worlds though. It crashed as we both expected. It rallied as I expected (a good 200 points in the green even). Something really bad happened next though. It was sold off just before the close, yet again. That's going to give people yet another weekend to look at red closing numbers and think about self-fulfilling prophecies.

The market is now continually repeating the expected, caught in a Groundhog Day loop. That's very dangerous. Day in and day out it is establishing "crash" expectations. Momentum players must be loving it. I'm not one. That's not what I'd bet on. My long-term bet continues to be stagflation and I've chosen to place my bet as a long-term safety seeker. That would be most unexpected at this point. Stagflation's had the rug pulled out from under it, literally. (The rug was taken back by the bank in a foreclosure.)

Markets are constantly in a state of uncertainty and flux and money is make by discounting the obvious and betting on the unexpected. - George Soros