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Conviction 2: Electric Boogaloo



August 04, 2011 – Comments (1)

I love today.  I love that finally the market is doing something.  I love that finally, right now, unlike 2009, I have a little visibility into my own financial future and a little cash sidelined that I could maybe allocate to stocks.

I stand by my prediction made in May, that before the end of the year the Fed raises rates and the S+P touches 999.99.  I don't know if this is the first lurch in that direction - it could be.

I think Congress' recent utter idiocy was the catalyst for this move.  The Tea Party almost succeeded in withdrawing all the effects of the entire $787 billion stimulus package of 2008-2010 in one fell swoop - after all that money had already been spent, too; they tried to make it wasted money - and they signaled that they're going to keep trying.  What they're signaling, although they may be too dumb to know it, is that they're going to try to raise rates.  When they failed this week, the 10-year T posted the biggest intraday price rise/yield drop in history - and a couple days after that, you get this (a 5% drop in the market, for those of you reading this with a sigh, ages and ages hence.)

My long term outlook hasn't changed.  A number of stocks suddenly became crazy cheap relative to their future earnings.  Amazing how different a day like this looks when you have some capital to deploy.  I love the smell of napalm in the morning! 

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