Thursday, September 19, 2013

Out of the market

Although I was a business reporter for most of my 45 years in newspapers, I was not much concerned with big issues; I covered local doings. When people asked, as they often did, for my thoughts on markets, I would usually say, "I'm 6,000 miles from Wall Street. You should read Barron's."

That was not particularly an endorsement of Barron's, just a way of saying I wasn't keeping up with day-to-day market gossip. That also did not mean that I didn't think I understood markets. I think I do.

When RtO started early in 2008, its constant theme was that the "rescue" of Bear Strearns was really a suspension and market failure, papered over in the interests of Wall Street, not of ordinary investors. I dated the market failure to August 2007, which I believe is pretty generally agreed by historians now, though I do not recall many other people saying so at the time. (The concept of a concealed market collapse is, I think, novel; it is an outcome of effective central banking, which can keep paper levitated for a surprisingly long time, but not forever.)

Anyhow, all through the summer of 2008 I broke my habit of not giving market advice to the extent of repeatedly advising followers of RtO to conserve cash, which meant cashing in securities -- funny word, that, in the context.

I didn't cash my own securities because I didn't have any and as far as I know, nobody else did on my suggestion either.

It wasn't the first time during my reporting life that I foresaw a capitalist coup but missed getting rich because I didn't have any capital. My heart is with the working man.

Now I do, and I've been waiting for a chance to sell short. This morning I dumped almost all my equities.

One of the brokerages  I use published a roundup of expert opinion that the federal fiscal crisis should not unduly disturb markets. I think otherwise. I anticipate a correction -- marvelous Freudian word! -- by the end of October, after which I will repurchase most of the securities I held until yesterday.

Just more of them.

That's the plan anyway.

There seems to be a disconnect between newspapermen and financial men. For example, this morning Greg Sargent had this to say in the Washington Post:
 * YEP: WE’RE HEADED FOR CHAOS THIS FALL: Norman Ornstein lays out the reasons he thinks a government shutdown and/or debt ceiling default are genuinely possible this time around. If anything, John Boehner is exerting even less control over the Tea Party wing than in 2011, while Mitch McConnell — facing a challenge from the right — has less of an incentive to step in and fill the vacuum. Meanwhile, the hope that a few GOP Senators splitting with party leaders and dragging their party towards sanity has waned. Utter chaos.
I can't lose. Should sanity break out and I lose money (more precisely, fail to gain), my country would gain.

I'm still rankled that I couldn't buy Chesapeake Bay Bridge-Tunnel C bonds at 190 in 1970, though. They paid off at par. 


  1. Well, I wish you luck. I have no idea if your are right, but I like clean bets.

  2. Since you are in Brazil, you may not have caught just how bizarre rightwing politics has been this past month.

    Two months ago, the pundits were anguished that when the Congress reconvened it would have just 9 days to deal with this important domestic issue. Did the Congress get down to it? Well, no, they've been too busy reading Vladimir Putin's entrails.

    My concern, growing by the hour, is that the rightwingers will decide that in fact killing off the economy is a bad idea but not have enough time (or brains) to avoid it.