EET SMART
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Sy Harding
CLIMBING A WALL OF WORRY! Dec. 12, 2008.
The largest sectors of the economy continue to plunge into a seemingly bottomless hole; the housing industry (where it all started), the financial sector still locked in a credit crisis, the giant auto industry possibly within weeks of major bankruptcies, retailers struggling in their worst holiday season in decades.
Almost three million jobs have been lost since the recession began last December, more in the last six months than in the entire 2001-2002 recession. The loss of 533,000 jobs in November was the largest monthly decline since December 1974.
Investors have lost several $trillions in savings and investments in the worst bear market in stocks in 75 years. Income yields on bonds are at unbelievable lows.
Headline making scandals are showing up all over the place. The Governor of Illinois trying to sell his influence, even the former senate seat of President-elect Obama. Bernard Madoff, a former chairman of the Nasdaq Stock Market, and a respected Wall Street presence for almost 50 years, arrested and charged with fraud, in what the SEC is calling a $50 billion ‘Ponzi-scheme’ swindle of investors, “a stunning fraud that appears to be of epic proportions”.
Is it any wonder that the confidence of consumers and investors is also in a deep dark hole?
And it is. Over the last three months fearful investors have pulled a record amount of money out of mutual funds, brokerage accounts, and even hedge funds, in a panicked rush to get out of the stock market. Recent polls show a surprising percentage of investors and consumers now don’t even believe that money in government insured savings accounts or money market-funds is safe, and have been piling into short-term U.S. Treasury bills at a pace that has dropped the yield on T-Bills close to zero. They are willing to loan their money to the government for nothing rather than risk it anywhere else.
What is going on reminds me of a remark attributed to J.P. Morgan back in the early 1900’s that, “Bear markets return stocks to their rightful owners”. By that he meant that smart money or ‘rightful owners’ sell their stocks temporarily to public investors at high prices near market tops, but then buy them back at low prices when investors bail out at the lows of the subsequent bear markets.
What is going on reminded me of his arrogant remark because, while public investors have been bailing out at such a frenzied pace over the last couple of months, others have been quietly buying so heavily that not only did it offset all that selling, but was sufficient to produce a gain of 20.8% by the S&P 500 from its November low to its high last week.
The volatility has continued, but in the process the market has been in a bullish pattern of higher highs on the rallies and higher lows on the brief pullbacks.
And more importantly, it has been rallying in spite of the economic reports and worries becoming even more dismal and foreboding, including ugly employment numbers, plunging retail sales reports, threat of an auto industry bankruptcy, and soaring home foreclosure rates.
That is, for it three weeks anyway it has been climbing the proverbial ‘wall of worry’.
That is a good sign. As I have been saying for the last couple of months on my free daily blog, “The market always looks ahead and begins its next bull market while a recession is still underway and worsening, while public investors are at an extreme of pessimism. So obviously at some point it has to begin to rise in spite of continuing bad economic news. Since public investors aren’t buying, it has to be institutional and other ’smart money’ that begins to buy in anticipation of improving economic conditions six to nine months ahead. And the market has to continue to climb a wall of worry for quite some time, until the economy itself begins to recover and public investors become less fearful.”
As regular readers of my column know, all year this year I have been predicting that the stock market would not bottom until the October/November time-frame, and that the bottom would be followed by a substantial bear market rally that would be well worth going after. Nothing so far had disabused me of that expectation. With the S&P 500 down 52% at its October low it would take a gain of 104% to get back to its peak of last October. It would take more than a 50% gain to retrace half of that decline in a bear market rally.
Stay tuned!
Sy Harding publishes the financial website http://www.streetsmartreport.com/ and a free daily Internet blog at http://www.syhardingblog.com/. In 1999 he authored Riding The Bear – How To Prosper In the Coming Bear Market. His latest book is Beat the Market the Easy Way! – Proven Seasonal Strategies Double Market’s Performance!
The (now impeached) Governor Blagojevich (Blog-oy-eh-vich) has been making headlines for months. The entire country understands that Blagojevich is a sleazy politician who, even though he has been proven guilty and impeached, still insists that he hasn’t done anything wrong and is giving interviews to just about anyone who will listen to convince them that he is an innocent bystander who is being victimized by…really mean people.
So what exactly is Blagojevich accused of? Well there is the accusation that he was trying to sell the Senate seat (now) President Barack Obama left vacant. He is also charged with conspiracy to commit wire fraud, mail fraud and of soliciting bribes.
While it seems clear to most that he is a sleazy politician, he has managed to make history. He is the first governor in the history of the United States to be impeached. And boy howdy was he impeached: The Illinois House of Representatives voted him out of office in a vote of 114 to 1. It looks like next to nobody wanted this guy to keep his office.
Blagojevich had a lot of support from Chicago residents as well as residents around the state as he signed into law an amazing array of legislation from reforming the Illinois state death penalty laws to implementing a statewide comprehensive smoking ban to finding health care for kids. His election platform vilified the spending of his opponent but he didn’t seem to mind doing a fair amount of spending himself once he was in office.
Perhaps most ironically for a man who was impeached for being unethical was the work he put into ethics reform.
To be honest, his whole defense feels like a joke. He missed the first days of his trial for media appearances and now claims that he was never given a fair trial at all because he was not allowed to call witnesses or challenge any of the heaps of evidence that was presented against him.
The last few months have been irony filled for Chicago residents as they have been forced to watch their state’s Governor has gone through all of this. He was accused. He denied. He was proven guilty. He still denied. He even swore in the State Congress that would be in charge of deciding whether or not to remove him from office!
The Impeachment trial is still going on but one thing is for sure: It has definitely been an exciting time for Chicago and Illinois politics. Chicago residents are famous for many things but not one of them really takes pride in the amount of corruption and scandal that seem to plague its political scene. It certainly does make local politics more interesting when someone is brought up on trial and then does a media blitz to convince people of his innocence even after he is proven without a doubt to be guilty.
Thank goodness for Barack Obama or people would still be convinced that the last respectable politician to come from Illinois was Abraham Lincoln.
For more information on politics in Chicago, visit http://www.chicagomicroblog.com and http://www.illinoismicroblog.com.
The Mississippi River is the most important river in North America. Most people understand why. Between the water it supplies and its use as a water transportation thoroughfare from the north into the Gulf and out to sea, it’s no wonder people call it the “Mighty Mississippi”.
Most people know how ancient the river is. It has forged its way through the continent willing other major rivers into its watery whispers, claiming their water as its own. It has shifted, changed course, and carved new pathways around glaciers, through earthquakes and blockages, amidst flooding surges, and throughout time.
Its persistence, its might, its ancient history; its simple elemental being has touched millennia of humans, animals, plants, and earth. Its timelessness and spirit have attempted to be told through countless tales, but seeing Ol’ Man River is an experience words and pictures can’t completely capture.
Some Great River Facts You May Not Know
The Father of Waters meanders all around its expansive floodplain taking 1,700 miles of twists, turns, and bows to complete its trip. A drop of rain plunging into Lake Itasca, the Big River’s origin, will take 90 days to reach the Gulf of Mexico.
Each flood changes the face of the Mississippi River making its exact length impossible to measure but estimates are over 2,350 miles from its origin to the Gulf. The Great River and its tributaries drains 41 percent of North American waters — a total of 1.2 to 1.8 million square miles over 31 states and two Canadian provinces.
The Gathering of Waters forms the third largest drainage basin in the world. Its system of 29 dams and locks extends for 669 miles between Minneapolis and Granite City, IL.
The depth of the Mississippi River ranges from as little as three feet at its Minnesotan headwaters to 200 feet between New Orleans’ Algiers Point and Governor Nicholls Wharf. Drinking water for more than 18 million people are supplied by Ol’ Miss and her tributaries.
Three hundred and twenty six species of North American birds — that’s 60 percent — use the Mississippi River Basin for their migratory air routes. There are about 100 documented species of mussels, 145 species of reptiles and amphibians, and 50 species of mammals that call the Mississippi their homes.
Hannibal, Missouri is home to the infamous “Unsinkable” Molly Brown and the outspoken author Samuel Clemens, better known as Mark Twain. Mark Twain called the area of the Mississippi that flows both east and west between Davenport, Iowa and Rock Island, Illinois, known as the “Quad Cities”, the Land of the Sunsets.
Water skiing was invented on the Mississippi River in 1922, in a wide part called Lake Pepin, between Wisconsin and Minnesota. The Upper Mississippi alone has over 600 water recreational sites.
The Lake Pontchartrain Causeway in New Orleans is the world’s longest over-water highway bridge at 24 miles long. One of the great geologic oddities of the world is found at Crowley’s Ridge in eastern Arkansas — the Delta’s only “highlands”. Only one other comparable land form in the world and exists in Siberia.
Illinois Borders
Though the Mississippi River carves the borders for ten states, Illinois heritage has blossomed and grown from this almost omnipotent river. Though the river’s actual real estate is constantly changing, people have been building, living, and prospering from the river’s presence and ocean-like continuity since humankind existed.
Whether you are a seasoned Illinoian, fresh Illinois resident, or looking to the Land of Lincoln to be your next home, take the time to discover this potent river and all of its Mississippi River lore.