Twilight of Illusion

Mark Twain once said: “Don’t part with your illusions; when they are gone, you may still exist, but you have ceased to live.” First it was Bear Stearns, then Fannie Mae and Freddie Mac, then AIG, and now the world, as we infuse billions of our dollars into foreign central banks. A bailout of the world? You be the judge. However, CNBC is playing this last Fed game as though it was the second coming of Christ. I don’t think it’s on quite the same level.

The only question one has to ask: Is this a bear market or a bull market? If, as I believe, it is a bear market, then all, and I mean all stocks will go down. Surprise Mr. Kass, surprise Mr. Kudlow, Mr. Paulson, and Mr. Bernanke. Yes, all stocks will go down. That doesn’t mean a bullet manufacturer in a war won’t have success, however, one’s long-term view should be negative and on the short-side, if in fact the bear market continues to exist.

The illusion that long-term always produces good things is just that, an illusion. That doesn’t mean that short-term trading opportunities don’t exist on the upside for the nimble and the fleet of foot, they do. But when the media, the pundits, and the politicians attempt to make lemonade from lemons, pushing the market ever higher, your best bet is to reload, and short, short, short.

Many years ago, when traveling on long trips with my young children they would ask the inevitable: “Are we there yet, are we there yet?” These days, I’m hearing a similar question from the CNBC all-stars: “Are we at the bottom, are we at the bottom?” Just like I told my kids at the time: We still have a long way to go.

Till next time,

Bill


P.S. – Looking to re-load on QID, and EEV. Still long SKF and SRS. Also, the gold that I purchased in the accounts during the Russian-Georgia confrontation is looking pretty fortuitous. Any slowdown, and I’ll ring the bell, and take the profit.