Insanity

You can’t make this stuff up. This last week, the Governor of Illinois made headlines for allegedly selling a Senate seat, the U.S. Senate voted down the auto industry bailout, and the former chairman of the NASDAQ was arrested for allegedly setting up the biggest Ponzi scheme since the 1920’s.

With that said, what you also can’t make up is the continued persistence of individuals to not adhere to, or not understand, what Einstein meant when he said insanity is doing the same thing over and over again, and expecting a different result. So what do we hear?
We hear that it’s time to jump back in the stock market again, and that we’re in it for the long-term. We hear that the stock market over the last ten days has moved higher, and everything is O.K. We hear the market is going to come back. We hear all the usual clichés that wall Street loves to throw around. And once again, the American public swallows it hook, line, and sinker, and continues to do the same thing because they believe this time it will be different.

Will the Illinois governor get off on these charges? Not on your life. Will Washington eventually bail out the automakers? Probably. Will the unwinding of the Ponzi scheme have an impact? More than likely. And oh, by the way, were there’s one cockroach…you know that theory. Is the bear market short-term rally over? I don’t think so.

I have been preaching, teaching, and screaming from the rooftops, that when it comes to investing, you must take a different approach. The idea that the stock market is an investment vehicle went out with the horse and buggy. The market is to be used as a trading vehicle. For example, if you get gains of 10% to 30% in the steel industry, in the cement industry, or in any infrastructure, take your gains. It’s called active management.

Yes, I am frustrated. I am frustrated by the gullibility of the American public. P.T Barnum once said: You can never grow broke underestimating the intelligence or the taste of the American public. I used to think he was wrong. Now, I’m beginning to think he may have been correct.


Till next time,

Bill


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