For anyone who has read this blog or heard me speak understands that I am quite willing to take criticism for being either wrong in my conclusions, or appearing wrong because I was early in my forecasts. Often when I am speaking to a group or an individual I will repeatedly state…” I could not only be wrong, but I might be dead wrong, however that doesn’t mean you shouldn’t research it for yourself and try to prove it either way. The more skeptical you are of my conclusions which leads you to research it yourself, the better it is not only for you, but also for me.” As I stated many times, my statements have more validity when you understand them to be correct, not just because I say so.
I have been stating over the last year that I felt we were in the middle of a financial hurricane. Every single so-called “expert” has been stating that the worst is behind us. I still believe the worst is ahead of us. I have made my calls and posted them right here on this blog, some of my writings have appeared in such places as Forbes.com…CEOnetwork (R)…and even on a professional Futures trading service for international traders. (SquawkTrader.com) Just click through the archives, they’re all right there. No hiding, no running, no hemming or hawing. That’s what you do if you want to be taken seriously. State what you think is correct, and let the chips fall where they may, Period.
Below is a link to an audio recording from May 6th, 2010. It’s from a service I currently subscribe to. It’s Ben Lichtenstein the owner of TradersAudio.com. To put it into a picture for you, Ben overlooks the S&P trading pit on the Chicago Mercantile Exchange. He calls out the trades that are happening on the floor in real-time to help traders understand what is going on in the pit at any given time. They do not allow cameras there, but they do allow this service to be broadcast. It’s subscription only. You have all likely seen on TV the shots of the exchanges with all these guys screaming Buy….Sell. Well here’s a link provided courtesy of TradersAudio of what that fateful 15 minutes of panic sounded like.
As I stated earlier, if this is not a one day wonder but the beginning of a much larger storm, many will be caught not only off guard, but without a life vest… or worse. Prepare for the worst, hope for the best. It’s still the best advice I know.
Last week the financial markets were all a buzz trying to explain why the stock market sold off in such an extreme manner. I have heard one commentator after another give this reason, that reason, but no true reason why. I’ll give you my take, ready? People were selling…No one was buying. I know, too simplistic right? That’s the problem most times, people want a different answers to what they perceive as complex questions. Sorry, even some of the most complex questions or problems can be answered with a simple answer. Why do you think the most powerful words in business have 3 letters or less? Remember these? Yes…No. Need I say more?
If the panic selling that took place last week was just a so-called “fat fingered event” (that’s Wall St. jargon for entered the order wrong.) Why wasn’t the pricing error of Good Stocks Cheap been completely retraced? Why was it only retraced by a little over 65%. I was listening to the financial channels all day after the sell off. One by one they commented on the breath-taking buy back the market was now engaged in. They were tripping over themselves to be the first one to recite the words…”Today we experienced one of the biggest up openings on record!” Wow! I guess that settles it then, it was just a bad order entry. However, what should be nagging at your ear, and what you should be focusing on is why didn’t it go back to where it started? Why only back 65%.
That would be a good question, but maybe a little late. The question you need to be asking yourself now is, Why did the biggest 1 day higher opening get completely erased 4 days later? If the event was a mistake, why aren’t they buying at even a larger discount? Or to use an analogy… You had dollar bills mistakenly priced at 70 cents… People came and bought them en mass, but no one was willing to pay any more than 70 cents, and just 3 days later, no one will buy them for 65 cents. If it was a mistake, how can the price be going lower?
It’s because people feel that buying is a mistake, no matter how good someone else thinks the price is. Will it still be argued that the sell off was caused by someone incorrectly placing an order, even when no one will buy at the level they said was a mistake? And what will the correct response be then? I can hear them on the financial news now…“Welcome to the Financial News, leading our discussion is our top market experts!…In today’s markets the……..”.