Monday, September 28, 2009
The meeting of "G" Groups causes more trader gossip than the "G" spot at a porn convention. Much like the days surrounding federal reserve meetings and announcements, rumors of the pending announcements get people all worked up about pending short-term moves. This is an aura that the federal reserve and G-5/G-7/G-20/G-Worthless apparatchiks would like to maintain.
Of course, as I have stated time and time again, governments and central banks can distort or amplify the primary trend, but they cannot create it. Everyone thinks Bernanke can wave his magic wand and all of the economies' troubles will go away with a sprinkle of some pixie dust (and money, of course). Ok, here, let's extrapolate this out a little bit.
I wager that U.S. stock markets will be 30-50% lower one year from now. If I am right, then it must mean Bernanke cannot do what everyone thinks he can. Because, as we all know, Bernanke wants the stock market to keep going higher. Keep in mind the ridiculous amount of stimulus applied to the stock markets and financial institutions during late 2007 and the first half of 2008, which did not prevent the Great Panic of 2008 from occurring last fall.
Many of us love to believe in wizards. But much like the wizard of Oz, pulling back the curtain at the federal reserve reveals a few crusty old white boyz with Princeton degrees and no common sense. Yes, the figure heads at the federal reserve take orders from the behind-the-scenes owners of the non-federal, for-profit federal reserve who are the real brains and brawn of the operation. And yes, these folks have an unfair advantage over the rest of us. C'est la vie.
But this does not mean investing in the primary trend is unprofitable for the educated masses who throw their hats into the rigged casino for the long term. Buying Gold will be a good choice until the Dow to Gold ratio gets to the 0.5-2 range, regardless of what the secretive central bankstas and G-20/G-Worthless apparatchiks do.
By the way, notice that the G-20 came up with nothing of value and made no concrete plans or decisions on a single important issue. Lots of rhetoric and lots of wasteful spending of taxpayer dollars, but no results. The more apparatchiks in a room, the less that gets done. It's like any federal government on steroids. Trading the "news" that comes from such public displays of incompetence is a great way to lose all your money. When the important changes come, they are never announced in advance by costumed buffoons.
Forget the central banksta and apparatchik wizards. Focus on the long-term trends: economic depression, lost decade(s), Gold is good, stocks are bad and real estate is bad. No government or banksta meeting will change these trends until they have run their course, short and intermediate-term swings aside.