Friday, September 19, 2003

Logorrhea

Hi. I don't have anything planned to talk about. I do have a list of potential topics I keep in a Word file that I can use for my blog here, but I don't feel like expanding on any of them today. What I would like to do is just freestyle, just come up with the stuff as I write this. It's fun to do, good for your creative writing skills. I am going to start off on the topic I study the most and like to talk about the most - money.

I think the U.S. financial market is in an interesting phase. The last three years it's been beaten down bad, setting record low numbers across the board, high unemployment, venture capitalists dropping off the face of the planet. We've lost enough money that would make the Great Depression look like someone just lost their change in the Coke machine. It was so bad, the president had to start two wars to try and improve his chances at reelection. He had nothing to lose. Poor economies don't get presidents reelected, just ask Jimmy Carter. Ok I'm being a bit critical. I'm sure the war in Afghanistan and Iraq were not started solely for the reason of improving an administration's image. I think we as a country got pissed about 9/11 and had to strike out at someone, even if they weren't involved. We wanted to make someone pay for our grief.

Anyway, back to my original point that I think the market is in an interesting phase. For so long, everything was taking a beating, hemorrhaging money (I love that term when it's used outside of a medical context), so we were used to losing our shirts. Here it is year four and the market is starting its recovery, at least according to the major index numbers and it's doing quite well I'd have to say. If this is just the start of its recovery, I think we're in for some good times ahead. That is why I opened my Roth IRA.

The indexes are approaching two year highs. The first year we didn't lose too much, just the accelerated growth of the tech boom slowed down. It wasn't until the second year that the markets turned south, in the third year took a huge dump but right now they are back up near those highs from three years ago. But who's noticed? Interestingly the pop started the week the Iraq war began. Right now, since March the major indexes are up over 20 percent, some close to 30. 30 percent in six months! In an average year, the markets do not make that in 12 months. There is not a mutual fund that can consistently make 30 percent in that amount of time. So why haven't we heard anything about this? 30 percent in six months is amazing progress yet there has been little media coverage on it, no declarations from experts saying that all is well. Bush's approval rating is actually going down as our inexperience of nation building becomes more obvious in Iraq. A 30 percent climb in six months is the kind of improvement we enjoyed during the technology sector boom, so why aren't we taking to the streets and throwing a ticker tape parade? Haven't you noticed there hasn't been much in the news lately about the supposed bankruptcy of the airline industry? You want to know why, it's because each of those companies stocks are up 50 percent in that same six month period. FIFTY PERCENT! They're doing better than the market overall. No complaints, but no cheers either. Why isn't this all over front page news?

I'll tell you why, part of it is the distraction of war in Iraq but once in awhile it still produces a slow news day. It's because of habit and the wounds we're still licking. For the past three years, we got nailed, retirements wiped, people laid off, huge super companies bankrupt because of accounting scandals. Three years of a bear market, we're not ready to declare that the bull has returned after an amazing six months.

And you know what? I like it that way. If the markets can make 30 percent without fan fare, without anyone really noticing, then there's nothing to stop it. It's news and reports that guides investors. 30 percent on no news is amazing. That climb will in turn produce capital to be invested back in to the business then they will have something good to report. If the people and corporations who support market advances with investments haven't even noticed or are still too afraid to commit, what do you think will happen when they start hearing the good news of recovery? They will come back in droves and get the boom started again. The longer we can pretend that things just really still suck while we rake in the cash, the longer we can run up the recovery. How cool is that? We preach doom but do so at the bank with a secret smile.

On another topic, many posts back, I used to include a list of what movies I had recently seen both in the theater and at home plus what music CD I was listening to. It was supposed to be a nostalgic reminder for me of that period in my life when I made the post. I haven't given any updates on that because nothing has changed in the last month. I haven't seen any new movies in the theater and I still have the same CD in my car stereo. What I would like to start doing is posting the financial market indexes. It might be fun to see a snapshot of the condition of the market at the time of the post. Sometimes, I'm sure it has an effect on my mood and it'd be interesting to find a correleation if there is one.

Cheers.

DJI 9633, SP5 1034, NASDAQ 1902