Notes From November 19, 2009

Here are some notes I made toward the end of 2009.

Why is everything right again?*

The belief that we are past the worst. We are.
The belief that better days are ahead. Unclear.
The belief that the "crisis" was more a psychological phenomenon than something real. Who knows, but it has had real effects.
The belief that it is reasonable to take risk(s) again. Seems to be the case.
The belief that Fed tightening is still a long way off. Stokes the bullish fires.
Evidence that the economy is moving forward again. Confirmation.
Evidence that profits are better than expected. Positive impetus.
The strength in the market provides courage and confidence. Reflexivity.
Momentum trumps fundamentals. The same old game.

So what has been the trade?
Long equities, bonds, commodities, energy, and precious metals. Short the dollar.

Believe we need a super-squeeze in order clear the market.


Why did everything fall last year?
Financial crisis of confidence predicated on a financial system collapsing under a burden of bad debts feeding into a large recession.
The fear that everything was just a con game, a house of cards.