Sometimes The Overall Market Negativity Is Deserved

With all this talk of people being “overly negative”, I can’t help but chime in….just as I did back in October last year when I correctly said there was no bottom yet because there was no capitulation.

Now we’re right back to November lows and there’s a lot of really smart people who say buy right now mainly because everyone else is sooo negative…you know the old contrarian investing way to profiting, which has had success over the years.

No, I’m not gonna play the far too popular macro/market guessing games—I think we go lower, but that’s only because basic technical analysis says so—all I want to do is state the obvious: sometimes absolute negativity is deserved.

For example, God forbid a friggin nuke ever goes off in NYC, it’s fair to assume 100% of the people will say “you know what, we know this area is gonna be radioactive for many centuries, maybe it’s not the best place to open a little shop in SoHo”.

And that’s the question now—has a financial nuke gone off with all our leverage, debt, speculation finally finally finally catching up to us after years of this very bad habit? Or maybe it’s just a blip and once we right ourselves by saving more $, speculating and being in debt less, we’ll be fine and this is the bottom?

I don’t know, all I know is that I don’t like trading when there is possible disaster afoot. GM, GE, BAC, STI—any of these companies with ridiculously tough to value securities that are leveraged more than anyone really understands—can come out at any time with truly disastrous news…and the market will crash….and of course consumers/retail probly to die waaaaaaaaaay more before the pain is over.

And of course we’ve got the people’s representative signing away trillions of taxpayer money and oney that hasn’t been printed yet without even reading the damn bill first!

All leads me to believe disaster is still possible and when I say those words, I’m talking Dow down 10%+ in one day….maybe even 1,000 points just to shake out the last few believers. Ask yourself what are the odds of a big 10% jump higher? Exactly, odds favor downside vs. upside.

Then again, stock market bottoms happen many months before the end of a recession/depression so this may very well be the bottom and all the worrying about some corporate goliath disaster may just be over-protective mom-type worrying.

So, me I don’t know, I put up posts like this to open the possibility that this time is different, that the US won’t rebound anytime soon because business/finance is radioactive. I’m not betting on further market destruction, I stick to betting against individual hype plays like ARNA, much more predictable.