Of Markets and Men

By R.L. Avery

This column explores the irrationality of the Stock Markets, the men that make and work in them with a literary leaning. R.L. is a reformed yacht racer, avid reader, raconteur and trader in the markets. He is in no way certified to offer investing advice but will attempt to shed light on how to live and breath with Mr. Market.
The title of this column suggests a certain amount of male chauvinism and is an allusion to author John Steinbeck’s novel Of Mice and Men. I hope the reader will take that with a grain of salt although I will try occasionally to speculate on “How it’s going to be Lenny?” We live in a world that has been shaped in large part by the men that precede us.
That being said, we have a woman that jumped out of a cake two weeks ago and announced that she would be “accommodative.”
That woman is Janet Yellen (the head of the Federal Reserve Bank) and as far as I can tell she is little different than her male predecessors. She single handedly sent the American Stock Markets to new highs, yet again.
Other Stock Markets around the world responded in kind although are far from making new highs. The party was the latest Fed announcement and the word “accommodative” refers to the Feds attitude toward interest rate policy and continuing to spike the proverbial punchbowl.
There was an awful lot of speculating as to whether or not that one word would be included in the announcement.
The thinking is that “accommodative” in Fed speak means the Fed will remain “dovish” and should there be any bumps in this economic recovery, they will do whatever it takes to smooth the road, so to speak.
Another woman that hit the news that same week is Christine LeGaurd, the much touted head of the I.M.F. She is being investigated for improprieties in her dealings prior to accepting the gauntlet at the head of another central bank.
There are many more woman heading fortune 500 companies today, than just a few short years ago but I’m afraid if anyone was hoping a female perspective might have an impact on the corporate agenda I think they will be sorely disappointed.
The corporate agenda, as I understand it, is simply to increase profits for shareholders, period.
So with the increasing financialization of the world we live, I suggest we can expect little change regardless of which gender is leading the charge in financial markets.
The party did not last very long. In fact the market rallied for two more days and has been in decline since.
Last week saw a very exciting ride down (3.5%) at one point and a very nice bounce into the close Friday. Could this be the beginning of something bigger? A bear market perhaps?
It has been a very strong bull market from the bottom (spring of 2009) to this point.
My uncle who is a buy and hold kind of guy says he is “almost even.” If the market transfers wealth I think this may be a signal of sorts. I believe it was J.P. Morgan who whilst having his shoes shinned received a stock tip from the man. He promptly went back to his office and sold everything. The year, 1929.
I will leave you with this quote from a favorite author, F. Scott Fitzgerald.
“The test of a first rate intelligence is the ability to hold two opposing ideas in the mind and still retain the ability to function.”
I suggest that is why good traders, not withstanding hedge funds, embrace the sell as well as the buy side. Good night, and good luck.

One comment

  1. Holding two thoughts in mind at the same time , or multitasking, has been shown to reduce your mental IQ during these operations. This may be the reason for an IQ decline among people in the world today. Single mindedness of old … had people doing things that cannot be done today. Check the quality of modern items that were also made centuries ago. The older they are, the better they have been made.
    Regarding the stock market, only the balanced funds that purchase stocks across the Dow Jones industrial stocks are safe for most investors. The Big money stock purchasers have developed high speed internet connections where when they see your purchase order, they can buy and sell it to you at a higher price.
    Real estate has made more millionaires than most any other investment. My grandparents lost most of their money made from silver mining , in a stock market crash. However a custom made house in San Francisco built in 1924 for $14,000 , at the high of the housing market in 2008 was worth some $2.5 million, and today in 2014 some $2.0 million, and is rising in double digits today.

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