Wednesday, February 9, 2011

From Rosie Today

"One would have thought that such a “what have you done for me lately” mentality would have been extinguished by the two crushing bear market lows of the past decade — 776 on the S&P 500 in 2002 and 666 in March 2009 — but the fact that people’s behaviour has not changed suggests that, sadly enough, we will ultimately have to endure, at some point in the not-too-distant future, another gut-wrenching experience for one only knows that we have actually tested the secular bear market low when the investor psychology has undergone profound change. I would have thought — it was hope in fact — that the return to classic Graham-Dodd investing for the long-term would have made a resurrection coming out of the housing and credit collapse. But when you have the Fed Chairman discuss openly the wonders of seeing the Russell 2000 index surge 30% in the time span of a few months, you know that speculative fervor and the magic of liquidity have come to once again dominate the investment landscape."

4 comments:

getyourselfconnected said...

A few years from now the last two Bernanke speeches will haunt him to the end of time.

CP said...

I think his call about unemployment not getting better will prove to be prescient though.

getyourselfconnected said...

Agree on UE, though he is wrong about most everything else so it will probably be 2% by next October. His talking up the Russel index was especially apalling, to me at least. He was so glad it was up 30%. Why not 300%, would'nt that be better still?

Eric said...

It doesn't take a genius to see that unemployment in the US is now more or less'structural' -- i.e. it is not going to 'get better' -- not significantly, anyway. Not anytime soon, anyway.

The same is pretty much true of deficits.