Monday, July 30, 2007

The Sting

I caught an interview via the radio with a 'middle America' broker and after the standard "we're in for the long haul, this is how markets work, yada, yada, yada. The next question posed to him was something I didn't expect from mainstream media considering it had substance was, "is there a point, ie falling markets, where you might re-reconsider that stance ?" His response was basically there is no level at which they would sell because markets always go up. Boy o' boy does that sounds like so many of my former colleagues. Now my question would be directed to this ad visor's (and thousands of others like him) customers. If there is no point at which you would sell, why are paying this guy (a flat fee of say 1-2% of assets is commonplace) to orchestrate something a seeing eye dog could do ?

Asking this biased advisor if its time to buy is just as ridiculous as asking a realtor, whose existence is commission dependent(hence biased), whether it is a good time to buy. We are watching how the housing market is turning out and given my favourite chart, remember 'chart to burn into your memory'. Don't fall victim to this biased hype.

This weekends worth of trotting out of 'experts' on television to tout this market as 'a buying opportunity' and 'a normal pullback' was nauseating. Not in and of the fact that each prior dip has been just that but that it is being done in the face of deteriorating economics whether it be housing, jobs, credit, the dollar, you name it. This whole thing reminds me of The Sting. You remember that movie set in the 1930's with Robert Redford and Paul Newman, boy did they suck in that gangster Lonnegan. It might be a good time to watch it again as this is exactly what is going on right now, one big elaborate sting ! No conspiracy either as it is being done to investors with their eyes wide open. Fascinating to the point of being worth in depth PhD study in the corridors of psychology and sociology.

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