When panic enters the recesses of the consciousness, it's too late for the 'so called' investor. We all have
heard that you buy when blood is in the street. But when Lord Rothschild uttered this axiom, he had advance notice that Wellington
had just defeated Napoleon at the battle of Waterloo. For those of us who don't possess that kind of crystal ball, we must
tread much more carefully. Will the vast majority, buy when they perceive a bottom, or will they be a seller on any tick up?
Most of us have lulled ourselves into thinking that equities are INVESTMENTS! But just what constitutes an investment?
I was a bear on the S & P at 700. My real time screen showed amble evidence that fundamentals didn't warrant
any further rise. My 'Japanese Candlestick' technical indicators clearly pointed to dark shadows on the horizon. But my experience
and fear of being wrong, told me that this game was too risky to sell short. Well how many of you have lost sight of that
prudence, and have fallen in love with your positions? The reality of the psychological damage that has been felt, will not
be averted with the next Greenspan cut in rates. The presence of the 'Day Trader', has waned and odds are, he will not return.
When a gambler losses his wad, he needs to raise another stake before he jumps back in.
At the core of this allusion is the emotion that seduces individuals by the accumulation of increased values,
at the risk of forgetting the basic law of economics.
"There is nothing in economic life so willfully misunderstood as the great speculative episode. When a mood
of excitement pervades a market or surrounds an investment prospect, when there is a claim of unique opportunity based on
special foresight, all sensible people should circle the wagons; it is time for caution." - John Kenneth Galbraith
A valid admonition from one who is hardly the staunchest supporter of Free Enterprise. But the essential lesson
that each of us should accept lies within the nature of the very markets that cause such a wide swing in values, to begin
with. To deny that insiders control the direction of the exchange and the time that a reversal will be set in motion, is to
dispute the very character of financial transactions. Most of you already accept this reality because you place your money
in mutual funds. You believe that YOUR professional is one of those insiders and that he will know when and what to do. Don't
you? So why is it so difficult for you to accept that the real insiders, the true movers, and the most powerful manipulators
CAN and DO create market panics?
For my money, Jessie Livermore was the true genius trader. And even this master of the market ended up broke . . . Those who defeated Jessie are the same
people who placed the Greenspan's to head their own privately owned central bank, The Federal Reserve. And you still want
to contend that you are a judicious long term INVESTOR? Maybe you need to face that we are all pawns in a game that few even
know is being played.
The best part about the stock market these days is not having to worry about capital gains taxes. - Alan Greenspan
SARTRE - March 19, 2001
