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Out of the market

September 19, 2013 - Harry Eagar
Although I was a business reporter for most of my 45 years in newspapers, I was not much concerned with big issues; I covered local doings. When people asked, as they often did, for my thoughts on markets, I would usually say, "I'm 6,000 miles from Wall Street. You should read Barron's."

That was not particularly an endorsement of Barron's, just a way of saying I wasn't keeping up with day-to-day market gossip. That also did not mean that I didn't think I understood markets. I think I do.

When RtO started early in 2008, its constant theme was that the "rescue" of Bear Strearns was really a suspension and market failure, papered over in the interests of Wall Street, not of ordinary investors. I dated the market failure to August 2007, which I believe is pretty generally agreed by historians now, though I do not recall many other people saying so at the time. (The concept of a concealed market collapse is, I think, novel; it is an outcome of effective central banking, which can keep paper levitated for a surprisingly long time, but not forever.)

Anyhow, all through the summer of 2008 I broke my habit of not giving market advice to the extent of repeatedly advising followers of RtO to conserve cash, which meant cashing in securities -- funny word, that, in the context.

I didn't cash my own securities because I didn't have any and as far as I know, nobody else did on my suggestion either.

It wasn't the first time during my reporting life that I foresaw a capitalist coup but missed getting rich because I didn't have any capital. My heart is with the working man.

Now I do, and I've been waiting for a chance to sell short. This morning I dumped almost all my equities.

One of the brokerages I use published a roundup of expert opinion that the federal fiscal crisis should not unduly disturb markets. I think otherwise. I anticipate a correction -- marvelous Freudian word! -- by the end of October, after which I will repurchase most of the securities I held until yesterday.

Just more of them.

That's the plan anyway.

There seems to be a disconnect between newspapermen and financial men. For example, this morning Greg Sargent had this to say in the Washington Post:

'* YEP: WE’RE HEADED FOR CHAOS THIS FALL: Norman Ornstein lays out the reasons he thinks a government shutdown and/or debt ceiling default are genuinely possible this time around. If anything, John Boehner is exerting even less control over the Tea Party wing than in 2011, while Mitch McConnell — facing a challenge from the right — has less of an incentive to step in and fill the vacuum. Meanwhile, the hope that a few GOP Senators splitting with party leaders and dragging their party towards sanity has waned. Utter chaos."

I can't lose. Should sanity break out and I lose money (more precisely, fail to gain), my country would gain.

I'm still rankled that I couldn't buy Chesapeake Bay Bridge-Tunnel C bonds at 190 in 1970, though. They paid off at par.

 
 

Article Comments

(4)

OneAikea

Sep-22-13 5:56 PM

I have some stocks with HECO. Not much, and dividends show not enough to be taxed. I need a million shares to live on dividends but even that depends on the wind.

OneAikea

Sep-20-13 5:56 PM

So true. Called donation or contribution to a candidate. Don't get caught with magnets at Vegas.

I was taught, to make money one has to spend money. To spend money one has to have money.

HarryEagar

Sep-19-13 9:32 PM

It's gambling for the ordinary investor. The deal is rigged for the rich.

It is possible for a small investor, like me, to make money, by understanding the psychology of the market and by looking for repeats of historical events.

I do pretty well. I should have said in the original comment, although I think this is a good time to cash out, watch out for your tax consequences.

My portfolio is such that I won't take much of a hit there, and besides I've been needing an opportunity to back out of preferred shares, which are going down in the medium turn, almost surely.

OneAikea

Sep-19-13 9:10 PM

There seems to be no difference in gambling or playing the stock market. You got bookies and you got brokers. Thought gambling was illegal in some states. In those state punish the one's who hold stocks.

Put a hundred dollars on Matson. It goes up I win. Molasses is going up in price. Once the price of it goes up, stocks go up. It is said to be a cure for Cancer and can be used to decontiminate nulcear waste water. Give me some sugar. Give me my earnings.

 
 

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