False Sense of Security

I like to trade stocks – no, scratch that, I LOVE to trade stocks. I love to learn about and follow interesting and innovative businesses and I love to make money. Sometimes though, I have to wonder if I am not more than a little bit crazy for it.

I look around me, or worse yet, I watch the news and I have to shake my head and wonder about the average American. The average American knows more about the back story of their favorite sitcom than they do about the company they work for.

They can tell you, in great detail about the happenings on the “Real Housewives” but they can’t tell you something as simple as if the company they work for is even profitable. They can break down exactly who got the rose on “The Bachelor” but don’t have the faintest idea of how damaging compound interest is if they carry debt on a high APR credit card.

Spend, spend, spend. No problem. We will pay for it later.

It’s no surprise then that many average Americans go over the falls and crash with every down cycle. They have no savings, live paycheck to paycheck and can’t see when their industry is clearly going into a downturn. Are they lying to themselves? Maybe. Are they paying attention? Again, maybe. Are they willing to go through some short term pain (i.e. saving rather than spending) to be prepared for a rainy day? Absolutely not.

This has bothered me for years and still does. The only problem is that bothersome feeling now makes sense. It’s not just that people don’t care, they have been basically trained to believe it’s not important. We are in America – it will ALWAYS work out. It will ALWAYS be easy. There is a certain amount of detachment here that is shocking.

We have been at war since late 2001 and outside of those directly affected (Military Personnel and their families) most people don’t even realize it. With the exception of longer lines at the airport or rising gas prices, it simply doesn’t matter to them.

I was thinking about this quite a bit and wondering if there is a solution. It’s strikingly similar to Rome and the Romans. They were partying while their world was literally falling to pieces. They had it easy. Hell, they were the ROMANS. It will ALWAYS work out. Unfortunately for them, it didn’t end so well.

So anyhow. I look at today’s American society and I see that our disregard or detachment is systemic. Politicians don’t want ANY discomfort on their watch, and they surely don’t want to give any negative campaign fodder to their opponents. So in government they do what the individuals now do. They spend. They borrow and they leverage until they can’t leverage anymore so we can all party on until that bright and shiny new SUV gets towed away with their gym back still in the back.

What’s my point?

My point is that basically every time we have hit a legitimate decline the Fed has injected Billions (and Trillions) of Dollars into the market to prop it up. The DotCom bust. Remember that when ridiculously bad companies were given billions to burn and burn they did. Recall that? I do. How did we fix it? We dropped rates. Remember 9/11? Again, we dumped tons of cheap cash into the market with amazingly low rates. How about the mortgage mess it spawned? We gave jumbo loans to people with no credit history, low paying jobs and non-existent underwriting. What happened? The person making $20K per year with a $500K house started using the home like an ATM machine loading up on RV’s, vacations and the best of everything. I used to blame them, but not anymore. It’s what our government is doing. The rates “ticked up” and the whole thing collapsed and pushed all of those first time home buyers back into the rental pool.

How did we fix it? Again, we dropped rates until they could not go any lower. We have continued to pump Trillions of Dollars of liquidity into the markets and we wonder why the Dow hovers around 17K? It’s no wonder. There is nowhere else for that money to go.

I used to be accused of being a perma-bull. I am a very optimistic and fun loving person. However, now I view being bullish in today’s markets as damned near suicidal.

Only problem is – I see the number of Bears finally capitulating as the market continues to go higher and as the financial puppets of CNBC try to justify it that it is “different this time”  and when the market gets so brutally lopsided to the Bull side, the correction is definitely coming.

I am scared to think of what this correction, crash, meltdown will look like since we have been artificially propping up the market for 15 years now. I just want to find a safe haven and hunker down, because once it happens there should be some really great bargains on publicly traded companies.

I am still very bullish on the American spirit and American businesses but am worries what politics and politicians have done to balance us so deftly on the edge.

I feel like I am the only Bear who sees it… that’s why I say I am lonely.