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— Ernest Becker
THE FEAR of the Lord is the beginning of wisdom.
— Proverbs 1:7
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New Year, Conservative Opinion
A: By buying certain stocks, in this case a basket of stocks---the ETF called the SPY, the basket comprising the S&P 500--- the Fed can drive up the stock market, or keep it from falling, at least temporarily and keep public optimism from plummeting again.
You see, both the Obama administration and the Federal Reserve know how bad things really are and how much worse it could get. They are buying some time right now by trying to keep the markets afloat. Today, Wednesday, markets couldn't wait any longer to start dropping. No one knows whether the Fed will artifically and secretly try to buy more of the SPY Thursday or the next day or two to prevent a continued fall, but it's certainly a possibility.
Q: Is it legal for the Feds to be buying stocks, or ETFs, like this and how are they doing it?
A: It is legal for the Fed to buy certain things, especially the SPY. But it's not generally known by the public. What's even more interesting is that there's a secret trading room filled with dozens of Bloomberg monitors and traders in the bowels of the Fed headquarters that track each and every market on a minute-to-minute basis.
Many traders believe that Federal Reserve has been buying the SPY over the past week or two through anonymous electronic orders placed through a trader at Goldman Sachs. I have been asked not to publish his name. But again many traders sense this.
Q: Okay now anyone who has had the fortitude to read this knows the Federal Reserve may be gaming the system to keep the stock market from going back down. So what? What does this mean to the average investor? Is this good or bad news in the smart money's opinioin?
A: The most important thing the small investor (who usually is in the market by going long) can do right now is put tight sell stops on their long (stock) positions and revise and tighten those stops upward if the market goes up, as it may temporarily. That way, they can capture whatever gains they may have before the market falls again.
Conversely, by putting stops on now, as in TODAY, it will prevent an investor from unlimited losses on the downside. The days of buying, holding and hoping are forever over in this day of electronic trading and the current volatile/hostile investing environment we're in. Anyone who takes the buy and hope approach would be considered very foolish indeed.
These are not times for the hopeful or the faint-hearted---either for stocks or bonds (which I'll get to in another post).
At the least, putting sell stops, tight downside stops on the stocks you haven't yet sold is like buckling your seat belt in case you get into an accident. Only the foolish don't buckle their seat belts in this day and age on the fast highway of finance and investing.
Q: Are markets going up or down now that the Federal Reserve may be gaming the system?
A. Can't say yet and if you have your seat belt fastened it doesn't matter. But it's for sure that while the Feds are a good-sized player, it/they can only control or prop up the enormous stock markets for the short-term. Nature will take its course. So taking profits or small losses now or putting tight stops on stocks are in order. That way you prepare for the worst and then, and only then and in that order, you can hope for the best.
Q: Anything else you want to convey?
A: Actually yes there is. I want to write a little about what's happening to the U.S. bond market and what the effects of falling bond prices and sky-rocketing yields will have on us all, and especially mortgage rates. Do you know why and how they're connected? Why we should be concerned? Why the Federal Reserve, Treasury and the Obama administration is concerned? So I'll finish in another post soon and then give it a rest.
Q: You're certainly a glutton for punishment.
A: Yes, I suppose I am. But if another hurricane or at least a financial tropical storm is coming wouldn't you rather be as prepared and knowledgeable as possible? I know I would.
RELATED - Do you know how this is all related? Let's connect more of the dots soon.
RELATED - IBD on America's Hidden Trillion Dollar Tax on Her Taxpayers and Citizens: Increased Government Regulation.
FAILURE, THE ULTIMATE TEACHER AND REGULATOR (BUT DON'T TELL THE LIBERALS WHO WANT TO REGULATE FAILURE AND LEARNING THE HARD WAY OUT OF EXISTENCE)
John Tamny writes at Forbes today on the folly of government regulators fixing the derivatives markets. If you want to better understand what's coming, then read this and all John's pieces on the economy:
It's folly to assume that over-degreed regulators with little to no market experience could somehow understand "exotic" derivatives--as financial journalists have dubbed them--well enough to save experienced investors from themselves. Regulators are rarely equal in knowledge to those they want to regulate.
More broadly, it has to be remembered that laws have already been put in place to insure greater oversight of public companies and their underlying assets. Sarbanes-Oxley was passed in 2002, and it imposed incredibly stringent rules on all public firms with regard to balance-sheet transparency.
The costs of compliance were enormous, but despite the figurative "root canals" that all public firms have been forced to suffer, regulators were still caught unaware when the economy turned in the wrong direction last year.
What this tells us is that contrary to their protests, regulators are always fighting the last war--and not very effectively. If they could somehow peek Cassandra-like into the future their work might prove useful, but once again, were they in possession of these kinds of remarkable skills, they would be making obscene amounts of money in the private sector......
Simplified, failure is the ultimate teacher, and the ultimate regulator as a result. So if eradication of market crises is the goal, our federal minders can and should only do one thing: let failures be.
CHAPTER 1: WOMAN AND ALTERNATOR
I should be a professional trucker the way I drive hither, thither and yon and, Neo, your post yesterday--Women, the car breakdown and the cell phone---reminded me of one of many wild stories from my driving resume of years gone by….it was long before cell phones and a while after I had a husband to call and beg to come rescue me. It was a new day of learning how to stand on my own two feet for me, and, I'd best get on with the lessons and learn to like 'em, or be forever miserable.
Anyway, thanks for jogging my memory, Neo. Fun to remember and seems like only yesterday when this whole thing unfolded.... Before I tell my story, let me say I think every woman needs to have her car serviced regularly whatever its age, whatever her age. My car guys are an integral part of my life as they keep my car in tip-top shape. With their fine maintenance, I've driven cars across the country with 230,000 miles on them. I also think a woman needs to have AAA Plus , a great emergency road service, though there are limits to what and where it functions best. Today's cell phones certainly help with having at least the illusion of help everywhere, all the time, though it certainly doesn't always work out that way.
Meanwhile, a while back, before cell phones, I was driving cross country around December 27 (the time of the shortest days of the year) from Nashville to meet friends in Colorado for a New Year's vacation of skiing.
As I drove from Missouri into the heartland of Kansas, I noticed my alternator light come on and the power starting to slowly fade. Somehow I got to a exit in the late afternoon and managed to find an old repair shop that had a new/used alternator which they installed in about four hours. As night fell, I was back on my way onto I-70. I drove for several more hours trying to make up for some of the time I'd lost but finally was so sleepy I stopped at a little motel to spend the night. I set my clock for 4 am at when I got up to make up the rest of the lost time and started to drive in the pitch black dark.
It was now snowing outside, the wind blowing fiercely and the temperature had dropped to -10.
Great driving weather, I thought as I gave thanks that I had gotten a new alternator installed the day before when the sun had been shining.
As I drove along for about thirty minutes in western Kansas in the dark, I looked down and noticed the alternator light had come on again. Then I saw all the gauges beginning to drop. Clearly I was losing power and on the high plains in a snow storm with almost no exits was not the best place.
Surely this couldn't be happening again. It had been fixed the day before and I had been assured by the auto mechanics it was safe to continue my drive to Denver.
But the falling gauges weren't lying. The electrical systems was slowing going down again.
I began to pray out loud as I considered my diminishing options. The next exit was miles away. I saw a rest stop sign up ahead. But I decided not to stop for fear of getting stalled there. Instead I decided to try to make it to exit miles away.
I drove by the rest stop, past the entrance ramp and continued on the Interstate…….I had to move on, I told myself, as long as I could. This was before cell phones and I was alone.
Then as I drove past the rest stop in the snow and wind, out of the corner of my eye…something caught my attention. As I drove on suddenly it hit me…..and I screeched on my brakes.
I saw something amazing in the rest stop.
My prayers had been answered, only not in the way I expected. I slammed on my brakes, pulled over, breathed a sigh of relief…..then backed up in the Interstate margin to the entrance of the rest stop. I drove in and surveyed my salvation as the last little bit of energy drained out of my drying car……
Now, I ask you, do you know what I spied from the corner of my eye that saved me that day in desolation of western Kansas in a snowstorm in sub-freezing weather and a snow storm?
Read on, dear reader, and see.
*************
CHAPTER 2: ANSWERED PRAYER
After passing the rest stop and catching a glimpse of a miracle out of the corner of my eye, I hit my brakes in the darkest hour before dawn on I-70 that late bitter cold December morning, backed up, then drove into the rest stop in the wind and freezing snow.
What I had seen from the corner of my eye and now loomed dead ahead of me was nothing short of amazing. It was certainly the unexpected answer to my prayers. But I was running out of time. Could I utilize the help that waited in front of me I so desperately needed before my car lost all power again?
All I could do was go for it.....a girl has to learn to ask boldly for what she needs. It was time for action:
I pushed my automatic shift into park, jumped out of my barely idling car and ran around in front of it. Then I started screaming at the top of my lungs over the blizzard and wind. I stood on my tip toes and reached up to pound the bottom of a door attached to large tractor trailer cab, screaming as loud as I could, “Hello! I need help! Anybody up there?…Hello! Help!”
It seemed like forever I kept yelling and pounding the bottom of that cab door. Then suddenly a man’s head popped up in the drivers window and looked down at me. He had been dead asleep.
“I need help. Could you please help me? I’m going to Denver and it’s my alternator…it’s almost gone and I have no power….it may already be too late, but I know you could help me if you would….I hope it’s not to late….”
No further explanation was necessary. He instantly comprehended the situation, what I was talking about and what needed to be done—fast.
Without batting an eye the man yelled back to me “Go into the ladies room and wait, I’m going to get you to Denver. Hurry and get out of the cold. Don't forget to get your pocketbook out of your car.....I’ll come and get you when I'm ready for you to come back.”
I did exactly as I was told and took shelter in the ladies room of that desolate rest stop on I-70.
Ten minutes later this big trucker man pounded on the ladies room door and yelled for me to come out. He told me everything was okay and it was time for us to head to Denver.
So I came out and ran to his big truck. He opened the passenger door of his cab, got the ladder down and helped hoist me up into the front seat. It was warm inside there and I had never sat so high off the ground above the highway, except in an airplane.
As he climbed into the drivers seat, he introduced himself. And then he revved up his big truck engine. Not only did he get me to Denver four hours later. He radioed ahead and found the best Volvo dealer to deliver me to. He radioed for someone to call my friends so they could meet me while my car was being repaired. He was truly a Godsend. And a very nice and honorable man to boot.
By now I’m sure you must know what caught my eye from the Interstate that morning, but just in case you haven’t figured it out:
It was a huge tractor trailer car carrier— fully loaded with brand spanking new cars….er, except for one little empty space on the lower back of his behemoth truck....one empty space on the back.....
As it turned out Divine Providence, had been saving that space, that bitter cold, dark and snowy December morning in western Kansas for my little Volvo...... And now you know the rest of the story.
UPDATE: Neo ups the ante.
IN MY BOOK there are few things as attractive in a woman or a man, especially a man since I'm a woman, than an ability to say what Andrew Breitbart said today in the Washington Times:
I JERK!
I always knew I liked Breitbart, but now I like him more. Unlike one of the great false liberal/romantic myths of the 60s----being a grown-up does indeed mean saying we're sorry when it's called for (and it's called for more often than we realize).
Sure people with power, clout and money don't have to say they're sorry, or I Jerk! when they/we should. And most don't. But doing so keeps us humble with our feet firmly on the ground, so there's less distance to fall. It also keeps our egos off steroids, eyes clear and sense of humor and the ability to laugh at ourselves sharp.
In other words (except in very, very rare cases), they want their cake and eat it too. They, like Nancy Pelosi want to be enabled to say, They lied to me....oh boo hoo, I didn't know having sex would cause me to get this pregnant! They lied to me! I demand to take it all back!
But this new way, all that happens is a citation arrives weeks or months later with a huge bill and return envelop. There is a procedure for contesting it, but it's very hard to make your case when you can't remember when or where it happened. In all fairness, I did contest somehow, maybe by phone, and got the penalty knocked down a few notches. But it still wasn't cheap. There
These cameras are only going to increase for these big cities looking for love and revenues in all the wrong places, so we'd best get used to it, lock up our wallets and drive the friendly way and avoid this first travesty.
The second drawback to DC driving is something we have Lady Bird Johnson to thank---the granite curb now installed all over the District.
IN WHAT CAN BEST BE described as a major tempst in a teapot, Carrie Prejean is now said to be able to keep her crown and title as the Miss California within the Miss USA/Universe franchises, owned and operated by Donald Trump. I frankly never understood how and why her title was up for grabs in the first place. Yes, she was photographed scantily clad several times several years ago and I certainly don't think that would be appropriate now, nor does she, but it seems a bit of a stretch to have taken her recent win away because of that.
Yet, we all know the real reason the pot was stirred and the liberals and feminists have suddenly become such prudes---why she almost lost her title, don't we? It's really all about gay/same sex marriage and gay rights nazis demonizing, shaming and attempting to ostracize anyone---everyone---who would dare be in favor of defining marriage as strictly between a man and a woman no matter how respectful they are in stating it. (Let's remember too that Miss Rhode Island posed similarly with not one ill effect or threat to her title.)
When it comes to the demands of gay nazis, free speech, free thought be damned! It's all about them, their needs, their demands all the time and the Constitution and our laws had better bend and change around them...or else!
I love Donald's statement today saying this firestrom proves these contests have become monsters. Indeed they have. And I think Trump needs to put one of his next apprentices on the case of keeping them open and honest and politically and culturally bipartisan.
I love CNN's typical rewrite of the story written by Alan Duke who said:
The decision, announced at Trump's New York headquarters Tuesday, follows several weeks of controversy ignited when Prejean, 21, declared her opposition to same-sex marriage in response to a question during the national pageant. She finished as runner-up to Miss USA.
Now let's be clear: the only firestorm, the only opposition, came from same-sex marriage protesters having a tantrum. Most of the rest of us were absolutely fine with her non-controversial answer. And one other thing: I never heard her say she was opposed to anything, so much as she was for marriage being defined between one man and one woman.
And she said it as respectfully as any lady could. I never heard anything about her abandoning her duties as Miss California to take on gay marriage. How absurd. And the press gets by with this day in and day out.
I've said this here many times before: when I was a newspaper reporter years ago, I was often ordered to stir up a controversy where none existed. I would be ordered to make a few phone calls and get people to innocently say something that just happened to conflict with what someone else said on the phone in a casual conversation. Then we'd put it on page 1. It was ludicrous, dishonest and one of the reasons I ultimately left.
Here's a perfect example of brewing up a pot of nothing and attempting to make something awful and huge out of a normal, everyday, humdrum, routine response of a typical young woman in America today. I don't even consider her response courageous. It was what it was---her honest opinion.
And without a doubt, I thought Donald Trump did the right thing. But I don't think he was particularly courageous either. It would have been a travesty to have fired this beautiful young woman for exercising her freedom of thought and speech in order to coddle the gay rights wailers. More on The Donald's response below. I like it: