Take It Easy — The
Eagles
Every once in a while, I stop to contemplate the unique place blogs have in
our lives. One such reflection is contained in the post Balance from
late last year. I am constantly amazed at the number of people who come to this
blog daily to read the off-the-wall rants and silly observations we make. When
I reflect on this phenomenon more deeply, I see that is exactly why people come
to blogs like this one.
Media outlets are like restaurants, newspapers are akin to the large chains,
and blogs are like the mom-and-pop restaurants of yesteryear. Large chain restaurants
have a consistent and bland menu of food in order not to offend anyone. If you
are looking for unique, tasty foods, you have to seek out the sole proprietor restaurants
where the cook might prepare something bold and special and offend some of the
general public. The sole proprietor does not need to please everyone to stay in
business. If they develop a loyal clientele that appreciates their food
quality, they will find a supportive niche.
Newspapers have become dumbed down to the point of lacking real news or
substantive analysis. Related to this phenomenon is the strict adherence to the
dictums of political correctness. A few feeble protests from some allegedly
aggrieved party are enough to cause newspapers to retract stories and censure
their output. Is it any wonder the truth has become so hard to find? Also,
newspapers are controlled by the dollars of their advertisers. I can tell the
truth about the housing debacle because I do not worry about the local realtors
pulling their ads from the blog. The fear of economic reprisal is another
factor obscuring the truth. People long for the truth. People want to know what
is really going on and why it is happening — even if this truth offends
someone or is not aligned with a powerful group’s economic interests. Blogs
have become popular because they provide this Truth. Blogs provide a unique
perspective unavailable from traditional publishing outlets.
To change the subject a bit, this week saw a large amount of really bad
news. The stock
market sold off hard, oil
is topping $140 a barrel, consumer
sentiment is at its lowest levels since 1980, the
credit markets are in turmoil, new
home sales are at their lowest levels ever, existing
home sales are at very low levels, and 75%
of the country blames Bush for these problems. When all the news is that
bad, the contrarian in me thinks it might be time to short oil and buy US
equities. It is always darkest before the dawn, and right now, it is pretty
dark. The housing market will continue to decline, and the financials and
homebuilding stocks will likely continue to decline as well, but I can’t help
but wonder if the broader market is near a medium-term bottom and the economy
is near the bottom of our unofficial recession. This isn’t investment advice,
just an observation on the historic relationship between sentiment and market
activity. If our economic woes continue, the sentiment might be right; however
at some point, sentiment will reach a bearish peak, and that will be when
everything improves.
