Admit it: recent stock market chaos has been scary for everyone but there have been moments of smug, self-satisfied schaedenfreude watching traders struggle with each daily market onslaught. Perhaps your new homepage is Crybaby Traders or Sad Guys on Trading Floors.
This is classic tall poppy syndrome at work. The market has valued highly the most intelligent, hardest-working, most virile among us and enriched them accordingly. Who would begrudge them that?
At the moment the market isn’t right though, so we all need to stay calm, hold our nerves and restore the princes of capitalism to their rightful place. Otherwise we could lose the likes of Hulk Hogan, who according to onmoneymaking.com spends "almost twice his monthly salary of $57,000" and could fall victim to the credit crisis.
As with any decline, there is an up-side and our very own ASXnewbie reports that some big moves have been taking place as bargains start to emerge. These include Deutsche Bank AG taking a chunk of Great Southern Ltd and Tiedemann Global Emerging Markets LP upping its stake in Golden Gate Petroleum Ltd.
Vitaliy Katsenelson at contrarianedge.com is similarly optimistic:
"In today’s market you see some unbelievable opportunities. For the first time, in a long, long time, we can actually put a full portfolio together where we don’t have to compromise on Quality, Valuation or Growth (QVG) […] On the positive side, it is a stock picking heaven for value investors. On the negative side, unless you had cash going into this debacle you have to sell one declined stock to buy another that has declined more."
Right now a lot of mainstream coverage is implying that traders have finished soiling themselves, but now they’re finding hard to get out of bed each day, and can be seen shuffling around the trading-room floors with puffy eyes, swigging cheap bourbon out of hip flasks.
This picture isn’t entirely accurate. Some of the blogs suggest traders are willing to batten down the hatches, and ride along in the hope that things have bottomed out. Solitary Trader (who’s moniker is "Beating the Market one Powerful Stock at a Time" was cautiously optimistic with Wall St rallying at the end of the week:
"Today’s action was positive. No doubt about it…and it was a confirmation of the rally attempt. But how many stocks are anywhere near a proper buy point? How many are posting solid earnings? Perhaps this is a new bull…perhaps it is a one-to-two-month trading opportunity…we’ll see."
As always, we’ll just have to watch the market and let it guide us.
Wall St Warrior is one hoping the market bottoms out, although he’s hedging his bets (and retirement) on a "double bottom":
"I am cautiously optimistic on the double bottom scenario. As noted in my previous post, I put some retirement money to work this afternoon and I’m holding overnight, which I haven’t done in a long time."
Governments around the world are agreeing that intervention on a global scale is necessary to control the crisis.
The Japanese are famous for paying stupid prices for various American assets (Pebble Beach, Rockefeller Center, etc.) in the 1980s, but the current financial panic presents a golden opportunity for the Chinese to deploy their hundreds of billions of paper dollars by snapping up any prime Alaskan assets at fire sale prices.
While the US and Europe have been busy attempting to correct markets, Maoxian.com believes that China will have to step up to the plate, and could even be persuaded to inject money into the US economy (in the form of purchasing Alaska). Of course, America bought Alaska from Emporer Alexander II for $7,200,000 (1.9 cents an acre) in 1867.
"Alternatively, they could buy up all the land in the American midwest, but relocating the people now living there (unless they would like to stay and take up some state-run jobs) may be more problematic than shipping out the 600,000 residents of Alaska."
Financial analyst Michael Covel was outraged to hear a Russian analyst say that, while Russian financial structures had led to the disaster of the early 1990s, the current problem was American.
Covel responded:
"Nice try. The current global meltdown is a result of first greed then fear. Those emotions don’t care about nationalities or borders. So if you, or if anyone, regardless of country, don’t like your portfolio’s direction…look in the mirror."
Of course, as far as we know, only one country’s banks were greedy enough to love sub-prime lending, and only one country really had the power to demand better regulation of the credit derivatives market. And didn’t.
But enough of such sour grapes. The real story on the trader blogs this week is how so many are heroically learning to live with a few million dollars less in the portfolio.
And amongst these touchingly human stories is this portrait of an ex-Lehman Brothers trader adjusting to life after the markets. You can’t help but admire the fortitude, resilience and optimism of the brave men steering our economy through these troubled waters.
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