3/9/11…market share

Yesterday’s Dow rally of  124 points or 1% a day after almost breaking through both 12000 and the 40 day moving average, was on volume of just 1B shares (800 million at 4pm and another 200 million on  the close), lowest since 2/25. This is just one more of those anomolies that punctuate this market…why? The answer has to be technicals as both Nasdaq indices and the S&P 500 had traded BELOW the 40 day the prior session. Also yesterday Transports were the big gainer +2.6%, followed by the Russell 2000 small cap +1.5%, while the two Nasdaq indices and the S&P 500 were up just 0.8%…think about it. The leaders in the Dow surge were IBM, CAT, AXP, MMM, JPM, and BA accounting for 60% of the gain, and the only major loser was MCD, taking off 5 points. In other words: a blue chip rally not tech driven!

…those two words in  a nutshell explain totally why we are in the mess we are in. TB is now half way through All The Devils Are Here, and just as when he is reading a good novel he finds himself waking up in the middle of the night craving more.

It was market share that drove Countrywide, WaMu, Ameriquest, and all the rest of the mortgage companies – including JPMorgan and even Wells Fargo, to make…well…crap loans. It was also market share that drove Wall Street to tell them not to worry about credit just write them and they would sell them to unsuspecting and supposedly sophisticated fools. It was even market share that drove the OTC and OTS to fight laws in multiple states and local jurisdictions that were designed for consumer protection…all under the cover of the anti-regulatory Fed Chairman, Alan Greenspan. Even the Supreme Court ruled in their favor…the consumer…and the economy be damned. This is the world we live in.

It is also market share in a way that has driven the wealthiest people…the luckiest…in this country to value earning a million or so more over the agony being experienced by the vast majority of this country. As Ivan Boesky said, “wealth is just a counter” …a measure of how you stack up against a guy you want to rip the eyeballs out of…it is capitalism at its worst, and if we are not careful it will destroy the dream…if it hasn’t already.

If you are in this business…or if you sincerely care about the future of America, or at least for your own children and grandchildren, you are an utter fool if you don’t read this book. Repeatedly, TB has mocked FOX’s “fair and balanced” motto, it is a self-serving joke of a crew of people who don’t want the truth, they want you to believe what they tell you IS the truth!

That is the beauty of this book…it IS fair and balanced…no theatrics, no personal statements, just facts and those facts will destroy your faith in the two party system…particularly the GOP who has an incredible ability to pass all the blame to the  ‘tax and spend’ Democrats. You will be shocked at the things the GOP has done that caused the mess…from Fannie and Freddie, to destruction of any and all forms of consumer protection. But to TB it is the person who can still label himself a Republican or a Democrat that is the fools fool…both parties are working on the fringes while the vast majority is virtually ignored…that vast majority is what we call “Americans.”

The chapter TB just finished reading begins with Goldman Sachs, and ends with Merrill Lynch (an excerpt from that can be found by googling ‘The Blundering Herd’ in an older issue of Vanity fair. But what that chapter does is prove a point TB has made repeatedly: there would have been no financial crisis of the brokers had not converted to publicly owned companies from partnerships with the partner’s own capital at risk…instead they were able to lever off other people’s money…and dupe them into taking the risk with dubious rewards while they enriched themselves. Nothing tells this better than Goldman Sachs and its utter contempt for its clients…all because as a partnership they could not attain what they wanted most: market share!

TB will end today’s diatribe with a mea culpa on yesterday’s closing rant about a financial sector tax to penalize those making over $200,000 pay a penalty for the luck they had in not only keeping their jobs while every other sector lost theirs (due to their lust for market share and personal gain). He called them “arrogant, selfish asses.” TB stands by that statement but thanks to a comment from a friend in the financial services industry who sends TB a lot of good information and ideas…and was deeply hurt by the association, let it be clear that I am talking about the Steve Schwarzman’s, Lloyd Blankfein, and others who are not only so cheap as to fight against paying taxes they rightfully owe, due to their concern over their personal ‘market share,’  and to those hedge fund operators who convinced the GOP leadership that it was imperative that their incomes that were lodged in their own hedge funds be treated as capital gains and taxed at 15%…when you are taxed on the individual transactions of your mutual funds and can have large gains even when the net asset value is plummeting.

Have a great day…don’t become complacent…and most importantly: read the book!

TB

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2 Comments »

  1. Robin Wilson said

    Will the Saudi’s Day of Rage this Friday have any major effexct on the market? If so why haven’t we seen it only two day before its start? I just rolled my 401k to my IRA and don’t plan any buys until next week. I for one am very concered that if we hear any gunshots during the “rally” it will be blown out of proportion in the press causing a major spike in oil which will scare the market.

    Aloha, Robin

    • traderbill said

      ‘Oil is a primary consideration but not just for the impact on the stock market but the fragile yet improving state of the economy…in all aspects except JOBS!!!
      I think we have much bigger and more immediate concerns than oil.

      We have a president now wanting to be liked so much that his answer to everything is I am considering all my options”???

      I believe a day of reckoning is coming and in less than a year…perhaps considerably less if the GOP continues its slash and burn mentality.

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