Sometimes it is worth looking back if you want to see where you are now. I did that yesterday when a reader wrote in and brought my attention to a column I wrote last July 8th. As I read it, I thought the market, the US economy, and the world have changed quite a bit in just over 6 months. Here is the important excerpt from that column.

Okay, I feel like I want to give up. The weight of the news is almost too much. This, coupled with a lack of sleep (had dinner guests and we stayed up late), makes me want to say to the market, “Fine. Be that way. Nobody cares if you go up or down anyway.” I know, I know, be careful of what you say, as once you say it, it can never be taken back …

So, let’s get the really bad news out of the way first. It won’t make me feel better, but it will make room in my head for other market news that is not so bad.

  • Spain’s 10-year yield climbed as much as 26 basis points to 7.04 percent

See what I mean. Although Spain is still receiving strong demand from investors, which is good, it, nevertheless, can’t catch a break on the bid. If this keeps up, Spain, Europe, the US, and the global economy will, by extension, have some really bad hair days in the future. Want more?

  • Japan’s government could run out of money by the end of October, halting all state spending including salaries, pensions, and unemployment benefits, because of a standoff in parliament that has blocked a bill to finance the deficit.
  • The U.S. economy is facing $4 trillion worth of expiring tax cuts and automatic government spending reductions at the end of the year, and a standoff in Congress makes the chance of a compromise over the so-called “fiscal cliff” look dim.

This goes to show nothing changes as much as it remains the same. Politics are politics no matter on which side of the Pacific one resides, and those dang politics will spook the market more than it is now with another weak jobs report. Really? Only 80,000 jobs? Let’s all scream together. R U ready?

Okay, so Japan did not run out of money, the US so far has muddled through its fiscal crisis, and Spain’s 10-year bond yield is safely in the 5.4% zone. The market? The DIJA is up some 1200 points and the S&P 500 is up some 150 points. Given the state of the breathless media back then, and given all the other places of fear the media has taken us the last few years, how is it that the market is higher now and is still climbing higher?

My statement that nothing changes as much as it remains the same seems true, even if the market has risen steadily since July. Nothing really has changed in the general scheme of things. The breathless media still has plenty of doom to throw around and the market is blowing it off, just as it did coming out of the summer heading into the fall and stepping into winter. The larger fact is that aside from a few small blips and a couple of larger blips, the market has steadily risen since the lows of 2009, and it has done this despite a horrendous spate of bad news and fear.

So, I look at the market today and I watch it undulate lightly as it tries to figure out what the mixed earnings mean and whether it wants to go for its all-time highs. I watch it and I remember where the world was in 2008, 2009, 2010, 2011, and 2012. I watch it today and I wonder how it defied all that bad stuff and how it still wants to go up. I guess it just does, want to go up that is. Yes, the market, the US economy, and the world have changed, but is anything really different?

Trade in the day; Invest in your life …

Trader Ed