Finally, 2009 is closing its chipped and shabby doors. It has come to the end with “less bad” as the mantra of those bulls who believe in the future, which makes sense as the bulls struggled mightily to beat the bears in a race with long odds. Well, the bulls did beat the odds (and the bears) handily. The bulls crossed the finish line with a limp, but no matter, as the race is over and there is time now to heal and get strong again.
What is to come in 2010 is anyone’s guess, so let’s leave that to the guessers, the same folks who told us early on in 2009 the DIJA would drop to 1000 by March, the financial markets would implode, no matter how much money the government gave the banks, and GM would never make it out of bankruptcy. These voices of doom shouted to the rooftops that the March rally had no legs, that the bears were firmly in control, and shorting the markets was the only way to make money. These same voices warned us that the summer rally was doomed, massive government spending would be catastrophic, and shorting the markets was the only way to make money. The dark voices told us that traditionally bad months of September and October would bring the “bear rally” to an end, even though the summer squeezing had brought many bears to their knees. And here we are, thank you very much. I hope these voices continue singing their tune in 2010 because they put me in a more than few highly successful trades betting against them. I love the short squeeze, and if I had to name 2009, I would call it The Year of the Short Squeeze.
A year can be a long time, and I think 2010 will be a long year. Dark clouds still hang over the markets, but at least for now, some sun is peeking through and the bitter cold of pessimism has turned to a mildly warm optimism. Make no mistake though, many questions are out there, and their answers will determine our economic future.
Will unemployment begin to tick lower? Will the foreclosure rate abate? Will the Fed hold rates down through June? Can the Fed engineer a smooth exist from quantitative easing and the injection of massive liquidity into the markets? Will the tight restrictions on commercial lending, small business lending, and consumer lending ease? Will the U.S. Treasury slow spending, implement a plan to reduce the deficit, and demonstrate to our creditors that we can get our fiscal house in order? We will find out …
In any case, I am a believer, especially after what we all witnessed in 2009. The rise from oblivion to a flat market up on average some 40-60% depending on the index, tells a story of resilience, strength, and determination to beat the odds. Think about it. We came to the edge of the abyss, looked long and hard into it, and then decided, no thanks. We fought our way back, with the help of government dollars, and here we are, alive and doing well. So, my advice to you is think long and hard about the “predictors,” those who speak in a voice filled with conviction, a voice that says, “I know what I am talking about. Listen to me.” In my experience, the louder and stronger the voice, the greater the personal agenda. Be careful.
To all, may 2010 be the year you make it all come together.
Trade in the day; invest in your life …
