Friday is a good day. It always comes with a sense of relief, relief that the next two days are days of rest, days lacking the daily grind of the previous five. Yup, TGIF. I get it …
We are almost to the end of this year, which always inspires me look back at what happened in the previous 11 months. Three things immediately popped into my head as I followed my inspiration.
The first is Meredith Whitney reiterating her call of 2010 last summer that the municipal bond market was headed for imminent collapse because so many states in the US could not survive their financial obligations.
- U.S. states are coming close to the end of a three-year trek back to the financial prosperity they enjoyed before the recession, according to a survey released on Friday.
No, the worst thing that happened to municipal bonds was Meredith Whitney, a banking analyst of the first order, acting as if she were a wild-eyed wanderer screaming doom from a hilltop. The muni-bond market did not collapse and for those who disregarded Ms. Whitney’s prediction because they understand oracles of doom are merely guessing at a future, the payoff was rich indeed.
- Not only did the predicted wave of defaults fail to occur, but municipal bonds took off. As of this writing, munis have yielded a 16.6% total return based on their net asset values over the last 12 months.
With the latest pronouncements from the Fed, more doom and gloom has come our way. This time the economic killer is inflation. Does anyone remember the screaming from the hilltops that that QE1, QE2, and QE3 spelled imminent hyperinflation, which would doom the fragile economic recovery? The call then was to buy gold, and so everyone did, driving the price up to absurd levels. Well, as of yesterday …
The Labor Department said on Friday its Consumer Price Index dropped 0.3 percent last month as a sharp decline in gasoline prices offset increases in other areas
As of this morning, in spite of the latest Fed news about continuing its program of buying bonds, gold is still trying to hold above $1700. This then is the second thing I remembered about the past year. – the oracles telling us gold would go to $2,000 for sure, likely get to $3,000, and, for some, $5,000 was their target in 2012. Okee, dokee …
The third thing that struck me was that back in January, the oracles were predicting 2012 would be the year the bumpy housing market would collapse from a wave of foreclosures. Oops …
I’ll have more to look back at it, I am sure, but these things struck me this morning. I write about them because I cannot impress hard enough upon those aspiring to work their money in the market that what you know about the market is what you endeavor to know. If you only listen to the oracles Wall St. and the breathless media trot out, you will miss what is really happening underneath the constant waves of agitation. Underneath the roiling water, a steady current of data and information flows and in that stream is reality, good or bad. It is your job to get beneath the waves and find that stream.
Oh yeh, one more thing I just remembered about 2012 – China’s economy was headed for a bad landing …
China shares outperformed Asian peers after the HSBC flash purchasing managers’ index for December hit a 14-month high of 50.9, the fifth straight monthly gain, showing growth in China’s vast manufacturing sector picked up and underlined a brighter outlook for the economy in coming months.
Happy Friday,
Trade in the day; Invest in your life …
