Wednesday, February 18, 2009

Total Stock Market Surrender

In the investing biz it's called 'capitulation,' when people simply give up. Investors throw up their hands, sell what they've got, and put their cash under a mattress. We may be at that point now.

The crisis of confidence wracking global financial markets has become so deep and profound, that some observers are questioning the long-term viability of pure capitalism. Even pro-market forces like French President Nicolas Sarkozy have mused that laissez-faire capitalism, as a concept, is essentially dead.

What a shift from recent times, even just last year. The author Nassim Taleb (The Black Swan) has opined that the stock market itself is a kind of mild Ponzi scheme, in that if people lose faith and start pulling their money out, it all falls apart like a house of cards. That's the historical moment we're in, when the Jakarta Index, the Dow Jones Industrial Average, and every other benchmark out there is being beseiged by an utter lack of confidence.

For good reason, since many American banks are now effectively insolvent, owing more than they're worth. But given that equities are priced for Armageddon, for those with a cash pile and a long time horizon, it could be a time when fortunes are made.


Today's Top Stories

Anyone got some Liquid Paper?

Sec. of State wooing Muslim nations

Government opening up more land for plantations

Strategic partnership coming together

7 comments:

Brett said...

I have read the same stuff with mild amusement. Basically, your average investor is pretty dumb and has a really REALLY short memory. Stocks climb and fall. That's the nature of the business. It's being doing this for a century. Sarkozy's comments about laissez faire capitalism are more interesting. I think he's right, but for different reasons. Capitalism is f-cked up. We need less consummerism, less greed and more socialism in society.

Christopher Taylor said...

Something about this time around seems a little more apocalyptic. When Ayn Raynd disciple Alan Greenspan is talking about nationalizing the banks, you know something has gone horribly awry ...

Brett said...

Maybe this is a scarier concept in the US than outside. In Australia and NZ, many banks started off as state-owned. I honestly don't think this is any worse than, say, the recession we saw in the 1970s. The good news is that oil is cheap! :)

Christopher Taylor said...

Yes, in terms of unemployment and inflation, even the recession of the early 80s was much worse. But the feeling on the ground here is of a failed world view, which unsettles people ... if what they were told for so many years was all wrong, then what?

Daniela said...

Thanks ever so much, very useful article. If you do not mind, please visit my article related to pandeglang district in Banten, Indonesia at Kenali dan Kunjungi Objek Wisata di Pandeglang or Kenali dan Kunjungi Objek Wisata di Pandeglang second and also Kenali dan Kunjungi Objek Wisata di Pandeglang Objek Wisata Air Terjun Curug Gendang and Kesenian Debus, Sejarah dan Ciri Khas Wisata Banten and our hard work at Kerja Keras Adalah Energi Kita that's right Kerja Keras Adalah Energi Kita, and Kenali dan Kunjungi Objek Wisata di Pandeglang Memasuki Babak Akhir also Objek Wisata Taman Wisata Alam Carita, Learn Indonesian language, Kenali dan Kunjungi Objek Wisata di Pandeglang, or Kenali dan Kunjungi Objek Wisata di Pandeglang, also Kenali dan Kunjungi Objek Wisata di Pandeglang, or Kenali dan Kunjungi Objek Wisata di Pandeglang, also Kenali dan Kunjungi Objek Wisata di Pandeglang, or Kenali dan Kunjungi Objek Wisata di Pandeglang, also Kenali dan Kunjungi Objek Wisata di Pandeglang, or Kenali dan Kunjungi Objek Wisata di Pandeglang, very smart thank you!

mkoswell said...

Find your great Travel News and sing the songs at Free Song Lyric or you can watch the drama at Korea Drama Online one of great korea drama is A Love to Kill if you go to travel to Indonesia learn Learn Indonesia Language first! And find your home cari rumah or make a blog Belajar membuat Blog find your home again rumah dijual and again at jual rumah then if you want buy a new laptop see the Laptop Price List or you can buy a New Blackberry and then take care your Health & Jewerly.

HawkEye said...

Also, you should encourage him to execute at your new Aspen funny event. Seriously.
Locksmith Washington DC