Josh Brown penned this amusing and accurate takedown on the anti-Rally squad.
“But the volume is lower than in previous years”
You say: Its time to forget about the volumes we saw during 2006, 2007, 2008. Hedge funds and prop traders will never have access again to the amount of margin that was once freely offered by prime brokerages and investment banks.
“But the volume has declined since the summer/ early fall”
You say: Sure, because no one is in the mood to risk the percentage gains they have on the books until the calendar turns to 2010. How refreshing it is to see people acting responsibly with Other Peoples Money, even if they’re abstaining from trading for selfish reasons (performance bonuses locked in).
“But taxes must be raised next year/ tax incentives will run out”
You say: The removal of fiscal policy may be likely, but the bears argue that incentives like “cash for clunkers” haven’t helped anyway.
“But the worst stocks like AIG and Fannie Mae seem to be leading the markets”
You say: I don’t know if they are leading, although they have made some huge gains. But you can’t have this discussion without mentioning the fact that they were the most crushed stocks going into the rally’s start, some of these names were down 95% from their peaks and probably would’ve gone to zero absent the government’s (ludicrous and illegal) intervention.
“But insiders are still selling, they are closer to the companies’ prospects than anyone”
You say: I have never seen a shred of concrete evidence that shows me that corporate insiders as a group have any edge whatsoever in terms of the timing of their stock buys and sells.
“But interest rates must be raised”
You say: True, and this will mean two things…one, that the markets and economy are no longer on the brink and secondly, just imagine the effect on stocks when all that money in the bond market (from a a total of $67 trillion-ish) comes rushing out, looking for a home.
“But Commercial Real Estate is the Next Shoe to Drop!”
You say: It will be ugly for the most leveraged among us, as usual, but there is also a tremendous amount of cash lurking out there, waiting to strike.
“But unemployment will remain elevated for quite some time to come”
You say: Congratulations on inventing a time machine that has allowed you to predict with utter certainty that there will not be any new companies/ industries coming out of the woodwork to take advantage of our high capacity labor pool.
“But Healthcare/ Energy Prices/ Aging Workforce will bankrupt the nation”
You say: As we speak, there are brilliant and clever people working on ideas and business models to address all of these issues and others. Human beings have always adapted to difficult circumstances, and American human beings happen to be better at this than any collective in world history.
Fun stuff!
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Full version here: The Rally Apologista's Handbook Joshua M Brown The Reformed Broker, December 7th, 2009 http://thereformedbroker.com/2009/12/07/the-rally-apologistas-handbook/
Barry, today you’ve portrayed a comment on insider activity as an “accurate take down”, specifically: “I have never seen a shred of concrete evidence that shows me that corporate insiders as a group have any edge whatsoever in terms of the timing of their stock buys and sells.”
Yet two weeks ago you posted an account of insider activity which as you summed it up, as a “busted myth” of the bailout era ( http://www.ritholtz.com/blog/2009/11/bear-stearns-lehman-execs-kept-billions/ ): Everyone knows that senior execs at Bear Stearns and Lehman Brothers were paid largely in stock, and that they lost most of their wealth when the companies collapsed, right? …. Turns out, not so much: “Executives Kept Wealth as Firms Failed …. Most of the executives sold far more shares during that period than the number they held when their companies hit bottom.”
Now re-read that first, more recent, comment again and witness how it collapses into tiny little pieces of pure bunk.
What’s your response to the fact that FASB has gotten rid of mark-to-market and the banks are not forced to realize their losses until the end of the loans?
^ note: I thought I saw a direct quote “busted myth”, though perhaps it was elsewhere. in any regard, it serves fairly well to paraphrase your summation on the matter, even if it wasn’t your exact words.
"But Healthcare/ Energy Prices/ Aging Workforce will bankrupt the nation"
The answer: It’s already bankrupt, if solvency is assets greater than liabilities.
awesome-
here is one they may have forgotten-
should i invest now- even after the big rally: you say-
does a cow shit in a pasture?
when they say- but . ..but
you say-
does Raggedy Ann have cotton boobies?
by then they’ll be writing a check- i’m sure of it
[...] Ritholtz links to a nice piece making the argument that the equity rally is for real. It’s a nice counterweight to constant [...]
Mmmmmm cotton boobies………. So soft a pillowy…….
Now who do I make the check out to?
He’s got some good points, but one that he left out was consumer’s propensity to spend. It’s been heading south for nine months straight: http://www.calculatedriskblog.com/2009/12/consumer-credit-declines-for-9th.html
That Mr. Yousay guy is full of crap.
doc i think your pointing out that the consumer has learned the same lesson from the GD. again. plus they make less that before and don’t care to use credit to make it up any more
So…
I can’t be the only one who sees the irony/cognitive dissonance behind the premise that a retail broker is giving “objective” “stay long” investment advice.
/former retail broker //100% Vanguard in non-trading accounts (IOW all accounts except my trading account) ///Still 50/50 stocks/cash, but getting progressively more liquid
Hey Byno, believe me, the last thing im doing is giving any kind of advice, especially of the long-only-at-all-times variety.
feel free to check out the whole piece, thx
jb
Where’s the wailing about how Obama’s a socialist?
You Say: Do you know what the word means? The TARP payoffs are UN-socializing the businesses Bush socialized and left to be socialized. …Barrack Obama, the greatest de-nationalizer in America’s history. Our Commander-in-Chief has saved American capitalism. Four more years… Four more years…
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