I’ve been investing in the stock market since the 1970s. I still don’t get it. When I ask my broker if the market is going to go up or down, a pretty simple question, he looks at me like a croupier at a roulette table who was just asked what number is coming up next. I come away from these encounters wondering if stock market investing is legal gambling or some sort of a science with actual principles. But determining whether the stock market is a casino or an economics lab isn’t easy. Recently the market tanked because Ben Bernanke decided to play Bernanke Panky with the vicissitudes of mass psychology. His off-handed, non-scripted mumblings set off a worldwide panic. When I try to paraphrase what he said, it goes something like this: maybe at some non-distinct point in the indeterminate distant future due to vague factors and variables unknown at present, the Fed may begin to slowly transition away from artificially stimulating the economy and allow the American economy to metaphorically grow up and move out of the house and get a job. Why is this bad? Judging from the world markets, this hint of Bernanke’s was like a Nostradamus prophesy. Really, should the government be purchasing trillions of dollars of its own bonds? Sounds incestuous to me. Would you buy your own money? The Fed calls it “stimulus”. In my field of emergency medicine the word “stimulus” is not a good thing. It usually means the patient isn’t doing well. It’s better if the patient doesn’t need a “stimulus”. On top of the mass hysteria that seems to drive the market these days, there are these programs built by teenage techies that buy and sell automatically with split second timing, trying to digitally arbitrage profits. Sometimes these machines blow a gasket which causes the market to go precipitously down, then right back up again in a matter of minutes, like a financial amusement ride. Then there are all these countries that seem to go bankrupt, but you never hear from them again. Iceland is still in existence, apparently. And, no doubt, due to market amnesia that seems to be rampant, everyone’s going to be talking about how great Icelandic investments are. Meanwhile, all the former Icelandic investment bankers have gone back to fishing sardines, a safer profession, apparently. On top of all this, it seems almost every day you read about a CEO either caught with his pants down or with his hand in the till, whichever expression you prefer. Despite C-suite hijinks, top executives of companies owned by the public, you and me, seem to make pretty big salaries with plenty of goodies even when the company is marginally profitable. Finally, now that we outsource everything to some other developing country, and what we are selling is mostly some plastic and a few circuits in a nice box at ridiculously marked up prices, and corporations instead of investing in expansion, are hiding their dough in offshore accounts to avoid paying US taxes—there is nothing for anyone to do, few jobs, no money in the hands of the majority of people and, therefore, few people to buy the plastic and circuits in nice boxes at ridiculously marked up prices. Well, I could get a nice 1% savings account, but even at the current low inflation rate, I’d be losing money.
Posted on: Fri, 21 Jun 2013 23:32:06 +0000
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