The Bears That Cried CRASH

We all know the story of the Boy That Cried Wolf. A little boy looking for some attention from the people around him made up a story about a Wolf. After a few 'false alarms' the people stopped paying attention. Just then a Wolf did show up and attacked the people even as the boy warned them that now there really was a Wolf. A famous fairy tale that is used by all of us with our own children to prevent them from telling stories or outright lying, so that when there is real trouble or a problem, we believe them and don't ignore something that truly needs our attention.

For the past year, the well known perma-bears and some other less reviled strategists, have been 'crying' about an economic environment that is unstable and off balance due to many things, which I will not list here, as they are just plain old depressing and have been discussed ad-nauseum in my previous writings. Yet, as the market has been rewarding ignorance and denial of these well known economic issues, investors have been disregarding them. Some very smart investors such as George Soros, Warren Buffet, Sir John Templeton, Robert Rubin, Bill Gross, and other previously well followed market mavens have sounded warning bells, yet investors continue to ignore the warnings. Now, when the proverbial Wolf may very well be upon us, clearly noone is listening.

So far, the market action makes their warnings seem senseless and unwarranted, but that is not because they are not valid. It is because the collective investment community, aided and abetted by the FED and the Bush administration continue to pull increasingly more dangerous economic maneuvers to keep the economic data 'plates' spinning. Hopefully, the analogy is clear. In a circus we watch the juggler put 1 plate up on a stick, then the next and the next until he has 7,8,9, even 10 plates spinning. It is amazing and the crowd ohh's and ahh's with each additional plate. It takes some time to get them all up and going, but at the end of the performance, the plates come crashing down all at once. The show is terrific and the ending is a mess.

Back to the bears and the Wolf, even though the Wolf is clearly knocking on the door, the Bulls don't care and continue to ignore the warnings. The only ending can be a horrible mess for all involved.