Expecting A Crash

There is no denying that the stock market has been volatile. That volatility has been quite a bit more extreme & completely unpredictable. The weekly, daily, & most especially hourly swings are unprecedented & there is less & less reasoning behind the movements. Dismal economic data, disappointing & downbeat corporate reports & outlooks, confusing recovery plans & signs from our financial leadership...both corporate & political, are all combining to cause the market to be dysfunctional. Investors & money managers are simply confused. FEAR is the only motivation...fear of further losses & fear of missing the next 10% rally. Valuation, fundamentals, prospects for the future, understanding the current economic weakness & knowing that all the powers that be are doing everything they can to fix it all seem irrelevant to the movement of stock prices. We are experiencing hourly swings that used to take months or years. Numerous Fortune 400 billionaires have lost vast amounts of wealth. Many S&P 500 companies & Dow Jones Industrials have been reduced to mere fractions of their former valuations. Pillars of our country's corporate strength have been decimated & are doing all they can to survive the severe credit crisis & economic weakness. Government intervention after government intervention has failed to provide even temporary stability to the markets & has clearly not stopped the systemic failures from continuing to occur. Leadership has tried to assure & reassure the markets, corporate managements, & investors that they can contain, control, & rectify what is broken, yet to no avail & certainly to no success. Its obvious that the market is headed lower. While that path lower may be uncertain, it seems inevitable. Even as many put forth valuation as a reason for the market to stabilize & in fact move higher, that is just not enough anymore. Confidence is shattered. Fear is pervasive. Leadership seems powerless. And people cannot accept the risk of losing any more of their wealth. The stock market has demonstrated that it can destroy wealth swiftly & sometimes for reasons unknown until too late. The market & individual companies have shown that nothing is unusual anymore. Movement in the market & stock prices has become completely random. A huge rally or devastating decline would surprise noone at this point & could be seen as nothing but expected. While most continue to hope for the market to rally sharply in order to stop their financial pain, what should be expected is a crash.