Scary Halloween Monday

Stocks had one of the greatest October runs ever, but just couldn't hold out for one last day. On this Halloween Monday, the Dow fell 276 points, with the S&P and Nasdaq falling 32 and 53, respectively. The sell off was due mostly to fears that the European crisis was still not contained, and sold off partly on the MF Global chapter 11 bankruptcy filing. The securities firm MF Global was going to be bought by Interactive Brokers Group over the weekend, but the group pulled out at the last minute on concerns of the amount of customer funds it held on deposit.

On another note, I'd like to mention something that irks me, and that is the psychological aspect of the stock market and the news that creates and follows moves in the market. What I mean is that news can create selling or buying, and it also reports based on what happened in the market (news follows moves in the market). Anyone with a little bit of foresight should be able to discount the negative news that follows after a down day on the stock market, yet so many lack this. I too am guilty.

What makes me think of this is an article I stumbled upon while browsing the BBC. On Friday, a day the Dow soared 340 points, I guarantee I would not have found this article. Yet today, of course I find this one and many like it. The article is titled, "World Economy on Verge of New Jobs Recession". Here is a link to the article Maybe the research in the article really did come out just today, but I think that the media plays into the negativity to incite fear and perhaps selling in the market. With the ease of information exchange via the internet and smartphones, these news outlets are very powerful vehicles in creating mass hysteria. This article alone will cause panic around the World, but when news titles claiming the end of the World are all that are circulated, they certainly have the power to.

I understand the Europe crisis may still not be solved and the outlook for the global economy may be bleak. What I am trying to understand is why the BBC did not publish this article yesterday as opposed to today. It is my opinion that the news likes to add fuel to the negativity fire. (Hence why Mr. Jim Cramer calls the Wall Street Journal the Negative Street Journal). And that is my rant on the news of the World!

As far as investments, I am at a crossroads and have been for many months. The long term macro economic outlook is grim, yet the ability for a short term run looks bright. I like oil as a long term investment, but am weary of investing if the economic outlook for the World is one of decreased productivity and consumption riding on the heels of a stagnant global economy caused in large part to huge, insurmountable sovereign debts of many nations. (Read Michael Lewis' new book, Boomerang, and you may get the idea that the crash of 2008 was not the disease but rather a symptom of a much larger issue at hand).  I like how everything is pretty badly beaten down and no doubt there are many steals out there, but I don't want to invest if things are going to go haywire in a few months. I'm staying away from banks although they may be providing the best deals out there. My logic follows that if the greatest problem plaguing our and the global economy is incredibly large debts, and many banks hold these debts, why would I ever want to own banks? Call me crazy but I think as global energy demand increases we need to turn to nuclear power. Therefore I like uranium long term (Could take MANY YEARS). And of course there are tons of great companies in various sectors such as technology, health care, retail, energy, etc. that I like but am weary to invest in because of the reasons described above. Good luck investing I'm still studying but taking a quick break to blog! Let's hope we have a much better Tuesday.

In the spirit of Halloween, I will leave you all with this pretty hilarious photo. Viewer discretion advised.


Cheers,
EZ