Reply #25: Salient points on trading and economic activity from Barry Ritholtz

[ozymandius]

Context can be found here. I think this segment stands pretty well by itself. - ozymandius

Does Citi still have its prior shareholders from before? Is the same management team there? Then they have NOT been nationalized — yet. When they finally are, trust me, you will know it.

Now, I can make an even stronger rhetorical argument than these guys did. The things that are bothering markets is more or less the same story that some that’s been slowly seeping into people’s stubborn brains for the past few quarters.

The top was made in October 2007, and since then, we have seen:

• This is the first quarter in the history of the S&P500 to have ZERO EARNINGS;

• The ongoing drip drip drip of never ending bailouts — with taxpayers funding its costs — is pressuring prices.

• The worst recession in many generations started over a year ago, and shows no signs of ending anytime soon;

• The market is tanking is due to the lack of nationalization — we’d better off getting it done sooner rather than later;

• The overall market trend has been down (relentlessly so) for the past 18 months;

• The overstretched consumer has retrenched and is now in savings mode;

• The US has deficits are horrific — and are only going to get worse;

• Consumer sentiment is so bad its spilling over to everything else.

• The leadership of corporate America has been shown to be so inept and incompetent that potential buyers of these businesses are marking them down to reflect this;

These are just a few obvious factors off of the top of my head. You can blame either Obama or Bush (or both), but the reality is the forces driving the market are much bigger than either of them.

Smart investors know that the day to day action amounts to little more than noise. What matters most are trend, earnings, and economic activity.