It’s starting to get ugly, kids. The world’s major indices all hit a pretty staggering tail slide yesterday, losing value left and right. It will be interesting to see what happens to the US markets today, as the Asian markets were still really down in Tuesday’s trading, but Euro markets were more mixed. Futures markets were all pointed down, so expect the first hour or so of trading to be a big drop.
It would be tempting to think that times of “irrational exuberance” would be followed by times of “irrational pessimism,” and that pessimism is what we are seeing now. Unfortunately, I don’t think this is the case. I think what’s happening now are that the problems unleashed by the housing credit situation are like a string being pulled on a sweater. The string might pull out soon and leave the sweater in near perfect condition, or it could be THE string and unravel the whole thing. No one knows for sure at this point, so it’s more “rational uncertainty” than anything else.
One point that seems obvious to me, although it’s shopworn as hell, is that when you have that much of a ride for a couple of years, there is a hangover. The runup in housing was fuelled on nothing more than vapor and greed, and it encouraged a whole lot of people and entities to saddle themselves with very real obligations. Now the bill is coming due, and it’s a whopper. One thing definitely to watch for is credit card delinquency. This statistic has held low for a couple of years, coincident with the housing runup and the bankruptcy legislation of a few years ago. With the housing runup, people could just turn their credit card debt into tax deductible home equity debt. Now they won’t be able to do that so easily. Also, it won’t be so easy to declare bankruptcy as it would have been several years ago. There could be some real problems with this one.
Kyle, I hope you read this far, because I need to address something to a question you asked a while ago: is it a good time to buy stocks. I think my answer was okay but I took for granted one point that I neglected to actually say. “Dollar cost averaging” is what you do when you buy or sell securities over extended periods. Say you want to invest $1000. If you invest it all at one point, your cost basis for that buy is all based on what that day’s price was. If you spread it over a month, your cost basis is the average of that month’s prices. This is automatic when you do something like invest in your 401k, and most of the advice I listen to says that this is a far preferable way. Timing the market is a fool’s errand.
Yesterday, the MABRA list serve was all abuzz about the cops at Hains Point. I was in a group that got stopped on Saturday, and the cop was pretty cool. We blatantly blew through a stop sign that has a sign right next to it saying “cyclists must stop at stop signs,” and he was behind us when we did it. No tickets for us, but a pretty good lecture. Cyclists (certainly myself included) have a tendency to roll around that joint like we own it, this was a reminder that we don’t.
Last night was yoga night. I did the flying crow, which certainly beats a pair of barking spiders. Actually the class was pretty demanding, there was some core strength stuff going on that was tough. Even though I’ve been working on flexibility for a while now, it’s sometimes tough to recognize improvements. Last night proved that I am more flexible than I once was, but less flexible than Yogi Kudu who was teaching the class. By the way, 100 points to anyone who recognizes the Yogi Kudu reference. So when you see someone standing on his head and chanting “OM” before races this season, just recognize that I am channeling all of my inner namaste to unleash a major helping of whoop ass afield. That’s my story and I’m sticking to it.
The next three weeks are going to be fairly aggressive, both at work and in training. Hopefully the winter we’re having now, during winter of all things, means that the spring this year will be normal spring instead of the tundra that we had last year.