Ideologues Play Chicken With Markets

Hey, you gotta hand it to them.  I’m not sure if you can chalk it up to principle or just plain stupidity but for whatever reason, the House Republicans stuck to their guns and dared the markets to do their worse.  Hope everyone enjoyed the warm-up act.  They will learn soon enough why Bill Clinton advisor, James Carville, once stated that he wanted to be reincarnated as the all-powerful bond market.

Offhand, my feeling is that the House Republicans aren’t too bright (especially if Rep Eric Cantor from VA is any indication) and thus, seriously miscalculated.  Of course this bailout isn’t very popular but it didn’t take a genius to figure out that the fallout from the lack of bailout would be even less popular.  It was amusing to watch the oh-so-righteous cable news pundits who, just days earlier, ranted against the bailout change their tune after a 8-10% drop in the stock market.  What these fools don’t even realize is that the equity markets aren’t where the real carnage resides.

Politicians, almost by definition, are not an overly courageous bunch.  A few more days of pain and I think Pelosi can put up the same exact bill for a revote and get a different result.  Perhaps the Senate will move on it instead and put pressure on the House.  In either casae, I expect to see a bailout sooner rather than later but then again, I was wrong last night so who knows?  I’m almost positive though that Helicopter Ben will find a way to drop cash into this economy.

While I am fairly terrified of a complete re-evaluation of equity multiples, I can’t help but keep finding (supposed) values in the market.  I took down another slug of FCX yesterday, added wide moat INTC (ready fire aim) at nice prices and am eyeing still a few more stocks as the market continues to drop.  Hopefully, I’m not making a big mistake as I was never much of a market timer but the market drop is starting to impact my psychology.

The day was quite painful and exhiliarating thanks to Congress but after the markets closed, I received word that my uncle is nearing the end of his time here.  Sure puts things in perspective as to what’s really important in this life.  Markets seem pretty small in comparison.

As always, be good out there.

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