Monday, July 21, 2008

About Last Week's Rally ----

Food for thought ---

Everybody was excited because things weren't as bad as expected. It wasn't because things were better than expected or because companies beat with huge increases. Instead, companies showed smaller losses than those expected.

Are these reasons really a good reason to rally -- that is, do you want to buy something because losses aren't that bad? Or, do you want to buy something because it is earning a whole lot more than expected?

Now let's compound the problem. Over the last year, how many negative stories have we seen come out of the financial sector compared to positive news stories? Let's compound it even more. How many times has a financial CEO said "things are fine" only to have really bad news hit the wire within a week of the positive statement?