Monday, September 28, 2009

How I Learned To Stop Worrying And Love the Markets

It's irked me that debt-laden companies have far outperformed value names with strong balance sheets for the past 6 months.

But really -- this makes sense.

We know the U.S. is insolvent.  We know the only way out is through inflating assets and destroying the value of the dollar.

Companies with huge mounds of cash are only going to lose value as the Fed prints and prints.

Companies like AIG that are essentially nothing but one big IOU become more valuable each day as their liability of U.S. debt shrinks.

I get it now.  It's kind of a sick game the Fed is playing.  I suppose in the future somehow millions of jobs will be created and everything will be all right and we can get through this.  The Fed just does not care for the down part of business cycles anymore.

For now, my theory that the market must come to its senses is dead wrong.  I know the market is tied to the dollar.  Some think the dollar may rise soon.  But it can't if the Fed says no to deflation.

Really -- it's just a matter of your willingness to drink the Kool-Aid.  I think I'll take a sip.  It'd probably help.

update: And now that I think about it, if this is true, than ROIAK is the mother of all strong buys.

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