Remember the phrase “fiscal cliff”? Whatever happened to that?
My answer to anybody that asks is that we already fell off of it, so there’s no more cliff anymore.
The financial press is always trying to find the next crisis and today’s is the calamity hitting the EU regarding Cyprus’ confiscation of people’s savings accounts.
I wonder if you had an active line of credit whether they’d pare that back, but I digress.
The point of this post is that there will always be some new crisis in the news and the question of the investor is whether these are relevant to decision-making with more localized securities.
While I believe the fiscal situation of the US government is quite frightening in the medium and long-term, in the short term, if it is out of sight, it is out of mind. Until it comes back in sight again – that time is impossible to tell.
In the meantime, we continue to get this:
A quick read of George Soros’ theory of reflexivity applies in this case – the broad market will keep going up until it stops going up. I know this sounds like very lame analysis, but sadly in the market context, it is the only real explanation of what is going on (in addition to all of the financial asset inflation being promoted by most of the world’s central banks).
There is very little to mention in terms of trading on my side other than that due to the release of a quarterly report, I have started to pare one of my positions. The quarterly report itself was roughly in expectations, but my fair value adjustment has been downgraded to what the market value is currently. If the share price goes higher my position will be exited and I will subsequently report this. I am not looking to redeploy the proceeds because of the existing margin position.
Ideally, market valuations will rise to the point where the decision to deleverage will be somewhat easier to make. My present degree of uncomfort is actually quite good in this respect – usually the markets work such that easy decisions are punished.