Tuesday, March 11, 2008

The Value of Nothing

We haven’t reached it yet. The capitulation phase, that is. But we have certainly have entered the panic phase of the market decline.

Reason is being replaced with fear-based rationales justifying nearly every form of economic disaster conceivable. And at the center of the storm is the mark-to-market madness producing forced liquidations, which produce lower values, which produce forced liquidations, which produce…. I think you get the picture.

Apparently, like any bad illness, this panic fever has to run its course. And run its course it will. To illustrate this, take a moment to view the above chart*. Perhaps you can tell what phase of the greed/fear cycle the market is currently in.

Investment Strategy Implications

The panic of ’08 has entered the realm of unreason – a place where far too many “investors” know the price of everything and the value of nothing.

*click on image to enlarge

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