Friday, March 06, 2009

Irrational This Irrational That

Markets face 'irrational pessimism'
New extreme in US stock sales leads to 'irrational pessimism' among investors

Rachel Beck, AP Business Writer Friday March 6, 2009, 1:45 pm EST
NEW YORK (AP) -- You've heard of "irrational exuberance," right? That's the expression Alan Greenspan coined more than a decade ago when he warned that investors could be bidding stock prices too high. His worry was that escalating asset values were trumping reality.

These days, the opposite seems to be the case. Call it "irrational pessimism," a fear that stock prices are headed in only one direction -- lower and lower -- because asset values and profits seem certain to fall.

Yeah, Alan Greenspan was warning about excessively high stock prices. December 5th 1996 when the stock market DJIA was at 6437. Snigger.


Northern Renter said...

First time I've been first in a long time. Or am I being irrational too? Alan, you're a damn fool and you're no John Galt.


PS Our Canadian housing market is finally starting to turn turtle.

sm_landlord said...

Huge Johnson and Perter Sorrentino cannot understand why GE is in trouble? How about GE Capital is pulling down the other businesses by starving them for capital? How about they just whacked their dividend, making the stock cheaper to short, and the shorts are piling on?

It doesn't matter what their real businesses are worth if their finance arm could drag the rest of the company into default.

That's not irrational fear in my book.

Full disclosure, I am long GE. I'll be getting my head examined over the weekend.

Casey Serin said...

Considering that Greenspan, Madoff, John Thain, Ken Lewis, Angelo Mozilo, myself, and thousands of other career fraudsters walk the streets freely...

... I'd say the pessimism is more than rational. :-p

w said...

No kidding Casey.

You guys belong in Congress.

Akubi said...

TGI Fishnet Friday!
NSFW fishies can be found via the Nuclear Tentacles linky.
Woohoo! Itsallgood as long as there's enough aspirin and antacid on hand.

Centipede said...

Hey Homer S.,
I liked your link!

Lou Minatti said...

Hey Casey, it's time to come out of your shell. It's clear that there are no criminal sanctions headed your way, so why not pick up blogging again? We are starved for entertainment. I think that most of us no longer want to hear about your bowel movements, but it could be interesting to read about the life of a divorced bankrupt guy in Sacramento living in his parent's house.


Didja get a damn job yet? Bet not.

Unknown said...

Not saying it's time, but at what time does the herd going in one direction tell you it's time to get back in?

My guess, late Summer things have not improved and "The One" is going to start sounding like a Republican and the market will respond.

Captain Nemo said...

Someone needs to press this button
seen in Beverly Hills, CA

To find it, go here:
and click "next" a few times.

Lost Cause said...

Wholesaling real estate leads to the next demolitions.

BY MID-2007, IT BECAME CLEAR to Brancatelli that his was a city at the mercy of lenders and real estate wholesalers, who now owned thousands of abandoned properties in the city. Somehow, the city needed to hold these new land barons accountable for their vacant houses, so many of which were in utter disrepair.

Brancatelli and others looked to Raymond Pianka, the judge in the city’s lone housing court. In 1996, Pianka gave up his seat on the City Council to accept this judgeship. His judicial colleagues derisively refer to it as “rat court,” because its main function is to make sure that owners mow their lawns, trim their hedges, clean up their garbage, repair leaning porches or hanging gutters — in short, that they make their homes inhospitable for rats. No one foresaw that this lowliest of courts would become one of the most powerful instruments in the city’s fight for survival. "The court’s the only tool we have", Brancatelli said. "When we get them into court, we can’t let them go."

In 2001, when it became clear how Raymond Delacruz was wreaking havoc on city neighborhoods by flipping houses, it was Pianka who ran him out of town. The city’s building and housing department cited Delacruz for code violations on a house he hadn’t flipped fast enough. When he didn’t show up in court, Pianka had his chief bailiff stake out Delacruz at a doughnut shop. Pianka placed him on house arrest, ordering him to spend 30 days in the dilapidated structure he owned but had not maintained. Shortly after his sentence was up, Delacruz moved to Columbus, where he continued his flipping, and was eventually convicted for fraud that included swindling a bank vice president.