Some Conclusions

Last week's events and some other scattered facts permit an observer to make some conclusions about theories and behavior of the times. The media might continue to babble about these concepts and issues, but the answers are now obvious to all who will see.

1. Pundits said pension funds and speculators weren't influencing the oil markets, as they were relying on their "free market" theory. The recent spike and drop in the face of steady demand destruction data proves that those two forces were the cause of recent oil market action.

2. Pundits said that financial institutions were going to keep getting worse results, that they were all "insolvent". Last week's quarterly results proved them now wrong as major banks reported better earnings and lower losses than the annointed analysts had forecast.

3. Pundits and editorial writers said short sellers don't influence prices in a major way. One simple enforcement action to prevent short sellers from selling virtual shares - in effect printing new shares to short temporarily - caused a short covering panic that popped the prices of major banks up 30%. So bear raids and illegal short selling were pushing those stock prices down by unwaranted amounts.

4. Stock buybacks are a stupid, wrong-headed use of corporate funds. When prices were high over a year ago and earlier, companies were buying back stock with abandon. Now when prices are low, they conserve cash. The maxim is buy low, sell high. Corporations seem to do the opposite. Nearly all stock buybacks are wrong behavior and should be halted as the evidence does seem clear now that they are not in companies' long term best interests.

To be intellectually honest, one must make conclusions about theories and perceived wisdom when data and facts exist. Singular events can bring facts and relationships to clarity at some times. Last week's market responses and action make apparent the above four conclusions now.

PS: Awaiting BAC earnings with some trepidation ... whew, BAC good earnings.

PPS: My sales of CVX, DVN, GOOG and AAPL on last Tuesday were quite fortuitous, as were the adds to BAC, C and JPM on the same day. Much of timing really is just luck, but ... it's better to be lucky than not.

PPS: Here is the link for the place I went to my annual fun weekend on Friday & Saturday -> http://greenmountainboysshootingclub.com/ I posted a summary of the fun on Sunday.

Word of the Day

"Advert" - verb, intransitive [$10] (this is a root for "advertisement")
Advert means to 1. to pay heed or attention; 2. call attention, allude, or refer
Sentence: Serious thinking about markets and the world requires one to advert to events to educe what ideas and theories are correct and really work, versus those that are stale or wrong.