From a broker with D.A. Davidson, whom I am citing without permission, so I won’t give his name:
On a side note, the amount of cash on the sidelines ($7.92 trillion in money markets, short-term CDs and the like) equals the market value of the S & P 500 ($7.93 trillion) which seems to indicate that folks are waiting to see how things turn out before they decide to commit to the equities markets again.
I don’t know what to make of that. The same broker also says
History suggests that markets only begin to recover when everyone believes they can do nothing but go down.
Is that a whistle I hear? Is that a graveyard I see?
Piece of Mindful 
Even casinos know there have to be some winners to keep the game going. Investors may want a new, fairer game to play. Right now, the house is playing against itself and losing (big) too. That really scares spectator/investor types.
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No, Mark, that’s market psychology. Most trading professionals call it capitulation and when bearish sentiment hits it’s highest it usually indicates a market bottom.
That said, brokers at Davidson are almost never good traders – they are salesmen who follow what the firm’s research department tells them to – which is often times not-so-good advice.
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I keep hearing the “Bush Economy”, when in actuality it’s the fear of the Obama economic plans and effects, that’s driving this downward plunge.
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Swede – you just made a cl;aim that can neither be proven or disproven. Welcome to my blog!
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Irrational exuberance, irrational fear, pick your poison. At lease Greenspan admitted, albeit a bit too late, the gross error in his thinking. To the disciples, however, there is no turning back, this gospel is written in stone.
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Now if only Greenspan will admit that he’s a fraud. Here’s a guy who extolled the virtues of free markets while for 15 years he intervened with BS monetary policy. If he had any intellectual honesty at all he would admit that his easy money policies were a fundamental cause of the current credit crash.
For those of you who care take a look at The Capital Asset Pricing Model and see what happens to systemic risk when the “risk free rate” is artificially low.
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