In a bull market, bad news is ignored or interpreted as good news somehow. (‘They lost $400 million? Good to know they’ve got that behind them – should make earnings comparisons next year look really sweet.’) In a bear market, good news is ignored or reinterpreted as bad news. (‘The economy could eventually pick up? Yes, well, I suppose it could – but you know what that’s likely to mean, especially with a falling dollar, don’t you? Higher interest rates. Uh, oh.’)

To a larger extent than anyone would like, markets just have to run their psychological courses. And they will.

Yes, some huge external factor could change psychology. If we read tomorrow that Saddam had been overthrown and that there was rejoicing throughout Iraq . . . and that – in a very big week for news – a secret peace plan had been accepted by the leaders of Israel and all the Arab states, including a new Palestinian state . . . I have to think psychology would change overnight, very possibly for the long-term, not just a few weeks.

But ordinarily, I think, good news is just the catalyst to trigger a change in investor psychology that was ready to happen anyway. Greed was all but ready to overtake fear – and this news just pushed it over the edge. Or vice versa.

Is it my imagination, or has there not been a lot of good news lately to test this theory? (Dept of ‘Thank God our long national nightmare of peace and prosperity is over’: The Bush administration said Friday the federal government would post a deficit of $165 billion this fiscal year, a 56% increase over earlier projections.)


A Security Guard (who read Friday’s thoughts on airport security): ‘There are three reasons we Security Goons pat you down without profiling:

‘1. Because if there is a random selection, we can’t take the easy way out and skip the irates, or the fun way and pick the pretty (and litigious) women, or the ones that annoy us by making pro/anti Republican political remarks, or are the wrong skin color, or are wearing expensive suits that we can’t afford on our miserable guard salary.

‘2. Because the profiled group will cooperate if it is not singled out. They do not feel personally put upon, since they know they are 99.99% conservative, god fearing, family making, sensible people. This makes it easier for us when we do pat them down. Hey, if even Al Gore doesn’t make a fuss about being felt up, then they can cooperate just like all the other good Americans.

‘3. Because considering the way the economy is behaving, and the likely precedents from the past, we may soon prefer to pat down the people that used to have several million dollars in IRA/equity/trustfunds/etc. They are the ones who will soon be feeling ready to end it all and take a few hundred people with them.’

☞ Good points. But I can’t wait for the retinal scanners.


‘I was the one who suggested the Amazon NextCard last year (and was immediately taken to task by a reader that had a bad experience with NextCard). Over the last year I have pulled in more than $700 in Amazon gift certificate credits, in large part through savings bond purchases. Much as I regret the failure of Nextbank and the loss of my card it was a good ride while it lasted. The reader who was lamenting the loss of his points has me puzzled. We have known that Nextbank was in receivership since February and that this program was going to end. And he didn’t cash in his points as soon as he earned them? Furthermore, Amazon has said that they will honor the points earned as stated here. I’d rather you didn’t print this with my name attached.’


Did you see Paul Krugman Friday?


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