THIS DRIVES ME NUTS
There are a few things I come across every single week that make me question the brain capacity of human beings as a functioning organism on this planet. Reality television and driving through Los Angeles (same thing?) are a couple that come to mind immediately. I came across one today that made me shake my head and sent my brain racing. As soon as I heard it, I imagined what a luxury it would be to have a chauffeur so that when I get these sparks of creativity caused by anger and frustration, my driver could deal with traffic and I could just machine gun the keyboard.
With no chauffeur in site and none on the hiring docket, I was forced to wait until now to unleash. I heard a gold commercial on a talk radio station this afternoon. The radio host was plugging a gold company and it went something like this, "24 out of 24 analysts say that the precious metal market is set to appreciate by X% this year". I can't remember the rest of the commercial because when I heard that part, I saw white and just stopped listening.
My brain completely shifted direction and I started having visions of middle class families getting decimated once again by yet another bubble trend that has reached the point of maximum inflection. Custom tailored, curve-fitted analysis has reached a juncture where it is driving prices beyond anything reasonable, causing this self-reinforcing cycle of completely deceptive marketing to litter the airwaves. I see Cash4Gold signs on the back of rundown buildings that are facing the freeway...saw one today, in fact.
"24 out of 24 analysts say that the precious metal market is going up by X%". Are we really that dense as a population that we can't remember the details of our previous torturous financial episodes? Do people not see that whenever any group of "experts" are all lined up on one side of the ship that ship is on its way to the museum under the sea?
- The internet bubble - 24 out of 24 analysts were expecting gains from 2000 and beyond. Investors closed their eyes, took a leap of faith. Investors were left with a worthless stock certificate to Pets.com and an investment account that couldn't buy them a ticket on Greyhound. Result - Congressional hearings.
- The housing bubble - 24 out of 24 analysts were expecting housing to continue double digit growth well past 2010. Investors closed their eyes, took a leap of faith. Investors were left with an upside down mortgage, the rules of which might as well be recited to them in Chinese and a negative net worth, as all their equity was spent on a Chevy Tahoe with a plasma television in the back to keep interaction with any children or other immediate family to a minimum. Result - Congressional hearings.
It seems that as soon as Congress begins their hearings on the last crisis, Wall Street shifts its curve-fitting machine over to a new asset. And low and behold, it's enough to keep Congress off their tracks long enough to continue running the wealth transfer machine at maximum efficiency. It makes me think that taking a cardboard box and a folding chair to the steps of Congress and setting up a game of "three shells and a pea" may be a profitable venture, as it seems that this group of politicians is adept at being one step behind and nothing more.
I'm not sure if it speaks to the weakness of human psychology or our tendency to always hope and dream, regardless of the pain we've suffered in the past as a result. Whatever it is, my hope is that the investment public will at least have the decency to take full accountability for their actions when the price of gold magically transfers what's remaining of their wealth into the accounts of the various little men, with funny hats, who sit behind the curtain and are experts at baiting the maximum number of market participants into exactly the incorrect position at precisely the incorrect time.
