October 13, 2008

Dow up 936

Best Day Ever
You've seen the news. The Dow Jones average was up by 936 points at today's close. If this is a real recovery, I'll be glad of it. Most of the Wall Street Experts who were in favor of the Big Bailout seem to think the corner has been turned. Bloomberg is even happy that oil prices are going up again.

I'm not so sure today's big gains aren't merely evidence of increased volatility due to investor uncertainty. I'm fairly sure that a good bit today's uptick is due to late-in-the-day buying by market bargain hunters. There is no doubt in my mind that the bargains are out there; the vast majority of the US economy wasn't suffering from the panicky sickness the anti-free-market bailout pill was intended to cure.

As I have said before, we now have absolutely no way to know if government meddling or natural market forces are responsible, no matter which way the market moves in the months ahead. If things improve, as I have confidence that they will, you can bet there won't be any credit given to the invisible hand of Adam Smith. The goons that got us into this mess will thump their chests and claim their costly socialist bailout scheme worked. If things get worse, it will be because we didn't socialize the market enough.

At any event, trends are defined over time, not in a day. Meanwhile, the pink area of the chart below should give some idea of how far the 'recovery' has yet to go to regain the position of a year ago.

Everything is Relative

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