A comment I heard on CNBC today intrigued me. A guy mentioned that the current mortgage/credit crisis should not come as a surprise to anyone. It has been written about in various journals and federal papers since last October. He said that people simply chose to ignore it. We are all told that markets are "efficient". Ken Fisher goes as far to say that all known information is priced into stocks so we need to figure out what is unknown.
These statements are in total conflict. I tend to agree that markets have become increasingly momentum based (all the computer/quant trading) and do not take longer term trends into consideration directly. PONR is a stock of mine that was an example. They announced they were going to increase capacity by investing in a new plant. This was going to depress current earnings, but increase future earnings. The market's reaction? A company ended up buying PONR recognizing the general market's mistake. TZOO is a more recent example. They're investing in broadening their Europe base. Again, the stock has dropped 50% since then. An opportunity for us?
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This is Barry Ritholtz's blog ... he's one of the regular talking heads on CNBC. I think he's 55% in cash right now.
http://bigpicture.typepad.com/
Check out today's post about the Employment Population Ratio and recessions ... very interesting graph.
I've been wondering why the unemployment rate has remained at 4.6% when I know of so many people who have lost their jobs this year.
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