Josh Brown penned this amusing and accurate takedown on the anti-Rally squad.
“But the volume is lower than in previous years”
You say: Its time to forget about the volumes we saw during 2006, 2007, 2008. Hedge funds and prop traders will never have access again to the amount of margin that was once freely offered by prime brokerages and investment banks.
“But the volume has declined since the summer/ early fall”
You say: Sure, because no one is in the mood to risk the percentage gains they have on the books until the calendar turns to 2010. How refreshing it is to see people acting responsibly with Other Peoples Money, even if they’re abstaining from trading for selfish reasons (performance bonuses locked in).
“But taxes must be raised next year/ tax incentives will run out”
You say: The removal of fiscal policy may be likely, but the bears argue that incentives like “cash for clunkers” haven’t helped anyway.
“But the worst stocks like AIG and Fannie Mae seem to be leading the markets”
You say: I don’t know if they are leading, although they have made some huge gains. But you can’t have this discussion without mentioning the fact that they were the most crushed stocks going into the rally’s start, some of these names were down 95% from their peaks and probably would’ve gone to zero absent the government’s (ludicrous and illegal) intervention.
“But insiders are still selling, they are closer to the companies’ prospects than anyone”
You say: I have never seen a shred of concrete evidence that shows me that corporate insiders as a group have any edge whatsoever in terms of the timing of their stock buys and sells.
“But interest rates must be raised”
You say: True, and this will mean two things…one, that the markets and economy are no longer on the brink and secondly, just imagine the effect on stocks when all that money in the bond market (from a a total of $67 trillion-ish) comes rushing out, looking for a home.
“But Commercial Real Estate is the Next Shoe to Drop!”
You say: It will be ugly for the most leveraged among us, as usual, but there is also a tremendous amount of cash lurking out there, waiting to strike.
“But unemployment will remain elevated for quite some time to come”
You say: Congratulations on inventing a time machine that has allowed you to predict with utter certainty that there will not be any new companies/ industries coming out of the woodwork to take advantage of our high capacity labor pool.
“But Healthcare/ Energy Prices/ Aging Workforce will bankrupt the nation”
You say: As we speak, there are brilliant and clever people working on ideas and business models to address all of these issues and others. Human beings have always adapted to difficult circumstances, and American human beings happen to be better at this than any collective in world history.
Full version here:
The Rally Apologista’s Handbook
Joshua M Brown
The Reformed Broker, December 7th, 2009