...And The Market Slide Continues

Uncertainty of the Fed. That's what they are saying is the cause for the now four day losing streak in the markets. To that I ask the logical question. What uncertainty exactly are we talking about? Is the who? Or the what?

It does not take a genius to fully grasp the fact that the economy is still in the dumps. No news flash there. It does not take a genius to fully grasp that the Obama administration has absolutely no clue about how to fix it. Nor does it take a genius to draw the logical conclusion that the Obama administration isn't going to do anything to fix it.

So here we are. I don't see anything uncertain about that. That seems pretty much set in stone as of this writing.

Of course we do not know who will succeed current Fed Chairman Ben Bernanke. But we've got a pretty good idea who it may most likely be. Think like Obama for just a second. Janet Yaller is likely to continue to prop up the economy through quantitative easing. Would this be right in line with what Obama would like to see happen? I think the obvious, glaring answer is yes. Prop it up. Because nothing he will do can prop anything, let alone get anything back onto a path of recovery.

"Keep printing me more money, Fed. I'll keep spending. I'll keep looking to raise the debt ceiling," says Obama.

"The cupboard is bare," said the brilliant mind of Pelosi. "There is nothing to cut."

The fact is that the Fed obviously seems to be in consensus that the economy is in a heap of crap still. And as a result it will continue to use QE as a way to help along this wheezing, dying thing. There is not one single economic indicator that would currently suggest otherwise.

So why in the hell is Wall Street selling off claiming uncertainties?

I think the simple answer is that they want it both ways. They want the economy propped up to artificially inflate the markets, and they want the economy to do well enough to support itself. They are not going to get the latter. So the former right now is the only alternative. And they want to be certain that the Fed is going to hold up what the Obama administration is certainly pulling down. In the interim.

To me it is all a load of crap. The new Fed Chairman nomination will shortly be announced. Wall Street will breathe a sigh of relief. The markets will reverse course and start rallying again. And who will make money? Those us of who saw the writing on the wall before the writing was put there.

Little guys like me buying into the uncertainty.

I am accumulating now just like I accumulated at the bottom of the market. I am certain that the uncertainty in the market is simply a panic maneuver. Not a wise one. And I will invest contrary to it, and while I cannot be 100% sure, I think it will mean gains ahead.

The Markets Are Not Rattling Me, Still

I said yesterday that I did not believe that the announcement by the Fed was a negative for the economy, and despite today's even sharper decline of over 350 points, and like effects happening in other markets across the globe over the Fed's comments, I stand by what I said.

The declines in the markets are an overreaction, and I think the trend that the Fed is indicating is a positive one, not a negative one.

Sure, interest rates did infact rise to a two-year high. But the dollar also rose, and based on the most basic things, I think these are signs of a strengthening of the economy. Not a weakening. Granted, the interest rate hike is not due to the Fed, but rather due to market reaction to the Fed, and certainly the Fed raising interest rates would signal growth in the economy needs to be slowed down (a positive sign), but this is again, just a reaction.

The fundamentals are strong. The markets are overreacting. There is nothing to see here.

I am still a buyer. As I said two days ago, I am cautiously optimistic. I remain so. I can't control the impulse of big players on Wall Street to sell off their stocks and send the markets into a freefall. But I can control my targeted response, which is to react contrary to their negative, and buy into their frantic frenzy to sell.

Shares of my favorite companies are on sale. Shares of companies I have been waiting to buy that were overpriced are coming into target buy territory. I don't see any fundamental reason for the selloff. If the economy improves then the Fed will change course. How is that a negative? If the Fed is suggesting that the efforts it has been employing to prop up a poor economy may soon not be needed, how is that a negative? If the training wheels are not necessary, how is this a negative?

I'm not buying into the idea of the selloff. But you can bet your ass I am buying into the unfounded frenzy that's causing stocks to go on sale. The sharp declines cannot continue contrary to the fundamentals, and that means gains for anyone who is going to buy into this much needed dip in the markets.

Sharp Decline In Markets an Overreaction

If you are a fundamental investor, today's sharp decline following comments by Fed Chairman Ben Bernanke that the Fed will not change its current plan to buy bonds and continue to print money, should be taken with a grain of salt. This is largely because the Fed was also upbeat, for the most part on their overall projections of the economy, saying much the same thing they said in May about where they thought things were going.

I would take this as a signal that the Fed believes that the market is on track to meet or exceed projections, but it is still a wait and see game.

I do not like the idea that the Fed wants to continue to print money since this leads to dilution when it comes to how much a dollar happens to be worth, and I think there could have been many more, more effective policy issues that could have curtailed the perceived need by the Fed to prop up the economy through its efforts. But barring that, and of course the Obama administration has only engaged in policies that are frankly, in my opinion, negative toward the prospect of real growth, I don't really believe that the Fed was left with much else of a choice.

My reaction to Wall Street's reaction is that it was an overreaction. And this is something I see as an opportunity to buy more shares of great companies at a discount. The fundamentals of the markets continue to be strong, even if the economy is still lagging, almost staggering behind.

What I drew from Bernanke's remarks is that the Fed will continue on it's current path until such time that some of the projections get closer to becoming foreseeable as becoming true. But to pull the plug too early is perhaps not the best plan...

Especially considering the slow growth we've seen in this recovery, and the fact that, so far as I can tell, Obama has no good policy decisions forthcoming that will speed things up at all. In fact, there may still be some heavy weights put on the economy, especially as Obamacare begins to get closer to full implementation.

Despite today's sharp decline I am bullish on the markets, and I am bullish on the economy as well. I don't expect anything robust economically speaking. But that's the point. I am certain that the economy will continue slowly, very slowly upward. At some point the Fed will leave go of the reigns and allow more natural forces to work. Again, nothing robust. But whatever growth will come more naturally. I think that's a positive. It also, for me, gives a sense of certainty, the counter of which is negative to the markets. I am comfortable with slower growth, because I can see that's the direction. If the economy gets closer to projections, I am confident that Bernanke will leave go of the training wheels, and let the economy do its own thing on its own terms.