Thursday, September 10, 2009

VIX updated

We have seen this movie before, and it sucks. But it is what it is and what it is is the firming of bull hubris.

The silly bulls enjoy the party and keep coming back to the punch bowl. The sane players drank from it early, before it got warmed over, drooled into and just downright stinky. The sane players have long since switched to Club Soda and are hanging around to see how the wild party ends.

Really, does analysis of this mess really need to be much more complicated than that? Stock prices can go higher in the short term, of course. This is supported by the fact that CNBC is about to air a sentimental retrospective of last year's disaster (the old 'if everybody's expecting it...' routine). So yeh, we have seen this movie before and the last time we saw it, the movie began in 2003 and ended with the cyclical bull market highs of 2007. The sequel has no such guaranteed longevity. Not by a long shot, and not without a hard correction to shake out the increasingly suspect investor base.