Post-Game Analysis or Pre-Game Calls

After last year's Super Bowl, every sports analyst could tell you exactly how the New York Giants beat the New England Patriots. Prior to the game, however, 98% (literally!) of these same analysts were predicting that the Patriots would triumph, in some cases by 20 points or more.

It is the same with the Great Asset Crash of 2008. Every Wall Street paragon or kid now can tell you why the bubbles popped. They can tell you why RIM deserves to trade down 70%, or why Citicorp is in the single digits. Even most managers and traders who are now feted for supposedly having "seen all this coming", if you examine their resumes, are the perpetual contrarians or bears. So they are naturally disposed to have seen all this coming… they would have bet against the herd regardless.

With all of the above types, they live in a narrowly-defined "reality". Understanding this "reality" – which serves them well in normal times – is a function of their training, experience and expertise. The Wall Street paragons are essentially plumbers of the money world as it was defined.

That is why nobody really knows anything today. Training, experience and expertise are out the window when the definitions of "reality" shift.

As I noted previously in this column, "Paper Is Dead". Financial Paper – the promise to pay – is dead today. The governments of the world have made paper meaningless for a few years – probably better that, than the world economy just completely comes to a stop.

Unfortunately, all the Wall Street guys trade paper. What they are trading is not what they think in a "paper is dead" world.

Today's trades of paper are trades for a promise to pay, if everything works out, at some future and unknown point (say 3 or 4 years down the road). That is why every stock is beginning to be priced at "call option" prices. You might as well own a bunch of LEAPS (long-dated options) rather than common stock.

Nice thing of all this is, we are still the United States. That's cool. We are the best creators and imaginers, we are not going to get invaded, and we still produce the vast majority of our own energy. We need to do more for manufacturing (see below), but if you have one market to own, it's still here.