Bait, switch, and distract

The third phase of a clever song and dance to get an artificial recovery...distract us.

They got our minds thinking of the recession being over, now it's over (still unofficially) and now they're going to distract us as long as possible to keep the recovery driving.

For some reason, President Obama decided to get involved in a worthless waste of taxpayer dollars caused by two headstrong egomaniacs who need to grow up. I'm talking about the recent arrest of Harvard Law professor Gates for trying to break into his own house.

Given, his true crime was being belligerent and impatient with a cop trying to do his job, and failing to respect an overstepping and meatheaded authority. The cop was initially trying to do his job, but then arrested and detained a man because he felt his position wasn't getting him the respect he deserved...

Whatever my opinion of the matter (they were both wrong) the president got involved in this to stir up a little controversy, back away from some inflammatory comments gracefully, and have the two men over to the White House for tea and crumpets. Sure am glad I'm paying for flying these two immature children to get together and make up.

Consider us distracted, too distracted to notice that we're still in the mud up to our necks and it'll be a little while before the economy feels normal for any amount of time. Things aren't very good, and they haven't been good since the late 1990's. We covered up the problems for quite a while, but that only made things worse. That's what putting problems off until tomorrow does...it's almost a universal law.

They won't be able to distract us forever, for before the year is out, some stuff is going to happen to remind us that we're still not quite out of the water. I would imagine it will be somehow tied to commercial real estate, which will probably start affecting smaller banks. The big names you know bailed from that market years ago, so the only big ones to fall will be small names.

That's what I imagine will be the next dip in the markets (although not as severe as the 2008 dip). It probably won't happen until at least mid-September, August is usually a slow month because most of Wall Street is sitting on the beach...basically earnings will drive stock prices, and I think they've got some plesant surprises ahead.

If you're playing time the market (which is probably going to be the only way to make money in the near future) then get ready to begin selling into some safety. Start re-evaluating value (use P/E) and get ready to sell off your higher ones first. You'd probably want to start selling faster when the Dow gets above 10k...because I sincerely doubt it will sustain much higher than that.

Now don't bail completely, stick with some, but make it safer stuff. Consumer staples, pharma, stuff like that.

Do the opposite of what most people are doing. No one is paying attention right now to the markets...now is the time to watch them like a hawk.

I love this website, not affiliated with them at all, but it's a very good tool to learn what numbers drive markets. It's not foolproof, but learn what the terms they measure mean if you want to understand markets.

http://www.bullandbearwise.com/