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Market Volatility & the (hopefully) Rational Man


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We cannot imagine that this is just us .....


But has anyone else noticed that the real money a value investor will make in this market will be simply by trading their position, reducing cost bases to almost zero, & just parking the gains in cash/index puts?


Case in point.


Last week, the S&P/TSX Index rose 8.95% off its low - on nothing better than 2-3 days of press report respite on the news from Europe.


Dexia was bailed out this weekend, & tonight Merkel/Sarkozy negotiate on how the EFSF fund will be used. Of course, the 11 billion Euro capital raise that BNP Paribas & Societe Generale will otherwise require has nothing to do with it?  http://www.reuters.com/article/2011/10/09/us-eurozone-idUSTRE7953D520111009. And neither do the highly likely significant unrealized losses sitting in Deutsche Bank &/or the Landesbanks ?


So why on earth would you expect that last weeks S&P/TSX Index 8.95% is going to hold - if ONLY these two banks, need to raise even HALF their 11 billion requirement?


We live in interesting times!


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