Buy the Rumor

This week has given way to a nice run up in the markets.  This appears to be based mostly on the "Jackson Hole" meeting that will be taking place on Friday.  This is were the chairman of the federal reserve, Ben Burnanke, will be making a speech/announcement.  The market, or somebody, is expecting him to swoop in to stop the bleeding that we have seen in the last month or so.  The problem is Burnanke has taken a lot of heat from the Congress and the public for the QE1 and QE2 (Quantitative Easing) measures that he implemented since the 2008 crisis. 

Quantitative Easing: When the federal reserve purchases financial assets from banks which has the effect of injecting money into the economy. 

The money the federal reserve uses to buy these assets is electronically created which is were the calls of "stop the money printing!" you hear from the Ron Pauls of the world.  So Burnanke has done this twice and now here we are.  The majority of analysts that I have heard are saying he will likely not implement QE3.  I think the market is seeing a ramp up on false hopes.  There is a common stock phrase called "Buy the rumor, Sell the news."  What this means is that when favorable news is expected to happen the "rumor" of that news will cause the market to go up.  Usually it goes up beyond what it should.  Then when the news actually happens the market drops or sells off because the market has already made it's profit and wants to cash out.  If the news doesn't happen or isn't as good as it was supposed to be then you see huge sell offs.  I think that could happen on Friday.  I really want to short this market but it would be a gamble.  I'm not in a gambling mood so I think I'll sit back and watch from the sidelines.

I'm on a 4 day workout streak.  I'm really tired of feeling out of shape on short runs.  Went for a 6 miler to the marina yesterday.  I did the run/walk method running for about 10 minutes then walking 1 minute.  That is a great way to not get injured.  I'm alternating a short circuit workout at home with the run days.  So far so good.  My record is 12 straight days, but that was when I was running just 1 mile to bounce back from an injury.  I would very much like to drag my sister out of her house for a run this weekend.  Hopefully I can make that happen.

 

The marina around lunch time yesterday.

What I was listening to at the time.