Sometimes I am mystified why we have to attribute a rally to any particular statement by the Fed.
Yesterday was one of those days. Ben Bernanke makes the same comments he has made about a half dozen times in the last six weeks and voila, it is worth almost a percent-and-a-half to the market? Does anyone really believe that?
Yet, that's how things played out yesterday. That's how we reported the day's events. It's as if Bernanke were to talk again next Monday and give the same talk that he gave yesterday or the half-dozen times before that and we would gain a similar amount.
That's just not true. The suckers who believe that are the same suckers who said that oil would go down if the dollar is strong or that gold will go up if the dollar is weak or any number of false positive statements that don't play out other than in the media and in the trigger-puller's lair.
I totally understand the need to find some substance behind the market's action. Think of it like this if you want absurdity. When China is slowing the market says China off and sells the cyclicals. When Bernanke says the U.S. is soft, we buy the cyclicals?
I think that's nonsense.
I think this has been an amazing quarter and many managers are uninvested or underinvested or didn't beat their benchmarks. Going into yesterday's session there were five business days to get long. You can't wait until Thursday or Friday to get long as that will look like you marked up and for all you know the SEC might be deciding to launch Operation Markup and make an example of you.
So what's the best days to buy? Yesterday, maybe today. Or more likely you support what you bought, maybe take it up a little more by more continuous buying until you can be equal weighted with the S&P. There's so little activity out there that that kind of buying is meaningful.
Sure, maybe there are some big firms that have executives who say "you know what, that's Ben Bernanke, he repeated what he said the last few times, so maybe we ought to believe him, take him at his word, and do some buying."
But there are far more people who say "oh man, this sucker isn't coming in, I have to capitulate and get long because this is going to be a real awkward conversation one week from now."
Nothing's changed when it comes to Bernanke. Everything's changed when it comes to the market not coming in and there are only five days left to the best quarter since 1998.