Friday, February 15, 2008

Stock Market Bottom?

Investors are wondering whether the US stock market has put in a bottom. I have no special insight based on firm economic indicators, but some qualitative evidence colors my opinion negatively.

Watching CNBC, I see advertisements for all sorts of services and products, but two stand out for their audacity. Investools and E-Trade are promoting their wares via the sheer excitement of buying stock. In the Investools ad, regular Joe types appear on trading floors shouting orders while basking in the glow of their own independent genius. In the E-Trade ads, home-gamers sit at their computers either marveling at their own power or being cheered on by a friendly audience.

Silly me, I always thought people played the stock market hoping to make money. Stock trading can certainly give a drug-like experience, but that's not why a person should invest. Products advertised on financial television typically tout the ability for said product to make a person money, not give them an adrenaline pop.

If individual investors - "home gamers" - are being lured into the market as some sort of eXtreme sport then I fear not enough weak hands have been shaken out to produce a bottom.

Or maybe with so much blood in the streets the advertisers can't think of any better way to promote their products.

We shall see.

(As I write this the S&P 500 stands at about 1340-ish.)

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