10/15/07

Welcome to the view from the cliff.

The 20^th anniversary of the biggest one-day stock market plunge to date comes after a torrent of bad news. But one thing stands out from the rest of the morass, one ominous cumulus that portends the sort of mayhem that makes the bunny feel as though he is once again peering into the abyss.

No, it wasn’t the New York Post-style screaming banner of this week’s Barron’s (BLACK MONDAY!!!).

It wasn’t the clever Doomsday headline of the Wall Street Journal piece from 10/11 (“The United States of Subprime”), which for the first time the extent of the mortgage mess, and in so doing drove home the point that it is much, much worse than even the most blindly optimistic liar shoved in front of a CNBC camera crew can dismiss.

It wasn’t Landon Thomas quoting Paul Tudor Jones II quoting Robert R. Prechter in the New York Times on 10/13 that the market is set for the biggest bear mauling since 1929 ( hangin’ ten on dat Elliott Wave, brah).

It wasn’t the viral analogy in the very next day’s Times comparing the America’s financial sniffles (which apparently no longer infect the rest of the world) to the pathology of that dastardly bastardly bug influenza.

It wasn’t a torrent of big banks and brokers coming out with multibillion-dollar losses lo the live-long week.

It was Leslie Norton’s feature tucked within the raven wings of the BLACK MONDAY!!! edition of Barron’s, describing the Chinese comet, a stock market making triple-digit percentage jumps year after year. Not only is the dragon flying to yet untrammeled chakras on high, but gweilo investors are chasing said dragon in droves; the bunny nearly choked on his alfalfa reading about how the U.S. Global Investor China Region Opportunity fund (USCOX) is up 73.4% in one year.

Now, it is true that rabbits are social animals, huddling together in their warrens to share warmth and food. But even within such groups, there is an alpha buck, one who crouches alone to master his fate by himself. Such is the lapine scribe of this blog you now peruse. And this solitude gives the bunny the long view of the meditative monk. What he sees is the next rush of lemmings over the cliff (a distant relation by dint of biology, gentle reader, not one the bunny is proud of). Why, the bunny wonders, do humans invest in packs? Chasing the flavor of the moment, all the way back to those dreamy Dutch tulips, hive mentality reigns supreme. It is yet another case of sheep following sheep (astute readers will notice how people have lost their human identity in this edition—the bunny is nothing if not subtle).

The Chinese bubble is but one among several growing around the world, and as prices rise, instead of walking away, het-up homo sapiens rush to grab the comet’s tail in the hopes that (now severely devalued) dollars will rain on their eager upturned faces.

The bunny will take bunker philosophy over the philosophy of crowds any day.

Bunny bullets:

·“Just How High Can China’s Shares Fly?” by Leslie P. Norton, Barron’s, 10/15/07

· “A Pause To Recall the 1987 Crash” by Conrad De Aenlle, and “Sniffles That Precede A Recession” by Robert J. Shiller, New York Times, 10/14/07

·”The Man Who Won As Others Lost” by Landon Thomas Jr., New York Times, 10/13/07

·”The United States of Subprime” by Rick Brooks and Constance Mitchell Ford, Wall Street Journal, 10/11/07