Watching the markets and the Fed from a snowy place

does anyone else get a sense of desperation from Bernecke's move?

To me, the smarter move would have been to act as if a mild recession was coming, and that it would be accompanied by a significant "market correction" -- basically say that there is a stock market bubble, and that the housing bubble burst has resulted in the bursting of the stock market bubble... and that it would be foolish at this point to lower rates solely to reinflate that bubble.

(And does anyone else suspect that there has been something akin to market manipulation by foreign investors....that the big selloff in asian markets was done with the knowledge that such a sell-off would lead to a huge drop in the Dow--and an opportunity to pick up "bargains" with all the cash these investors had thanks to their sell-off of asian stocks?)

Yesterday, at debate Barack Obama accurately predicted that the stock market may have a problem tomorrow due to some other country's stock market having low numbers and Wolf shot back, no one knows what will happen on the Stock Market tomorrow. Well, apparently, Obama DID and was able to have the foresight to connect the dots!

Justin: I was wondering if you had any observations about your own profession and their ability (or inability) to provide quality analysis of this kind of "market meltdown"? Do these events sort the men and women from the boys in terms of financial journalists, analysts and commentators?

Watching the primary season from the other end of the world, my main observation is that the political commentary pack's ability to predict and analyse should come with the qualifier that it does not apply to actual real world conditions in actual contested races. I am assuming that the same rule applies to the finance pack as soon as the financial tide becomes stormy rather than just floating all boats?

Given you're going to be spending a bit of a time with a lot of your colleagues in Davos in the next little while, I'd be curious if you have any observations of their collective state of mind and quality of output..?

marcus:

i dont know if this helps you come to a conclusion or not (and some of these 'facts' may in fact be things I have misremembered).

1. It takes approximately 7-10 years of consistently beating the market to be considered true skill as opposed to being that guy who rolled snake eyes 5 times in a row. And even this is not conclusive..just indicative. The only good news is hopefully you've packed away a boatload of money in the meantime before you are found out - and there's almost always some other sucker out there who'll give you their money after a disaster. The fellows at Long Term Capital Mgmt are all running a new hedge fund despite losing all the money..

2. Even in above, luck plays a factor. Much todo was made of that guy at Legg Mason who's market beating streak came to an end after a number of years. Yet someone noted, his streak would have been over years ago after a significantly shorter period had the year been defined june to june instead of jan to jan..

3. Separately, stock analyst earnings projections one year out (i.e. what they think the company will make next year) for companies they cover are way innacurate when compared with reality (accuracy

hey my last post looks truncated...

accuracy

okay dont use the less than sign..

accuracy less than 30 percent). Since these projections are what they then plug into their models (further sources of innaccuracy) you can imagine the value of said analysis of the markets..