While reviewing my posts one fact keeps resurfacing. Although I was correct on the oil bubble and the damage to the financial system (it was far worse than even I thought), I poorly assessed the preferred securities situation. This is especially true of the preferred market.
My problem is that I was thinking logically. It appeared illogical that the government would do anything to make it more difficult for compamies to raise Tier-1 capital. Yet, this is exactly what it did when it blew up FRE and FNM preferred holders. It then blundered by acting inconsistently when dealing with troubled firms.
The markets abhor the illogical. Research analysts and strategists do a good job of taking data and formulating opinions. Government actions now require psychics instead of analysts to forecast the markets. Blowing up Lehman after engineering a shotgun wedding for Bear, but before taking over AIG has done that.
I can do a good job looking at the data and telling readers how certain investments shoudl react. However, I can not read the minds of Paulson and Bernanke. It would be helpful if they visited trading desks and financial advisers befoe further policy actions.
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