Perhaps nailing down my economic philosophy while trying to consider actual market machination helped put me on the right track to profitability. The scars I earned trying to short NFLX, BIDU, GMCR, STI, RCL and kin finally caused me to realize that fundamentals never matter in a 5 day window. Excepting, of course, known catalysts like HLF being convicted in Europe for running a pyramid scheme. Were that well known news to be questioned in an American court the stock would rightfully drop 20% in minutes. More recently, this HPQ scandal was well telegraphed as Chanos has been nothing if not vocal about the accounting issues at Autonomy. Importantly, across a basket of stocks like the Russell or S&P, no news will materially affect stocks in a way that can't be undone, if trading is withheld until extreme conditions are reached.
Our markets have endured crashes, black days, the flash crash, and Sandy -- they are still open and humans still trade them. These market events gave off warning signs like chipmunks scurrying around before a storm. No matter how impersonal computers are, they are still operated by people, and those people leave footprints. As long as the market data is true, and the fundamentals don't matter on a weekly time frame one can justify technical analysis and quantitative trading strategies.
Further, I agree that there is an ever present tail risk that a syndicate of individuals or, more likely, a sovereign would seek to crash the markets. Afterall, PIMCO is worth $1.7T AUM and the whole S&P is only worth $13T. I feel that we are in a place that should such an occurrence take place middle America will wholesale abandon The Street. The Occupy movement started as a pack of hippies sitting in a park. If the markets dive in an uncontrolled manner too many Americans will become mattress-stuffers, and everything that Bernake has done will be for nothing. I believe the Obama victory can be principally attributed to a wave of libertarian (not TeaParty Republican) sentiment in America's middle as evidenced by the marijuana reform movement, and the middle's vote against partisan conservatism. Libertarians are ready to be less effected by the government and "The Economy." They are deploying their money locally and that favorably affects the structure of our real economy. Where Europe is fully developed, America has room for advancement. Where they are fully indoctrinated in socialism, we still have Animal Spirits.
Since Financialism is the United States' principal economic output, a second crash event like the follow-on to the Great Depression's initial dip would have severe and lasting implications. At such a point America would be exposed to threat of international imperialistic motives as we no longer produce enough of our own goods to readily sustain society. There is a risk, I accept it. I do not think the global elite would allow such a thing to happen as a sheep can only be slaughtered once. Global civil war suits noone. Even if we look at the Roman Civilization as an analogue for the United States, we have not over extended our boundaries, or become too heavily reliant on mercenaries above self-defense. If one chose to look at the Japanese model, we have yet another 50 years before the population begins to meaningfully decline. Further, I believe that the markets are still anchoring to the relatively fresh memories of the banking crisis.
While the government's actions have been controversial, they have been decisive and of a shockingly large scope. They have committed to their end of the deal, and now it is the responsibility of the global elite to uphold their end. I believe they will do so.