I watch the markets on a daily basis, and attempt to stay informed as to what is happening in the world.  To be honest it isn’t a easy task as there is so much information to digest.  Alas, that is the beauty of the Internet.  

Anyways, I started to notice a similar feeling that creeps back in every so often.  The feeling has been apparent over the last year or so about the time this whole mess started to unravel.  After the peak of the market in October of 2007 we have had a falling market with a few cliffs and hills along the way.  After every step down there is a period of reprieve when everyone feels safe, though a bit cautious.  October has been a horrible month for equity markets.  We are now moving up slightly and into the future.  Everyone is hoping for a rally and return to a bull market.  

Unfortunately, I think this is just another calm before the storm.  We will probably continue to rally as people on the sidelines jump in hoping to make a gain or get in at a bargain.  What concerns me is that the market fundamentals are not improving, they are looking much more dire.  Take shipping for example.  Imports and Exports are down significantly from last year.  Consumer spending is way down.  Unemployment is rising.  Interest rates are looking to be on the verge of rising.  Housing is still falling.  Manufacturing is down.  

Does it suck to be in a position where all I see is an endless abyss… sure.  However, I think that it is necessary to clean out and let the market clear away all the excesses.  This post isn’t about economic theory, but a gut feeling that is slowly bubbling to the surface.  When someone with major clout such as Warren Buffett makes an announcement that he is buying equities alarm bells start ringing in my ears.  

Why I ask does Buffet need to provide confidence to investors.  For one many of Berkshire’s companies aren’t doing very well this year.  Then again what stock are really booming?  For Buffet to reassure investors makes me think that things may actually be worse than we even know.  On the surface everything is a mess, but what is underlying the mess that we don’t yet know about?

Once this recession goes into full swing, ARMs continue to readjust, and people’s credit cards are maxed out… 

I end this post patiently waiting the next layer of the rotting onion to peel away just to reveal another layer.