Geez... I dunno about working for the builder, but I am strongly suspect now. However, it could be just another bull/bag holder, who has defended the value of their home from going down. I mean, it is not new for a bull to change their name, er multiple times. Even if they so strongly believed in their position, then they shouldn't be so spineless, to not stay with the same name. How pathetic would that be, making it seem there are others who agree with them, even when they are only agreeing with themselves? I don't understand that, but then again, I have always been graph. Of course, some think I have never negotiated anything in my life, so I am probably just a nutter. Maybe, I don't truly understand <a href="http://bigpicture.typepad.com/comments/2008/01/5-stages-of-mar.html">all the stages</a>.
<p>One of the most intriguing things I find about the market is how the collective psyche sometimes resembles a singular entity. In particular, I have been fascinated by the commentary we have heard from some quarters regarding deep and obvious flaws in the present macro environment. I spent a lot of time over the holidays (skeptically) reading commentary from various pundits. There was something strangely familiar in the absurdly erroneous observations, but I couldn't place my finger on what it was.</p>
<p>Until Friday. I don't know who or what actually triggered my memory, but it finally dawned on me what the parallel was: The <a href="http://en.wikipedia.org/wiki/K%C3%83%C2%BCbler-Ross_model">Kübler-Ross model</a> of 5 stages of grief. </p>
<p>For those of you who never took any psych in college, that is the process by which us <em>humans </em>deal with grief and tragedy. It was introduced by Elisabeth Kübler-Ross in her 1969 book "<a href="http://www.amazon.com/exec/obidos/ASIN/0684839385/thebigpictu09-20">On Death and Dying</a>". This has become well-known as the "<em>Five Stages of Grief.</em>" They are:</p>
<p>1. Denial
2. Anger
3. Bargaining
4. Depression
5. Acceptance</p>
<p>Reviewing recent market commentary, it appears that the investors, traders and pundits alike have been working their way through each of these 5 stages. Consider:</p>
<p>>
<strong>1. <u>Denial</u></strong>: For the longest time, the consensus was that Housing issues wouldn't impact anything else. Classic denial was demonstrated by the insistence that first Housing, then the credit crunch, was "contained." </p>
<p>There has been a multi-step process for the deniers (denialists?). Initially, they insisted there was no housing slowdown. Then, any slowdown would not impact consumer spending or the broader economy. The 3rd denial step was that while it was no longer contained, any damage would be mild. The most recent denial was that while the Housing issue has been worse than previously believed, it is now fully reflected in stock prices. </p>
<p><em>Me thinks they doth protest too much.</em></p>
<p>We saw the same denial steps in inflation, consumer spending, and job creation. The denial transition went from: a) No slowdown; to b) Slowdown, but no impact; to c) Impact, but contained; to d) Broad impact already reflected in stock prices. </p>
<p>>
<strong>2. <u>Anger</u>:</strong> The details of this were personified by <a href="http://bigpicture.typepad.com/comments/2007/08/cramer-pleads-f.html">Jim Cramer's now infamous Fed rant</a>. After spending the prior year discussing <a href="http://www.youtube.com/watch?v=jmt5_T2WAQc">that Housing was fine</a> (February 2007), and pointing out each <a href="http://www.youtube.com/watch?v=f5zAvh-iFfU">bounce in the home builders</a> (November 2006) was proof the Housing bottom was in, Cramer's incredible meltdown was stark evidence that the denial stage was over, and the classic anger stage was beginning.<strong> </strong></p>
<p>>
<strong>3. <u>Bargaining</u></strong>: I believe we are now at the bargaining stage. This is reflected in the increased expectations of a 50 bps rate cut (If the Fed cuts aggressively, stocks will be fine). Buying falling knives is a form of bargaining (If I avoid momentum plays and only buy cheap stocks, I'm okay). </p>
<p>Yet another example I've been seeing: "Invest Now in Anticipation of Recession Recovery."</p>
