donfm

The (In)Efficient Market Hypothesis

Good article --

There are many good theoretical ideas to take fronm EMH. Everybody needs to remember that it is a theory based on alot of unrealistic (real world) assumptions.

I believe that there will be many changes and new theories about market dynamics to come out of this current crisis. One is that, obviuosly, the market is not efficient, but also the phsychology of trading and its reaction to market events (crisis, corrections, bubbles), and the realization that these events happen with much more frequency than EMH predicts. Much of modern market dynamics has changed over the past 20 years. Technology has enabled market players to trade more frequently and speculate more frequently. Greed and fear play a big role market bubbles and corrections.

The California Employment Lesson

California has a serious problem with the legislature and balancing the budget. Taxes are the highest in the nation and unions control a big part of labor. A big part of the economy is government expenditures and government jobs. When the economy declined in '08, California took a big hit on tax revenue (from businesses and individuals), and expenditures. Unemployment benefits have skyrocketed with the high unemployment rate and up to three benefit extensions. My point is that with a dysfunctional state government, high government expenditures, with high tax rates, the cost of unemployment is amplified compared to the US average. There needs to be a lot of reform before unemployment will be averaging below national levels.

Fundamentals Don't Support Oil at $55-60 a Barrel

I agree that speculators have re-entered the market. Oil will rise to levels over $100 again as the economy turns around and inflation kicks in. The idea is to go long at the right time.

Bear Market Rally, or New Bull Market?

We've been in a bear market rally this entire decade. Along way to go to reach the highs of the late '90's. With inflation looming on the horizon, look for a sideways market for the next several years.