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2009-06-23 09:28

WHEN INVESTORS LOSE FAITH

"She will start from her slumber When gusts shake the door She will hear the winds howling Will hear the waves roar We shall see, while above us The waves roar and whirl A ceiling of amber A pavement of pearl Singing, "Here came a mortal" But faithless was she And alone dwell forever The king of the sea" -Matthew Arnold A rally built on faith can be a temperamental one that sees a rapid sea change in the face of opposition. For the last couple of weeks the rally fell into a slumber, but now winds are howling and the waves are roaring. Are people going to hold stocks based on hope and faith? Or, will they bolt for the nearest exit? Of course, many of the buyers in the market weren't apostles but just hot money traders on the prowl for big-time trades. Those big-time trades took major league hits yesterday as a company like Freeport McMoran (FCX) took a drubbing as it was every man for himself. Under such pressure, the faithful will be tested even more. The longer they hold the lonelier it will become as it's much easier to become a believer when the flock is alive and growing. I wrote about consumers being giddy with the new direction of the economy having a chance to prove the depths of their joy with economic data out this week. On Wall Street, those economists that sang lyrically of "green shoots" will need to tell us again why all the bad news was really good news. While there is no doubt that Main Street is enamored with change, many are not so enamored that they plunged into the stock market. Why put money at risk? Still, this rally has been as much about hope for the future as any sliver lining. Now, the monthly economic data cycle is upon us again. Stocks need to exit this current cycle on an upbeat note. We don't need to see water turned into wine, although any pluses in the housing market would be considered a miracle. So, the market took a hit yesterday, testing the resolve of the believers. Last week I asked for your opinions on certain matters and they are still flooding into my mailbox. Will a cascade of rules and regulations do more good than harm? I read some of the responses on "Money for Breakfast Weekend" on the Fox Business Network this past weekend. Admittedly, most wrote about the dismantling of the country, contract law, and the three branches of government. We will be sharing the responses in future commentaries, so stay on the lookout. In the meantime, please check out www.wstreet.com to see some of the early responses. New Poll: Will the nation be sicker and poorer or healthier and wealthier if proposed healthcare plans become law?

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