Friday’s Free Association

For anyone who follows the market over a long period of time, one thing becomes clear. The search for clarity is nearly futile. I say nearly because delusion works wonders for some. The markets are like a mirror not only to our current sentiment, but to our expectations. The recent bounce higher in light of weak GDP data, Europe’s morass, and depressed home prices, brings out our most powerful of delusions. Maybe the onset of Spring has something to do with it? The irony of a rising Euro under a potential socialist French president, and the ongoing implosion at the European core speaks volumes.

Lloyd Blankfein, this week (on a victory tour) claimed that success was a risk, things might actually work out better than we expect. The banks might snap out of their slump and start lending, Europe might find a way out, and political ineptitude might somehow evaporate. It was another way to say ‘this time might be different’. The problem for anyone risking their (or others) money in this environment is timing. Obviously. Apple will go up, Amazon will rise on hope, demand, and crafty accounting, until they don’t. Goldman Sachs GS reaches globally into politics, enterprise boardrooms, central banking, and investment banking, their version of risk management is very different than mine. The cautious optimism of Mr. Blankfein was both reassuring and freakily scary.