Friday, July 18, 2014

When It Rains . . .

Yesterday, a civilian plane was shot down over the Ukraine, killing all 298 passengers.  Within the hour, Israel invades Gaza.  The Dow drops 161 points, the biggest drop in two months, reflecting the increased uncertainty.

In addition, the civil war in Syria still rages on.  Despite our investment of lives and treasure, Iraq is sub-dividing itself.  We're still not out of Afghanistan, and they cannot agree on who won their Presidential election.  Massacres of the weak are still routine in the Sudan.  Only Putin knows why he has not already taken the eastern half of the Ukraine, to go with his seizure of Crimea.  The Shining Path is still alive and murderous in Peru.  Argentine is dangerously re-writing the rules of international finance.  Even the U.S. has a thorny invasion issue on its southern border.  And, just for good measure, there is another outbreak of Ebola in Africa.

I recall a professor in college saying it was not a constitutional requirement that the President of the United States be intelligent.  In fact, it is such a lousy job that no intelligent person would want it.  Anybody who actually wants the job is inherently unqualified for it.

The bright side is that this uncertainty spike may finally cause a much-needed dip in the stock market.  On average, the market experiences a 10% or more dip every 18 months.  We haven't had one in 32 months now and are long overdue.  (Frankly, I was surprised the Dow dropped less than 1% yesterday, which may indicate the underlying strength of the bulls.)

Without insensitivity to the human heartache involved, this uncertainly spike will resolve itself to a more normal level, and the stock market will resume its more normal long-term growth.  Until then, let it rain, let it rain . . .