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	Firing Back
	Dr. Smartypants

	MaryEllen Tribby Publisher
	Jedd Canty Business Director
	Nicole Reynolds Marketing
	Jon Herring Editor

	Charles Delvalle
	Andrew M. Gordon
	Dr. Russell McDougal D.D.S.
	Rick Pendergraft

Tuesday, May 13, 2008

Firing Back


	Rick Pendergraft

I received several emails about my Barney Fife/ Ben Bernanke analogy. Most of you agreed with my take on the Fed and the fact that they keep firing shots and they keep missing the target. I received one email that was the best though, just because of the gentleman’s enthusiasm:

WOW!

Have you been reading my mind? I've been using this "running out of bullets"analogy since the "rate drop extravaganza" began! I've been telling friends that it's going to drive oil prices up as the $$$ sinks against the Euro!

Finally!

Someone actually puts it in print! Now I can print this and take it to my friends and tell them to stop calling me "Chicken Little" now!

Great article!

Tony A

Well Chicken Little, I mean Tony, I wish you were friends with someone at the Fed. Maybe then we could get this message to the Fed Heads and it wouldn’t cost me $60 to fill up my tank.

My article from May 5 received some attention in the inbox last week as well. One gentleman from the UK was a little confused about the economy and the market.

Hi Rick,
Im a new reader of your excellent e.mail and also a new and inexperienced invester, so hopefully my very general question won't sound too naive!
Over the last few months, your e.mails (and other articles that I read) have painted a logical view that the American economy is in (or approaching) recession and things aren't looking good for the forseeable future. My simple question is: Why has the Dow moved up around 10% over the last month or two with this economic backdrop? (or are we due for a lagging correction?)
As a beginner in my pre-investment reading, I would appreciate your comments
Thanks for your excellent articles
Phil W

Thanks for the kind words Phil. It’s always nice to hear when readers are learning from what we write and benefiting from our labor. The first thing I would caution is that you use the word “logical” to describe what is going on. The more you follow the market and the more you trade, the more you will realize that trading and the markets have little to do with logic.

The second thing to learn from this scenario is how much sentiment matters. Back in March, we were seeing extremely high levels of pessimism (five-year highs to be precise). That pessimism has now faded and we are seeing more and more optimism.

Most people learn technical analysis and fundamental analysis first, but sentiment analysis is just as important as the other two. The problem is that there isn’t as much information out there about sentiment as technicals and fundamentals. When you see extremes in the sentiment indicators, you can bet that a reversal is at hand. Learning sentiment will sometimes make the illogical sound logical.

Good Luck and Good Trading,

Rick Pendergraft

P.S. To let me know what you thought of today's article, send an e-mail to: feedback@investorsdailyedge.com.

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Dr. Russell McDougal

Let’s get unplugged. The following response came in from Robert in regards to my article on commufascisocialists:

“I have been appreciating your essays. I experienced some mild resistance to today's "Commufascosocialism" . The US Constitution is a fine document. Whether it is singularly responsible for the "greatness" of this country or not is up for debate. I was thoroughly indoctrinated like every other child out of the 1960's - Pledge of Allegiance every day, etc. But it is blind of us to think this country is SO much more wonderful than any other in the world ! What conceit !! This grand experiment has been a rather messy affair.

I cherish my freedoms. I like happiness and privacy. I am really troubled when I hear of personal properties being condemned and confiscated. But I do worry about ALL of the members of our society. If compassion and empathy evoke some "Socialist" response - well, call me a Commie! The problem, I think, stems from the fact that the world has become far too small (read: too many people and not enough resources/opportunities). We all can't continue to exploit the planet (the way you do, Rusty...) Ultimately, we will run out of stuff, AND the crush of the disenfranchised will max out. Talk about ugly. We are screwing the planet AND the human race! I'd like you to meditate on the concept of Sustainability - for you, your children and grandchildren - and everybody and everything.

Is unfettered "freedom" a really good thing always?? Obviously not (witness the over harvesting and collapse of fish populations - our food source for God's sake !!) Whatayagotta say about THAT, Smartypants?!

Best regards,

Robert”

Oh, gosh, Robert, I hardly know where to start. Whatever has gone wrong with the Great American Experiment is certainly not because the Constitution was flawed. More like the Constitution was abused.

The US Constitution and the freedoms guaranteed therein set a new global standard. This changed everything. This inspiring document has yet to be surpassed as to setting up individual freedoms against inevitable government abuses. You somehow think there is “conceit” in claiming the Constitution as being superior to other countries foundations? I’ll stick with the Constitution and you can have whatever you believe is superior.

“Compassion and empathy” have very little to do with the “state”. The feds tend to goof up anything they attempt to solve. These issues are much better left to the private sector. Dreaded words… “I’m from the government and I’m here to help you.”

Identifying yourself with socialists or even communists is not extraordinarily surprising to me. The US has long since plunged in these directions. I believe both of these systems are unmitigated disasters. You can have your manifestos and your Little Red Books.

Too many folks on the planet? That’s the globalist dogma. Let’s just trim the population down and everything will be OK. You have obviously bought the big lie. Let’s let you choose which human beings get eliminated. I’m from the camp that says all men (women) are created equal. It is the elite greedy globalists that are destroying the Constitution and raping far and wide.

How about “exploitation of the planet”? Maybe you’d rather not have a computer screen, keyboard, computer, light source, transportation or modern housing? Shut down exploration and mining and you’ll get your wish. It’ll be back to the dark ages.

There is such a thing as responsible use of global resources. The people you think shouldn’t be clinging to the earth are an order of magnitude more important than earthly contents. Still, I decry any abuse of our earthly resources. They are there for our use, not abuse.

Any chance you were drinking or smoking when you wrote the above response?

Live Resourcefully,

Dr. Smartypants

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