Why I don’t worry about the Dow

The Dow went up 936 points today, the biggest one day jump in Wall Street history. Last week, it went down by a record 800+ points. This has been quite a roller coaster ride, and with any luck, it will catapult Barack Obama into the White House, which is where he belongs. Have I had any fear? No. Not a bit. Here’s why, and why you shouldn’t either. First, Wall Street is all about confidence (or a lack thereof) and the last two weeks have been no exception. With governments around the world cooperating and throwing billions to banks around the world, there is NO WAY the credit crisis or liquidity problems will continue to exist for long, and thus, sentiment will improve and thus, Wall Street will begin to prosper again (not by their own doing). Wall Street’ers will become "bailout welfare recipients" unabashed to accept Uncle Sam’s cash. It’s incredible to believe bailout legislation, as currently written, will reward those most guilty of harming the global economy during the housing run-up. Second, the old rule "what goes up must go down" is still in effect, but in reverse. No matter how bad Wall Street has performed, historically the Dow returns to a relative level of "normal" trading after huge losses. Bush and Team announcing they will inject billions into struggling banks (who, as many of you know, are the ones I place PRINCIPAL BLAME on for this crisis) will inject the markets will confidence, leading to more multiple triple-digit gain days. Third, the global connectivity and speed with which the markets move is much faster than in the 80’s, or even the 90’s. Computerization, the speed of international communications and information flow, and twenty-four-seven coverage of the "overnight" markets in Asia means we all know what each other are trading, almost instantly. No market can hide the ebb and flow of confidence anymore, and as we’ve seen, the human act of watching others do poorly or well in real time has an immediate effect on emotions. As the markets rise here, confidence will immediately impact other world markets, just as surely as the sun rises and sets. So don’t worry. For what it’s worth, this is still a big paper game, with only SOME of the paper actually being real, and the rest of it being forged and printed only in the minds of its pursuers. Your government pension fund or Social Security check will be safe. Most of us with market retirement instruments like 401k’s will see a drop, but most probably a return to profitability within a month or two. No one can afford to let the free world economy shrivel up and die - even if debt has to be written off. So whatever happens, keep your spirits up - as Wall Street proved again today, that’s really the only thing that matters.