Tom, i agree with your misgivings about the exposure of the funds (incredibly overweighted in tech, and the recent flight into 'value' has made that segment overowned and overvalued too), as well as the comment re. lack of a free market. imo we see constant interventions in all sorts of markets that remind me of communist style central planning.
take palladium for instance, a market that can't be manipulated by US authorities. (the Russians of course CAN). well, they tried EVERYTHING beginning with TOCOM suspending trading in Pd futures, to the CFTC raising margin requirements to twice the value of the underlying, and the defense dept. selling off its very last 200,000 oz.
then they had to give up. result: palladium soared to its
true value, reflecting both the declining marginal utility of the frizzlebun (thanks Ed Bugos) and the scarcity of the metal.
my theory is that every market that CAN be manipulated by the authorities IS in fact manipulated, and the private sector vested interests are lending a helping hand. of course, aside from the more blatant examples, much of this is done very quietly. but circumstantial evidence abounds.
the 'money on the sidelines' myth has been dissected here already. guess what was the major theme in financial press articles on the eve of the '29 BK? yes, right, "money on the sidelines", "mountains of it". |
