Wall of Catastrophic Doom

The Sunday afternoon guest on Asian Squawk Box was Puru Saxena, President of Bridgewater which is the same outfit where Stephen Gollop hangs his hat. Like Mr. Gollop, Mr. Saxena is very bearish on the US, he actually said the US dollar is doomed. We don't save enough and places like China and India can do a lot of our work for a fraction of the cost.

He makes a compelling case. He advocates owning gold, oil and other hard commodities. Increased demand for resources, he feels, is obvious. He goes on to say the American economy will be crushed under the weight of higher rates, higher inflation and the consumer's inability to keep spending.

Barry Ritholtz published a series of what he called bearish quotes that should make anyone uneasy about the future direction on the US markets.

Any articulate follower of the market could support or refute either side of the argument. There are always people like Larry Kudlow (bullish no matter what) and Bill Fleckenstein (always bearish) that are very accessible.

It is human nature to be easily motivated by a talking head who sounds like he's smart. The fact is Ned Riley and Joe Battipaglia were wrong in ruinous proportions in 2000, 2001 and 2002. David Tice and Michael Metz missed 2003 and 2004. Riley and Batipaglia will miss the next bear move and Tice and Metz will miss the next bull move.

When I appear on TV I have a knack (maybe you would call it luck and I wouldn't argue) of getting more calls right than wrong. There are others that also get more right than wrong. How easy would it be to get only one thing wrong but have that one thing be the most important call? Very easy.

The point is to not get too carried away with anything that anyone says. Listen and learn, yes. Get panicked into buying or selling, no.

I believe all of this speaks to my philosophy of letting the market signal when there is a problem. There are a few ways to do this, I've written about the ones I use. In the article I linked to above to Barry Ritholtz' page there is a nugget about oil increases being behind every economic disaster, an 80% rise in the price of crude is likely to lead to a recession or a bear market.

OK, we'll take it as it comes and get defensive when it makes sense to do so.