The Vietnam War as portrayed in Apocalypse Now displaying its madness and carelessness around the people in the war followed by the "villian" Colonel Kurtz .... or was the Villian the U.S. government?

Despite the insanity American's demonstrated enormous loyalty to their commander in chief who despite criticsm from the "liberals" convinced many honest parents their duty was to send their kids to Vietnam only to be sent home in a body bag, be exposed to agent orange and be ostracized by society after experiencing the unthinkable first hand in serving their nation.

truly was indeed MADNESS.

The horror of today is that those who developed all of the models upon which derivatives were based are the same as those who developed all of the incredible analytical devices today called technical analysis. TA looks at the market and predicts its direction based upon the behaviour of the market using historical patterns to predict the future. It gives abolutely no thought to fundamentals. Fundamentals simply assess at a micro level the ability of the company to perform. It is forward looking in that it uses predictions of future returns based upon future sales, past performance of management, ability to change cost structures etc to determine the profitability of the company. The collective total of all companies using such an approach could thus predict the macro picture.

Here's the rub, its a lot of work and requires a fair amount of specialized training to successfully predict a single company's success let alone the entire market/economy. Seems like way too much work for today's "need it now mentality" esp when you can count on those same model makers, mathematicians, actuaries etc to bypass all that work and simply apply some lines to existing data to make a chart.

No one can argue the success the TA adherents have had. In essence TA has become an excellent predictor of market sentiment. Of course the same can be said about other even more complex models used by highly sophisticated bankers to extract enormous bonuses using derivative models while nearly collapsing the banking system. Only the collective wealth of American citizens (and I might add their future earning capacity) used liberally by the Fed and treasury dep't (remember from whence they came and who their friends are) prevented such collapse.

Are we today sitting on the precipice of the markets apocalypse? Just as the trusting American's of main street protested the US involvement in Vietnam today they protest the bail-outs, the loss of houses by good hard working people, the continued greed of Wall street, but they remain sheople ... The Horror ....

Bernanke and Paulsen demonstrated forgiveness is easier to get than permission. Yes the Ron Paul's of this world are attempting within a corrupt system to expose the travesty to middle America's wealth perpetrated which continues today. Can he be successful ... probably not ... let's hope I am wrong!

So what's the upshot of this commentary ... it certainly seems that this short term uptrend driven by TA has been an effective way to recover substantial losses most of us have experienced? Is the party over ... not likely yet but IMO its day will come. Be cautious in your use of TA especially those who have trouble using stop losses and accepting the loss. TA will continue to be effective in a status quo world but when the fundamental changes needed to correct the imperfections in the market occur a new model will be necessary. IN the meantime watch the fundamentals very closely and don't believe everything those who had little regard for the lives of those fine kids brought home in body bags from Vietnam say about the recovery.

the prophet

p.s.

For the other old timers out there have another look at 3 truly classic films ... The Rainmaker, Elmer Gantry, and Meet John Doe.

The first two star an amazingly charismatic Burt Lancaster and focus on religion and snake oil and how easily the public can be hooked. The last stars Gary Cooper and Barbara Stanwyck and wonderfully represents how the media can make something sinister out of innocence.

Those who have never heard of these films would do well to watch them ... who knows you may be inspired to watch a number of old films at a time that Hollywood produced films that provided both great entertainment, moral integrity and reminded us all to take responsiblity for our thinking, avoid the frenzy of populist movements, and be skeptical of your government and those selling a message.

Thought of yesterday ... A society that burns books eventually burns humans (pre holocaust)

Thought of today ... One need not destroy meaningful media, one need only replace it with the opiate of the masses. It will simply diappear.