Do You Trust The Stock Market? I Don't!

No news tonight. Just a commentary.

Wow what a bounce. Its amazing how the stock market can throw a huge party while Rome burns.

I wanted to talk a little bit about the insanity that we are watching in the stock markets, and how the regulators are responding to it.

I must say I have never seen such a level of incompetence. About a month ago, the regulators decided to go after the longs by trying to regulate oil speculators that were long oil. This week the SEC decided to go after the shorts by attempting to stop all naked shorting on Fannie and Freddie as well as the investment banks.

First of all let me say that this is insane. What kind of message do you send with this type of policy? Are they mad at the longs or the shorts? At least be consistent when you are trying to regulate the markets. I keep asking myself this question: Do we even have a capitalistic stock market when people are not allowed to go long or short?

Here's an idea. Lets stop all investors from going long or short. This way no one will lose anything and we can sit here and enjoy fantasyland! The regulators need to wake the hell up. Longs and shorts set the prices in the stock market. This is how free markets work!

Without both sides of the trade, how do you set a price on anything. Is oil worth $20 or $200? If traders can't set a price, who in the hell knows?

When you interfere with how the markets work, you hurt investor confidence. This is the last thing the market needs right now. How can anyone take a position long or short if the regulators keep changing the rules?

I have absolutely zero confidence in the stock market right now. I am mainly frozen in cash because of the insanity that I watch on a daily basis on Wall St. The market is quickly becoming one giant manipulated piece of garbage. If they aren't careful, investors will take there money and put it elswhere.

As it stands right now, I may never be fully invested in the stock market ever again. You know why? Because I don't trust it. There is too much instability. I compare it to the wild wild west! I mean take a look at whats going on: Regulators are going hog wild as they meddle in the markets, traders are driving companies into the ground, Rumors are spread on a daily basis that manipulate prices(even on CNBC).

If Warren Buffet had bought every company that he had been rumored to have been interested in he would be in bankruptcy!

Value investing has been thrown out the window. The S&P is up 2.7% over the last 10 years as we go in and out of bubbles. If I had thrown my money into fixed income in 1999, I would have killed the stock market in terms of performance. I could have gotten 5% just in CD's which would have almost doubled what the pigmen returned in the last decade.

Who in the hell wants to invest in a stock market that rises and drops 50% with almost zero return in the long run? Not me! Fixed income is looking better and better in my eyes.

In order to restore confidence on Wall St., the regulators need to stay out of how the market works and focus on the crooks that are manipulating it.

If a bunch of trading desks got together and shorted Bear Stearns out of business then throw the book at them if the evidence is there. Send them to prison!

Here is some more advice after you get done throwing these crooks in jail. Why don't you force the banks to open up their books and realize their losses? This would go a long ways towards restoring confidence.

We all need to understand that this debt bubble needs to unwind and there is no way to stop it. I cringe as I watch all of these bailouts that are flying through Congress. You might as well just take that money and start a bondfire in front of the Washington Monument. I have a favor to ask of you after you throw this money away. Can you please raise my taxes 20% and force me to pay for it?

The founding fatheres of this country would roll over in their grave if they saw what was going on today on Wall St. and in DC.

The regulators should focus more on restoring confidence and making sure this debt unwind is done in an ordely fashion.

If they continue to pick on the longs and the shorts, they might find themselves with no market left to regulate.