The Return of FOMO?

 For some, Thursday likely brought the return of FOMO - the Fear of Missing Out. Volatility is an overused and abused term, but one example of it was Thursday. The stock market exploded up. Oh, and let's not forget the bond market as well. After weeks and weeks of a horrid grinding down, explosives were placed under bonds too. Even gold got a shot of adrenalin.

And so the financial media began it's chant: The bottom was reached last week. Thursday shows us the way to restoration of a bullish stock market. Get in while the getting's good.

And for those who hear the siren song and allow their emotions to be wrapped up in a bullish bow, FOMO emerges as the driver of piling back into stocks...of course, only the "bargains" that the Bear Market has left for us to pick on.

If you believe the Bear Market is over, you'll likely buy into the FOMO camp. But what of those who see this from another view. What view is that? Well, a few things come to mind.

Most immediately, let's address the "lighter" inflation number that's came out. They were supposedly the igniter. And, yes, the rate of inflation was lower than anticipated. Of course, the media - and other collaborators - presented this data as a sign inflation was declining. In reality, the rate of increase declined. To be clear, inflation increased. But, alas, the chatter was enough to trigger the HFTs (high-frequency traders) who dominate daily trading volume on Wall Street, into a buying frenzy. 

But was that frenzy all the result of HFTs programmed to respond to date points that include media coverage? Likely not. Apparently big players had built up a huge short position against the stock market in anticipation of the election. That is, they bet on stocks going down in earnest. When the extreme opposite occurred, the Big Boys had to cover their shorts by buying back the stocks they had borrowed. That was the gasoline sprayed onto the flames the HFTs stoked. A conflagration ensued.

That's the technical explanation. But here's an interesting theory proffered by one of our Brain Trust.

Recall that all of this occurred in the face of the collapse of a big - as in BIG - crypto firm, along with other lesser cryptos that apparently withered to the virtual nothing from which they were created without much fanfare. You had to be paying attention to even notice. While the financial media did cover the story, it was quickly squashed on Thursday. So the theory here goes something like this:

The explosion was instigated by the government PPT (Plunge Protection Team) These folks manipulate markets for their own reasons, although theoretically it's for the good of all of us (Hah!). The collapse fo the big crypto firm caused losses - some quite enormous - to be suffered by many supposedly sophisticated investors. Would this be the start of something even bigger, along the lives of the collapse of Lehman Brothers? (Remember that started the financial chaos of 2008.) So instead of a bail out, the PPT manipulates the markets higher - dramatically higher - to stem cascading selling of firms needing to meet margin calls - the typical cause of credit market liquidity freeze-ups, the frequent cause of stock market collapses, the germ of financial crises.

So...instead of bailing anyone out to stem the tide of financial chaos, we had Thursday's manipulated run-up, which should continue now for a while, perhaps through the end of the year.

It's a theory.

Whether that theory explains this week's drama, those of us who don't buy into FOMO need to divert our attention away from all this for the sake of our peace of mind. And, of course, only with peace of mind and quelled emotions can we at least attempt to make rational decisions about our money.

In that spirit, here's a diversion, one that's not trivial and certainly not frivolous or stupid. We consider the fact that the month of November is devoted to the Souls in Purgatory. Of course, you have to understand what Purgatory is, and believe in its existence, to appreciate where we're going with this. If you don't, just know that it's a "place" where those who've died might go if their souls are not sufficiently "clean" to enter into the Presence of God, in Heaven. Their "cleaning" consists of suffering, to be endured for the reparation of their sins. They could have fixed things while they were alive, but for whatever the reasons (and they are legion and common to most of us), they died before sufficient reparation was made. 

So upon death, they find out they are indeed saved, but not quite spruced up properly to enter the Pearly Gates yet. They now must endure sufficient suffering such that their sins are fully wiped away. The filth that causes their souls to be unable to stand the Perfection that reigns in Heaven must be cleansed.

Seriously.

And so during this month, we who grasp and believe in the reality of Purgatory say special prayers, make special sacrifices on behalf of these suffering souls. Again, November is the month devoted to the Holy Souls in Purgatory.

With that in mind (and heart), we of such ilk can focus our time and energy today not on ruminations about the doings of the past week in the markets, but on those who need our help. And to help us to be recollected sufficiently to do so, here's an incredible performance of an version of "Lux Aeterna" by a group called Voces 8, a live performance. It's short, less than 4 minutes. I does the trick for me. I hope it does for you too.

Oh, and if you're unfamiliar with all this about Purgatory, you'll benefit anyway. If this can't quell unruly emotions and promote peace of mind, I don't know what can.

Here are the words:

Lux aeterna luceat eis, Domine, cum sanctis tuis in aeternum, quia pius es.
Requiem aeternam dona eis, Domine, et lux perpetua luceat eis.

May light eternal shine upon them, O Lord, with Thy saints, forever, for Thou art Merciful.
Eternal rest grant unto them, O Lord, and let light perpetual shine upon them.