Market rallies as . . . well, who really knows?
Today the stock market is rallying. And it must be because investors love the way President Obama is dismantling Republican Socialism. Between January 2001 and January 2009, the U.S. was under the control of Republican Socialism, the idea that the purpose of government is to enrich the top one percent. How does it work? Cut taxes on the rich; fight wars that put money into the pockets of defense contractors; cut wages; get people hooked on debt to make up the difference; deregulate Wall Street and when they crater use taxpayer money to pay bonuses to the bankers who created the mess while keeping their banks from failing.
But maybe there's another reason the market is rallying -- investors are scrambling to cover their short positions in financial stocks in the wake of a letter from Citigroup (C) CEO Vikram Pandit, who said Citi is going to be profitable in 2009.
This little exercise in confusion is brought to you to expose how little I believe the explanations that people use in trying to describe why stocks move up and down every day. The real way to find out why stocks move would be to interview the people who decide to buy and sell specific stocks. Such interviews, which never happen, would reveal the reasons for the decisions they made.
Just remember that for every person who thinks it's time to dump stocks, there must be others who think it's time to buy them. Otherwise a trade would not be completed and stocks would not be priced. What we never hear in market analysis is what is behind the buy and sell decisions. The rest is utter nonsense.
Peter Cohan is president of Peter S. Cohan & Associates. He also teaches management at Babson College and is the author of You Can't Order Change: Lessons from Jim McNerney's Turnaround at Boeing. He owns Citi shares.