Euphoria On Wall Street

I am still short, and will take this rally as an opportunity to buy more put options on several overvalued stocks. (If their prices come down, which so far, they haven't.)

Traders and big banks are buying stocks because they have nowhere else to put their money.

This is not a good reason to buy stocks. The FED is trying to reflate the world. But all their bubble blowing will be in vain, because stock market bubbles do not stimulate demand.

I know it is very difficult to not jump on the bandwagon, but if you can refrain, you will be glad you didn't join the party.

While others are suffering from a terrible hangover, you will have enough cash to make real, solid investments that pay you cash. You will be able to buy assets like real estate and large dividend paying blue chip stocks. The party crowd won't, because they will have lost their gains...again.

Remember your buddies bragging about all the money they were making in Tech stocks that you thought were too risky? Remember what happened to their retirement funds when the tech bubble burst? Do not chase returns. It is the sure way to financial ruin.

In order to believe in the stock market rally we are seeing you must believe at least a few of the following:

1) Value can be created by devaluing currency.

2) Current debt levels are sustainable, for financial institutions, households, and other corporations.

3) Our Federal Debt can be reduced without a period of economic contraction.

4) Average consumers are not tapped out, they are ready to spend again.

5) The FED inflating stock prices will cause no long term damage to our economy.

6) Corporations and consumers will do well in an inflationary environment.

7) Corporations will make more money as the world's financial system implodes.

Unless Bernanke is mad, he would not have authorized QE2. I am assuming he is not crazy, and his intention is not to destroy our economy. Therefore, he must think DEFLATION, not INFLATION, is taking hold of the economy.

What he is doing is like maxing out your credit cards to do a major remodel so your neighbors will think you are rich even though you just lost your job and are deeply in debt.

This is what he is doing to our country. I don't even think he realizes it. I think he believes he is doing the right thing. I think he believes he can stop a depression from happening. He is wrong. I just hope the unintentional damage he does in the process won't destroy this country I love.