Juggling Dynamite

I must admit: some days life on earth can seem a little dark. Sometimes it can seem like we humans are rather hopeless creatures. Too big to fail? More often it can seem like our more serious issues are just too big to fix. Never mind the financial system for a moment, what about water management, food and the sustainability of our eco-system? Wasn't it David Suzuki who said we are all speeding head-long into a brick wall driving a Mini and arguing about who gets to sit in the front seat?
A few years ago I saw an Astrophysicist being interviewed about the evolution of our planet and the fate of humans. He acknowledged that we were very likely destined for extinction eventually but “that was ok”. He was calm about it; I will never forget the peace he seemed to possess.
This excellent video clip about the Big Bang gave me a similar sense of peace about our world. Not that it is hopeless. Not that we should give up or give in, or not keep trying to make things better. But in the end, we are not ultimately in control of our destiny. Whether we believe it was “God” or random, there was definitely a larger energy force that created our universe. We are perhaps only one phase in an enormous boom and bust life cycle that will carry on throughout infinity. Food for thought…

First is Nouriel Roubini reminding us that although we are likely to see a couple of positive growth quarters born of government stimulus, there are significant problems still overhanging the world recovery and why the Euro zone is in worse shape than the US. See Ambrosetti forum 2009: The Rising Risk of a Double Dip.
And from the World Economic Forum meeting in China this week, FANG XINGHAI, Director-general of the Shanghai Metropolitan financial services office, on the need for China financial reform and why Chinese people are culturally averse to spending on credit. See Fang Xinghai on The need for China financial reform.

Our technical analyst Cory Venable gave me an interesting picture this week of relative risk and reward in the S&P 500 today. Dividing the VIX (Volatility Index) by the price level of the S&P 500 Index, we can see buys were triggered for “a trade” in both November 2008 and March 2009. What is interesting now is that with stock prices about 50% higher than March and volatility about 70% lower than the highs of last November, this risk ratio has recently been ticking up again. A third test of the dotted trend line may present another buying opportunity ahead.