Mass Hysteria over what again?

Can you taste pessimism seeping out of the mouths of every financial “journo” about the market? Every financial tabloid and dramatized show have two important tools on their Swiss Army knife lexicon; recession and housing crisis.

I was watching CNBC and realized that this is a bunch of hype for a myriad of reasons. While I could go on for some time about the fear tactics that many journalists use to keep the viewer glued to the ticker, I think there are a few things that need to be pointed out about our current condition.

First of all, recession is apart of a healthy economy. Much in the same way that a forest needs to be burned down, sometimes a recession or a “blip on the radar screen” can be a good thing. Not only does it allow the investor to rethink a trading strategy and reemploy a new one, but it keeps the economy in check and often times slaps the hand of those doing risky or unethical behavior, i.e. the sub prime swindlers. What we are really looking for here is a Goldilocks economy.

The bump in our road is not as bad as it could be. While indicators of recession have moved a few percentage points, there have been no wild swings. For the most part, consumer spending continues to be steady and people seem to be secure in mortgages that were thought to be in technical default.

What is really bothersome is the reoccurring thought of why? Why do they keep reporting something that cannot be changed by anyone until the next set of number, those that will establish a trend happen? The markets enter a new realm in this situation and that is the mastery of the technical analyst. The reason that the real moneymakers do not care about a down turn is the financial tools that are available. The hedge fund managers and the venture capital guys have their money hedged in a much more sophisticated way.

While Jim Cramer is telling all of you to be diversified by having stocks in several different industries, the Wall Street guys are doing that and buying stocks short and long. They are diversified by, essentially, making beta one. These professionals are the people that are outsmarting you. They are the professionals that do not care if there is mass hysteria, they will make money either way the market goes.