Nobel Prize for Finance and Medicine

Hallelujah! Looks like we can play this game for another two years. Dr Bernanke has saved the day. I am not sure whether he is a doctorate in finance but the Dr that I have prefixed to his name refers to the fact that he should be at least a medical doctor. No, I am serious. Ben Bernanke must be a medical doctor because he has taken and used a time tested device of medical doctors yesterday. Let me explain. The cure for a disease like polio  is a vaccination of weakened polio virus. All vaccinations are basically weakened agents of the same agents which cause the disease in the first place. The general rule is that a weakened version of the cause of the disease can be used to prevent the disease.

It is only now that I have started to understand what the good Dr knew all along. That the problems of debt can be solved by more debt. To ensure that the debt burden is weak he has promised to keep the interest rates close to zero for at least another two years. Thus, in one swell stroke, he has not just copied the medical principle, he has lifted it to a different plane all together by applying it to the financial markets. Just for this one act, he deserves to be the first person to win the Nobel prize for Finance and Medicine at the same time.

In such a scenario however, who could be the eventual winners? There are a lot of high paid strategists who will work on their excel sheets to give you an answer in the coming weeks. But if the good Dr could divine such a unique solution to our problems, maybe I can divine the future by meditating on it! My winners will again be the precious metals and commodities as inflation gets stoked around the world. The winners could also be emerging market stocks. The losers have to be paper currencies.

What confidence do I have in my prediction? I am extremely confident that my prediction will be as good as the predictions of most of the strategists we see in the industry! Notice that I just said that my predictions will be as good as that of others. I did not say I am confident that the predictions will be right!

Coming to my own trading positions. I am short and will continue to be short until 5210 is taken out now. I know that there is a morning high of 5223 but that was only at the open and not really traded. If 5210 is crossed I will cut my short positions. Will not go long yet.