BUY and HOLD?

The market is up and I am long. I should be in a happy place currently. But I am not and that has to do with the fact that somehow what the Europeans have done looks less like a solution and more like a procrastination. The day of reckoning has only been postponed. Hopefully it has been postponed enough for me to see a good rally and make some money in the markets.

This rally has helped my position in commodities too with metals and crude rallying nicely from their lows. As some noted strategists would put it, "the risk off trade is being cut and we are seeing some risk on trades being put on" "The ability of the market to continue this rally will depend on whether the European plan succeeds in its endeavour to stem the contagion and whether the US consumer will remain resilient and continue to buy this holiday season"

In other words what the strategists are saying is that the rally depends on two things 1]  whether we are willing to indulge in self delusion and believe that the Europeans will implement this plan in full and that the full implementation of this solution is sufficient to halt the contagion and 2] whether the US consumer will continue to consume things that he does not need with money he does not have in search of an illusory and transitory happiness

The answer to these questions is not obvious. While it is possible that this time the markets will question the whole solution story pretty soon, it is also possible that the markets could buy into it for the time being. We humans have an incredibly capacity to delude ourselves, specially when it is in our short term interest to do so. So for the time being the markets could believe in the European fairy tale. The US consumer could continue to buy out of sheer habit and we could for some time feel a sense of normalcy return to the proceedings. But reality has a nasty habit of catching us at the most inopportune time and when we least expect it to. So while the markets can rally currently, I would still not want to be a BUY and HOLD investor in this market.