Market At The Crossroads

i went to the crossroad, fell down on my knees

i went to the crossroad, fell down on my knees

asked the lord above “have mercy, now save poor bob, if you please”

yeoo, standin’ at the crossroad, tried to flag a ride

ooo eee, i tried to flag a ride

didn’t nobody seem to know me, babe, everybody pass me by

standin’ at the crossroad, baby, risin’ sun goin’ down

standin’ at the crossroad, baby, eee, eee, risin’ sun goin’ down

i believe to my soul, poor bob is sinkin’ down

Robert Johnson

A lot of people know the song Crossroad Blues, although I imagine most people don’t know it as a Robert Johnson song. It was originally recorded in 1936 in San Antonio for ARC records along with some other Johnson songs that aren’t known as Robert Johnson songs, including Sweet Home Chicago and Terraplane Blues. It was later recorded by Elmore James in the 1950s and again by Eric Clapton (with Stevie Winwood on vocals) when he was part of John Mayall’s Bluesbreakers. God Clapton recorded it again when he formed Cream with Ginger Baker and Jack Bruce in the late 1960s. But my favorite version of the song is by Ry Cooder, an underappreciated guitarist probably best known, especially here in Miami, for his association with the Buena Vista Social Club.

So, the song has been around a long time and it has been recorded countless times. And if you mention the song to someone who knows it if they’ll tell you it’s about Robert Johnson (or more likely, a generic blues guitarist) selling his soul to the devil in exchange for guitar talent. The Ry Cooder version of the song is from a movie – not a particularly good one I might add – that tells a version of this myth, albeit a kind of beige one with Ralph Macchio and Jamie Gertz.

And yet if you read all the lyrics, you will be hard pressed to find anything that even remotely supports that assertion. You can listen all you want but if you think the lyrics support that interpretation you are hearing what you want to hear. Now, there is, possibly, some social commentary in the song when he says “risin’ sun goin’ down, I believe to my soul, now, poor Bob is sinkin’ down” as that may be a reference to sundown laws, curfews for blacks during segregation in the south. But more likely the song is just a lament about not catching a ride at the crossroads – which is where anyone hitchhiking in the south back then would have stuck out their thumb – and not having a woman to keep him company. Sometimes things are just what they seem.

Investors do this all the time, see what they want to see, hear what they want to hear. Or sometimes see and hear what someone in a position of power wants them to see and hear. Their internal bias, their desire for a particular outcome, clouds their judgment and doesn’t allow them to see markets as they are. Everyone wants to know the future, thinks they need to know the future, to invest wisely and so they see in markets confirmation of what they already believe – or hope – about how that future will unfold. This is particularly so after big changes in the market as we’ve had in the last few months.

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Disclosure: This material has been distributed for informational purposes only. It is the opinion of the author and should not be considered as investment advice or a recommendation of any ...

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David Haggith 9 months ago Contributor's comment

This sounds like the usual pro-bull story that tries its hardest to recreate a bullish narrative in bad times. I predicted the stock market would take its first plunge in January of 2018, which it did at the end of January in a record-breaking drop at the time. I predicted the market's second leg down in this protracted crash would not come until summer, which it did when the FAANG stocks that had been the market generals for a decade utterly crashed (falling by about 40%). And I predicted that the market's worst leg down would be its third event in October, and it was. Why was the future predicable. Not because I'm divinely inspired or extra brilliant or have a crystal ball or have the market rigged.... but because the Federal Reserve has the market rigged and it told us exactly what its balance-sheet unwind schedule would be. It was a fundamental deduction to conclude that the start of QT in the fall of 2017 would not amount to much because it was so small that its only effect would be the fear that it was beginning, but that when the Fed doubled that rate in January, bond yields would spike and start drawing money out of stocks. Then, the market would digest this new reality, new tax breaks would fully kick in with economic benefits that were frontloaded to fuel a massive built-in guarantee of stock buybacks, which would carry the market along until summer when the Fed's third increase in its Great Recover Rewind speed would click in at a level that would finally start to get actually serious. And then, at then, just in time for an October surprise, they would kick things up to full velocity -- a rate of financial tightening equal to 5/8 of the massive doses of financial loosening they used to goose the market to heady heights in the first place. If you look at a graph of any market index it is undeniably obvious that the market blew all to pieces in January of 2018. The dive down then was not just a jolt down, it broke the markets trend line like a falling person breaks their back landing backward on a stair rail. It couldn't be more obviously broken, and the market has failed to recover throughout the Fed's tightening period. So, until the Fed stops it Great Recover Rewind, it is going to keep rewinding its fake recovery all the back to the pit of the recession where it started. --David Haggith The Great Recession Blog

Carol Klein 9 months ago Member's comment

Ah, if only we all had a crystal ball! :)