Today GM declared bankruptcy. I did you the favor of grabbing the latest news headlines from money.cnn.com. I'm highlighting the good news in green and the bad news in red:
- Stocks start June with a bang
- America's 10 biggest collapses
- JPMorgan to raise $5 billion
- Oil jumps on stock rally
- Time Warner's well-timed tax break
- Is the bank stock rally over?
- Bailed out banks lending less
- Why the market doesn't care about GM
- Manufacturing index hits 9-month high
- Xerox bets on pricey printers
- Shrinking salaries: Why we're saving more
- Trillion dollar health-care fix
So, as you can see there was a mix of news. Let me highlight the most "important" piece. This would be the manufacturing index. Why is that in red? I mean, the index did hit a 9 month high. Yes, the index did hit a 9 month high, but it is still in contraction. So while it is optimistic news, it's not good news. It's like when you think 500 people have died, then you find out it was "only" 450. Better, but still not good. And it is this news that sent the market spiraling up and 221.11 points. Forget that one of the largest companies in American history, GM, is filing bankruptcy (which, ironically enough, will affect Manufacturing.). Now, I by no means am a GM sympatheizer, but this just strikes me as gambling with emotion.
I understand that this is supposed to signify a recovery, but if you're crossing a mine field, and someone waves you on, are you just going to run sprinting across? If you're getting into a shark viewing cage and someone says "You'll be fine" are you just going to start throwing chum in the water and hop in happily (some of you might :-/)?
I just feel like the markets have lost all sensibility and are just running full steam on gut instinct and emotion. That's a very dangerous game to play. If you're going into the stock market, proceed with caution, because emotion creates volatility.
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