Intuition

I graduated Georgetown Business School at the height of the dot com boom (2000). Many of my fellow MBAs had job offers at start ups.

While the money was tempting, my intuition told me something was badly out of sync. If everything I was learning in school actually applied to the real world, then these 1 year old companies with negative cash flows should not have a larger market capitalization than established firms with a 20 year track record of solid earnings and growth.

This intuition played out right around graduation, and it left several of my colleagues stranded without a job after school.

Why the long story you ask....well it is that same intuition that led us to sell our house in 2006 and wait out the real estate cycle.

Again my intuition has been questioning the current run-up in the stock market. I didn't see how the housing slowdown could not affect the economy as a whole. They way I see it, all the equity and $$ people have been making in RE over the last 6 years was fueling consumer spending. Hence earnings at Home Depot and Lowes were the first to take a hit. Now auto makers are blaming the housing market. I think we will see more unravelling to come.

Yesterday's market correction, was small. But sorely needed IMHO.