Bipolar Mr. Market

Obviously, I can't predict the amount dividends every high-paying stock is going to pay next quarter. But while the Dow and many stock markets around the world tumble on worries about the subprime mortgage industry in the US, and you feel poorer because the market price of your portfolio makes you feel like you just dropped off a cliff, think about this --

Is demand for electricity any less now than before this crisis started?

-- I can't speak for the overall economy, but here in St Louis the temporature has been reaching high 90s and triple digits (Fahrenheit) for over a week. Demand for electricity to run air conditioners is very high.

So has the true value of utility companies dropped?

Is demand for soft drinks any less now than before this crisis started?

-- I can't speak for the overall economy, but I'm pretty sure that lots of people are consuming record quantities of soft drinks, thanks to the terrific heat.

So has the true value of Coca-Cola (KO) and Pepsi dropped?

Is demand for gasoline any less now than before this crisis started?

-- Thanks to people driving and flying on summer vacation trips, I doubt there's been any serious drop in demand for oil and its byproducts.

So has the value of Canadian oil trusts dropped?

I hope you get my point -- don't count on market prices which are driven by market sentiment that blows hot and cold. In modern terms, Benjamin Graham's "Mr. Market" has a severe case of bipolar depressive disorder. He's going through a depressive stage right now.

And considering the amount of bad mortgage loans in the economy, I can't blame him . . . I feel bad when I think about the debts I owe!

But if you count on basic human needs for electricity, gas, snack foods and other such items . . . you can continue to receive income while everybody else is hoping Mr. Market will be happy again.

Bipolar Mr. Market
Bipolar Mr. Market