ehsaale:I'm the first to admit I was one of those who refused to...

ehsaale:

I'm the first to admit I was one of those who refused to participate in the inflation led rally of QE1 and QE2.

Yes I missed out on fortunes, I was short the final death spiral and covered and went long pretty much rock bottom - 680ish SPX if I remember.

I only took 200 points. And went short from 900 all the way back to 1100, giving up all my profits and then some.

I will not make that same mistake this time. Hence why I am entertaining the possibility of a market surge to new highs this year.

What I am saying is - your comfort level of Central banking and government intervention is based on current predicaments and preceding events. No one really knows how big the ball of debt twine is - and when it unravels all the external machinations will be for naught.

Turning the temperature off, removing the kettle and using protection is all fine, but it works to a certain extent.

The brutal and honest truth is, the general investing/trading populance has become quite vigilant this time around - hence cushioning the falls. Which is credit to the banking system. However, with every failed disintegration comes the higher possibility of complacency.

I do take your point, that complacency can take years, even decades to finally pay the piper. I know smart guys who have gone broke trading the market as they see it, not as the market sees it.

Which is why I say thats the hard part, riding the eventual wave down. I'm willing to wager there were only a handful of people in the world with enough conviction (and funding) to toughen out the mortgage bubble (which really exploded in 2004).

Michael Lewis's book - The Big Short, chronicles hedge funds and professional traders who were utterly convinced housing was going to collapse the economy, only to see their bets go against them for 3 years. Even in the eventual meltdown - from Northern Rock going bust in 07, it still took 6 months for the real dramas to unravel.

Saying all that - experienced guys will note that Black Swan events happen in higher frequency this past decade.

Watch Societe Generale CLOSELY. EXTREMELY CLOSELY.