Markets have been running hot for some time now with upside price distortions generated in large part by a Fed promoting asset price increases. The problems of large scale speculation across the board is that they become highly susceptible to event trauma. While Japan's problems are certainly off the charts, the principles of market declines from greater fool theory rallies is the same, ugly. Stories such as the amount of corporate cash on the sidelines, always the greatest hype extension, fade quickly as positions rapidly turn to red. As we learned in 2008, companies need all that cash when investors no longer want their stock.
Recent data showing broader participation in stocks by those once burned comes at a time when indexes have almost doubled. The fact that the pros are selling it to them and providing another clubbing is too amazing. Gold and agricultural commodities generate fascination but are doomed to fall to earth leaving the same morons looking at their statements with the same agony as their 401K brothers.
