I was shocked today that the shares of both companies nearly doubled today on a press release stating that Freddie Mac reported a second quarter profit! I have examined the mark to market and accounting shenanigans which the press have not. The companies have manipulated the conservatory regulations related to receivership to distort their liabilities vs. their assets! The companies are as bankrupt as they ever were. What irritates me is that I sold shares in the companies two weeks ago because I thought they were a hopeless loss.

This leads me to the video that Matt recommended for viewing this weekend. Prechtor developed a very sophisticated argument for the 'herd' mentality in investing. He examined history in light of news pronouncements and historical sentiment and lectured that all of this pricing to past precendent and valuation based on fundamentals is nonsense. It is the sentment of the moment or the times which drives the investing herd and therefore price momentum. The 'news' of the two mortgage companies is irrational exuberance demonstrated. No one wants to be left behind so greed nixes fear and there is a rush to jump on the train! That is precisely what is driving this market higher. Fear that if you don't invest now the price will be higher tomorrow. Is this not the bubble herd instinct at play? The very irrational attitude that bid real estate values to the moon and created the liberal credit environment in which to play is now the same environment  now bidding equity values to the moon in the next bubble.

Indicating that the market is irrational and illogical. Set aside your biases about the dominance of bull or bear and trade the trends!