A Bear Market: Where Good News is Punished

Stocks in general are down about 2% today, but the big losers are all the companies in the news. Merrill Lynch has found itself $6.6 billion of new equity? Down 3.9%! Citigroup has found even more, to offset an $18 billion write-down? Mark those shares down 6.8%! Apple has a really gorgeous new laptop, and a super-simple way of renting movies using the internet? Well, we'll take 6.8% off Apple, and 4.1% off Netflix, just for good measure.

This is the difference between 2007 and 2008. Last year, equity investors had an astonishing ability to look on the bright side. Good news was rewarded, and bad news was, well, rewarded. (It can't get any worse!) This year, investors seem to have lost all patience. Bad news is punished, and good news is punished equally.

In the case of Apple, I can understand the sell-off. The computer company sells consumer discretionary items, and the mood of the country, as it slides towards recession, means that the masses are much less likely than they were last year to decide to splurge $1800 on a new computer they don't really need, no matter how thin it is. And if the markets were hoping for a 3G iPhone from Steve Jobs today, then it makes sense that they might punish his stock for its absence.

But I still want an Apple TV, and a Time Capsule, and a MacBook Air. I'm just sad it's not going to ship in time for me to take it to Davos.