Well, former trader and man who has been trying really, really hard lately to keep from flipping the fuck out in his daily missives, Richard Breslow, is out with his latest and it’s a winner.

Richard’s Thursday piece touches on a variety of stories we’ve mentioned here over the past month, including the fact that the SNB is a giant hedge fund, and the fact that the largest SWF in the world is about to up its already high equity allocation to 70% (incidentally, you should really read that last linked piece – it’s important).

That, as Breslow puts it, means “equities have friends in high places,” which in turn means it’s probably not entirely logical to try and frame everything in terms of whether the BTFD crowd was or wasn’t… well … BTFD‘ing on a given day.

That’s duly noted, but then again, it also underscores the idea that we are indeed operating under a regime that’s in a certain respect “tyrannical.” One of the things that makes it possible for these (essentially) price insensitive mammoths to keep plowing money into equities is the notion that stocks no longer fall. That’s one of the points we tried to make in our post on Norway.

Of course stocks do generally rise on a long enough time horizon, but at the end of the day it still feels like everyone (central banks, day traders, SWFs, the institutional crowd, the passive crowd, and the 2 and 20 crowd) are all just riding the same wave without realizing their own roll in creating the very same wave they’re riding.

Anyway, long live Richard Breslow. Here’s more…

Via Bloomberg

When most asset prices go up or down we talk in terms of some investing dynamic thesis. There’s a theory, a set of facts and forecasts and then we see how it plays out. What iron ore or wheat futures end up doing today affects the P/L, if you have a position, but it doesn’t validate your worth as a human being. Not so with equity prices. Especially indexes. It’s become a matter of principle to equate falling prices as proof that the investing citizenry is finally taking a stand against tyranny and rising prices as a craven capitulation. Looking at the markets through this prism is a logical consequence stemming from the seeming failure of more mundane analysis to explain what’s going on.