How dumb can investors be?

Watching the recent activity on the stock market - especially today - offers a glimpse into the mind of the investor. When the Fed released minutes from their last meeting, stocks, which were already down, again, as usual, as they should be - fell even further as investors didn't cozy up to the idea that the FOMC was not seriously considering cutting the federal funds rate.

Hello! Earth to investors! The Fed isn't going to cut rates at this juncture because that would only exacerbate the conditions which afflict this sick market. The Fed is not about to bail out people who lost money on derivatives, packaged sub-prime mortgages, stocks, mutual funds or any other financial instrument.

The idea that supposedly "smart" individuals trading stocks would wait to hear the official word from the Fed that they weren't about to apply essentially what amounts to a band-aid to the economy. The economy will fail or succeed without help from the Fed. It always does, despite the weight people put on the actions of the beloved Federal Reserve.

Plainly, the people working on Wall Street are overpaid mimicking morons who follow, sheep-like, every movement (or non-movement) of the Fed instead of focusing on fundamentals in the stocks they are trading. If it wasn't so sad, the attitude of traders these days would be laughable.

Dow 13,041.85 -280.28; NASDAQ 2,500.64 -60.61; S&P 500 1,432.36 -34.43; NYSE Composite 9,289.49 -239.44

The Dow lost nearly 100 points in just the last hour - after the release of the Fed minutes. It doesn't really matter when the market moves lower, it is simply enough to know that it will and that there's little, if anything, the Fed or anybody else can do about it. Conditions in the credit markets are so entirely warped and information so sketchy that nobody is really sure of how bad the damage is and how severe the fall of the economy will be.

Suffice it to say that when the market - that being made up of mostly clueless traders - is unsure, it will not perform well. The credit markets are of vital importance to businesses and consumers alike and they are in a condition of complete disarray. As I've said here before, a crash is almost a certainty, it's only the exact timing that isn't known.

For every advancing issue today, there were five that were declining in price. There were 58 stocks making new highs and 150 making new lows. The stage has been set for some time now. Shortly, probably after the Labor Day holiday - or maybe just before it - all of the actors will take their places and deliver a hammer blow to stocks, not just in the US, but worldwide. It's going to be a sobering situation.

Oil and gold declined by marginal amounts. Silver was unchanged at $11.92 per ounce. Commodities are now acting as a proxy for the economy. Lower prices mean slack demand and there's a trend forming, though the oil markets, in particular, are still very much detached from reality. When oil falls, it will be a large drop. We could see oil prices down to levels that may actually stimulate the economy instead of acting as a hidden tax. Gas at the pump may be below $2.50 per gallon by Christmas, if not sooner.

The carnage on Wall Street is magnificent and we're just getting started. The next shoe could drop at any moment. Stay tuned and be nimble... and not stupid.