The market drops and everybody wants to know why.  The popular press is carrying on about the government’s belated, small, and weak fraud suit against Goldman, Sachs (The real reason the market dropped? There were more sellers than buyers).  The market has been steadily advancing and is looking for a reason to take a break.  The Goldman suit provided the excuse; if it hadn’t that then there would have been another explanation for the drop: the volcano that ate the airline industry would have been faulted, or something else.  (By the way, that volcano will cause some real economic damage, though not likely severe, except in Iceland . Those poor folks in Iceland really didn’t need any more bad news.)

Though it is clear to see that Goldman is guilty of some wrongdoing, don’t get excited about justice finally coming to “the Wall Street Fat Cats that Did This to Us”.  On first blush the government’s case looks rather weak. There is only one individual named; a mid-level trader (age 29 years at the time) that bragged about how fab he was even though he did not understand the implications of what was happening.  Unless the government has or finds more evidence this thing will pass with little impact on the markets, and no significant punishments being doled out (unless you’re that poor kid with the big mouth).

Do not place bets on the beginning of the next great bear based on this, you’ll just get bit.  This market is lined up to take a breather before it continues on uphill.  My thinking is that we are a year into an extended bull (2-3 years).  As a reminder, a bull market is one that is trending positive, a bear market trends down.

A fair piece of the justice due those who “Did This to Us” has already been dealt out.  Who got punished?  We did, and most of us participated in creating this mess.  We over-spent, over-borrowed, over-rewarded excess risk, and generally applauded when it was all good.  It was quite a party, now we are recovering from the hang-over.  There are few innocents.  Oddly, one of the few innocents are folks in nations whose governments bought our poison debt derivatives like, well, like Iceland.

Jim Heitman, CPF Jim Heitman, CFP®, is a writer, speaker, and Certified Financial Planning practitioner in Southern California.