As I stated on my web page, what I want to happen is for the fed to raise so we can get it out of the way and I don't believe they will raise a fourth time this year. That would be a lot easier to trade for me. I however doubt that will happenfor the reason I stated in my earlier post. Yes, I think the Fed is hostile and I would be too iof the market ignored my warnings for years and bid the market up 35% on a 7% increase in earnings.
I don't listen to these talking heads that all said there would be no raise 2 raises ago since it is in all thier best interests to give the slant that all is OK and to invest fully. None of these "experts" ever have warned of a drop in the market or an increase in rates BEFORE it happened. If we traded based on the "experts" we would lose 99% of the time since they are most bullish at tops and most bearish at bottoms. Thanks but I will stick with us amatuers.
The reason the Fed should stay hostile as you put it is they have been warning this market that they are out of hand with possible bubbles, irrational exuberance, "investing with idealogical conditions" etc for years. The market has shrugged all this off but times were good with interest rates dropping, a strong bond, favorable unemployment etc. All those things are changing. I won't go into how they are changing since this thread has been talking about it for 6 months.
One only has to look at how many calls are being purchased and how few puts to see that despite a 10% drop in the indexes and 20% drop in most stocks, there is still no curbing of the "market only goes up" mentality.
The number of professional brokers, traders etc that have ever seen a bear market is a very minute percentage so to most people it will never be a possibility until they just plain have it hit them between the eyes with a sledge hammer. Look around SI, how many people are down in thier portfoliios and think it is because they messed up not realizing the chances of picking a winner now are getting slimmer and slimmer.
In my data base, almost all my stocks went up, then last year as things changed in the market, I tried to balance my picks to 75% long and 25% short. Over the last 6 months, I would have to say that 80% are now shorts and 20% are longs. This recent pullback appears to have narrowed the winner list even further. I have not counted but it appears that "IF" we head back up, I will be able to count the stocks over last years prices on 10 fingers.
Feel free to keep fighting the Fed and what is going on underneath the market. As for me, I will play both sides but I will keep my bias with where the Fed is trying to move us and where the majority of the market has been moving for the last 18 months. When bulls post, it is always "just because it has to go up". The neutral people here that seem to be bearish are so only because of all the reasons posted, declining fundamentals and majority of stocks that are bearish. I am sorry but I have a hard time mortgaging my house and going full long on margin when the dollar is getting spanked, the bank and utility charts are in a spiral down, transports are getting slammed, the Fed is tightening due to increases in commodities, gold, tightening labor markets, irrational exuberance in the handfull of stocks that are still climbing which seem to be only stocks with zero earnings that will probably NEVER make money etc etc. Yeah that is smart investing <ng>
EDIT - Just found this "futures aso bright gotta wear shades note"
<<<New data Friday from brokerage Salomon Smith Barney show just how deep and widespread the market's decline has become:
* The average New York Stock Exchange stock has fallen 27.7% from its 52-week high (through last Tuesday), or nearly three times the Dow's decline from its high.
* The average Nasdaq stock is down a stunning 34.8% from its 52-week high.
Because averages can be skewed by some very big losers (or winners), Salomon Smith Barney looked at the market from another angle: the percentage of issues traded that have fallen more than 10%, 20% or 30%.
On the NYSE, 37.5% of all stocks now are down 30% or more from their 52-week highs. And 62.6% are down 20% or more.
On Nasdaq, 52.1% of all stocks traded now have lost 30% or more from their highs, and a whopping 70.9% are down at least 20%.
Perhaps most striking is that the hammering has become relentless in the cases of many former market stars. Example: Mattel on Friday plunged $2.13 to $16.88, its lowest price since 1995, amid fears that the company's earnings may again miss expectations.
Many health-maintenance organization stocks dived 20% or more Thursday on reports that the industry may be hit with class-action suits alleging lousy patient care.
The term "out of favor" is quickly becoming superfluous in trying to segment stock groups. With few exceptions--notably, the new-issues market, where the speculators still are running wild--try to name some stock groups that are in favor.
How much worse can it get? That's the trillion-dollar question, of course. To buy into the market today takes a lot of guts, with the interest rate question looming and Y2K worries likely to become more pronounced in coming months.
But then, buying stocks when they're down is always the hardest decision. It's also the way savvy investors reap the biggest rewards in the long run.
A year ago, at the depths of the market's fears about the world economy, few people wanted to sink money into Asian stocks. One year later the average Japanese stock mutual fund is up 100%.
Wall Street's bears argue that even though U.S. stock prices are down, they aren't down enough. The pain level needs to become excruciating, they say, before stocks will be worth buying.
It could happen, certainly. But if the outlook for interest rates, inflation, the dollar, corporate earnings and other key market concerns isn't as dire as many people now fear, there is at least a reasonable chance that what is now a bad bear market for many stocks won't turn into a severe one--and instead will give way to another substantial rally sooner than later.
The accompanying graphic is something I've kept on the wall next to my desk for decades--I received it so many years ago I've forgotten its source.
It tells the story of the market's cycle: At the bottom of the curve (when stock prices are depressed) investors view shares with contempt. As the market rallies, investors first are cautious, then confident. At or near the peak, investors have total conviction about their stocks, and even when prices begin to fall, psychology remains complacent ("It'll blow over").
Finally, when prices are down sharply, there is concern. As they fall further, concern turns to capitulation ("Get me out at any price!"). Which then leads to contempt--and the cycle starts over.
Where are we now on the bell curve? With many stocks, I'd argue we're already into concern and capitulation. The bears say we've only crested conviction.
Someone's going to be wrong. >>>
Tom Petruno ---latimes.com.
Message 11435055
Good Luck,
Lee |
