Hi Joel!
In the spirit of providing a bit of counterpoint, I'm sending this link along (warning: not for the faint-of-heart if you're bullish!)
prudentbear.com
One problem I had (beginning in the Spring) with remaining bullish is the credit excesses that kept cropping up. In the tech area, this takes the form of things like the Telco equipment companies vendor financing. It bothers me that they are selling stuff to companies that are VERY weak financially (such as the CLEC's), on their own credit. It's also why the Houses were so alarmed by the MSDW high yield credit chief resigning. In the finance area you see it in things like "125% home equity loans", the still high level of margin debt and increasing loan volume by subprime lenders. In spite of all of that activity, the general levels of bankruptcies and loan default remain high (which is definitely NOT what you'd like to see if the economy is just starting to slow down, ie, unemployment remains under 4%). The problem is you hear little about credit concerns from the popular media (though they'll always put on a seemingly endless stream of bullish sell-side analysts, CEO's and others who see "nuthin' but Blue Skies, from now on...). I can only conclude that these (valid, IMO) concerns have NOT been priced into stocks in general at this point. Therefore, despite the recent correction in tech stocks, I think they have further to go. I also believe financials are overvalued and uniquely vulnerable to an economic slowdown (yes, including the paper of the Houses themselves..ever wonder why Goldman Sachs put out that SPO a few months ago? Makes you say, HHmmmm). Therefore I remain mostly in cash, with some energy exposure (mostly natural gas and service equipment cos), some gold (yes, YECHHH, I know<G>), and some shorts and puts in financials (especially sub-prime lenders) and tech shares (IBM and regrettably JDSU...the latter based on technical/chart factors as much as anything). At this point, catching a falling knife is dangerous (and expensive, given rising Health Care costs!) The above is JMHO, and I understand if you guys don't agree. Good luck to all with your investments.
EDIT: Here's a "link to a link" on Friday's WSJ article on the MSDW high yield desk chief's resignation:
Message 14533164
Regards,
Patron |
