. . . . . . . . . . . . . . . . Is This The Anti-Market? . . . . .
To all:
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Possible Anti-Market Scenario
The anemic volume and decreasing volatility concerns me greatly!!
If this trend continues, this whole thing could turn into an L-Bottom. And that is the type of bear market activity which psychologically and financially drains all but the very biggest investors. Like Chinese water torture, the markets drip slowly nowhere.
I see 4 good days, price wise. . . .but I want to see volume return and the number of advancers widen out considerably before I declare, "land, ho!". It is difficult to see today, because all looks good. . . but look beyond the prices at the overall market vitals and you will see what I mean.
Now we made incredible money playing aggressively long from 98 top 2000. And we have hedged and made money playing defensively and short over the past year. Playing the trends is easy when there is sufficient volatility. But when you take away that volatility and volume, the markets become like a desert. . . and nobody makes any money.
To Whom Does It Benefit?
And when we apply our 'qui bono' criteria template, I hate to say that the investment bankers still win. Here's why: Investment Banks have had to cancel and postpone many IPOs while the markets sold off, due to "unfavorable market conditions". However, when the market moves sideways on very low volume, it is not unfavorable. In fact, it is quite favorable because while the broad market is dormant, newly released IPOs become the primary focus of financial commentary and daytrading. They become the only thing to watch on an otherwise boring day. And they become the only things worth trading.
So What?
The possible scenario I am describing is not the market any of us [bulls or bears] had hoped to see. Yet there are signs pointing toward such a market. . . .but we'll need to see the earnings next month. If April earnings season doesn't cause the markets to move significantly higher or lower, then this is going to be one LONG and BORING summer for traders and investors alike. And if the markets do continue in this fashion, the way I see it, we have two choices:
1. We could force it. . . . and open as many accounts at E-Trade, Wit Capital, DLJ or other companies that specialize in IPOs. . . .hoping to flip as many shares as possible. [some of the most lucrative +500% to 1000% gain reports in the past years have come from those with literally hundreds of brokerage accounts. . . .each account assigned 100 shares of each IPO which were then flipped on the first day of issue. . . though I am not sure if this loophole has yet been found] . . . or
2. We could sit it out. . . . . pick a place we've always wanted to go on vacation. . . .and plan a wonderful summer for our families, visit our extended families and friends and just wait it out. . . . or take advantage of these wonderful interest rates and the possible slowing housing market . . . and use the summer to pick out a house and make a move.
Hide Out In Canada?
Have you ever spent time in Canada? I mean lots of time? With the U.S. dollar as strong as it is vs. the Canadian dollar finance.yahoo.com and with possible power outages threatening the U.S. over the summer, I am thinking about the Montreal Jazz Festival, the International Fireworks Competition in Toronto, Vancouver and Victoria. . . . and everything in between. . . . .always wanted to take that train across the country. However, we already have plans for Ohio and Palm Springs. . . . and are considering other points of interest. . . so not sure if there is enough time to do everything. . . I'll leave that to my wife to decide.
Care To Sit This One Out?
But looking at this objectively, the markets do need a rest after such an upheaval as we've seen both north and south. That much is for certain. And unfortunately, when it does rest in thin trading ranges, it tends to do so for extended periods. So we may as well make the best of it. Now if this is not the way things progress, and the markets do heat up with volume over the summer, [instead of cooling off as they traditionally do]. . . then we'll take it as it comes.
But by all means, don't trade, just to trade. That is a sure-fire road to loss. I've been sitting out for quite some time now and feel just fine. Not feeling any trading withdrawls! >g< For many, sitting out will have better results than forcing trades [long or short]. And at the end of the day, instead of counting your winnings or counting your losses, you count your blessings. . . .and that's not a bad place to be!
So once again, instead of analyzing these markets under a microscope, I feel we can be better served using a wide angle lens and by taking a few steps back. Wait. And carefully pick your targets before jumping back in. And for investors, KNOW YOUR COMPANY.
Herd Mentality
Some traders are running around looking for divine wisdom. . . on whether or not we've hit the bottom. And some stooges on TV are even trying to offer such. I don't think that is the question we should be asking. But rather, "What type of market is ahead?" and "How should I best position myself?" and "Where will the growth and earnings be?" and "Will I do better for my family by being IN the markets or OUT of them over the summer?"
Since we first started here at HOME 2 1/2 years ago, we've never followed the herd. . . but preferred to set our own course. . . .with outstanding results. Be sure not to default into a herd follower looking for something that will not happen because too many are watching for it.
NOTE: A reminder to those wanting REITs for the summer. . . you must get in many of them THIS WEEK to qualify for June dividends.
Best wishes,
Rande Is
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[C]2001 |
