In the fwiw category ... comments from Robert Loest ..
"August 24, 2001: Is The Friday Rally for Real? In a word, no. There seemed to be an awful lot of enthusiasm on Friday as investors whooped it up. Can't blame them, of course. It's been a pretty grim year, and most of us can get pretty excited just by not losing any money. Nevertheless, Friday was not the beginning of a new bull market. Investor sentiment is still not negative enough, for one thing. The clincher for us, though, was a look at the stocks that had the largest gains. As Laszlo Birinyi has already pointed out, rallies are often in those companies that have declined the most, so that we are just recouping some of our losses, not extending gains.
The reason is pretty obvious, actually. We compared a list of the biggest gainers today with a list of the biggest short positions in the last month. They were practically the same list. Clearly, then, the rally was due to short covering, not long term investors getting back into the market. Sorry, but we aren't biting on this one. We want to see a different list of companies going up in the middle of more bearish sentiment, then maybe we'll start spending some of our cash hoard. We hate sitting on it, but this is not the time to be reinvesting just because we have the cash. And no, we aren't timing. We just can't find much to buy right now."
Regards
Stephen |
