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Pastimes : The Justa and Lars Honors Bob Brinker Investment Club Thread
VTI 338.73+0.7%Dec 10 4:00 PM EST
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To: Boca_PETE who wrote (6409)9/30/2011 6:29:52 PM
From: marc ultra1 Recommendation  Read Replies (2) of 10065
 
My thoughts on the ECRI call:

1. I've learned from experience to take their major calls very seriously.

2. I'm sure the recession call was putting pressure on the market today per their huge institutional following.
I suspect other institutions will be discussing it over the weekend which could be a factor Mon.

3. In terms of how I view it, I think it clearly increases the possibility of a bear. That 1101-1119 area of the Aug lows has held so far so if that fails we're not far from a bear. If and when that happens and we're in a bear which could be soon, I'll say my bullish call was wrong.

4. For now I'll just note the possibility of a bear has increased and I'll no longer be an aggressive buyer on market weakness and I'll wait and see if the bear comes. Unfortunately the ECRI is so influential that there could be an element of a self-fulfilling prophecy in terms of flipping into a bear.

5. Given their cyclical nature I sold my WY $16 call ex 10/21 for a modest loss as the timing of the ECRI call has changed things, and in the conservative account I'm handling for a relative I sold the GM convertible bonds and DLN a good dividend ETF I had recently bought which I had a small profit on but don't want the equity risk anymore.

6. We're at high risk for bad things now and I'm still stuck with a lot of WY which is not what I'd want in a recession. We also have very low valuations, very negative sentiment and a extremely accomodative Fed.

. Against those positive market factors, given the make-up of the House now ,significant new fiscal stimulus is off the table and the desire to cut spending further is putting us in a similar position as others whose economy is faltering and being made worse by a push for austerity.

If you look at the employment numbers the last several month private sector jobs were not that bad but there's an ongoing huge loss of public sector jobs dragging it down into really ugly territory. When you throw in stock market losses, continued weakness in the housing market, and the global nature of the economic downturn and specific threat from Europe, a recession wouldn't be surprising and could easily overcome the other positive factors for he market. So if we break below 1101 and then the rest of the short way into a bear I'm not going to eagerly be looking to buy the market..
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