You're right about gloating about other's pain. I certainly don't mean to do that and would like to retract any sense of that. People loosing $ certainly doesn't make me happy.
But sometimes I think those on the long side don't listen to how THEY sound at all. Enthusiasm is one thing. But I took a fair amount of ridicule when I predicted that the market was set for an imminent downspell Tuesday at 2:30 or so after 1) it had rallied for a number of days to the high side of what may be its current (downward sloping) trading range, and 2) the fed failed to lower the full .5 hoped for, and also left untouched the symbolic overnight lending rate. I said those things, and that the market would again shift its focus from interest rates coming slowly down in the US to overseas troubles (spreading financial system teetering and worldwide contraction of credit), in an effort to be helpful. I had just sold a number of positions I had been in for a short term rally, following the fed announcement.
I have since reminded someone who engaged in some ridicule that perhaps he shouldn't be so sure that in this environment the market is wholly unpredictable. (Certainly it is NEVER completely predictable either.) But there are certain moments that are pretty easy.
I would certainly agree that no one can be right in calling it every time, or, generally, calling the inflection points perfectly.
An important event right around the corner is the Brazilian election. The good guy for the markets, Cardozo, is heavily favored to win, and win by enough to obviate a second round runoff. If he doesn't win by that much, look out...because Brazilian devaluation will seem that much more likely.
If he does win, I'm not sure. It should be bullish, and probably will be for a bit. But then concern will rise that Brazil is a cooked goose no matter what they do. (Because their budget deficit remains at 8%, and though Cardozo will again work hard to get the legislature to approve budget slashing steps, they won't happen immediately...an the wolf is at the door.
If a devaluation does happen, and the markets DO tank here as a result, those moments of quasi panic selling will turn into a great buying opportunity. Near term at least.
It's if they struggle to muddle through, and manage to at least for a while, that its tough to call. And of course that is the most likely scenario.
My crystal ball.
Doug |
