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Strategies & Market Trends : Sharck Soup -- Ignore unavailable to you. Want to Upgrade?

To: American Spirit who wrote (20706)	5/5/2001 10:40:52 PM
From: DebtBomb	Read Replies (1) \| Respond to of 37746

Another Deep Interest Rate Cut Ahead ``You just can't expect to issue an interest rate cut and expect to have the ocean liner turn on a dime. You just have to wait a little bit for this to play itself out,'' said Steve Gallagher, economist at SG Cowen Securities, who expects a half-point cut on May 15 to be the Fed's last in the cycle. biz.yahoo.com

To: American Spirit who wrote (20706)	5/6/2001 3:35:47 AM
From: j-at-home	Read Replies (1) \| Respond to of 37746

"What if the analysts are right? Why can't you accept that possibility? .. The only risks I see are the market getting ahead of itself .. find it hard to believe there won't be a nice recovery by the 4th quarter at the latest." Allow me a couple questions AS. What will have to happen for you to conclude that following "the analysts" has been and is a particularly poor strategy - afterall, the average investor was clearly not led to the short side of the market where ample (perhaps I should BOLD that for emphasis) gains were achieved. There were few wall street voices telling their clients - "We have material imbalances which are far out of sync with all historical measurements, and current expectations can only go one direction and that is down. We are advising you as one of our valued clients to meet with your accountant ASAP regarding your capital gain strategy as it is in your best interest to divest yourself from the market and/or initiate a portfolio which is either principally short or effectively so through the use of options. We consider the "buying the dip" strategy to be incorrect and especially dangerous. While we as a firm have benefited greatly from and contributed mightily to this mania, we're getting OUT and not looking back. You better do the same." As few counseled the successful strategy on the way down, why would one place faith in their recommendations today? It's astonishing really. CNBC parades their usual "experts" for our benefit and it goes something like this: "Let's see, Jim, on your last visit to our show you picked these companies, A looks to be down 43%, B's only down 16%, and C's down 28%. Tough going. Do you still like these Jim? Well, Sue, actually we do. In particular company B. And eh .. Jim have you sold any shares in the downturn? No. We've held them. See we're long term investors Sue, anywhere from 112 to 240 years or more. Our customers know we perform over time. We have never had a disappointed customer who has adhered to our strict definition of proper investment time horizon." Argh. Whap. Whap. Whap. That's the sound of my head slamming against the wall everytime I hear another of these imbeciles. Ok, I can agree there's a "risk" the market is getting (has gotten - incredible understatement imo) ahead of itself - but the "only" risk? I wonder if a case can't be made that the damage caused by the bubble will now undermine any recovery and perhaps elongate the time until better performance by years. Phenomenal growth rate projections (now completely torn asunder) were used as justification for abnormally high valuations. Either the market adheres to the historical norms and fundamental measurements or you throw them out and cling to "new paradigms" and voodoo economics. Can't have it both ways. Companies are having to cut employees first as an offset to weaker revenues, then as a reaction to slower growth. Any bargaining advantage built up these past many years should deteriorate as unemployment levels rise higher. Won't work for $60K? No problem, we've now got a pool of applicants. Consumer debt is at an all time high. I wonder how quickly interest rate reductions are reflected on our credit cards? Am I pessimistic or is it possible the myriad of fine print in those agreements work to mitigate timely adjustment. Savings? No savings - that's only needed for rainy days. Were companies running that fat, or are employment cuts acknowledgement of trouble ahead? Less job stability, will work to undermine whatever prayer companies are clinging to regarding the public's faith in analyst's projected growth rates. It seems reasonable that the 50-70% haircut in prices was largely not anticipated (probably 90% of the market was clueless last year now it's only like 80% as more open their eyes) and the desperation to recover more mania dollars will also have the unintended affect of breaking consumer confidence. Let more people go to improve your numbers, while reducing confidence in the overall economic environment (hard to convince common folk things are improving when unemployment is rising). Whether some factors are lagging indicators or not may turn out to be moot. Rising unemployment may imo beat the fed to the punch. Retail stocks are all richly valued by their norms (not surprisingly the talking heads are upgrading retail and promulgating their ownership, but I digress). When unemployment reaches 5% the consumer will have already pulled back for their own lack of "visibility". Interest rates cuts need time to be stimulative yet will not make a whole lot of difference to an increasingly panicked consumer. Unless companies are gonna hire back the people they're letting go, investors may be recklessly counting on the "promised" end of the year recovery. It may not take much from here, for the retail numbers to soften then get whacked. If the consumer pulls back I doubt tech will be able to find any footing from cheaper money. A slowing economy could mean that today's stock prices (i.e., the move over the last 3-4 weeks) represent more than just a market getting a little "ahead of itself". It may mean one, that these levels are still far from being enough to engender or restore consumer/investor confidence (i.e., the wealth-effect). Afterall, the overhang is immense in the Naz. Many people just want their money back much less the thought of being wealthier. It would need to go much higher to restore confidence. And, may also mean a little priming is going on to facilitate new short positions and/or liquidations. With the growing probability that retail will weaken, combined with rising unemployment, no one is gonna buy the proposition that current growth projections are close to realistic. [The saving grace for wall street is that they will again fail to raise a timely voice of warning (does this mean they are incompetent fools without a clue about the stocks they recommend or the markets they frequent or gifted wall street thespians aiming to financially diminish listeners as their bosses guilefully pick pockets with grinch-like precision?). Of course, Mr and Mrs 9-5 can look forward to being the ultimate bagholder.] This would assure that the current rally gets stopped in its tracks - much less provides a "nice recovery by the 4th quarter at the latest". No wealth-effect revisited. This bounce may turn out to have been just a very tradeable rally - nothing more. By AG's willingness to cut intraday without notice it is fairly clear that all pretense of not acting on behalf of the market is dispelled. No doubt his bionic pump cannot be discounted (especially by a trader). I expect we will trade narrowly on the Naz and likely be down but above the year's low in the 4th. AG's efforts prop and give short-term support to the year's low which'll hold as long as unemployment does not accelerate dramatically. This move in the Naz should be sold especially if May 15 provides a further lift. Without even factoring in the energy issue, I feel it is more aggressive (reckless) and certainly less conservative for a trader (acknowledging many traders accept and have a higher tolerance for risk - the trade-off for reward) to remain long and not sell this rally. Personally, I am positioning against the common viewpoint and will look to remain short against retail, and without a doubt tech after this recent run-up (opportunity) as a trade. If I'm entirely off-base or the mania regenerates regardless I feel the downside is limited. From these historically lofty levels, I do not believe retail stocks can do much in the face of the overall economic environment. Their upside is limited and their downside significant. I'll take that bet anytime. I'm weighted 60-40 or 65-35 toward retail currently. While tech is obviously more volatile, I doubt anyone believes the short-term technical picture provides a basis for going much higher regardless of what happens on the 15th. Not long to see just how much juice is left or affect can be produced from the fed pouring "fuel on the fire" as you said. AS, your infinite optimism is, to say the least, quite consistent.