Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : MARKET INDEX TECHNICAL ANALYSIS - MITA -- Ignore unavailable to you. Want to Upgrade?

To: Killswitch who wrote (10800)	2/27/2002 9:34:05 AM
From: Killswitch	Read Replies (1) \| Respond to of 19219

Doug Kass: "Contrary Season 02/27/02 07:48 AM EST To summarize the state of the markets today: Investors have shunned stocks (especially the more volatile technology component) in favor of more conservative investments (stocks that cater to what we eat, drink and smoke). An even more obvious trend is a reduced propensity to invest in the equity market. This is clearly manifested in a mere trickle of inflows into mutual funds over the last 12 months. Instead, individual investors, many of whom had bought into mutual funds and stocks at relatively high levels, have sought "shelter" in home ownership. This is clearly being reflected in the recent spike in home prices and turnover of the existing housing stock to record levels of more than 6 million units (seasonally adjusted). It is also seen in the market's embrace of homebuilding stocks, most of which have hit 52-week highs, and are up dramatically year-over-year. These trends -- toward stock market leadership in consumer nondurables, the underweighting of the previously strong technology segment and confidence in the enduring value of the housing stock are believed by most investors to be enduring trends for the foreseeable future. These trends are now accepted and conventional wisdom. I would now fade these conventional views in favor of a contrarian stance as I am beginning to see fundamental signs of improvement developing in the technology segment, and an extreme state of investor negativity toward the sector. Conversely, a developing speculative tone in the housing markets is my principal reason for shorting that sector. In investing, contrary-mindedness is often a virtue. Remember, if the majority confidently knows something, that one thing is probably already reflected in the structure in prices, and the market is vulnerable to a surprise. Investors are prone to be bullish at the top of the market (housing) when prices are high, and bearish at the bottom when prices are low. Most of all, remember one's best, most profitable ideas frequently begin unprofitably. The concept of "finding value" is as good as an investment precept as any. But most define "finding value" as "finding what is going up." Never forget that financial ideas have their seasons. And I view the transition from winter into spring as the time to rotate away from the winners that are in vogue back into the market laggards. In short, I view the euphoria and despondency in certain areas of the market as contrarian opportunities. I am long technology and short homebuilders and some consumer nondurables."