Monday, April 16, 2007


I purchased CSIQ at $10.05. Above is today's chart. The little turbo boost you see was due to an innocuous news story that came out to explain why all the solar plays were going zonkers. I sold it around 2 p.m.

Why? I'm going to refrain from calling myself a name. Seriously, though, I think that this market is too frothy for the fundamentals. But I say that recognizing that I have a distinctive bias. An interesting question to ask yourself when you are steeped in your own bias is what would you have to believe to be true to change your current mindset. I'll make a stab at that. I would have to believe that...

  1. jobless claims would not increase. I think that they will increase due to the effects of the slowdown in builders and all of the other supporting industries to that critical sector.
  2. interest rates would be stable or decline. I don't see stability in interest rates. I see upward pressure due to USD and inflationary pressures. Also, that commodities are increasing is troubling to me for I think that puts pressure on the consumer.
  3. the consumer would have to remain strong. Income growth is not keeping up with the price of things: housing, gasoline, food and healthcare--the things that we mere mortals have to buy to keep our families fed and sheltered with some measure of safety.
  4. corporate spending would have to backfill for the consumer (presuming of course that the consumer falters). So far, corporations have been tightfisted except for buying back stock and compensating the heck out of their CEO's.
  5. all of the things that I think are going to be an issue really will be an issue, but much later, and there is still some juice to goose. Okay....I'll give this one a tepid thumbs up.
I don't believe that 1-4 are going to happen. I do know that market pundits were touting the capex resurgence due to Vista--hear that thud?. Nonsense. Lending was being spun into a subprime issue, but it is an overleveraging using specious vehicle issues. Given the structure of many of these loans, problems (which to be fair I must say if there are going to be any problems) may be deferred--for several quarters. And remember the retail sales number; it was punk.

So this is the backdrop in which a stock run up of 20+% (and then later go on to be up 38% in a matter of an hour later) just a few days makes me nervous. If I felt more positive about the overall market, I would have stood steadfast. And understand, if I cannot feel comfortable with holding these types of gains, I'll never hit the proverbial home-run stock.

I also did another hard thing. I picked up some FMD on the debacle. It looked like a genius thing to do at one point during the day; then its IQ regressed. We'll see in a couple of days. I've generally had good luck stepping into the fray.

So I write this to share my quandries--and by sharing my quandries, you'll be sure to always remember that none of this is ever investment advice, but rather an exposition.


Anonymous said...

Leisa you have been topical!

Note the sleight of hand with regard to LTCM, whose hand was it in and whose hand is it in now, and therefore in the whole statement.

Does that mean don't look to us, only look to us if you are like LTCM, or LTCM was an exception. Certainly it still says in order to take big risks you'd better put in some stop loss "systemic risk".

Are we all grown-ups now?

The leveraged mind wobbles. But if it does...

Ahh... if only money did collected in pools

Good source for tracking hedge fund

On Faber, Asia's maverick Dr. Doom I think you will see he has made some good medium term calls, BRICS, real assets and some where he got caught out by acts of the gods.

He did also used to get down and dirty on individual companies, writes reasonably well, always worth a look.

Leisa said...

"Leisa you have been topical!"--Like a rash!

Thanks for the links. I did see a Bloomberg blurb about BB speaking about HF's and a glancing blow at regulation.

I'm happy that I have a better understanding of the issues.