Tuesday, July 15, 2008

PM Post


Zen Iris
Fine Art Print
by Pamela Gladding

I'm still mostly cash. I'm finding my UYG entry.....search for word....'regrettable' springs to mind. Oh, I fully hedged it with SRS which I closed near the top today. And I did my sell almost automatically. I tend to overthink things. So I "funded" the current loss that I'm holding (in retirement account). The current close in UYG is $3 below my entry point of $17.60 or so.

A friend of mine with whom I'm having lunch of Friday (I never buy stuff on expiration day), said his contacts (at a very large money center bank) see no lending, particularly in the capital markets area. This dovetails with what V_6 mentioned in the comments area recently. Also, that credit markets will likely not normalize until late 2009. It's hard to imagine how much lowest some of these names can go.

I bought some more WX. I'm working on reversing a previous habit--that habit being averaging down. I'm going to learn how to average up. It had very good volume today. It could all go to hell, but this sector is benefitting from the meltdown in the others.

I'm still very underinvested. But I don't mind. I think that this market has much gnashing of teeth, fire belching, and other disgusting machinations to go through before the end comes in a whimper. I think that we need another bank failure to come. Oh....my friend (retired) mentions that his contacts see 90+ failures.

I think that there is more bad news to come. What will be key is to watch the market's response to that bad news. And it is important to note that in times of uncertainty, no news=bad news, as the vaccum creates all sorts of fabrications of the worst sort. That is at least my business experience.

1 comment:

nice said...

optimism...

The bears are getting obnoxious - giving bulls the 'I told you so'

They are confident that their short positions are the right trade - and that there is only one direction for this market ---- down...

Could be - they have the trend in their favor - but is their timing right NOW I ask?

The Bulls are gored and bloody...

But most people are on the sidelines with cash..

So it is not the Bulls that will control the market going forward - nor is it the Bears (since the Bears are now over invested)...

It is now a battle between
(a) those that have to (or 'feel' they have to) liquidate stocks

and

(b) The fence sitters hoarding cash

All the 'papa' bears have been doing the rounds all week on Financial TV entertainment.

I particular, Jim Rogers leaves a bad taste in my mouth:

IMO essentially FRE and FNM are government agencies masquerading as public companies...

Rogers strong assertion that the Fed's should have let FRE and FNM go under is both irresponsible and self serving.

Not to mention unpatriotic...

I am often baffled how so many people bad mouth this country (Aloha!) and yet choose to live in the US and reap its benefits...

--

...Now on to some potential news for those bullishly inclined:

Uber bull Don Hays had an interesting article - where he examined how the market behaves after a bank bailout..

Interestingly in almost all cases since the 1970's - the market reacted positively within weeks (sometimes within days) with no more than a 5% decline within a month after the bailout...

Of course things may be different this time - in that there may be multiple failures... but the point is that once the deed is done (the bailout) - that is one level of fear that has been played out...

Psychologically people (investors) cannot be in a state of fear indefinitely .

... optimism during times of fear can be a difficult task... but often profitable...

nice