What I am doing
Looks like I mistakenly got caught in a dead cat bounce. Hey, after 2 weeks of collapsing stocks, I thought the worst was over. Wrong.
Uncertainty is driving money managers to lock in profits now, before the end of Q2. So money is leaving the market in droves. As institutions lock in gains, the highest flying stocks are getting hit the hardest: that's where the biggest gains have been. Instead of 50% profit, they will settle for 30%.
What's an investor to do? First, protect your investments. I am sitting tight - I don't think that oil is going to $50 anytime soon, so drilling will continue. Second, plan your moves carefully. I think that there are some stocks which are weathering this psat few weeks volatilty - I am looking for them (DIS is one). It's not exactly a flight to quality but a sign of strength. However, I am not putting any new money into the market until I see the institutions do the same.
I see bargains everywhere. Many of my favorite stocks are nearing incredibly low P/Es. I am not going to bargain hunt. I misread the past few weeks as another market gyration which would be followed by a return to sanity. I didn't count on Bernanke wanting to talk the market down.
That's right: it dawned on me today as the markets collapsed again for the 4th week, that Bernanke has been remarkably silent. That is in itself a strong message: rather than raise rates, he is letting the fear of rate hikes do the trick. Savvy and effective. "Maybe I will, maybe I won't." He is achieving lower inflation by talking down commodities without actually pulling the trigger. And it's working
Gold is down almost 20% in 3 weeks. Didn't investors, touts, and others say that gold was a haven during uncertainty, hedge against weak dollar, blah blah blah? It was naked speculation and it was adding to inflationary fears. It isn't titanium, a metal that is actually used.
Bernanke - I now respect you and wished I'd been able to pick up your game sooner. You bought yourself and the Fed moving room without doing a damn thing. In the space of 3 weeks, you have wiped out 5 months of worldwide stock market values. Now that's power.
Bernanke is also playing with fire. With housing values coming down (watch - they are) and with the stock market coming down, US consumers will feel poorer and stop buying things. This can and will cause a faster and deeper recession. He will sacrifice the worldwide economy to keep inflation in check. That's a powerful message.
A long term investor would move now and not worry about a near-term further erosion in position. That has been my style and I have lost a great deal the last week doing this instead of waiting to see institutional money move back in. See, I think he wants to talk the Dow down to 10,500. That scares me because I saw the Dow rising high this year based on underlying strength. I thought there was no more room, no companies overvalued and worth shorting. And now it's gotten even bloodier.
We have to wait a long 2 weeks.
Uncertainty is driving money managers to lock in profits now, before the end of Q2. So money is leaving the market in droves. As institutions lock in gains, the highest flying stocks are getting hit the hardest: that's where the biggest gains have been. Instead of 50% profit, they will settle for 30%.
What's an investor to do? First, protect your investments. I am sitting tight - I don't think that oil is going to $50 anytime soon, so drilling will continue. Second, plan your moves carefully. I think that there are some stocks which are weathering this psat few weeks volatilty - I am looking for them (DIS is one). It's not exactly a flight to quality but a sign of strength. However, I am not putting any new money into the market until I see the institutions do the same.
I see bargains everywhere. Many of my favorite stocks are nearing incredibly low P/Es. I am not going to bargain hunt. I misread the past few weeks as another market gyration which would be followed by a return to sanity. I didn't count on Bernanke wanting to talk the market down.
That's right: it dawned on me today as the markets collapsed again for the 4th week, that Bernanke has been remarkably silent. That is in itself a strong message: rather than raise rates, he is letting the fear of rate hikes do the trick. Savvy and effective. "Maybe I will, maybe I won't." He is achieving lower inflation by talking down commodities without actually pulling the trigger. And it's working
Gold is down almost 20% in 3 weeks. Didn't investors, touts, and others say that gold was a haven during uncertainty, hedge against weak dollar, blah blah blah? It was naked speculation and it was adding to inflationary fears. It isn't titanium, a metal that is actually used.
Bernanke - I now respect you and wished I'd been able to pick up your game sooner. You bought yourself and the Fed moving room without doing a damn thing. In the space of 3 weeks, you have wiped out 5 months of worldwide stock market values. Now that's power.
Bernanke is also playing with fire. With housing values coming down (watch - they are) and with the stock market coming down, US consumers will feel poorer and stop buying things. This can and will cause a faster and deeper recession. He will sacrifice the worldwide economy to keep inflation in check. That's a powerful message.
A long term investor would move now and not worry about a near-term further erosion in position. That has been my style and I have lost a great deal the last week doing this instead of waiting to see institutional money move back in. See, I think he wants to talk the Dow down to 10,500. That scares me because I saw the Dow rising high this year based on underlying strength. I thought there was no more room, no companies overvalued and worth shorting. And now it's gotten even bloodier.
We have to wait a long 2 weeks.
posted by Andrew at
9:02 AM
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