Yesterday, in between cruising around, we saw Floyd Landis clinch the Tour de France in the time trial. He overcame a huge adversity from the other day when he blew up on one of the mountain stages.
Phil and Paul (the announcers) were giving up on him as being dead in the race. Landis was apparently not phased by this as he just did what he needed to do one stage at a time.
I think there can be a metaphor here for investing. Setbacks in either one stock, your portfolio, the overall market or all of the above are going to happen. No one can control those things but you can control your own actions.
The massive one day lift last week did not convince me, not even close, that I am wrong about being a little defensive these days. In simple terms, demand for equities is, to use John Hussman's words, not favorable.
This does not have to mean a ghastly bear market but I suppose that is possible I don't know. I do know that every big move down (excluding crashes and terror attacks) starts with a small move down, a rolling over. The magnitude of the decline so far has been a rolling over of sorts, how most bear markets start. How the month ends could be very constructive in telling us whether a bear market is hear but more on that later.
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2 comments:
I e-mailed J Walters at Birinyi Ass. about if they were going to expand their ETF coverage to grade them like they do stocks and sectors (timing and over/under valued). He responded that they were. This seems like a timely product. Are you aware of any other products out there that do this for ETF's? Now that the TDF is over I have to get back to the real world of summer home improvements like painting etc. Tom in Indy
I have been pondering on whether the economy can withstand the current challenges to further expansion. As a consumer, my number one expense is my mortgage payment. If I had a variable rate mortgage (which I don't) having that monthly payment increase would be a worrysome problem. It might even force me to resize to a lower payment home or to rent. Both of these scenarios are high quality problems. Neither takes me out of the economic mainstream. My other expenses; natural gas, gasoline, power, car payments, taxes, food, insurance all have had some volatility but all are higher by an amount I can budget for. The lynchpin of all the arguments for a recession or worse happening (that I have read) rely on the consumer slowing or stopping spending. I just don't see that happening for a simple reason. We (all of us collectively) lack the discipline to cut back. Only when confronted directly, face to face, with a monumental tragedy will the US consumer curtail their spending voluntarily. Now if everyone's mortgages were in the 8-14% range like they were in the Carter Presidency years that would be another story alltogether. Rates will stay lowish (6-7%) for quite a while for a number of reasons. People much smarter than me say the US markets will stay rangebound until the excess liquidity in the system worldwide is wrung out. I have hedged myself for downward risk and will stay that way until October and then reevaluate. Call it reloading. Tom in Indy
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