If you ever watched Curb Your Enthusiasm you probably know the guy on the right and his tag line question which is exactly what I was thinking as I watched the US stock market skyrocket in the last hour or so of its Tuesday session.Yesterday I called for a snapback to come but I was not expecting it to come a few hours later. Ditto earlier this summer.
One little trick, if you will, calling for a reversal of a very fast move has a high likelihood of being right. Getting something like that correct is not particularly clever as the odds are overwhelmingly in your favor.
This is obviously a fascinating time in the market. I questioned whether Monday's decline was constructive with regard to sentiment and that the market snapped back so soon leaves me thinking that Monday's decline was not helpful at all--as if it never happened. All the more so if fear doesn't come back today.
I wonder if this lack of fear (if that is what's going on) will persist ultimately pushing the ultimate bottom further out. In looking back at how past bear markets and other nasty periods ended there is a mix of quiet (late 1990 until the explosive we bombed Iraq rally three months after the bottom) and loud (fall 2002 was pretty big pretty quick).
It makes sense to expect further krazeeness for a while. It seems various unwindings are moving all sorts of markets. If that is true it will take more time to finish processing through--at least I think that will be the case.
7 comments:
The after tax return of the DJIA is now greater than the after tax return of 10 yr treas for those in the highest bracket. SPX is getting closer. I would say equity valuations are beginning to look much better. If one has a long time horizon, it doesn't seem unreasonable to start increasing exposure to equities now. What difference does it make if the market falls another 10% if the income stream is relatively unaffected?
Anon in C.G.
for anyone who has been very underweight equities, doing a little buying down 23% from the peak is not the single dumbest thing that could be done to be sure even if the next 10-15% is down.
it's not a krazze market...
it's a killa market
sorry...couldn't resist
--ggj49
p.s. no comments can be made on the killa's question--at least not in a family oriented blog
let's just say that his tag line question was not "are you having a laugh?"
At this time, I am having very little angst regarding this market - or any other world market, including housing.
Sure, I have losses and have to laugh at a few of my well-intentioned investments, especially getting into financials as a speculation way too early.
That said, a permanent component of my portfolio, actively managed real estate, is providing excellent returns. Folks that no longer qualify to buy have to rent, driving up prices for good quality homes and larger apartment units. Government subsidized rents, based upon market comps, are being raised monthly for my holdings in several states. The homebuilding business, down for many, is up for me, because my little NC LLC of mine is building 3/3 homes with energy efficiencies for +/-95g and selling for 140-160g. Why so cheap? Sub-contractors are out of work because the luxury/custom/big box home market is very poor and they need work - at any price.Folks can qualify for FHA loans at that price point.
A note to readers. If you have the will, take a strong look at buying a reposessed or distressed apartment complex. Banks are holding them and having them rehabbed for sale. You can buy at a large discount if you get in before the rehab process.
Every investment sector has its season. Investing beyond a trading account may serve the individuals quite well.
T
http://www.federalreserve.gov/releases/cp/
Anon 7:33's link tells the story and the bond markets are convulsed; e.g, TED spread has blown out to 1987 gaps. Yesterdays postmortem twitch offered a brief opportunity to increase cash or short positions, contemplating which companies look promising going forward seems wise too, but actually adding to long stock or bond positions at this point in time would appear to be, umm ...premature.
Do second T's observation though: Buying into a couple residential limited partnerships, one of them specializing in distressed/renovation properties, has certainly improved my free cash flow picture this past year. There's more than one way to skin a cat (particularly if its dead).
Post a Comment