Astonishing New Discovery!

I’m listening to CNBC’s discussion of today’s sell off, and I am astonished to learn that there is Inflation and a Slowing Economy!

Of course, those topics have been discussed in these pages for nearly a year now. The issue with these macro-economic concerns is ALWAYS one of timing. Why? You cannot trade off of macro-economics unless you have a  v e r y  long time horizon. It takes months, quarters and sometimes years for economic issues to work their way thru to the kinda-sorta-eventually-mostly efficient markets. Thats why mating technicals to macro-economics gives you a glimpse into both the longer and shorter term events.

As to today’s issues:  I hate to be blunt, but if on April 20, 2005, you are first discovering that this economy has inflationary pressure —  more than 2 years after the CRB rally began — then Lucy, you have some splainin’ to do.

Just discover GDP has been slowing? (duh) Follow the numbers: Q3 ’03=7.4% (originally reported as almost 9%), Q4 ’03 4.2% (orig 6+%), then 2004 Q1-4 data: 4.5, 3.3, 4.0, 3.8.

I plan on addressing the problems investors face when trying to balance these competing, and often contradictory, time frame issues.

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  1. Hans Suter commented on Apr 20

    I can’t imagine a more important theme. That concerns investing, of course.

  2. alex norman commented on Apr 20

    Yes! The time frame/Investment Horizon issue is I think one of the most important and difficult issues in investing. In the conventional wisdom, it is the difference between “investing” and “trading.”

    Long-term buy and hold “investing” works great in secular super bulls like 1982-2000, but now it looks as if we are in for a secular bear in equities (and perhaps bonds) with bull cycles.

    So now more than ever the short-to-medium time frame is going to become important for anyone who is looking for a good tradeoff between capital gain and capital preservation.

    Bring it on!

  3. John commented on Apr 20


    Thoughts on ECRI leading indicators suggesting continued economic growth? (Seems like they give a heavy weighting to stocks price change as I recall)

    Note relative strength of GLD, TLT… smart money seeking safety?

    If safety, relative to stocks or broad financial system?

    Long TLT, GLD

  4. JWC commented on Apr 20

    I was watching CNBC this afternoon. What a hoot seeing them try and contort their way around what happened today. Jim Cramer said the market needed more “bad news”. The other guy said the marked needed more good news.. so they could thinkg we would be having growth along with the inflation. Way over my head, but still entertaining to watch. I get my real analysis from the net and blogs like yours.

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