Or as that old stock market axiom goes, “When prices are high they want to buy, when prices are low they let them go.”
That mass-psychology mind-set can be found was here, “Circle Completed?"
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Source:
Investment Strategy
Jeffrey Saut
June 12, 2006
http://www.raymondjames.com/inv_strat.htm
one thing i’ve noticed on many sites is how bearish people have become these last 6 weeks …. good contrary indicator
Yeah, the fact that bulls have all gone into hiding and everyone is a bear now must mean something.
(Except Battapaglia surfaced on Kudlow yesterday. That was like seening Abby again. Thought they had run off to Tahiti or something).
On the surface, it looks like our markets are stabilizing today given foreign markets were so terrible.
But what is pretty disconcerting is the number of new lows today, NYSE and Nasdaq both >200 and increasing. And index P/C ratio is approaching 3 in a market that doesn’t look very red if you just pull up the indices.
People are still dumping stock today as much as ever.
This doesn’t seem like bearishness to me. Just the end of euphoria in a couple of overheated markets like gold, emerging markets, pacific, commodities, etc. The S&P 500 is just a little below where it started the year, and it never saw the kinds of gains those other markets saw. I don’t know whether the market is going to tank further or go back up, but it doesn’t sound like panic out there yet.
Yahoo Finance runs a daily poll. Friday’s poll was pretty interesting:
==================================
What currently looks most attractive to you?
U.S. stocks
23%
Foreign stocks
19%
Cash
41%
Commodities
9%
Bonds
11%
19268 Votes to date
==================================
41% cash- yikes, head for the hills!
It certainly does seem too bearish out there, but OTOH, I wish I was in cash today…
You want cash? ING Direct is paying 4.25% for a savings acct. That’s not too bad for semi-liquid cash when the 30-yr is only 5%! (10-yr 4.96%)
schwab paying 4.74% for large amounts, can sell it in a day, and i think i’m being robbed at that. vanguard paying more. no reason to own stocks here. another site says some fellow Merriman with good long-term models today said “100% out of equities”
what does a 1921 “point or two” mean in adjusted points. ;)
> But what is pretty disconcerting is the number of new lows today, NYSE and Nasdaq both >200 and increasing.
i saw this earlier as well. massive pain being inflicted on gold and the Russell off another percent as I type. Let’s see what the 3 o’clock hour brings today.
on the contrary indicator side of things, marketwatch has added “GLOBAL MARKETS SELL-OFF” section to their homepage (Columbia and Russia off 9%) as well as section on short sellers (WHO ARE THEY? ARE YOU AT RISK?!?) in bright red box.
btw, Barry, thank you for this post, which came a few weeks after I found the site and led me to re-examine/realign. At the very least I owe you something from your gi-nor-mo wish list.
Actually, I do have ING acct’s (savings and short term CD’s). I guess I am compartmentalizing money, but I don’t really “count” that when thinking about investments. I just sold my Bay Area house in March and am renting for a while. I am not comfortable with literally playing with the house’s money, so there it sits.
if inflation is upon us , what does gold -22% .. silver -35% … copper -25% ( blowing up )tell us? CRB -9% from it’s high as well…….DJIA -8% , SPX -8% , NAZZ off 13% from its high , not too bad …. but just the start …. CAC-40 -10% , FTSE -10% , DAX -11% , HangSeng -12% , Nikkei -18% , Korea -22% , Russia -24% , India -25%, Egypt -38%… the 100-year flood isn’t here yet , just a correction
speculation’s hard game , and margin’s a killer …. 3 days straight , margin calls met record at my firm
Hey, anyone know who makes Tater Tots?
I think it’s time to load up on Tater Tots. There’s gonna be alot of people invested in and living in emerging markets who are gonna be eating alot of Tater Tots for dinner.
Ahhh, the Chernobyl play, I like it, it’s Ore-Ida!
I cashed out of all my long trades this morning, so add another one to the right column…
Now you’re talking my language! I’ve got a 5-lb bag of Ore-Ida tater tots in my freezer that I’ve been whittling down for a while. They’re owned by Heinz.
I heard of a financial firm exec who just sold his house to rent, as NABNALB is doing. A good friend at work is looking to by a 2-unit multifamily to live in and rent out the top half. Just made an offer yesterday, so we’ve been discussing the best choice for real estate. It’s right on the water in Norwalk, so the value should hold, right?
Why rent? Are you expecting housing to go down or just stay flat for a while? Rents are predicted to go up, so are you attempting to lock-in a long lease? Please forgive the newbie questions if they sound too simple.
These gyrations are getting violent in the final hour. CNBC’s ticker is screwing up. This is the first time in a long time I’d describe the market as feeling distinctly unstable.
Going long before tomorrow’s data and the reaction seems a bit, uh, RISKY with this tape…..
sln:
Those are just the commodity and equity revaluations. The housing revaluation is in its early stages and will take longer to play out….but it’s coming.
The deflation B writes about is here.
Anybody seen any articles documenting the global dollar amount of wealth destruction that has occured so far?
Ore-Ida. That’s right! So, they are owned by Heinz. That’s a great American company with a marvelous dividend. Those people must be goddamn geniuses over there. Not only do they make Tater Tots, they make the ketchup you lather all over them. So, they get you coming and going.
>I heard of a financial firm exec who just sold his house to rent
Yeah, I think you mean this guy: http://www.pimco.com/LeftNav/Regional+Market+Commentary/
Global+Credit+Perspectives/2006/Kiesel_For_Sale_06+2005.htm
Why rent? Well, as with any decision, it has to be your own, but I see things dropping 20-30% over the next few years in the Bay Area. Even a flat market means you lose serious money to taxes, maintenance and inflation when rents are so cheap. I am not seeing rents creep up yet around here but I did sign a 1 yr lease. All this said, I am still fairly young with no kids and I probably would not be trying to game it if I were in a different situation. Of course, if I had kids, I probably wouldn’t raise them here either.
>>>speculation’s hard game , and margin’s a killer …. 3 days straight , margin calls met record at my firm<<< Can you tell us how this compares to other past selloffs?
THAT WAS ONE WACKY 30 MINUTES.
S&P500 -$940B since May 5 …. not sure on global destruction
3 straight days of record margin calls…and they seem to be more orderly than in the past— usually we had them after the market was down more -15%+ ….. my guess is we have another 5% to go , at least since these margin calls haven’t met enough “pain”
My thought for the day: Oil might have to “correct” before this is all over. And with so many people long energy, what the heck would that do to the market?!
Thanks mac:
Also, aside from the small fund at Ospraie, any large hedgies or CTA’s gotten taken out on a stretcher yet?
liz ann sonders @ SCH throwing in the towel today ??? going to cash… interesting
not there yet ……..23% of S&P 500 stocks are above their 50-day moving averages….. typically we’ve had to get below 20% to reach an intermediate-term market bottom
Well we got the big drop in Gold today, so now maybe
we can get some dovish comments from those friggin
Fed Heads…
Was that the enima that XOM needed? or are they still
backed up.
Regarding cash. If you have large amounts you can buy discount notes instead of mm funds and get the funds underlying rate for yourself.
For example today you could have bought a 30 day FHLB disco (cash trade) to 7/12/06 at a 4.98 discount. That is a 5.00 annualized yield.
I do this instead of going with the sweep account that pays only 4.45% or thereabouts, or the Schwab tradable MMF (commission in and out) that pays about 4.75%
By the way, no commision is charged for discos. You can find FHLB disco throughout the trading day here: http://www.fhlb-of.com/contrib/dnrates.htm
And, if it matters to you, the interest on them is state tax free.
Regarding cash. If you have large amounts you can buy discount notes instead of mm funds and get the funds underlying rate for yourself.
For example today you could have bought a 30 day FHLB disco (cash trade) to 7/12/06 at a 4.98 discount. That is a 5.00 annualized yield.
I do this instead of going with the sweep account that pays only 4.45% or thereabouts, or the Schwab tradable MMF (commission in and out) that pays about 4.75%
By the way, no commision is charged for discos. You can find FHLB disco throughout the trading day here: http://www.fhlb-of.com/contrib/dnrates.htm
And, if it matters to you, the interest on them is state tax free.
Thanks for the heads up on the discos Ken, very interesting. I don’t have $100k free to put into that at the moment, but could scare it up when the 90 day cds that I have been buying mature in July and Aug. Good info.
According to
http://www.washingtonpost.com/wp-dyn/content/article/2006/06/13/AR2006061301189.html
total equity losses since the peak are at least $2 Trillion. Recent outflows are:
$8.5B from emerging markets for three weeks ending June 8
$1.9B from US mutual funds for the week ending June 7
$7.1B from US mutual funds for the previous week (ending May 31)
Fidelity claims they have not noticed anything unusual for the past few days, but money market inflows were high for May.
The MSCI World index has lost $1.9T in market cap since the peak.
Time to Buy
Note that after 1929, the bull phase was short-lived. I think that is the most like scenario now also given that earnings are strong and earnings projections are even stronger. Further, the breadth of companies forecast to have positive earnings is near record levels. This is positive, folks.
Look, I’m fine with sound reasons for a bull market but this does not appear to be it. There are advice-givers who have short positions, which can distort their objectivity. I think that I need to take the advice of those who have short positions and a financial interest with a grain of salt. This is a battle right now of long-term bears and short-term bulls. We’ll see after the CPI announcement tomorrow morning.
See “Why It’s a Good Time to Buy” from S&P Research.
http://www.businessweek.com/investor/content/jun2006/pi20060609_031809.htm?campaign_id=rss_null
good luck Obi Wan. I am expecting to add your ears to those of the other bulls that are floating in the jar on my desk now, whether tomorrow or the next week or the next month.
The fact that a pop publication like BusinessWeek would suggest that a bear market is a good time to buy is a good tell that it is time to either stand aside or go short.
Of course the ultimate prize is Cramer, but I don’t have the capital to actually take his ears by myself. Someone does though.
the only problem with that circle of trading wisdom
is to figure out where we are today ??
Easy to draw it, hard to execute without some
quantitative indicators