Market Strategizing Takes Precedence Over Blogging
Blogging has been light because I have been cogitating overtime in order to make sense of the market these days. There can be a case made that this is a golden buying opportunity. The global economy is strong and has solid fundamentals driving it. But the consistent stream of worrying news is beating up pretty hard on the animal spirits. My initial thoughts are this whole sub-prime meme is a distraction. The real game is in Washington where the roster of terrible policy ideas that could become law is long. Handicap these and you'll have your market call, don't get sucked into the sub-prime story. The reason the sub-prime theme is causing so much market pressure is that, although minor, it is coming at the wrong time - in the dog days of summer when most of the street is not around or prepared to make serious buying commitments. The buyers are on the beach and analysts can't make a call or the analysts are on the beach and the portfolio bossman (or woman) can't get the numbers fast enough to make sense of things.
Still, I am not sure now is the time to go all in. I'd dabble throughout August and ramp it up at the first sign of President Bush wielding a veto pen for any of the major bad ideas that come out of the Sausage Factory in September.
UPDATE: I am hearing scuttlebutt that major investment firms are telling traders and portfolio managers to cut short or forget about their August vacation plans. The rest of the month could get interesting.
Still, I am not sure now is the time to go all in. I'd dabble throughout August and ramp it up at the first sign of President Bush wielding a veto pen for any of the major bad ideas that come out of the Sausage Factory in September.
UPDATE: I am hearing scuttlebutt that major investment firms are telling traders and portfolio managers to cut short or forget about their August vacation plans. The rest of the month could get interesting.
posted by Donny Baseball at 10:27 AM
4 Comments:
Just trying to play devil's advocate here...
The global economy is strong and has solid fundamentals driving it
Bear markets don't start when fundamentals look terrible.
The real game is in Washington..Handicap these and you'll have your market call
Washington was not directly responsible for the dot com bubble burst. It was the Fed. And this time, it is the Fed again. The paralleles are there: asset bubble created originated from the Fed's past mistakes deflates as the Fed tightens. The last time we had a multi-year bear market. To me, the only question is are we close to 80% or 30% into the correction.
this whole sub-prime meme is a distraction
What if it is not about sub-prime at all. What if the correction is about investors losing confidence in Wall Street? I think the investoment banks really screwed up this time. It reminds me of mid 1990's when they packaged Mexican bonds into a bet on currency and unloaded them to pension funds. It was just dirty. How can they unload the CDOs and CLOs to their own customers knowing they are toxic? Shouldn't they look out for the best interest of their customers? Trust in the system is broken.
Good points. Couple thoughts. The Clinton gov't was complicit in the Internet bubble because Bubba and Reed Hundt explicitly and purposefully goosed the telecom sector with the 1996 telecom legislation that was designed to get new players into the game and that is why crazy capital flowed to scheisters like Gary Winnick and Bernie Ebbers.
True, bears don't arrive when fundys look good, but the world is a collectin of fundamental stories. It is hard to conceive of a global bear market when the fundys all over the world are of different nature and different magnitude. The US mortgage market is unlikely to sink the global economy.
Well, I said that there is a risk to "animal spirits" which is worrying. Lenders everywhere could get spooked and we will be in deep yogurt if that happens but the fact that some "global multi-strategy hedge funds" made dumb overlevered bets does not necessarily mean that a bank will refuse to finance a refinery in Saskatchewan or an LBO of an auto parts maker.
The fear now is the unknown, but once the half dead are identified, the markets will dance over the corpse as the likes of Citadel and others feast on the busted positions.
The fear now is the unknown
I think this was true two weeks ago, but the situation has changed. With a true liquidity crunch underway in Europe, US, and Japan, everyone can see the chain reaction and where this is going. Subprime is no longer relevent. They all know what's next, ceteris paribus.
You may be right. Today's news looks quite ominous and I may have to rethink this. Still, I think there are some sweet spots to be buying in - you should buy when the blood is in the streets.
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