[stoney]

Guys,

I want to re-iterate this again. TAKE PROFITS! If you are up on this rally, take profits. This rally is substantiated by nothing. If you say earnings, you've been lied to. The reasons earnings are being "blown-out" is because analyst lowered the bar so much, it would be difficult to miss them.

**This is for investors in single name equities (not mut funds)**

While I am not suggesting getting out of the market, do take profits. I have been, as this is an air rally.

Disclosure: I have only a few core positions in Healthcare remaining, with the rest in cash, gold, and short the SPX. Even on my core positions, I have taken 15-30% haircuts to lock in gains.

Make sure you are aware of the general market, and well informed. Below are a few great, free newsletters.

www.zerohedge.com
http://market-ticker.denninger.net/
http://www.johnmauldin.com/ (Sign-up for 'Outside the Box' and 'Thoughts from the Frontline'. Both are free)

 

[ohio]

Even oil/energy?

 

[stoney]

That's a grey one...Their is a glut of supply, but it is a harbinger/canary of inflation...

I am less inclined to play with oil than I am to look at oil service providers - RIG for example - but even still, with this rally, the service providers are overvalued by 30-40%.

Equity markets are way over cooked. I'm not a cmdty guy to the level I know equity, so... yeah. I follow Casey Research for mining, oil, and cmdty research. They are generally very good. One of my colleagues, who is arguably one of the most experienced market person I know has been commenting that their ersearch is very good. IT's expensive, but has been profitable for me, on a macro-level. long/short sector targets, economic levels.

 

[ohio]

It's a good thought, but I don't have the attention span or depth to look at service providers, especially individually. I ask because I grabbed crude futures when they hit 50. I don't see it dropping.

You've got my attention on everything else. I'm glad I ignored you through quarterly earnings, but I'm taking your advice now and moving everything but oil to cash and short term treasury, at least temporarily.

Also, just to temper your doom a little bit, wall street is an echo chamber of negativity and no one on WS believes the green shoots are there, but labor and manufacturing has never been cheaper than right now and there are folks taking advantage of it, me included. It's never been a better time to bootstrap.

 

[stoney]

I'm a doomer, I realize that, but I'm a fundamentally focused realist. Generally I am a contrarian investor. I'm a huge fan of deep value. IF the fundamentals of the economy said go long, I'd do so. But it doesn't. The market is showing a momo bubble.

RE: labor and manufacturing, they will be very cheap for a while. As long as there is overcapacity, products will be cheap. When products are cheap, roi for a producer will be low. lLow ROI means less product being made. Less product being made, means less people needed. Deflationary cycle.
That being said, the rate the treasury has their presses going, they will inflate usd soon enough. It will be an interesting mkt, where usd is worth nothing due to inflation. Labor is so cheap because the glut, that they will be paid nothing. when paid nothing, they will not make enough to buy goods at the inflated prices. cycle continues.

Until consumer debt has been brought within reasonable levels, we will not see viable rally. Too much forward GDP was pulled that has to be repaid.

I am looking more at the macro level and trying to place bets accordingly.

One thing to be aware of is short covering. This looks like it might be a short covering rally. Many of the large lending desks have started calling in stock lend, forcing sellers to buy back in, even at losses (which are px increases). While artificial, it's a short squeeze. The party for the long side will eventually end, and when it does, it will be bloodshed. When you remove large shorts and there is a steep drop in the market, there are no shorts to damp the falls while they buy-in to take profits.

Good grab on the CLA there. That's a nicely cooked in profit.

As for my quarterly commentary, I called that wrong, but I know a LOT of people on the wrong end of that. My shorts are slightly underwater, but they will come back. While I missed gains on some names, I am always willing to risk a miss of gain to save principle.

For oil services, I rely on Casey Rsch for my cmdty market rsch. Their buy prices are almost always at fundamental value levels, so they are way below current px. It allows you to place stink bets to catch irrational drops. I've hit a few and they are very nice when they happen.

I'm tempted to substantially reduce my HC holdings again, because they are up 30%+ in the last few days, but I don't want to because I have already reduced, AND they are still below FMV. Ah the risk, gotta love it.

 

[Secret Squirrel]

With all the talk of betting and guessing and risking...what's the difference between this and just going through Tony "I breaka yo knees" Bugliotti and putting it on the Clippers in 7?





I keeed! I keeeed!

 

[dante]

What's your gauge on overbought? P/E, and trailing 12 months or forward looking? I just don't know what to gauge anything on, since TTM we're oversold, snapshot PE we're overbought, and who the hell knows what the next 12 months are going to bring as far as forward-looking PEs?

 

[stoney]

I tend to look at book value to value the co. Once I have a Book value I am confident in, I will then look at realistic (ie adjusted to a 30% drop in GDP) earnings.

On a larger scale, I look at debt for consumer and businesses. If you are paying debt service, you can not purchase goods. This is a 70% consumer driven economy, until the consumer comes back, nothing is going to happen.

I'm also looking at momo techincals for the short term.

I'm putting my money on a W-shaped recovery at best, a depression-like increasingly lower low's and highs (downward stair steps) most likely.

 

[stoney]

All this being said, this is not a fundamentals driven market. It's a technicals and momentum driven market.

Dante, Ohio - PM me your personal emails. I will add you to my rsch distribution list.

 

[kidwoo]

All right.

So I've got the underpants.

I understand what you're saying.

I just can't find the connection!

 

[ridiculous]

I have a feeling China has something to do with phase 2.

 

[Pesqueeb]

Joker, have you read "The Myth of the Rational Market"? I think recent history has shown that our economy is not rational, but thats just my take. Perhaps I read you wrong but you sound like you might be a believer. Personally I'm way to conservative with my money to do any sort of stock market gambling out side of my 401K and some mutual funds. Sure I might be missing some big gains but I'm more concerned with not losing my capital. I'll take 3-5 percent and be happy not risking my money (too much). I'm happy with average returns.

 

[stoney]

The market is not rational by any means. I also do not believe in the efficient market hypothesis (fully). If any individual in the market has an advantage, then the hypothesis is bunk. I think it's clear that our current markets are not perfectly equal, so there goes the hypothesis.

It anything, I am a hyper-critical, hyper-cynic when it comes to the market. I belive littel from those with a vested interest, and do not trust most main stream media (see CNBC) in general. I am also a believer in Reason and Logic, but hopefully all who are in the market are...

 

[ohio]

Joker, have you read "The Myth of the Rational Market"? I think recent history has shown that our economy is not rational, but thats just my take. Perhaps I read you wrong but you sound like you might be a believer. Personally I'm way to conservative with my money to do any sort of stock market gambling out side of my 401K and some mutual funds. Sure I might be missing some big gains but I'm more concerned with not losing my capital. I'll take 3-5 percent and be happy not risking my money (too much). I'm happy with average returns.

There's a difference between consumers acting rationally vs emotionally and there being underlying principles that always hold true. You can only stretch debt so far before creditors want to collect on what they've lent. No one wants to give anything away for free.

What markets can't do is decide what is desirable and what isn't, but they can and do ensure that eventually goods and services are priced to match that desirability.