To Heck with Fundamentals: Dow 11,000 Is Up Next 28 comments
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As those of you who have read my finance articles already know, I was the first writer to call the current bull swing- way back in late January 2009, when the financial markets were in great peril, and it seemed that 50% of the so-called "professional" analysts were even calling for the Dow and S&P 500 to continue their slides into market oblivion. And 100% of them were certain the markets were destined to continue tanking. Newer lows. Re-test this. Re-test that. Then U-shaped recovery. Or maybe a W-shaped. Bump along the bottom. Blah. Blah. Blah.
Boy were they all wrong! And still are...
Rather than continue to blow my own horn however, or explain exactly how it is I knew the markets would rebound at that time - then play out exactly as they have done- heading straight up over the last 7 months (and will continue to do so), this article, instead, is geared toward the here and now (although I will say this: if people knew what really happened, there would, indeed, be quite a hubub, to say the least).
Many of us want to live in the moment (with an eye on the future). To this end, therefore, the markets will continue to rebound. The Dow will hit 11,000 on its next stop. The S&P 500 will hit 1250 as well.
Why?
Because it's not about the fundamentals (not yet). Again- I'm not going to get into the juicy details and sordid analysis of what tanked the markets in the first place. However, as the markets shouldn't have been down where they were in the first place, it stands to reason that they will simply head back to where they should have been in the second place.
Yes- it's easy to play the status quo game of fundamental and technical analysis. And, if I were to do so, well, of course, the markets should not be where they are now. But it's not about that at this place in time.
It's actually about one basic fact.
Traders crave "direction" in the markets. Other than the minority of die-hard short-selling fanatics out there, most investors actually yearn for a bull market in times of economic uncertainty and dire household financial realities. It's an emotional response to being American- fix what's wrong so we can all make money, take care of our families and defend our capitalistic flag, all at the same time.
In other words- bull markets feel good when economic panic has taken hold of our hearts and wallets. And bull markets feel extremely good when severe economic panic has taken hold of our hearts and bank accounts.
So, the next time you hear some financial analyst or economic egghead waffle on about the markets "re-testing the lows" or "pulling back to allow those who were late to the party get in" - forget these idiots. The markets heading up feels good. The markets will continue to head up until the the emotional panic or uncertainty finally dissipates. When we get to Dow 11k and S&P 1250- a lot the panic and uncertainty will begin to be ceremoniously replaced by greed and arrogance. Then we'll all be back to where we're used to being at. And I'll weigh back in at that time to put it all in perspective.
For now, my fellow Americans- enjoy the ride up. Get some sleep. Tell your families that everything is going to be alright.
Disclosure: Author holds no positions in any of the stocks mentioned in the article above.
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This article has 28 comments:
On Oct 19 06:54 PM The Geoffster wrote:
> When do I sell?
Markets may crave direction, but they crave liquidity even more.
If the Dow is going to retake 11k, it is going to have to do it Very soon.
On Oct 19 06:09 PM Mad Hedge Fund Trader wrote:
> zgi When everything is working, and my portfolio is firing on all
> 12 cylinders, I pinch myself and ask “Is this real? What can go wrong?”
> I’m reminded of the slave whose task it was to remind conquering
> Roman generals “All glory is fleeting.” Virtually all of my recommended
> core longs in gold, silver, Canadian, New Zealand, and Australian
> dollars, Brazil, Russia, India, South Korea, Taiwan, Vietnam, and
> junk bonds are at or near highs for the year. I called the bottom
> in Natural Gas within 40 cents, and mercifully baled on my one short
> in US government bonds, the TBT. What we are seeing is a global surge
> in liquidity as cash emerges from the bomb shelter, squints at the
> day light, and then rushes to buy the first thing it can find. Everything
> is going up, regardless of fundamentals. It is the proverbial tide
> that is lifting all boats. You can make a lot of money in these conditions,
> but there is no way of knowing if this will last for one week, or
> another year. But they can go on much longer than you think. In the
> last two liquidity driven markets I traded, Japan in the eighties
> and NASDAQ in the nineties, fundamental analysts railed against the
> tide for years, claiming that stocks were overvalued, each call getting
> their office moved ever closer to the elevator and men’s bathroom.
> When someone finally did throw the switch on these markets, it got
> dark amazingly fast. Tokyo went out at an all time high on the last
> day of 1989, and then dropped a staggering 45% in January. NASDAQ
> plunged just as fast from its 2000 top. The one thing we can all
> be certain about is that the survivors have vastly improved their
> risk control after our recent crash. Make hay while the sun shines,
> but keep your finger hovering over that mouse. The level of risk
> is definitely high than it was in March. When the next real downturn
> starts, it could resemble a flash fire in a movie theater.
On Oct 19 06:54 PM The Geoffster wrote:
> When do I sell?
Yes, you blow it more than enough... You are a pompous prick.
Yes, actually they "should have", and the only thing that saved them is the new bubble that's (temporarily) getting blown by the Fed. In a normalized interest rate environment, stocks would never be selling at the multiples they are now (and I'm talking about run-rate-- not trough-- earnings) and in a normal (as in "legitimate") accounting environment, the financials would be right back where they were at the March lows (if not lower). So unless you predicted back in January that the Fed would be blowing a new bubble, all you did was get lucky.
- Golda Meir (1898-1978)
Because you are going to continue to blow your own horn right through a pair of your soiled underwear.
Irresponsible!!!
Yeah "867-5309" means buy 867 shares of JENY at a limit of $53.09
On Oct 19 09:10 PM Swashbuckler wrote:
> Glancing back at your previous articles, it is difficult to infer
> anything with certainty other than you have an extremely inflated
> sense of your own worth. This article confirms that. I was the first
> to this, I was the first to do that, blah blah yadda yadda. I can
> get better investment advice off the toilet partitions in any public
> men's room.
I do smell some arrogance here though. You were not the only guy to call a bottom at the wrong time, so I don't know why you are tooting your own horn for being a month off. 20% from the bottom? Anyone who leveraged themselves would have been killed! Timing is everything. :)
I only scalp because, unlike many on here, I know I don't know it all.
On Oct 19 08:21 PM logicalthought wrote:
> >>Rather than continue to blow my own horn...<<
>
> Yes, you blow it more than enough... You are a pompous prick.
Oh you forgot to mention that Even DOW 10,000 today is worth less than 75% of DOW 10,000 in 2000 and that the main rise recently in the markets is the crashing dollar that will evemtually take many of you over agressive buls for a long ride down a steep mountain when you finally realize that all the "profits" you made and forecast won't buy you a cup of coffee..
Now you are more careful and just call DOW 11,000 "on the next stop" (tomorrow?, a month from now?, 10 years from now?). You should go read "DOW 36,000" book, its author still claims he was right since he didn't say it will hit 36,000 either.
On a positive side of things, it is your probably kind that creates an opportunity for "alpha" for decent money managers.
I agree with many posters here. When the dumb money is irrationally exuberant, it is probably time to sell.
On Oct 19 10:57 PM yellowhoard wrote:
> Maybe "Horn" is his nickname for his cock?
The author who doesn't understand this deserves oblivion.
low inflation environment (under 4% a year) is 9.4% how can it be
overvalued now?
Furthermore, if you read all of my articles here and elsewhere- my stock calls have now AVERAGED an almost 4x move, including calls made during extremely dire market conditions (calls which had been met at that time.with equal derision as per some of the comments to the above article).
When I write these kinds of articles- such as my Dow 11k- I always expect to get the typical snide comments from the usual suspects...amateurs (usually from traders who lost their shirts or were well behind the curve- or at very least, from those who are clueless as to how the markets really work)..
Yet my record speaks for itself...
BTW- here's an interesting article for you to read, which I wrote in early December 2008...(although it might be somewhat over your head).
Link- www.cnbc.com/id/28113580 / www.cnbc.com/id/25263628/
On Oct 19 11:02 PM DrBenway wrote:
> You called bull market in February. So your call was wrong.
>
> Now you are more careful and just call DOW 11,000 "on the next stop"
> (tomorrow?, a month from now?, 10 years from now?). You should go
> read "DOW 36,000" book, its author still claims he was right since
> he didn't say it will hit 36,000 either.
>
> On a positive side of things, it is your probably kind that creates
> an opportunity for "alpha" for decent money managers.
>
> I agree with many posters here. When the dumb money is irrationally
> exuberant, it is probably time to sell.
I'm up approximately 90% YTD and have compounded just under 30%/year for the past five years, and I still say you're a schmuck.
>>>Yet my record speaks for itself...<<<
Dude, maybe you do have a respectable record, I wouldn't know because I don't follow buy & holders/hopers and generally don't listen to any market advice from anyone. I ESPECIALLY wouldn't be listening to guys like Kudlow and Cramer who were bullish pretty much through the whole down turn; the very guys you call the sexiest men alive!...lol
After your last post I have to agree with logicalthought: yes, you are a pompous prick!
I make my living trading (scalping) and I trade highly leveraged futures. A 1% market move against me puts a big dent in my capital. Had I followed your market advice and bet my whole wad on a buy and hold strategy, I would have been wiped out.
For one who claims they called a market bottom 20% from the bottom (or to be nice to you and say 14% since you claim you meant to get long Valentines Day; though I don't know how one could do that since it was a Saturday and I see nowhere in your post where you said when to get long on Valentines Day) and then turns around and calls others amateurs, is in my opinion certainly a pompous prick!
Your ego is typical of the neophyte investor who managed to be lucky in a couple of calls. You need to check that ego if you plan on actually making it in the long hall.
You still didn't call the bottom either. I can't for the life of me figure how you see you did. Calling a bottom 20% or 14% from the bottom is not calling a bottom; you need to make that call on the bottom or shortly after.