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Several people have specifically asked for my explicit investing thesis, as opposed to the more general economic discussion/market analysis we see on the blog.

It is a fine line to provide stimulating discussion here, while at the same time not being unfair to the people who actually pay for our research and commentary. Anytime research runs in the press (Such as this: "Real Estate and the Post-Crash Economy"), some subscriber lodges a complaint.

An astute observer should be able to deduce what my general views are from the various posts and appearances. Meanwhile, I can provide a short excerpt that reveals some additional details. This is the intro from a longer piece that went out yesterday:

In a seeming paradox, we have a rapidly accelerating market, and a rapidly decelerating economy. Hopes for a rate cut in the face of this asset inflation are pushed out further and further into the future. This is now a trading market, where momentum and trend dominate, increasingly detached from the decaying domestic fundamentals. Global growth remains strong, and despite that – or perhaps because of it – U.S. markets are lagging their overseas peers.

How much further this market can rally is anyone’s guess, but a “Melt-Up” to Dow 14,000 would not surprise us. While overdue for a pullback, the markets have shown little interest in any such activity. Instead, traders seem to want to rally ‘em on any news, good or bad.

A melt up would likely be accompanied by a rush back into equities by the one group notably absent from the current action: the public. As the trading volumes at the major online brokers have revealed, John Q. Public is nowhere to be found in the current market. We suspect that the aforementioned rush back in would be accompanied by a significant spike in Bullish sentiment. Until that excessive Bullish sentiment develops, it is not safe to trade on the short side of the market.

Meanwhile, a “melt up” presents a high risk trading, not investing, opportunity. A melt up inflates the air pocket that has already developed underneath the present environment; only the most nimble traders are capable of avoiding the ensuing danger.

Today's WSJ had an interesting quote describing Wednesday's action as a Buying Panic, a characterization I do not disagree with:

For the next week or two, I would advise investors who have money that they're thinking of putting in the market to hold off," said strategist Al Goldman, of A.G. Edwards & Sons. Mr. Goldman said there seems to be a "buying panic" this week among money managers who have come to regret keeping clients' money on the sidelines during last month's gains. "At the end of the day, these guys are paid to manage stock, not to manage cash," he said.

That oughta hold the little bastards . . .

Sources:
Next stop, Dow 14,000?
RR&A, May 2, 2007
http://www.ritholtz.com/component/option,com_docman/task,cat_view/gid,26/Itemid,126/

'Buying Panic' Drives Stocks As Blue-Chip Rally Goes On
PETER A. MCKAY
WSJ, May 3, 2007; Page C1
http://online.wsj.com/article/SB117814978098390167.html

Source: A Dow 14,000 "Melt-Up" Would Not Surprise Us