Scott Weitz

Why This Rally Is Unsustainable

Of course individual stocks can do well.

I'm referring to our macro situation...and its not pretty. Bankruptcies are climbing rapidly, foreclosures are off the charts, we're closer to socialism than most realize. Equities have rallied, but credit markets remain terrible.

The game has changed. Those that think we're going to bounce back to 2007 levels are kidding themselves.


On May 05 05:12 PM Smackdown wrote:

> Wrong. Plenty of opportunity. I already pointed out the MLP space.
> Earnings have continued strongly and distributions are being increased.
> Things are not so tough. The world goes on and taking advantage of
> the panic has yielded once in a lifetime returns.
>
> Alerian MLP index returns for 10 years (as of 4/27) is 13.27% annual.
> One year is -21.9%, five year is 6.94%, ytd is up over 25%.
>
> S&P by comparison is 10 year -2.85%, One year is -37.01%, five
> year -3.57%, and ytd is kind of a wash.
>
> From Oct/Nov lows, the Alerian is up over 50% with divs. Individual
> name, the way I do it, are up way more.
>
> Please educate me about why these companies are doing poorly or why
> I should not be long? Some like SXL and NS have announced record
> results and are actually forecasting more records....
>
> Plus I am collecting huge tax deferred distributions that are steadily
> increasing.
>
> On May 05 02:59 PM Scott Weitz wrote:

Why This Rally Is Unsustainable

How can you call the author a 'basketcase' when you give no facts and/or data to support your position.

The reality is that home prices have not hit bottom, the banks are a fraud, the commercial real estate market collapse is imminent...and don't forgot about the coming crisis for municipalities and state and dreadful lack of tax revenue.

Lets call a pig and pig, and not try to dress it up. Earnings are down 33% + across the board. Things are tough....but we need to let the system unwind. Denying that we have a problem will not fix the situation.

In time, you will certainly be right, a recovery will come...but we are not in the midst of it now. Things are still getting worse.

On May 02 02:32 AM InvestBaboo wrote:

> This author is a real basketcase.
>
> XL capital staged a rally to $9.84 from the low digits. To this basketcase
> author this is a 400% unjustfied rally. He would argue "What has
> changed in the fundamentals since March of this year to justify a
> 400% rally?" To those investors who remember seeing XL at 40 dollar
> plus last year it has barely begun to make up for the decline. These
> investors were probably shocked and aghast that a 40 dollar stock
> so quickly ran down to the single low digits in such a short timeframe.
> The same is true with all other equities the author talks about.
> The author forgets that these were behemoths once that were brutally
> punished by the market and have not recovered even to half their
> original value.
>
> "THE MARKET OVER CORRECTED MANY EQUITIES TO THE DOWNSIDE AND NOW
> IS BARELY BEGUN MAKING UP FOR THE OVER CORRECTION." There have been
> significant improvements in the fundamentals that are helping the
> markets now put proper value on these devastated equities. While
> the market will not reward them with their 2008 highs (yet!) the
> market will certainly take them a lot higher than where they are
> today.
>
> It is exactly this "Cup half empty" syndrome that creates suckers
> out of people. People like this author always think they are smarter
> than the market and always try to double guess and/or outsmart the
> market. There is a whole bunch of these sucker authors on Seeking
> Alpha who have caused their readers great disservice by influencing
> them to stay out of this rally. If this author and others like him
> had simply followed charts and then came up with a rationale to justify
> why the markets were rewarding the equities perhaps they would not
> only be wiser but also richer.
>
> As for the author finding faults with the technical parameters of
> this rally there are thousand other analysts who will look at the
> same data and argue otherwise. At the end of the day the markets
> rule and investors are wise to follow the trend till the bend at
> the end.