slickvguy

Finally, Some Holiday Cheer

Am I the only one who sees the giddiness today as a sign of extreme desperation? How many pundits have bought into the "trade this Obama bounce"? From Richard Russell to Marc Faber and everyone in-between. I'm slightly long here - I expected this rally. But the higher it goes now, the flatter I'll get, waiting to put on shorts again.

I don't think that the market has all the bad news built in. It's highly likely that we retest 2008 lows. This rally has that bubble feeling we had in 2000. Ignoring of reality. Optimism is nice - but REALISM is even better. Great values? Sorry - I don't see too many of those. I see lots of relatively lower prices - but that does not mean relatively cheap. To be sure, value is much better than it was a year ago. At SPX 800, I'm a buyer. At SPX 900, much less eager. And the higher we go above 900, the worse the expected reward gets for a value investor. Let others jump on the trend train. Haven't we seen that go bust enough times?

I'm not a doom and gloomer. We'll get through this eventually. But I see far too much wishing and hoping for rebounds/bottoms rather than recognition that fundamental long-term shifts have taken place. There's still far too much economic damage that needs to get unwound before a healthy recovery can take place. Did bailing out GM and Chrysler for a few months get rid of their problems? Of course not. All those layoffs and business closings are going to suddenly revers? Government trillions will take time to work their way through the system.

I hope I'm wrong, but I see this as a suckers/delusional rally. The higher it goes, the worse the outcome for those buying into it. When I sense the frantic buying of those who fear they have missed the bottom, it'll be time to short again.