The Wall of Worry

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Includes: ALV, AMZN, CMI, NFLX
by: Steve Reitmeister

I am reminded today of the old investment adage “the market climbs a wall of worry”. Meaning that often when things look bleak, the market puts in some of its most impressive gains.

Certainly we see that being true as we look back to March 2009 when the market rebounded ferociously in the face of still dire economic news. So it’s quite possible we are seeing the same thing taking place here as the market is rising without the benefit of great economic data. Then throw in that the market has crossed above the 50 day moving average and might be ready to extend higher from here.

So I am willing to take my foot off the brake a bit more. Meaning I have cut my short positions and am now more long the market. Of course, if this is a false rally, then it’s always easy to quickly throw another short into the mix for downside protection.

Today’s Train of Thought

(On the train ride home from work I like to read the important investment articles of the day. Here are links to them with my 2 cents added underneath).

The Embarrassment of Cash

The low rates all along the yield curve are shocking. It’s a sad statement if people truly think that getting less than 3% on the 10 year is better than they will do in the stock market (and don’t forget the S&P yields over 2% and you can also short on the stock market). So even with a double and triple dip, I'd rather be in the stock market than treasuries.

August Auto Sales Worst in 27 Years

I saw David Jackson, CEO of AutoNation (NYSE:AN), on CNBC Thursday morning. He too pointed out the unfair comparison versus cash for clunkers spiked sales. But overall he says industry trends continue to improve. Then looking outside the US you can see strong trends in developing countries. CMI and ALV are two good ways to play the healthy trends in cars, industrials and transportation.

When New Jobs Mean Lower Wages

The sad fact is that the world is getting smaller. And there are more and more ways to outsource labor around the world. For example a talented computer programmer in the US makes $125K whereas an equally talented person in India makes about $15-20K. This is adding to the unemployment AND underemployment now being seen in the US.

The Market Is Perfectly Correlated, So Why Bother With Individual Stocks?

Direction may be correlated...but not the magnitude of the move.

Amazon: Netflix Move Means It's Time to Sell

Netflix (NASDAQ:NFLX) has first mover's advantage. But now everyone and their mother is getting into the game. Simply put, Apple (NASDAQ:AAPL) and Google (NASDAQ:GOOG) have the muscle to come in late and still come out winners.

A Real Black Swan

Supposedly the US has the largest reserves of oil in the world. Yes, the US. But what we have is hard to get to forms like oil sands and oil shale. So yes, I have heard the same thing. That our long term strategy is to deplete the rest of the worlds supply of cheap, easy to get to liquid oil. And then we are sitting on the worlds richest supply of oil which puts us in the fabled cat birds seat.

Disclosure: If I recommend the stock, then I most likely own it. Wouldn't it be lame if I didn't own them?