It was an interesting first half of the year as we waited on data that would show improvement in the war, jobs, housing and politics. Today though, all I feel is the weight of unmet expectations, poor choices by consumers and politicians and an American consumer that has an upside down balance sheet, facing higher taxes and poor wage growth.
My portfolio has become highly weighted to my own business and early stage web businesses (my choice). I wait too, but I don’t yet (hopefully) feel the weight that the American Stock Markets do.
Since I dont own but a few stocks and have been reading more than writing this year, I thought that my friend ‘The Fly ‘The Fly’ who has continued writing and trading aggressively in 2010 (with stunning results) best summed up how I feel about the markets and economy:
Well, we are halfway through 2010 and the markets are reeling. Despite minor year to date losses, the recent trends have been horrific, particularly in commodity related names. As always, there is a fight being played out, live in the markets, between the inflation and deflation crews. On one hand, common sense dictates that we are about to enter some brand of fucked up inflation, based upon the behavior of the Federal Reserve and incessant “bail out anyone” attitude of the Federal Government.
On the other hand, people seem to forget the banks are lying about their losses, thanks to new accounting rules, and will get sucked into the deflationary vortex, hard core, if some of the sovereign debt risk worsens. The losses are too great for the banks to bear. As a result, there will be a seizing up of credit, effectively pushing us over the ledge into the whimsical world of “double dip recession.” Plus, there seems to be a worldwide movement against easy money, vis a vis “austerity” measures and “responsible budgeting” here in the states.
…If forced to guess, I’d say we are going much, much lower. But, you never know what the Fed has up their gay sleeves. Keep in mind, the tougher things get, the greater the likelihood the Fed will intervene. Hell, we may get another stimulus package before it’s all said and done. After all, it is an election year.
We had a fantastic rally off the lows starting 2009. I waited a long time to get bullish and caught some of the move starting February 2010. Unfortunately by May, the momentum was over.
My Stock market allocation remains extremely low as housing and taxes weigh on our pocketbooks and minds.
For me, I will continue to focus on companies ‘Too Small to Fail’ as I have since 2006 when I started Wallstrip. I can’t cut wood, build bridges or offer up much more than a few laughs on Twitter, so I fortunately do what I feel I can control and luckily at the same time love.
For those in denial of their balance sheet and the possible market and political scenarios, the remainder of 2010 will likely shock you.
Good comments…All should heed. My question is 980 on the SPX a bottom or is it likely to go lower???
Good comments…All should heed. My question is 980 on the SPX a bottom or is it likely to go lower???
I think M. Le Fly is right about the banks. So I’ve been betting against them, e.g., PACW and FBP (which has dropped like a rock in the last week or so).
The big picture remains grim. Instead of helping (or, at least letting) the economy adjust to the new, post-credit bust reality, the government is blowing its balance sheet on hair-of-the-dog attempts at stimulus when we really need to sober up instead.
Unloaded those FBP puts yesterday for a 23.5% gain. That bank may still go bust, but no one ever lost money by taking a profit.
I think M. Le Fly is right about the banks. So I've been betting against them, e.g., PACW and FBP (which has dropped like a rock in the last week or so).
The big picture remains grim. Instead of helping (or, at least letting) the economy adjust to the new, post-credit bust reality, the government is blowing its balance sheet on hair-of-the-dog attempts at stimulus when we really need to sober up instead.
I agree with “too small to fail.” Of course, too small to fail means not being in debt and inventory matches with sales, as close as possible. The ideal companies are those established or will be established that meet these criteria. Check out the new concept at stridedeck,ca. That company has no debts and inventory matches sales. So, what ever happens in the economy, inflation or deflation, these “too small to fail” companies can adapt quite easily: lowering or raising their prices. That is the best way to protect your hard earned capital and wealth. Not in bank deposits or CD which are all vulnerable to the economy.
I agree with “too small to fail.” Of course, too small to fail means not being in debt and inventory matches with sales, as close as possible. The ideal companies are those established or will be established that meet these criteria. Check out the new concept at stridedeck,ca. That company has no debts and inventory matches sales. So, what ever happens in the economy, inflation or deflation, these “too small to fail” companies can adapt quite easily: lowering or raising their prices. That is the best way to protect your hard earned capital and wealth. Not in bank deposits or CD which are all vulnerable to the economy.
Too small to fail? more like too small to succeed. 90% of small biz fails within 5 years.
“more than a few laughs on Twitter” ..lol you can’t even provide that much
Howard may mean many things to many people, but he’ll never be seen as funny.
“Too small to fail” hardly equals “too small to succeed”, especially during a turning point in an economy. It is like the extinction of the dinosaurs with the mammals surviving. The mammals were too small to fail from the impact. That is what we are talking about now. The old dinosaurs were the large companies with huge debts as inflation made them competitive. Couldn’t lose. Now, it’s the opposite. The”too small to fail” will be the next leaders, adapting to the new situations. There are many good books stating that bubbles are good after their crash as the new companies, “too small to fail”, bought all the equipment and know how below 10 cents on the dollar.
Too small to fail? more like too small to succeed. 90% of small biz fails within 5 years.
“more than a few laughs on Twitter” ..lol you can't even provide that much
Howard may mean many things to many people, but he'll never be seen as funny.
“Too small to fail” hardly equals “too small to succeed”, especially during a turning point in an economy. It is like the extinction of the dinosaurs with the mammals surviving. The mammals were too small to fail from the impact. That is what we are talking about now. The old dinosaurs were the large companies with huge debts as inflation made them competitive. Couldn't lose. Now, it's the opposite. The”too small to fail” will be the next leaders, adapting to the new situations. There are many good books stating that bubbles are good after their crash as the new companies, “too small to fail”, bought all the equipment and know how below 10 cents on the dollar.
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Unloaded those FBP puts yesterday for a 23.5% gain. That bank may still go bust, but no one ever lost money by taking a profit.
No post in a while Howard. What gives? I always enjoy your breakout posts. They give me ideas about stocks to add to my algo. That was not a request. ;-)
No post in a while Howard. What gives? I always enjoy your breakout posts. They give me ideas about stocks to add to my algo. That was not a request. ;-)