What Is Your Favorite Cliche (even a broken clock is right twice a day)?
Even a stopped clock gives the right time twice a day
Originally uploaded by crouchingbadger
As a constant listener to business radio and watcher of business TV, I am consistently being given advice by so-called experts that is usually something that could be generated by my 12 year old.
Stock Market Sayings
When we are in the deepest throes of a downside crisis, and the markets are in maximum turmoil, I hear very few if any of them tell me that this is the bottom, this is the spot and this is where you should commit your money. No, what I get are one or more from a long and very tired list of market cliches that are designed to say everything, but really nothing.
The Wizard Of Oz Technique
These cliches, much like most of the advice out of Wall Street that come with a multitude of caveats, are designed to basically sit on both sides of the fence, and to exonerate the speaker from any responsibility if wrong. It's kind of like the Scarecrow in the Wizard Of Oz who points in both directions when asked a question. I am going to highlight the part in each phrase that allows you to really come to no definite decision.
That said, in my travels there is one guy on TV that does not sugarcoat his thoughts or advice, is many times wrong but takes responsibility for it. Once you get past the bells and whistles, Jim Cramer is a smart guy that stands up for what he thinks. Better than stock picking he is great on macro-economic thinking. How refreshing.
Anyway, here is a small list. If you have more, send them on in:
The market is starting to get cheap based on fundamentals
We could go down to ... and test the low set in....
Hedge fund selling could go on for a while
This is a critical level to hold or we could have a way to go
Don't want to catch a falling knife
I would start to nibble in here but keep some power dry
We are starting to get constructive on the market
Could be a good time to buy if you have a long term time horizon
I may be a few weeks early, but ....
My firm thinks that .....
Etc.
Once we have bounced hard off the low as we did last week, the new cliches are:
I think we have put a bottom in
We may go back and test the lows but....
Assuming no new market shock, I think we have seen the lows
Individual stock fundamentals look good here assuming...
Not to say that this isn't the start of a new bull cycle, but if you look at the last 3 recessions we will probably retest the lows
Etc.
Take a stand and live with the consequences, because like economists there are typically are no consequences for being wrong.
I remember guys like Joe Battipaglia during the 2000 NASDQ absurdity riding it down from 5000, banging the table along the way that anyone that thought there was no where to go but up was crazy.
They then change their tune to whatever is working down the road, and still have their jobs and are still on TV giving their opinions.
Vote now at The Political and Financial Markets Commentator at http://politicsandfinance.blogspot.com
Presidential Poll: Vote Here Now!!!
Cast Your Vote Now
I am conducting this poll through Monday afternoon in order to get a feel for how the ordinary American as well as the exceptional American that reads this blog feels about the candidates going into Tuesday's critical election.
Just Days Before The Election, What's Going On?
In about 5 days we are going to know who our new president is, and have a better idea of the direction that our fiscal policy is going to head in. Higher taxes, lower taxes, higher taxes for the rich (if earning above $250 K is considered rich), more drilling, less drilling, more green, less green, more government, less government, etc.
How the markets will react to the eventual winner will start to be apparent on Wednesday morning, or even on Tuesday afternoon as the exit polling kicks into high gear. That being said, what we can say for now is that we have endured an enormous amount of trauma the past months, and that at least for now things seem to have stabilized somewhat.
Cocktail Party Talk
With the weekend upon us, it is important to look at some of the key indicators so that as we go off to our smart dinner parties or the local gin mill or just hang out at home we have some idea of what is going on out there.
The 3 month LIBOR rate had about a .25% drop into Thursday bringing it below 3.2%, and the TED Spread continued to improve with an afternoon level of 2.76.
The VIX, always a big topic among friends remains at very high levels relatively, but far off of the highs that approached 90. While normalcy used to be in the high teens, low 20's, things seem absolutely tranquil at 67.5.
Commodity prices as measured by the CRB Index has fallen from 474 on July 3 to the current level of 268, off the low of 253 set just 3 days ago. While this is good in terms of lower raw material costs, it is bad in that it is a further indication of what we already know. We are in a recession.
Speaking of recession, the GDP news on Thursday was that the economy was at an annual rate of negative .3% . Most people did not need this report to tip them off. Ironically, the National Bureau of Economic Research has not yet decided as to when they would declare recession.
Crude, which had been an albatross around our necks a very short time ago close to $150 a barrel, has provided the equivalent of a tax cut falling to the current level of about $65 a barrel.
Hope this helps. Have a great weekend.
Read the entire story at The Political and Financial Markets Commentator at http://politicsandfinance.blogspot.com
Thursday, October 30, 2008
The Two Day Fed Meeting Ends With A Cut Of 50bp.
Reprinted from The Political and Financial Markets Commentator at http://politicsandfinance.blogspot.com
Are You Confident?
When I first started writing the Politics and Finance blog at the beginning of the summer, in my wildest imagination I would not have expected that my daily rant would be so consistently negative. The goal, which has morphed slightly since the inception was to provide commentary on the ever changing political and financial landscapes that affect us all. The goal has not yet been attained, because the landscape has not been ever changing, but going in one direction.
While I have been accused in the past of having the trait of negativity, I have always called it pragmatism and realism. Just try and call them like I see them. Just wanted to get that out there. In any event, we had the report Tuesday morning for consumer confidence, and the survey says.....they aren't.
The Conference Board announced the October reading fell to 38, well below the expected number of 52, and one of the lowest, if not the lowest reading since this number has been reported. I was listening to a talking head on the radio who said that it is not what the consumer says, but what they do. These can sometimes be different. They are now unfortunately the same.
Very Positive News From The Commercial Paper Market
It looks like there might be a thaw in the credit markets with the Fed getting involved buying corporate commercial paper. On Monday there were 1,511 issues sold with maturities over 80 days with an aggregate value of $67.1 billion. The Fed bought about $60 billion of the total. This end of the CP market has pretty much been frozen since the Lehman bankruptcy.. Last week there were 340 issues brought to market with an aggregate value of $6.7 billion. There was over $232 billion of CP sold of all maturities. (Source: Bloomberg)
Trading In Financials
I am writing this on Tuesday morning at about 10:35 AM, and the stock market is still in rally mode after an extremely strong rally in Hong Kong over night. The rally weakened some after the consumer confidence number, but is still hanging on.
What peaks my interest is the way that the financials are trading, particularly Goldman Sachs and Morgan Stanley, both on no particular news. Goldman is down over $8 to $84 and change, while Morgan is down over $2.50 , make that $3.00 at $10 and change. Other financial are not particularly strong either. This type of trading, with an increase in volume during the slide down definitely bears watching. Both are trading at or near yearly lows. I will come back if there are any developments.
During the slide in these two stocks, the overall market has taken a hit, and looks like it is headed back into negative territory (10:42 AM EST).
(3:23 PM) Whoops. Bad call at 10:42. This is the monster rally I talked about Tuesday morning that would eventually come. The yellow caution flag needs to remain out, as this is probably a vicious bounce within what remains a bear market, unless of course the anecdotal evidence begins to show an improvement in bank lending and in the prospects for improved corporate earnings.
The commentary on the radio is that investors are attracted by the most attractive valuations in 20 years (unlike the investors selling at these valuations yesterday), but these valuations will only be attractive if we can believe in the E in the P/E ratios.
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