Tuesday, July 24, 2007

Bullish on These

Some stocks above that I am bullish on.

I have taken the following exerpt from Bill Fleckenstein from out on the left coast. His thoughts are sobering, unequivocal, and in my opinion, spot on.

Lastly, as a foil to what passes for investment knowledge on the airwaves, I'd like to make a comment about analysis versus opinion. In the investment business, there are two components of an outcome you expect to see in the marketplace. The first is your analysis of the phenomenon or security you are scrutinizing. The second is your opinion (educated guess) about how other people will greet (price) the outcome that you expect.

For some time now, I have been chronicling the problems in the subprime-mortgage market and what they mean. It was possible to look at what had been occurring in subprime and know that a large number of these loans shouldn't have been made, as they weren't going to be paid back. In addition, it was possible to know that the people who owned the loans were levered up, as were the people on the hook for them. Thus, it was logical to conclude that many of these mortgages would be defaulted on, creating ramifications throughout the financing and economic food chain.
Those of us who believed in that analysis have been correct, and I believe we continue to be correct. However, those people (like me) who thought that analysis would matter to the stock market (the opinion part) have been incorrect, as thus far it hasn't mattered.
Nonetheless, I am more convinced than ever that the outcome I envision is unavoidable, even as the timing remains unpredictable.

In the final analysis, analysis is best Why do I bring this up? Because folks at home trying to determine whom they'd like to listen to and what information to consider -- versus what to ignore -- need to be aware of those two components. I say that because if somebody continually gets the analysis part wrong, even if he gets the guess part right -- i.e., temporarily makes money buying stocks because he says that subprime either doesn't matter or is contained -- that incorrect analysis ultimately will see him get carried out. In the long term, correct analysis is more important than your guess about how people will react to it.

Today's bulls have all been right about their belief that stocks should go up every day, but many have been wrong in their analyses. One of these days, Mr. Market is going to exact a penalty for the guessers who've guessed right for the wrong reason. I believe that day is coming sooner rather than later and will cause far more damage than anyone expects.

His comment about price and value reasonate with me which is why I try to marry some fundamentals(the foundation) with lots and lots of technicals. As an example I believe in peak oil and it along with the fundamentals of the world energy scene are the foundation. I now have an arena I can operate in and now will go to technicals for specific items for consideration. I am a notorious value poacher, which means I watch guys like Charles Brandes to see what stocks he is buying. He usually will own multiple names in a sector, for example about 24 months ago he was loaded with the telecoms (VZ, BLS, DT), and the drugs (MRK, PFE, SGP). This will give me ashopping list to start my technical work on. Nothing to complicated as that would make my head hurt!

Good luck and good trading to you.

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