Monday, October 1, 2007

Monday Thoughts

Regarding those buying Citigroup and UBS today .... please remember, there is never just one cockroach. I know the phrase is getting overused but for anyone who caught Richard Bove, the financial analyst of Punk Ziegel today on bubble TV, his comments continue to be refreshingly candid and spot on.

Is today's action short covering ? Is it panic buying ? Who knows and who cares we must concern ourselves with the tape. I try to trade when the technicals and the fundamentals are lined up in tandem. The problem I have is the significant underlying deterioration in the fundamentals contrasted with a market that refuses to recognize. Will we get through this unscathed as Mr. Market is telling us is the case or will it be a case of mistaken identity like March of 2000 when the party ended while so many refused to believe. I am still short and profits still remain but have eroded substantially ! Happy? Of course not ! Frustrated ? Yes but this is what the market is about and we need to deal with it. The market cares not a whit for what my positions or wants or needs are. The market will do as it will do in he short run but in the long run the facts will obtain. It is our job to react to the market, not anticipate it. New highs are being made in the Dow and Naz yet not in the S&P and the Russell 2K. The financials are lagging rather than leading. MY old chief strategist Don Coxe was on bubble TV today and made a very astute comment regarding the financials when he said in times like this they trade on the balance sheet rather than income statement. How do you value the balance sheet here for a financial with off-balance sheet conduits, portfolios of mark to make believe positions. The many bulls will counter as Maria did with Don when she said what does the market not get cause its going up.

A friend in politics(behind the scenes) always has reminded me that when you are explaining you're losing. I continue to listen to pundits explain why housing doesn't matter. Why debt doesn't matter. Why the dollar doesn't matter. Why oil doesn't matter. Why inflation doesn't matter. I am always asking myself what happens to this market when it does matter. At some point it will, about that there is no doubt. There is a lot of hot, fast aggressive, highly levergaged institutional money flying around the globe leading to market moves that a fast and furious if not fleeting. If aggressive day trading is your game this is your market, no question about it! This is not a market for the faint of heart, the slow or the indecisive. If you are one of the fair weather fans who only jump on the bandwagon when the home team is winning please be careful. Yes, you know who you are, the type who buys any and all reactions (the dips) and will hold good companies forever(like you did in mid 1999 thru 2000). Did you learn from that experience? If you are not using tight, judicious stops you learned nothing and are going to regret it enormously, maybe even more than you did in the tech bubble. Bubble TV will not be there to help you when this rolls over. Jim Cramer will have no answers for as disconnected as this run up is from the underlying fundamentals so the ensuing decline will be as well. Enjoy your gains but that means hanging on to them. As perverse as it sounds, the fear of missing out can make you do foolish things and make you forget about the fear of losing.

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