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Wednesday,
May 27, 2009
(Cont'd from
above)...
Jim (cont'd):
I am neither a
perma-bull nor a
perma-bear… so
instead of screaming
about why this
decline is wrong… I
am going to tell you
what I would do
about it… I would
use the big decline,
coming right on the
heels of yesterday’s
massive rally as a
chance to get into
the market cheaper…
why not give into
the negativity you
might ask… because
even though the
world feels like it
is about to end
every day of the
week, we manage to
scrape thru… and
stocks have been
able to push their
way higher… even
after today’s
beating, I still
think that we have a
resilient market…
consider the parade
of horrible that
confronted us just
yesterday… staring
right into the huge
rally that we had…
when I woke up on
Tuesday, and I went
on line to see what
was going on… I
almost wanted to
shoot myself… I
almost sank down to
the dirty linoleum
floor, where I would
be sipping cheap
whiskey… could not
even afford the
scotch… while I
braced myself for
the impact of what
seemed like the
financial equivalent
of a handful of
hydrogen bombs in
the air… and already
falling… on their
way to wreak havoc
and nuclear
destruction on
stocks… or, at the
very least, it sure
seemed like the
market was about to
get pantsed… and
then hit with a very
incredible
uncomfortable wedgie…
the dreaded one, two
punch of humiliating
value destruction.
It seemed so bad
that if I were not
such an incredibly,
emotionally, well
balanced individual,
they might have had
to confiscate the
tie and the
shoelaces and I
would be switching
to loafers… what
looked so terrible…
let me give you the
partial list of the
most alarming data
points that drew my
attention in the
first hour… that I
spent looking over
the market when the
futures were
plummeting... here
is what I had to
contend with.
First, a trenched
note from a major
strategist at a bank
I trust, talking
about why the market
must be avoided…
because private
equity evaluations
are collapsing… so
what is the point of
owning public stocks
at all… if no one is
willing to pay up to
take the underlying
companies private...
Second, some brutal
reports indicating
that all is not
quite on the middle
class front… where
they are taking
heavy inflating
fire… people are
losing their homes
to foreclosure…
simply because more
and more of them are
losing their jobs…
foreclosures are now
hitting, not just
the people who were
irresponsible, but
now more people who
are unemployed… and
can no longer afford
to pay their
mortgages.
Third, in the things
that confronted the
market right before
the huge rally… a
far eastern guru,
who everyone seems
to love and respect,
for heaven knows
what reason…
spouting on TV that
the US is about to
experience
hyperinflation that
will destroy
equities in our
purchasing power.
Fourth bad news that
confronted us right
before the rally… GM
bondholders getting
stuck holding next
to nothing… even
though bondholders
were supposed to get
the common stock…
and the unions did
pretty well for
themselves…
especially
considering that
they are the most
highly paid factory
workers in the
world.
And the fifth piece
of news that
brightened my
morning before the
big rally… North
Korea threatening to
destroy the
Western/Eastern
world… or if you
look at that dear
leader, maybe Jack
Kirby’s fourth
world.
When you read these
things, come on,
don’t you just want
to crawl… don’t you
want to just hide
under the bed… hide
under your desk…
this is where I want
to hide right… this
is where you want to
meet the stock
market and say,
please do not hurt
me… that the market
is just a joke… that
it is obviously
going to zero… that
it is worthless…
maybe it should not
even open… doesn’t
that litany make you
feel as if you are
buying German
stocks, going into
that Vei Mar
republic… or how
about buying a
little Russian
equities right
before Lenin stormed
the winter palace…
and then despite all
of these negatives…
even though it felt
like the sky was
falling… what
happened… we rallied
big… huge, one of
the greatest and
most broad based
moves of the year…
Dow Jones up 196
points… stocks that
had not gone up in
weeks, like the pile
makers, some of the
bio-techs, the
foods… totally out
of favor, made you
money.
The bears thought
that we were playing
music on the deck of
the Titanic… to me
it felt like one of
those 3, 4, 7 day
Carnival cruise
trips… or maybe a
nuclear flattop…
that said, of the 57
varieties of voices
in my head… the
intellectually
honest ones admit
that yesterday’s
rally was a total
mockery of the data…
a travesty even…
based on what we
know… oh sure, there
are some positives…
a glowing
manufacturing report
from the Richmond
Fed… or a Dallas Fed
report that said
that the world is
not ending… along
with a couple of
thousand people in
that Michigan
consumer confidence
survey that said
that they felt
better… no doubt
because they had
bowled 200’s that
very weekend.
The negatives more
than cancel out the
positives… Michigan
survey… which means
that yesterday’s
rally was
intellectually
dishonest in the
extreme… it was a
rally that was based
on nothing when you
consider all of the
bankruptcies and the
capital destruction
that we have to look
forward to… right… I
mean isn’t
everything bad that
has happened
completely
irreversible… aren’t
we being told that
every house that
goes up for sale is
just going right
back on the market
because no one can
afford them.
How about the fact
that the Fed is just
printing money… that
is wrong, right…
something that will
inevitably lead to
terrible inflation…
isn’t every point
advance really just
a colossal joke on
you… on the poor
people who are
trying to catch that
unjustified move,
and when all is said
and done it is a
fraud… right… except
for the part where
it happened… every
bit of the rally
took place… and
isn’t that a whole
lot more important
than whether it was
justified… even with
today’s 173 point
pullback in the Dow…
we are still well
above where we
opened yesterday…
Apple did go up 8
points… that was not
fraudulent… you
could sell it… and
then 2 more today
with the iPhones
coming to China…
that did happen.
Google did go up 10
points, maybe
because the quarter
is better… the VF
Corp did go up too,
because retail might
not be so bad for
this best of breed
apparel maker… all
of these things
happened… the
advances happened…
so what is an
intellectually
honest investor
supposed to do when
you see these gains
that you are not
getting… because you
saw the negatives
and chose to sell or
sit on the
sidelines.. I will
tell you what I did
every time I did
every time I was
intellectually
honest…. where I
actually believed in
the negatives… I
found reasons to
hate and dismiss
every rally… I would
act like go take
those points, you
can have them… I
would stomp my feet,
and clap my hands,
and bang the desk,
and throw water
bottles at all of
those who wanted to
grab those points.
But you know what…
no matter how hard I
tried, I could not
wish those gains
other people were
making away… and
ultimately I
realized that all of
my arguments, every
single one, were
just as valid at
some lower point as
they were at the
time that I was
still making them…
they were valid at
6500, they were
valid at 8500... in
short, my negativity
was dead wrong… and
it cost me money.
Now, there are times
when we go so high
that every buyer is
courting danger… but
you know what, you
can sell when that
happens… like when I
told you to sell
last year… at Dow
11,000... reiterate
Dow 10,000... that
was a good time to
sell… but it is not
intellectually
dishonest… my view
is not
intellectually
dishonest, it is
flexible… it is
dexterity… it is
being nimble… or to
put it simply, it is
called, making
money… so to all of
you perma-bears, go
ahead stamp your
feet, clap your
hands, close your
eyes, cheer today’s
pullback… call every
rally absurd… go all
the way back to
March 6th at the
bottom… decide that
everything that has
happened since has
been totally bogus…
do it… you have got
the big picture… you
have got the big
macro data… you have
got the facts…
intellectually it is
all yours… I may be
bullish… but I am
not fighting today’s
decline… I am
telling you that I
think to use it to
buy what you like on
weakness… because
that is flexible…
frankly, I just want
the money… the
dishonest
intellectually
dismiss the money…
.the money that
should have been
made, I want it… the
money that does not
deserve to be made,
I want it… we can
both go to the bank…
I know that mine
takes money… but I
am not sure whether
they let you deposit
your intellectual
rigor.
To all of the
perma-bears out
there… you can be
making money… but
you are prisoners,
you are shackled by
your own mind…
forged manacles… and
you can be
emancipated, Marley
like, from your
mental slavery… how…
well, that is the
bottom line…
▼ ▼
▼ ▼
▼
 The Bottom Line!:
You do not have to
believe that a rally
is right or
justified… or even
if it will hold up
for the long term to
profit from it… you
just have to be
flexible… willing to
go with the flow of
an inflexible
market… so instead
of trying to be
right… how about
trying to make
money.
The people who are
perma-bears must
emancipate
themselves from
mental slavery.. and
they have got to
stop killing our
profits.
[verbatim recap]
[end of segment]
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