RANDOM THOUGHTS BY TPC
Courtesy of The Pragmatic Capitalist
- These holiday trading weeks are always interesting. I have spent a great deal of time trying to decipher the reasons why they are consistently bullish and there appears to be just one answer. The sellers completely disappear. When investors head for vacation they tend to do their selling and hedging before they leave so that nothing can go haywire while they are gone. Therefore, the trading desks are manned by subordinates and other people who aren’t in control of who hits the bids in a time of panic. What are you left with? Tons of fund managers who are positioning their portfolios for the next year. As we’ve seen over the course of the last few weeks in my analyst outlook series, the banks and brokerage firms are almost unanimously bullish. Hence, it’s not surprising to see the melt-up continue this week.
- Just when it looked like the housing market was seeing some real strength new home
sales tank. The media was really grasping for a reason for yesterday’s continued rally, but the reality of it is likely nothing more than the comment above. Case in point – today’s disastrous housing data didn’t even faze the market. New home sales came in at 355K which was well below estimates of 440K. Perhaps most alarming was a sharp increase in new homes inventories. Inventories jumped to 7.9 months from 7.2 months in October.
- I’ve noticed a deep hatred for many of the stories on the site tracking the large banks and brokerage firms. While I agree with and understand the hatred for these companies, they simply can’t be ignored. The fact is, many of these firms are highly influential in market outcomes. While no firm has an unblemished track record I still believe it’s important to use the summation of all these ideas to formulate your own investment ideas. Hating a firm because it took taxpayer bailout money might be justified, but will in no way help you make money in your investing account. Goldman Sachs, for instance, is the most hated firm on Wall Street, but ignoring their advice over the last few months has cost you quite a bit of money. My point is, check your personal biases at the door. The market doesn’t care about your morals and personal beliefs. You should accumulate as much information as you can (even though most of it will be fairly useless in your end plan) and break it down in a manner that helps you find your own personal answers.
