Wait, Chinese water torture is up 150% this year... too expensive. More like Indian water torture... wait that's up 120% this year... gosh, can't a guy find a reasonably priced water torture around here anymore? Ok let's go with death by a thousand cuts - I believe that still offered free!
Anyhow, this is more of a type of market that just grinds on you and takes out all hope slowly but surely. I can just imagine the slumped shoulders all over New York City. I keep referring to it as Ground Hog day because every day is about the same. But once we broke that S&P 1440 and did not recapture it quickly, the trend down just reinforced itself.
Eventually it will turn... believe it. Times like this grow hair on your chest (well I suppose that is a net negative for female readers but....) Just remember times like this when your investments are golden and you are making out like a Fed printing press, and remember times like that (the good times) in times like this. As bearish as I am on the US economy, nothing goes straight down and these counter rallies that should come should be good times to lighten up if you feel sick to your stomach. Some stocks are actually good values now (just need some buyers) and expectations are getting ratcheted down by the day; which is also good. While I think 2008 expectations are still too high, they are now a lot more negative than they were even 1 month ago. I continue to be a bit bemused by seeing stocks that create wonderful earnings and provide bullish guidance get hammered nearly as bad as the financials and retailers but this is where we are now, where good, bad, and indifferent get punished.
The good (?) news is we are now approaching mid August lows, but its in a more orderly fashion than that time frame. While it is not a fun time from the long side, in mid August the declines in individual names were even more harsh as hedge funds were liquidating their strong positions to provide liquidity for redemptions. I don't know if that is a good or bad things that we have not reached that stage - one could say its good because things are not so desperate - or one could say its bad because we have not reached that point of desperation.
There are still plenty of stocks trading stubbornly above their 50 day moving average and I am trying to populate the fund with those names. Eventually when people want to buy stocks again, these are the names with the fundamentals, and should be the names people are drawn to.
Either way, have a good Thanksgiving!
4 comments:
What scares me is that many stocks are near August lows yet we have not seen the capitualtion that so often is needed for a bottom to be in place.
true but not all bottoms are the same
there wasnt a capitulation really in Feb 07 and the sell off in Feb was very different than Aug. So sometimes we look at the most recent event and think things must be like that time frame.
2002 was an entire year of grinding down,sparked by sporadic rallies. but not a lot of capitulation. Just desperation and giving up. So it can be very different every time. I would agree if they finally give up on Google, Apple, et al and those guys bust their 50 day moving averages we would probably be in capitulation but truth be told is we are starting to get some very good values. CF Industries is growing >50% in past year and next year and is trading at 12x 08 estimates. hah
I guess it could go to 8x earnings? or 10x? seems a bit outrageous but who knows.
I also noticed that so called "value" stocks have taken a beating. I'm not sure how low the financial stocks could go but I expect a bounce here soon as many of the internals seems oversold.
Yes legendary Bill Miller was saying to buy financials and housing stocks and other deep value stocks for a 5 year hold. I think its a bit early for such things
in terms of value the issue is 2008 estimates are still too high so its a value trap. And for financials in specific who knows what their true earnings are - even they don't know. They are due for a bounce but they are impossible to analyze because how much of their past earnings was due to trading what is now junk. That business is now gone. This is why they are called black boxes - you cannot look into their vault and see how they truly make money. So impossible to trend their future... further anything tied to the consumer will be in trouble in 2008-2009, so what looks cheap today could look expensive in 9 months as earnings degrade for these companies. Its a tough way to go. Eventually when things calm down money will flow back in but I would assume instead of chasing beaten down junk whose 08 profitability is seriously in question it will go to companies with no such issues, but thats my thesis only, we shall see.
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