Comments on Fund My Mutual Fund: Short Term Bullish?

I hear ya. And fyi - i am a foreigner... Canada,...

2008-03-18T11:11:00.000-04:00

I hear ya. And fyi - i am a foreigner... Canada, that is. A few years ago, when i started to trade more in the US, I started to notice that while I was making money in US terms, my CAD PnL wasn't keeping up to pace. That being said, I had to shift to companies that would benefit from the falling US dollar. It really adds up. So yeah, I guess we are in the same boat. We're going from wall street to main street. I wonder it if spans the oceans... even more than we thing. Probably. Its going to make the commodity markets extremely volatile (even more so) as inflation/slow growth & resession rhetoric pops up. Regardless, great blog. I actually find it a great starting spot for some research.

Thanks RMJ,By downer, I mean the relentless negati...

2008-03-18T10:45:00.000-04:00

Thanks RMJ,
By downer, I mean the relentless negative commentary on the state of things probably gets old at some point :) Unfortunately its the truth. And truth appears very hard to find in a world of denial especially last summer, fall, and up to say 3 weeks ago.

Yes in my 13 Outlier 2008 Predictions I called for a bad first half and then a large rally in 2nd half 2008 to take us to near flat for the year. That said, while I anticipated 3% rates I did not anticipate an era of 125 basis point cuts within a week (as they did 6 weeks ago) and then another potential 100 today.

This is more of a liquidity play than anything else - ALL ASSETS will be artifically propped up by the liquidity sloshing through including stock prices. I always tell people who get happy about the stock market being propped up "if your stock return is 10% but inflation is 12%, are you really ahead?" The problem is stock market "score" is easily measured, daily/hourly/to the second. The inflation "score" is vague, shrouded in poor government reporting, and not something you can pull up a stock quote for. So the "masses" will be happy with their inflated assets (homes/stock prices) not realizing the real costs. It is too bad, but this is the system. Adjusted for inflation anyone invested in the stock market has made zero in 2000-2008. And don't ask any foreigners who invested in US equities for that period how they did.

I do expect a divergence between Main Street and Wall Street, especially in 2nd half of 2008. And into early 2009. But we will get ANOTHER stimulus package (more checks in the mail) I am sure sometime in that period... ;)

This is why this period is SO difficult - we are not just talking recession and Main Street slowdown. We have a credit nuclear bomb on top of it. Once that is off the table we can concentrate on a good old fashioned recession ... or as the administration likes to call it "a slowdown" ;)

A downer? No.. entertaining - surely. But on to ...

2008-03-18T10:31:00.000-04:00

A downer? No.. entertaining - surely. But on to the markets... Perhaps we have seen the panic. they just occured during non-market hours. Add to it, that the Fed has literally jammed money into the system is going to take effect. Everyone always says, 'the Fed is running out of bullets'. Well, rate cuts arent bullets. They have lasting effects. The cuts back in August still have impacts today. So, its not quite the correct analogy. Now that the "Powers That Be" are much more aware of the financial situation, the risks are likely to be significantly reduced. The next concern may be the real economy. (not that it hasnt already been taking a hit) If you're right, in that 08 is the year of the 'walk away', then main street could be alot worse. Ok - this is sounding more like a downer.