Posts Tagged ‘Sentiment’

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Why 2010 May Be Quite Similar to 2009

01/08/2010

If you did well this past year, I guess that’s a good thing!

Friday is my market day and it seems that with the new year some realignment of the big picture is in order. Note of optimism: When you know what’s going on you can properly position yourself to benefit from its leverage. No condition is ever entirely good or entirely bad. So here’s what’s going on…

“Sentiment Oscillation” or “Paradigm Shift”.
That’s the reason for all this mayhem. As general conditions continue to change (as they have since 2007), so will the general mindset. From growing to sustaining. From net profit to net loss. From Investment to saving. From short-term gains to long-term advantage.

Let’s focus solely on economic facts:

The How:

  1. Internationally Governments have already allocated rescue money that will be spent over the next few years
  2. They have also lowered Interest Rates which spurs a higher inflation of credit
  3. When Rates rise savings gains precedence and production falls decreasing the supply of goods and labor
  4. Less supply causes over-demand and higher prices for real goods and commodities
  5. When commodities prices rise, they tend to cut into expenses thus lowering profits
  6. Lower profits and demand for cash decrease momentum of corporate investment and the stock markets decline
  7. Lower Markets lower the sentiment of the consumer and spending decreases
  8. Less sales means less revenue and retail venues under pressure go under causing a Commercial Real Estate bust
  9. With Investing and Equity down and out people turn to Savings and Cash
  10. With Bond markets already pressured by higher Interest Rates and a debt laden currency people begin to turn to Precious Metals and Tangible Goods

Why:

  1. Someone say Bailout? Trillions have been spent and Trillions more will
  2. With the lowest Interest Rates in decades credit is merely being deferred
  3. Businesses decide to save rather than reinvest profits
  4. This one’s tricky but the former ALWAYS leads to latter
  5. Even if businesses raise prices, profits will fall
  6. Bond yields begin to resemble stock dividends only with less apparent risk
  7. Higher stock prices are always met with consumer exuberance
  8. This has already begun but has been prevented by soon ending rescue funds
  9. With higher Interest rates CD’s and Money Market funds begin to make sense again
  10. This is what happened during the 70’s as Real Interest Rates remained negative

Investing Advice: If you are going to “invest”, you must understand that the next 10 years will be similar to the last. Much higher prices for real goods, much lower valuations for equity and paper. This is because we’re doing the same things over (lower rates, more issuance of credit, more debt to pay off). These are times to seek under-valued out-of-favor securities.

Business Advice: If you are going to do business, I believe you will be better off than many people trying to make ends meet on unemployment checks and the reason for that is the ability to be proactive. Your success is what you make of it, and if you’re determination is deep then no recession or even depression could abstain it. Focus on providing customers with durable and consistent value.

Fundraising Advice: If you are in the legions of the eager financiers trying to keep the lights on in your non-profit, raising for a local charity or even seeking capital for your small business, remember that people are always searching for the best place to put their money. Your job is to provide them with the sense of value that its going to the right place for the right reasons.

Have an awesome weekend!

Gold and Silver Update

09/16/2009

When Fundamentals clash with Technical Charts who to follow? What role does the Gold-Silver ratio play? What happens if Gold breaks above $1000? What does that mean for Silver? And what should the prudent investor do?

How Intelligent Investors Think

We are approaching another critical point for the Precious Metals Trader. Notice how I say “trader” not “investor”. An investor doesn’t follow a position. He buys low – when demand is virtually non-existent, and sells high – when demand is irrationally justified. A trader on the other hand, may profit from medium term trends. What’s interesting is that more often than not, the investor wins. The reason for this is that generally markets follow trends. “Generally” implies most of the time, however when they do buck the trend they do so with “shock and awe”. Thus, we must approach this current scenario like an investor/long-term trader, and not like a little kid out to make a few dollars.

Many recall the March 2008 highs. Note that Silver is still 20% below its 2008 high and 65% below its all-time. At the time, we did not sell and our reasoning was very clear and even in hindsight “justified”. “If the downside is significant we can always wait it out. Yet if prices pivot to the upside – and they have strong reason to do so – then there will be no way for the investor to re-enter the market”. Basically, you can’t jump onto a moving train. (Well, you could, but its not advised).

One note on the matter: We don’t really “invest” in gold or silver. Gold is the ultimate currency and should be the default holding of any investor. Only an investment of significant upside and strictly limited downside should be wagered for its value.

Outlook

What we see now is similar to March 2008 in the sense that the Technicals look bleak, while the Fundamentals look increasingly resilient. Gold has just broken-out above $1000. This has stood as a significant resistance level and its abolition holds the keys necessary to bring thousands of traders and funds into the market again. These are mostly people who are waiting on the sidelines to see if the rally is sustainable.

Another factor, that will definitely play a key role in the longer-term is the fact that Central Banks are now buying gold, not just selling it. This create a fascinating equilibrium in a once Dollar-dominated monetary system. The game may be up, this time for good. In addition, mining companies, such as Barrick, intend to de-hedge their positions in gold shorts – which were profitable when Gold was falling in the 80s and 90s but with rising prices has now turned against them. These two development are decade changing events and will alter the precious metals market for years to come.

Finally, there is not a lot that the U.S. and the Dollar have to gain from expensive gold. It destroys their credibility and instills fear in the hearts of fiat-borrowers. This being the case, it would be of no surprise if governments make one last-standing effort to contain the gold price. Problem is, that while this was once going with the flow, its now battling an uphill trend – a strong one to say the least.

When Fundamental and Technical indicators clash one must look at Sentiment. This is the one differentiating fact between 2008 and today. While March 2008 was met with great fear and anxiety regarding the future of the economy causing extreme bullishness in precious metals, September 2009 is met with confidence and calm, to the point of skepticism that Gold can old above $1000.

The fact remains, that the precious metals are over-bought and reaching stress levels on the upside, but these factors are merely short term. The overall trend remains up and amidst the strongest buying month of the year, the top may not yet be upon us.

The Gold-Silver Ratio

Many market followers don’t reallize that silver is due to outperform simply due to its recent under-performance and under-valuation relative to gold. Geologists estimate that the in-ground Gold-Silver ratio stands at something between 8-20. This means that there is approximately 8-20 times more silver than gold. Yet above ground reserves have dwindled significantly in recent years as much of the metal has been used industrially or has gone into private hoards and won’t come out until prices increase over-and-above current estimates.

The ratio, now at about 60 as of this writing, is still high relative to its suggested variant. This means that if one could expect a mean ratio of say 45, then with Gold hovering at $1000, Silver can still rally straight up to $22. If Gold rallied to $1650, as many expect within the next 12 months, we can expect to see Silver as high as $36. Again this is all if we revert to a mean ratio. But markets tend to over-extend their pre-defined impacts. Only time will tell.

Summary

There is no question that the bull market is intact. As for corrections, “they’re as predictable as snow storms in winter”. Yet, when it comes to making sound financial decisions, the ones that don’t require much thinking are those that warrant action. The best action is often no action. I saw many people who call themselves “investors” pile out of Gold in 2008. Yet, they did so for the wrong reasons. No one saw the collapse of Lehman Brothers sweeping the market causing a massive full-scale sell-off affecting each and every asset class – precious metals included.

On the flip side, had the market rallied on the COT short-squeeze, or had a major buyer stepped into the market, they’d probably still be locked out of the market forever. This time is no different. Maybe prices will decline, maybe they’ll rally… but its a bull market you know!

A Story

In Reminisces of a Stock Operator, the famed trader Jesse Livermore teaches many valuable lessons about markets and trends. In one event, he was told the following

“When you are as old as I am and you’ve been through as many booms and panics as I have, you’ll know that to lose your position is something nobody can afford; not even John D. Rockefeller. I hope the stock reacts and that you will be able to repurchase your line at a substantial concession, sir. But I myself can only trade in accordance with the experience of many years. I paid a high price for it and I don’t feel like throwing away a second tuition fee. But I am as much obliged to you as if I had the money in the bank. It’s a bull market, you know.”

On Living on the Edge

07/27/2009

“Most People Die When They’re 23 and Aren’t Buried Until They’re 70!” ~ Benjamin Franklin

“If you aren’t living on the edge you’re taking up too much space!” ~ Jayne Howard

04/25/2008
Sentimentally Challenged

How funny is it when you see this headline on the most prominent media center Marketwatch.com

Contrarian analysis no longer as bullish on gold

Draw your own conclusions.

12/05/2007

Contrarian Indicator?

“Silver? That’s so 2000”

Well it’s referring to the car color, not the metal. But these days you can never be too sure of a double meaning. Silver (the metal) still lags at under $15. Only wish it was cheaper.

Holiday Tip: Buy Japanese Yen and Silver on dips. (and Dow Shorts on rallies).

08/16/2007
Sentimental Thoughts

Ever wonder as to if technical analysis actually works? Last week Lehman Brothers said “Models (ours including) are behaving in the opposite way we would predict and have seen and tested for over very long time periods.” Wonder no longer.

Perception is reality on Wall Street, and that perception is changing awfully fast.

The Yen/AUD Carry Trade is now in full reversal.

Why Smart People Aren’t Rich

“I am more intelligent than most people. I have proved that throughout my life. I can now use my knowledge and intelligence in the stock market to gain an advantage over all those other idiots out there who think they know what they are doing, but don’t.”

Then everything goes to hell.

Moral: Everyone has emotions. It’s not about how smart you are, but how good you are at controlling emotions.

The “Short-Term”

Many hedge funds are said to be barring investors from taking their money out (as a matter of fact today was the deadline for requesting withdrawal for end of the quarter).

One analyst writes

Everyone seems to be caught up in the fear this decline has generated that they’ve forgotten that despite the 8% dip, the market had risen 14% off the March low. Before that the market had rallied 20% off the June 2006 low, only to correct 7% in March this year. Before that the market rallied 14% off the October ’05 low only to correct 8% into June ’06. You can see that these are just normal, healthy pullbacks in an ongoing bull market. Most investors get too caught up in the short-term market noise and in doing so they miss the big picture (where the real money is always made).

So, the market rallied off of March 2007, June 2006 and October 2005 lows. I really am dying to know where this guy was in 2000.

The Contrarian Philosopher

08/13/2007
They say good traders happen to be philosophers, and necessarily so. A good analyst must understand what everyone else knows. If a good play has been diluted with public interests, it’s not ought to be that promising. In June we wrote

Contrarians aren’t always right. Many times contrarians are dead wrong – consider shorting the market in 1998. Divergent thinking comes in handy only once fundamental analysis is strongly in play. A stock can be a good value, but if everyone is ranting about it, there may be something you don’t know.

As I read through some of the articles the bulls (as well as those who don’t want to write anything bearish) are writing, it seems that the spectrum has radically changed. One analyst writes that at times when short-interest is at record highs and shorting from floor Specialists are at lows, a bear market has never commenced. This fits with the chanting of all the short-term analysts who, along with all the technical technical analysis (yes), claim that markets remain stable and healthy. The problem with such thinking is that we find ourselves in an information age where the time difference between a headline, the trader wanting to make a trade and the trade being executed, is literally instantaneous. A short ratio can be cleared in a day or two through awfully volatile trading. The predicament may change during after-hour trading and may not even give the investor a chance to position him or herself properly. I mention this to bring up the dynamic concept of contrarian sentiment. Now, the average analyst, upon hearing this will probably roll his eyes. But in essence it is the core mindset; one indispensable to the long-term investor and his decisions. The idea is quite simple: Any great idea may cease to be a great idea if everyone knows it’s a great idea. An example is the “January Effect”. For years it was one of Wall Street’s biggest secrets: “Throw away the bad stocks toward year end as tax write offs and buy them back in January”. Naturally, year after year stocks rallied during this month, however over time as the average investor became aware, returns declined gradually to mediocrity. In the long run the crowd is always wrong. Yes, they may group together and seem equally successful over a period of time, but this will end badly, as did every bubble in history. This said, it becomes similiarly apparent that as the crowd begins to question the crowd itself, you are left with an inverse logic. This is what I believe is occurring in the markets as we speak; an increase in overall volatility as well as a wide spread of critical thoughts from both camps, (calls for both Dow 26,000 and 5,000). When people try thinking like contrarians, they flounder. They will often begin with a biased mindset, moving with ideas congruent with their desired outcome. This may be exemplified by the current logic of the bulls in two ways. Firstly, the “Stocks are long term vehicles and this is only short-term noise” group, remains dominantly strong. As a matter of fact I strongly believe that many astute investors haven’t sold a single share since markets have turned volatile. This will change and the longer it takes to do so the stronger and more crucial the downturn will be. Secondly, some analyst have attempted to claim themselves “counter-bearish” advocating how with so much worry in the air stocks will surely rise. When I look at the stock market I try time and again to see a rationale behind the presented logic. Just two weeks ago the Dow hit an all-time high. Unemployment stands at historically low levels, the economy seems stable and many have just been observant of the subprime mess. The Dollar hasn’t made any major adjustments, the Federal Reserve hasn’t touched interest rates (as they did in 87 and 91), many investors remain calm expecting the action to subside, the Dow hasn’t even reached what is considered an adequate Correction (10% decline), there is still the inventory problem in housing, there is still much speculation in the derivatives market as there are still many bond portfolios that have not yet been re-rated or marked-to-market. How could anyone say that the danger has passed? The contrarian knows to “buy when others are fearful”. When there are no more eager sellers, eager buyers are usually nearby. But where does one see frantic selling? Recent down days by no means represent liquidation, especially when a significant number of those days have been of strong rallies. It seems that now too, many who attempt to beat the market are indeed falling under their own weight. It has long been shown that the average investor wrongfully cuts his gains and extends his losses. In the event of a hard sell-off we may see again, as we have in recent days (and today), surging short-covering rallies. It is quite interesting to note that after every major crash in history a strong rally has followed. It happened in 1929. After October stocks began to climb again. Many investors eager to recuperate their losses, as well as throngs of people previously on the sidelines saw it as a buying opportunity. The market came back strong. Then along came the Crash of 1930 and wiped out investors a second time. This occurred time after time until 89% of investors money was history. Those “long-term” traders waited 24 years to see a positive return on their capital. “Be greedy when others are fearful and fearful when others are greedy” we are taught. And it sure as hell doesn’t seem like investors are running around in panic, desperate to sell shares for pennies on the dollar, at multiples of 10 times earnings, as they have in the past. We wait.

07/30/2007
The Bear Has Passed

I simply cannot get over some of the thoughts I’m seeing posted.

Marketwatch headline “Lower prices attract buyers“. I mean come on. Firstly, lower prices? We had lower prices on Thursday too but I guess that didn’t help much. Secondly, all shares have buyers! The only way to fix this headline is to change “Lower” to “Higher” and get rid of the words “attract buyers”. Bloomberg’s headline seems far more appropriate U.S. Stocks Rebound as Brokers Advise Buying After Sell-Off”.

Get this one. “The worst way to invest is to buy when optimism fills the air like it did two weeks ago, and to sell out when everyone’s predicting the end of the world, like last week.” The end of the world?? (yes two question marks, for proper analysis of such a pompous statement see our previous post “It Doesn’t Matter).

The following note from the article above should tell you exactly where you shouldn’t be looking – the Media!If I knew that, I’d be a professional investor, not a professional writer.”

This is nothing more than an inevitable short-covering rally. It may last for a few more days and may even attract buyers (higher prices will attract them that is). After that we are due to see a lot of seemingly meaningless motion and volatility. Looking at some historical chats it is interesting to note that crashes never occur right after the exact top, but jumped around for a while in a wide two-steps-back one-step-forward scenario. (Great time to be a Day Trader!)

Honestly, I considered covering my shorts due to the excess pessimism but advised against it since (1) the bad news is still coming out and is going to hit stocks again. It’s a matter of time. And (2) the meaning of a day like today (in what seems to be a beginning of a down market) is insignificant. This is especially true for small speculators shorting in small portions. Considering fees they may even come out negative.

Just one more bone I had to pick, and its on Alexander Green from the InvestmentU. He writes

Valuations are reasonable, too. Today the S&P 500 is selling for 16 times trailing earnings. That’s well below the average p/e of 21.7 for the past 10 years. And nowhere near the 2000 peak of 28 times trailing earnings. (In fact, the average p/e for the market the last 50 years is 16 times earnings – right where we are today.)

“Reasonable” is usually defined as something that is congruently sensible. These valuations however are not. You cannot compare an object that has been in motion for a longer period of time (the earnings valuation at the conclusion of a 20 year Bull Market and four year mini-bull cycle) to one that has just begun its course (a inevitably continuing secular bear market contained so far by a mere two years of declining prices).

I’m sure that the average 50 year P/E average for 1980 was quite different, considering it would have spanned two Bear markets and one Bull as opposed to two bulls and one Bear. So much for reasonable.

Did anyone consider that Ben Graham called for a degree of increased safety at the exact top in 1965!

Investors have turned bullish again and this couldn’t possibly be more bearish.

07/29/2007
Why So Bullish

James Altucher from The Street sites Seven Reasons to Be Bullish Now.

I see only two possible perceptions that led to the writing of this article.

a) What if the contrarians aren’t thinking? It’s been a while since the last meaningful decline, maybe they forgot how it works.

b) They are trying to get out. They weren’t ready for so much so soon and, as a prominent media source they are advising retail investors to hold to the course while they cash out. The typical pump-and-dump we saw in the 90s.

1. Private equity. Lots of cash on the sidelines may end up in stocks and buyouts.

Last I recall buyouts aren’t profitable. They are bought with debt, fees are made, they finance the company, and resell it to the investing public. This does not work in a Bear Markets (a.k.a. “Credit Busts”).

2. Retail investing. The retail investor still has not gotten back into the game.

And they are not coming! Since when do we need a blow off in order for stocks to fall? Stocks have fallen many times in the past but we have only had 3 or so blow offs. Go figure.

3. Buybacks. This boosts share value.

And it doesn’t mean a thing. Stock buybacks are famous in bear markets. This also answers the liquidity problem mentioned in Number 1.

4. Low-P/E oils and financials.

Let me share with you some math. Dow (13,265) sells at 21 times earnings (645). Bear Markets have in the past brought valuations closer to a P/E of 8. 645 x 8 = 5,160. This means that earnings could easily triple without a single stocks on the Index having to move a dime. Thought: If the two most important items in this economy (Energy and Money) are selling at low valuation I think you should start thinking.

5. Global economy boom.

The stocks market is nonetheless, a) a short-term indicator and, b) a leading one. Many of these future gains have already been discounted in the past. Thought: This past the Emerging Markets fell right along the developed nations.

6. China.

Amazing no one ever seems to leave it out. But let us remember that China is the producer and we are the consumer. If either we stop spending or they stop lending China can easily be taken out of the equation. Thought: The U.S. was also amidst its Industrial Boom when it plunged into the Great Depression.

7. Tech upgrade cycle.

Again with technology. The stocks market didn’t rally because people were upgrading their TVs from black and white to color. Besides, this is why Microsoft is selling at 20 times earnings, isn’t it?

A few more sentimental thoughts…

The bulls always seem to bring examples of 1999 saying that if the standard retail investor isn’t in the game you can’t have a real Bear market. This is wrong from its premise. Consider a moment that those individuals who were running out to buy stocks in the late 60s didn’t see a similar excitement until 30 years later! History says it should be about the same amount of time until the next euphoric blow off.

Nevertheless, he comes to give us reasons why we’re not yet at a top. This is quite interesting because many wonder as to what was the catalyst for the market downturns in 1974 and 1978. After all these were by no means speculative tops and on the contrary, were amidst recessionary periods of falling valuations.

So there you have it. James has given you seven reasons why stocks should go higher and I have given 7 why they may head south.

But do recall that while no Bull market ever supported ratios of earnings below 10, few Bear markets have supported ratios above 20.

07/29/2007
It Doesn’t Matter

It’s the mantra that our generation has come to proclaim. We have it well and why shouldn’t we. We were born in the greatest country in the world, into the wealthiest economy of nations, living on soil on which no war has been fought upon in over 150 years. Bred into an era awash with liquidity, credit and good fortune that has infused not only our own but that of the entire world. A planet free of international conflict, depression and social pandemic for over 3 decades.

So when we hear of such things, when our children read of depressions in their text books, we come to ask why. Why do we learn of such devastating events that has no affiliation whatsoever with our day and age? Why do we continue to teach industry instead of finance? “It doesn’t matter” we tell them.

However, history would beg to differ. We learn of the ancient cities of Rome and Tyre to remind us that those times were also ruled by men. Men who are invincible and who could not fail. Men who believe they are wiser than nature and the course of events. They told themselves “This time is different” while they scoffed at the failure of the empires. “Veni, vidi, vici” Caesar said. Today, people tell themselves the same.

Here are three examples, brought to us by Bill Bonner, of the sentimental shift that has occurred over the past few decades

Crashes Don’t Matter
First, there was the Crash of ’87. Stocks fell hard. But then, they got right back up again, as though nothing ever happened. Then, people began to think that crashes were no trouble. Even if stocks fell, they’d soon be on an upswing again. Books began to appear such as “Stocks for the Long Run.” People began to believe you couldn’t go wrong in stocks, no matter how much you paid for them.

Terrorists Don’t Matter
Second, in 1989, the Berlin Wall was dismantled. Suddenly, we no longer had any enemy worthy of the name. We weren’t going to be exterminated in a nuclear war after all. From here on, it would be clear sailing.

Deficits Don’t Matter
Third, Ronald Reagan and the neo-cons transformed the Republican Party. “Deficits don’t matter,” said Dick Cheney. They don’t matter to the Democrats. And now they no longer matter to Republicans either. After the ’80s there was no longer any organized political party in favor of fiscal and monetary conservativism.

Oh, the system won’t collapse tomorrow, or the next day. On the contrary it may seem to become stronger. It may rise to new heights, we may find additional ways to turn a dollar into many.

But let us not “discount nirvana” as Greenspan warned. (He may of been wrong too many times but it doesn’t make his statements any less true).

07/21/2007
Sentimental Analysis

Last year around this time we observed how the polls favored cash and by a large margin.

In June’s Contrarian Analysis we observed how the general public mostly favored Stocks, then cash and then Bonds and Real Estate.

Again in December 2006 we did a similar Sentimental Analysis that suggested investors favored Cash by 26%, Real Estate 23%, Stocks (I guess all markets) 22%, Other 12%, and bonds and gold each 9%.

As you can tell, the overall bullish sentiment is changing albeit slowly. In mi-2006 we still saw a strong warrant for cash and safety, to gold nevertheless oblivious.

We then saw this shift over from cash to issues of better return, i.e. the end of the Real Estate bubble and the continuation of the bull market in stocks as institutional buying was replaced by the small investor.

This has since then diminished with common folk now speculating in everything from credit swaps to Chinese equities. We are now seeing a gradual flight from the dollar (44% to a mere 8%) as many of its negative attributes are becoming known.

So what do many money-savvy web surfers think now? We turn to Yahoo! Finance

What will deliver the greatest returns in the next 12 months?

U.S. Stocks 29%
International Stocks 52%
Cash 8%
Bonds 6%
Real estate 8%

It is thus obvious that a bubble is now seen emerging in the emerging markets. Instead of Tech stocks, every investor now owns something in China and the Far East. Russia, Brazil and India are all booming.

Furthermore the fears of a slowdown or even a crash seem all that familiar to similar warnings by our very own Alan Greenspan calling “irrational exuberance” in 1997.

But this poll should be studied with caution, as many believe the worst for housing has passed. This is far from the truth. Inventories still remain high and prices not far from their peaks.

Additionally, it should be noted that houses, unlike equities, are illiquid. There is no market price to be sold at, while it takes time for homes to sell. Prices are issued periodically, not daily, and are thus subject to larger variations.

Still, there is much to look forward to in the precious metals as no polls I’ve seen from the likes of Yahoo Finance, Motley Fool or CNN Money have even given the slightest attention to them. For those investors who do hold them they either allocated it as Cash or Commodities.

07/19/2007
On Bernanke’s Fed

Ben Bernanke said Wednesday, but the problems in the subprime mortgage market haven’t caused a systemwide credit crunch. Well, I’ll be damned if I missed it.

Bernanke pinned much of the blame for the recent economic slowdown on the

“ongoing adjustment in the housing sector… one risk to the outlook is that the ongoing housing correction might prove larger than anticipated, with possible spillovers onto consumer spending.”

So much for housing not affecting the overall economy. Please note the word: “might”. This means this is yet to happen.

This is also somewhat similar to the investment banks pricing CDOs on how much they expect to make and not on what they may actually return. Everyone is looking in the wrong places and when they see what they should see – a bunch of bogus numbers – Wall Street ain’t going to look so pretty.

Ever wonder what people in the 70s would have said to you if you told them you were seeking 20% annual returns? He’d either think you were mad or he wouldn’t care because “the dollar is worthless” and thus were returns.

How about in the 90s when people were convinced that they could conservatively rake returns of 30%? (If this were so, Bill Gates would now be worth approximately $627 Billion… I hope that makes you laugh).

Oh, how sentiment changes.

07/09/2007
I Can’t Help But Wonder…

Ford Reconsiders Electric Car“. It still amazes me how such large and (once) dominant corporations miss the greatest opportunities. Bill Gates predicted that one day we’ll be selling music online, but then lost the market to Apple’s iTunes. Where have they been?

Funny how when you buy value while dollar-cost-averaging you want whatever it is you are buying to go up and down at the same time. Better to trust your instincts that your purchase is correct and just keep buying for as low as possible.

It’s not inflation and deflation of assets that makes things so complicated. It’s the dollar. So you might as well just get rid of the dollar altogether and only deal with real inflation, no?

With all the hype surrounding Apple and no pizazz whatsoever involving Microsoft, wouldn’t a spread between the two stocks sound like a good idea?

Will this bubble slowly deflate like a bad tire, or will it pop like “OMG WTF just happened to all my money!”?

Will silver be following suit with nickel, when large institutions attempted to corner the market through hoarding the metal and watching prices rise as demand was not met? If it is, “Watch out longs”.

06/19/2007
The Counter-Contrarian

Contrarians aren’t always right. Many times contrarians are dead wrong – consider shorting the market in 1998. Divergent thinking comes in handy only once fundamental analysis is strongly in play. A stock can be a good value, but if everyone is ranting about it, there may be something you don’t know.

As long as the thinking is rational go with the flow. Once the money goes irrational, its ok to bet against it.