The Height of My Lunacy
By Jeff Clark
October 15, 2009
All is right with the world again.
The economy is recovering. The stimulus efforts put in place several months ago are working. And the worst is behind us.
The government and its many acts of benevolence have saved us all from another Great Depression.
Don't pay any attention to the inconvenient truth of 9.8% unemployment. After all, the unemployment report is a lagging indicator.
Declining income tax receipts should also be ignored – as should the increased bankruptcy filings and rising rates of foreclosure.
Oh yeah, don't you worry your pretty little head about the collapsing U.S. dollar. It allows U.S. companies to sell more things overseas. So really, a declining dollar is a good thing.
Just look at the stock market. If it's rallying, then all must be well and good.
Yes, I'm being sarcastic. And no, I don't really believe the government has saved us from anything. It has only delayed the inevitable pain associated with living within one's means.
For the time being, though, the stock market rally continues. Those who fight it are destined to spend most of their mornings wiping egg off their faces.
And as I cleared the egg yolk from my pores this morning, it dawned on me that this is perhaps the most challenging trading environment in which I've ever participated. Never before have I seen such price persistency in one direction. Nor have I ever seen so many intermediate-term indicators get whipped around so much.
It is as fascinating as it is painful.
The Internet bubble of 1999-2000 comes close to resembling today. Back then, I fought the trend like Rocky Balboa fighting Apollo Creed in the first Rocky movie. I was a long shot. It made no sense to me that stocks were trading on the basis of page views, eyeballs, or "potential" market exposure. And I lost a small fortune shorting stocks in the face of such overwhelming, yet undeserved, momentum.
The height of my lunacy was exposed during a holiday party in late 1999. Maybe 200 people were at this party, and I swear nearly every single one of them came up to me and commented on how I must be making tons of money in the Internet craze.
Of course, it was the exact opposite. I was fighting the trend and losing money in the process.
Sure, six months later, everything worked out. The Internet bubble popped, and my short positions paid off just fine.
But if I had the ability to go back in time, I would have bought eBay in December 1999 and sold it two months later for a 100% gain. Or maybe I would have bought JDS Uniphase at $600 per share in December 1999 and sold it for $1,100 per share in January 2000. Those were the smart trades.
Over the long term, neither of those trades made sense. The stocks eventually crashed and burned along with the rest of the Internet dung heap. But in the short term, there was a tremendous profit opportunity.
And that brings us to today...
Longer term, I am overwhelmingly bearish on the stock market. Just as I was convinced Internet stocks would crash and burn in 2000, I am absolutely convinced stocks are in a long-term bear market and will ultimately fall below the March lows.
In the short term, however, anything can happen. And in this case, the term "anything" means stocks are likely to go higher.
I'm not changing my opinion. But I am accepting the fact that, just as in December 1999, there are pressures that will force money into stocks through the end of this year.
Keep in mind, though, stocks won't go straight up forever. Bubbles have a nasty habit of popping. And when this one finally goes, it's going to get real messy real fast.
Best regards and good trading,
Jeff Clark |
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| • |
Dow touches 10,000... the industrial average reaches its highest point in over a year. |
| • |
Beer giants surging... Anheuser-Busch InBev and AMBEV hit fresh highs. |
| • |
Mining giants rally higher... BHP Billiton, Goldcorp, and Southern Copper at new 52-week highs. |
| • |
Earnings today... AMD, Citigroup, Google, Goldman Sachs, IBM. |
|
Last |
Change |
52-Wk |
| S&P 500 |
1062.98 |
+1.78% |
-12.37% |
| Oil (USO) |
34.51 |
+1.50% |
-59.97% |
| Gold (GLD) |
97.05 |
+0.05% |
+12.02% |
| Silver (SLV) |
15.91 |
+1.08% |
+20.99% |
| U.S. Dollar |
77.11 |
+0.26% |
-0.52% |
| Euro |
1.46 |
-0.40% |
+0.97% |
| VIX |
24.88 |
-2.85% |
-28.38% |
| HUI |
398.09 |
+0.10% |
+20.93% |
| 10-Year Yield |
3.30% |
-0.03 |
-0.46 |
|
|
| Company |
Sym |
Industry |
Google |
GOOG |
online search |
Intel |
INTC |
semiconductors |
America Movil |
AMX |
wireless telecom |
Wyeth |
WYE |
Big Pharma |
AMBEV |
ABV |
beer |
Bank of Nova Scotia |
BNS |
bank |
AB InBev |
BUD |
beer |
Bank of Montreal |
BMO |
banks |
Canadian Natl Rail |
CNI |
railroad |
PetroChina |
PTR |
Big Oil |
IBM |
IBM |
computers |
Sanofi-Aventis |
SNY |
Big Pharma |
StatoilHydro |
STO |
oil & gas drilling |
Occidental |
OXY |
oil & gas drilling |
Daimler |
DAI |
autos |
Alcon |
ACL |
medical devices |
Anadarko |
APC |
oil & gas drilling |
Halliburton |
HAL |
oil & gas svcs |
BHP Billiton |
BHP |
mining |
Cisco |
CSCO |
network equip |
Itau Unibanco |
ITUB |
bank |
Westpac |
WBK |
bank |
Visa |
V |
credit cards |
Deutsche Bank |
DB |
bank |
Target |
TGT |
dept stores |
News Corp |
NWSA |
news |
Siderurgica Nacl |
SID |
steel |
Petroleo Brasileiro |
PBR |
Big Oil |
Total |
TOT |
Big Oil |
Goldman Sachs |
GS |
investment bank |
SPDRs |
SPY |
S&P 500 ETF |
Banco Bradesco |
BBD |
bank |
3M |
MMM |
conglomerate |
Amazon |
AMZN |
online retail |
eBay |
EBAY |
online auctions |
Praxair |
PX |
synthetics |
JPMorgan Chase |
JPM |
investment bank |
Telefonica |
TEF |
telecom |
Eni SpA |
E |
Big Oil |
Banco Bilbao |
BBV |
bank |
SAP |
SAP |
business software |
ABB |
ABB |
industrial equip |
Time Warner |
TWX |
TV programming |
Goldcorp |
GG |
gold mining |
Philips |
PHG |
electronics |
Royal Dutch Shell |
RDS-B |
Big Oil |
Vale |
VALE |
steel |
Unilever |
UN |
packaged goods |
Credit Suisse |
CS |
bank |
AXA |
AXA |
insurance |
Schering-Plough |
SGP |
Big Pharma |
EMC |
EMC |
data storage |
BlackRock |
BLK |
asset mgmt |
Prudential |
PUK |
insurance |
Apple |
AAPL |
computers |
Banco Santander |
STD |
bank |
Siemens |
SI |
telecom |
CNOOC |
CEO |
oil & gas drilling |
Allianz |
AZ |
insurance |
EnCana |
ECA |
oil & gas drilling |
Suncor Energy |
SU |
oil sands |
Southern Copper |
PCU |
copper mining |
Franklin Resources |
BEN |
asset mgmt |
|
| Company |
Sym |
Industry |
MetroPCS |
PCS |
wireless telecom |
|
