We Can Make Fun But…

A few months ago I was critical of the many CNBC guests who seemed to be ignoring what clearly looked like the start of a bear market. There was a lot of “looking across the valley” sorts of talk which I think did a disservice to people. It’s wasn’t so much looking across the valley so much as leading off with that like it was the most important thing. I would have liked to have heard a little more realistic thought but that is probably just me being naive. So as far as looking across the valley goes there is this recap of the Lone Star purchase of a chunk of Merrill’s mortgage backed portfolio for $0.22 on the dollar. Lone Star didn’t buy them because they think the paper is expensive and ripe for an implosion. It could happen of course but the deal, based on price and all the concessions Merrill is giving them is attractive relative to some period of time, in their opinion. This bring us to the financial stocks. For anyone in the 1+1=11 brigade I am underweight as I have been for years and am not buying more exposure (it may grow larger here if the sector rallies). Throughout the entire crisis or whatever we should call it I have made clear that I think underweight as opposed to zero weight accomplishes the goal of missing a chunk of down a lot without the risk of missing some massive counter-intuitive rally, should one ever come along. But for anyone who is zero weight and afraid of missing some sort of massive counter-intuitive rally,...

We Can Make Fun But…

A few months ago I was critical of the many CNBC guests who seemed to be ignoring what clearly looked like the start of a bear market. There was a lot of “looking across the valley” sorts of talk which I think did a disservice to people. It’s wasn’t so much looking across the valley so much as leading off with that like it was the most important thing. I would have liked to have heard a little more realistic thought but that is probably just me being naive. So as far as looking across the valley goes there is this recap of the Lone Star purchase of a chunk of Merrill’s mortgage backed portfolio for $0.22 on the dollar. Lone Star didn’t buy them because they think the paper is expensive and ripe for an implosion. It could happen of course but the deal, based on price and all the concessions Merrill is giving them is attractive relative to some period of time, in their opinion. This bring us to the financial stocks. For anyone in the 1+1=11 brigade I am underweight as I have been for years and am not buying more exposure (it may grow larger here if the sector rallies). Throughout the entire crisis or whatever we should call it I have made clear that I think underweight as opposed to zero weight accomplishes the goal of missing a chunk of down a lot without the risk of missing some massive counter-intuitive rally, should one ever come along. But for anyone who is zero weight and afraid of missing some sort of massive counter-intuitive rally,...

Mid Morning–Yet More Oil

Random Roger’s Big Picture: Mid Morning Yesterday Yesterday I was skeptical of the oil decline and today oil is up a bunch. After one day, yesterday’s post is neither right nor wrong, it is too soon to know. I don’t know if analysts actually change their mind so often or if they just bring out the oil bears on a down day and bring out the bulls on an up day. The prudent path for you is to draw your own conclusion about longer term, global supply and demand and realize that your opinion will not be right today and then immediately wrong tomorrow only to be right again on Friday. Oil went up a lot, has corrected a noticeable amount (not the first time for this mind you) and now the market seems to be trying to sort out the short term. If you are a short term trader then you should care about the short term. If you are longer term then you probably should not be overly concerned with short term...

Mid Morning–Yet More Oil

Random Roger’s Big Picture: Mid Morning Yesterday Yesterday I was skeptical of the oil decline and today oil is up a bunch. After one day, yesterday’s post is neither right nor wrong, it is too soon to know. I don’t know if analysts actually change their mind so often or if they just bring out the oil bears on a down day and bring out the bulls on an up day. The prudent path for you is to draw your own conclusion about longer term, global supply and demand and realize that your opinion will not be right today and then immediately wrong tomorrow only to be right again on Friday. Oil went up a lot, has corrected a noticeable amount (not the first time for this mind you) and now the market seems to be trying to sort out the short term. If you are a short term trader then you should care about the short term. If you are longer term then you probably should not be overly concerned with short term...

Top Down

I had to be in the car toward the end of the market session yesterday and I heard a segment on the radio (CNBC on satellite) that included a value manager of some sort. He made a comment that I think sums up the difference between top down and bottom up very well. He said (and I am paraphrasing) this is a time to seek out the stocks that can do well in this environment. Finding stocks that should do well during a bear market is not easy to do. Finding stocks that are doing well during a bull market is pretty easy to do (not talking about beating the market just talking about stocks going up in a bull). Anytime the market is on its way to a bear market decline I think just protecting what you have makes more sense and is easier to do than, for example, finding the one or two bank stocks that are up over the last 12 months. The big macro is that stock markets go up most of the time (this sets aside the discussion of whether returns will be lower than normal or not). People that save enough, capture the market over long periods of time and avoid major panic sales at the wrong time are very likely to have what they need when they need it. Again that is the big macro. From there the details fill in with things beyond the individual (market related) and things that are solely about the individual (savings rate and tolerances). Given that simplicity, there are times where growth should be the priority...