Any shorts left?
- Thread starter bluematrix
- Start date
Many longer-term market participants would save themselves much grief if they just followed the SP500 significant higher high, significant lower low principle as confirmation to their fundamental analysis. Most recent significant low is 1350. It would not be unhealthy to have a correction to mid-1400's, which would then perhaps represent our next s. low. When we starting breaking through said lows, sell and short into the subsequent rallies. Unfortunately such a rudimentary age old approach scares people away for a number of illogical reasons. Instead of going for 75% of a bull/bear, they chase for 90-100%, and learn the hard truths surrounding opportunity cost. The fool is dead, long live the greater fool.
You can be bearish on the economy but still bullish on the stock market. I don't think anyone is arguing (outside of the Whitehouse) that the economy is recovering and that things are getting noticeably better in America, however that doesn't mean the stock market can't keep going up. Almost every intelligent investor I talk to sees the divergence going on right now with economic reality and what the markets are actually doing. Just like most of you, I would not be buying stocks at these levels, but we are all small time traders will small capital in terms of the bigger picture. The bigger players (hedge funds, mutual funds, institutional investors, etc..) have to put their money somewhere and equities are the only attractive thing right now in terms of return. I was just trying to give some insight into the rationale of an institutional money manager I spoke with who has to deploy his money somewhere. We can agree that buying at these levels doesn't makes sense, but our $50k trading accounts don't move the market like the $billions of dollars being cycled from low yield investments into stocks. And as long as governments around the world keep printing money and keeps rates low, this cycle will probably continue.
You asked which equities, but then listed emerging market debt and high yield savings accounts? The most attractive stocks to these guys are companies that are spitting out high levels of free cash flows compared to invested equity, pay dividends, and are in stable markets.
When someone replies to something I wrote,it seems that they infer a lot of things I didn't talk about.
I was NOT talking about how the market is or what I think the market is,if it is coherent with economy,if a small account can move the markets.I was just examining that investor's reasoning.Here's what I meant:
1) If someone sees a lot of bear signs,(s)he can't be "as bullish as (s)he could be" on a market only because "there are no alternatives",independent of the market or the time we are talking about
2) US stocks are not the only alternative to bonds,even if you have billions of dollars to invest: I listed some other possibilities
3) The fact that FED and other central banks are pumping money into forex/bond/equity markets doesn't guarantee that these markets will be "stable" forever: what if something goes wrong?I think that everyone agrees that without all this pumping, markets would fall miserably.
Moreover, I would not be so sure of the "great rotation" from bonds to equities: Pimco said that they don't see money flowing from bonds to equities.
I was NOT talking about how the market is or what I think the market is,if it is coherent with economy,if a small account can move the markets.I was just examining that investor's reasoning.Here's what I meant:
1) If someone sees a lot of bear signs,(s)he can't be "as bullish as (s)he could be" on a market only because "there are no alternatives",independent of the market or the time we are talking about
2) US stocks are not the only alternative to bonds,even if you have billions of dollars to invest: I listed some other possibilities
3) The fact that FED and other central banks are pumping money into forex/bond/equity markets doesn't guarantee that these markets will be "stable" forever: what if something goes wrong?I think that everyone agrees that without all this pumping, markets would fall miserably.
Moreover, I would not be so sure of the "great rotation" from bonds to equities: Pimco said that they don't see money flowing from bonds to equities.
It wasn't my intention to infer additional information into what you said, and I am sorry if it came off that way. I was merely relaying what a investment manager was saying on a quarterly call the other day and it seemed like you were inferring that what he was saying was BS, which it could be. I was just trying to reiterate what his rationale was. And yes he was bullish on stocks but also cited many poor economic indicators steadily being reported. This isn't that irrational since I think a lot of people view the economy as still being "in the tank" or not recovered from the financial crisis, but yet the market has been on a steady path up since 2009. As far as alternatives to stocks go, of course there are a lot out there, but none are as attractive to him as equities.
I actually agree with you on most of your points and think that this is going to end real bad in the future, but I am just trying to relay a money manager's rationale on why he and many others keep buying into these ridiculous levels.
no need for excuses,my point is that I try to argue something objective,keeping away my ideas which are subjective.
That is in order to avoid useless and endless wars based on "prices are high", "no, prices are not high,can be higher", "FED is doing good","no,FED is doing bad"...
But here is my opinion anyway: what governments and central banks did, did not solve one single real problem.They are just covering shit with other shit,but they couldn't do anything else.
Others can have different ideas, but when they recognize the problems (as that investor did),they should explain why they disregard the danger of such a situation.
If they don't do that, they are either fools, or well-informed people who do not want to uncover that they have material information.
Both Draghi and Vegas (CONSOB president) said that we must be careful as this equilibrium is unstable. So the only reasonable talk I see (UNLESS YOU KNOW SOMETHING WE DON'T) is "I diversify on many different areas because I don't trust anything"
That is in order to avoid useless and endless wars based on "prices are high", "no, prices are not high,can be higher", "FED is doing good","no,FED is doing bad"...
But here is my opinion anyway: what governments and central banks did, did not solve one single real problem.They are just covering shit with other shit,but they couldn't do anything else.
Others can have different ideas, but when they recognize the problems (as that investor did),they should explain why they disregard the danger of such a situation.
If they don't do that, they are either fools, or well-informed people who do not want to uncover that they have material information.
Both Draghi and Vegas (CONSOB president) said that we must be careful as this equilibrium is unstable. So the only reasonable talk I see (UNLESS YOU KNOW SOMETHING WE DON'T) is "I diversify on many different areas because I don't trust anything"