Doug Kass says might be time to buy

Okay so this is how it goes.....


Market rises for nearly 11 months straight over 70%++++

Analysts, money managers and about 99% say to go long and continue to buy no matter what, they say to buy dow 10700, 10600, they say that 10-20% gains are possible by the end of the year, s$p 1200, 1250 even 1300++++ Even after the markets have run 70% not many even say that risk outweighs reward at any point during the rally, they just tell you gdp is growing and profits are rising so keep buying stocks. The problem is that the market are still overbought, I think its fairly valued around 7500, maybe even lower.

The funny part about this situation is that after 11 months of STRAIGHT gains the minor correction sets in and only 11 "TRADING DAYS" later they are screaming to buy the dip, meanwhile these people yelling to buy the dips are the same ones who were screaming for everyone to buy at 10500++ Seems they are quick to say buy, buy, buy but never even hint at saying its time to take profits.

Can the markets jump to 10500, 10750, 11,000 11,500....sure they can, but on what basis, the only catalyst is stimulus, will see what happens, if this was the pullback to buy and the markets do take off another 10%-15% from here without any pullback you will know what to expect when things start to turn south. Markets are being driven by stimulus and liquidity which will be drying up sooner than later. Other thing to take notice is that 1-2 million will be losing unemployment benefits over the next 2-3 months and by june 2010, 5 million will be totally out of benefits. Keep this in mind because every DOLLAR in unemployment benefits received creates around $1.65 in economic activity. Those numbers sound very interesting. With millions losing benefits in the next 3-6 months, this could create a significant problem for GDP.


So one more question....

You know how everyone says "the trend is your friend".....

when does this down trend in the market become ones friend? I always here this and think the only time one knows it was a trend was of course after the fact. So how do we know this isnt the start of a trend towards s$p 1025, 1000, 980,940, 925,900, 875, 825 etc etc.....anyone have any guesses, if the trend is still your friend that means this must be the biggest buying opportunity since March 2009.

:p
 
kass's track record is horrid. in 2003-2005 he got destroyed shorting brokers and homebuilders. he tried to short homebuilders 2 times and i bet he lost 50%. his claim to fame is calling the march bottom. he turned bearish at 970 or so in the summer and has been dead wrong ever since. he's gotten killed shorting and whats funny i can't recall him one time saying he was covering any shorts the last few days which means he tired of getting killed being short so gave up before the drop. he was buying banks stocks weeks ago and got killed. overall he's terrible. how can anyone buy a lousy 7% selloff after running 80%?this is far from over
 
Quote from jnorty:

how can anyone buy a lousy 7% selloff after running 80%?this is far from over
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Exactly, all small investors who haven't put much of anything into this market over the last 11 months are now taking notice once again how volatile this market can be, I know a few people in the market who gained most of their losses back that say once they break even they are getting out for good, there are some who sold in early 2009 that will probably never come back into the market, only way is probably if the markets were to fall 50% from here. These baby boomers that are retiring will NOT risk anything in this market knowing how backwards this economy is right now.
 
Kinda funny. For months after he (and quite a few others) said last March might be a good time to buy he touted his "great call". Then he started getting bearish, and stayed bearish, for months and months as the market jumped higher and higher.

So now he's bullish? Based on his last calls, and some really horrid home builder shorts wayyy before the crash that he must have been hurt badly on, he is hitting less than 50%. Even jerk Crammer approaches the SP500 returns!
 
Quote from Wayne Gibbous:

Kinda funny. For months after he (and quite a few others) said last March might be a good time to buy he touted his "great call". Then he started getting bearish, and stayed bearish, for months and months as the market jumped higher and higher.

So now he's bullish? Based on his last calls, and some really horrid home builder shorts wayyy before the crash that he must have been hurt badly on, he is hitting less than 50%. Even jerk Crammer approaches the SP500 returns!
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i cant document it but i saw on real money once that he did close to 80% in 2008. he did get bearish too soon last year but caught the spring ramp in banks.
 
I have a question - how can a longer-term player like Kass be bearish at 1125 and bullish at 1050? That implies:

1. that fair value is around 1075-1100
2. that Kass thinks he can value the stock market to within 2-3% accuracy
3. that he thinks a 2-3% undervaluation is a sufficient profit to take the risk of buying (or shorting) an asset with 20-30% annual volatility.

In other words, it's a ridiculous thesis.

If you are a long-term or even medium-term bear at 1125-1150 then you cannot be a bull at 1050, 6-7% is just noise on all but the short-term timeframe. Markets cannot be valued precisely to within 2-3%.
 
kass is a private hedge fund so we'll never know what his return was in 2008. as far as kass being bearish at 1125 and bullish at 1050. the man was bearish at 975,1000,1025 and all the way up to 1150. he was on fast money at least 3 times in that time frame and talked the same crap YET HE NEVER ONCE SAID WHAT HE DID WITH HIS SHORTS FROM ALL THE OTHER LEVELS. what i also found fascinating was he stuck to a 10% correction thesis all the way from 975-1150. does that mean at 1150 we need to correct to 975 minus10%? I HAVE ONE OTHER THOUGHT. IF YOU WERE A SHORT LIKE KASS FROM 2003-2007 AND GOT DESTROYED WHAT ARE THE CHANCES OF YOU HOLDING YOUR SHORTS THREW MOST OF 2008? you would be so battle scared no way in heck you'd hold your shorts all the way down.the first sign of a rally on postions you're up on and you cover. all these guys are carnival barkers talking there book and are worthless.
 
Quote from Ghost of Cutten:

I have a question - how can a longer-term player like Kass be bearish at 1125 and bullish at 1050? That implies:

1. that fair value is around 1075-1100
2. that Kass thinks he can value the stock market to within 2-3% accuracy
3. that he thinks a 2-3% undervaluation is a sufficient profit to take the risk of buying (or shorting) an asset with 20-30% annual volatility.

In other words, it's a ridiculous thesis.

If you are a long-term or even medium-term bear at 1125-1150 then you cannot be a bull at 1050, 6-7% is just noise on all but the short-term timeframe. Markets cannot be valued precisely to within 2-3%.
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One contrary point: If you look at individual stocks (of all beta levels), there are plenty of buys that are very far from 7% off highs. ie X (32% off), GS (21% off), ABX (25% off), CME (20% off), GOOG (16% off), AA ( 25% or so), etc etc. Plenty of small caps are 30-40%+ off highs. I think certain sectors have tempered the index fall (without looking, I assume divvy plays as well health care), making the S&P perhaps provide a distorted view.

I'd say aside from sector rotation, if you are a stock picker who hasn't had perfect luck, it has felt like a very tough market and generally resistive since November. (for evidence, look at stocks like INTC)

I do think it is a buying opportunity, considering the labor or credit markets while not exactly bouyant, aren't falling apart right now and the Fed will likely be extending the MBS purchase program soon. The conditions of early 09 were nothing like now. 1.1B of reserves at the Fed + loose MTM rules guarantee that (meaning "insolvent" banks are suddenly stabilized).
 
Quote from scriabinop23:



I do think it is a buying opportunity, considering the labor or credit markets while not exactly bouyant, aren't falling apart right now and the Fed will likely be extending the MBS purchase program soon. The conditions of early 09 were nothing like now. 1.1B of reserves at the Fed + loose MTM rules guarantee that (meaning "insolvent" banks are suddenly stabilized). [/B]
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That's the problem, the fed continues to keep the markets propped by taking additional measures to keep every program in place, the problem with that is that a continuation of these programs and low interest rates are going to create more problems than good. The market and economy is so used to these easy money policies that once it stops it's going to create a very complex situation in the market.
 
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