MarketVVizard's Market Thoughts

Top 410. Oct 22, 2003 9:04 PM

» collguy - Re: Re: Re: ULTIMATE PPET

I made several pretty poor trades on Williams Brothers (WMB) last year based in large measure on Warren Buffet's acquisition of some of their preferred shares as part of the sale of the Kern River pipeline to Mid America. Buffet had high praise for the company's management and even Bill Gross described WMB as a company that was doing everything right in terms of getting their debt under control. I liked the numbers they were putting up and it seemed to be a good value stock with a secure dividend. When I bought in in Mar. 2002 at 19 it was investment grade and had already sufferred a 60% decline. Within two months and several credit downgrades it was on the doorstep of BK at .76 a share. I sufferred several terrible losses which I prevented from being worse by using stops. Normally, I wouldn't make multiple runs at a stock,but based on my own due DD, plus the blessing of Buffet and Gross I thought it was way undervalued and certainly turnaround. Ultimately, it did but not until all the commons had soiled their shorts and were asking for their Mommies. This made me a much more self sufficient investor and place much less reliance in the advice of the investing icons. It was a very humbling and rough ride for me from May,2002 to October,2002. I managed to eventually right the ship with some utility stocks and now golds, but I certainly learned that it pays to go with your own business knowledge and instincts-do not be swayed by pundits public statements. In this case of WMB, there were many trigger provision in their debt agreements which were tripped by the multiple downgrades. 10k reviews or normal DD wouldn't have shown this.

-- posted by collguy

Top 411. Oct 23, 2003 4:23 AM

» MarketVVizard - Good morning

Treasury yields plunging. Japan and Hong Kong in a panic overnight:

^N225 3:01am 10,335.16 -554.46 -5.09%
^HSI 4:06am 11,737.18 -501.45 -4.10%

If the Nikei can fall 500 points overnight, our DOW certainly can too.

-- posted by MarketVVizard

Top 412. Oct 23, 2003 2:42 PM

» MarketVVizard - Futures off again tonight

Futures taking a hit again tonight as the pattern of selling on news continues with the Microsoft report. I strongly suspect that IF we gap down again tomorrow we will NOT see the resilient market that we saw today. It will be interesting to see what Japan & Hong Kong do tonight. Also noteworthy is the big reversal in treasuries this morning. Hussman a while back said to look for a divergence in the pattern between stocks and bonds (i.e. the inverse relationship that has been typical for so long now).

Got stopped out of NVLS short at $37.10 but it turned out to be a good thing, not to mention a pretty nice profit. It can be shorted for $37.40 afterhours right now although I'm not sure its really the best instrument at this point in time. I'd almost rather be short something that has flown a little higher (3 or 4 hundred percent) over the last 12 months. There are many to chose from...

-- posted by MarketVVizard

Top 413. Oct 24, 2003 11:14 AM

» MarketVVizard - Got lucky today

This is the high flier I choose to short on the open:

I also tried to short XMSR which would have made more money so far (down about 10% for the day) but I could not borrow the shares. High fliers with bad fundamentals also have very high short interest. This is a definite red flag that may indicate there is still too much bearishness for a meaningful top (?). Only time will tell.

Gold looking like it will definitely cross $400 before the year is out...

-- posted by MarketVVizard

Top 414. Oct 24, 2003 11:35 AM

» Normxxx - Re: Got lucky today

In response to message posted by MarketVVizard:

That's the only thing I find disconcerting. I can't see what is holding the market up, but I find most of the "smart" money is bearish. I don't know if that is good or bad, but I don't think we can have a real drop until everyone is drawing a sigh of relief that the worst is over- probably in the December - January time frame.

-- posted by Normxxx

Top 415. Oct 24, 2003 11:50 AM

» MarketVVizard - Re: Re: Got lucky today

In response to message posted by Normxxx:

I hear ya Norm.

I'm still trying to figure out who is right when it comes to sentiment indicators. At the beginning of the week I posted the stats showing bullish consensus steadily rising over the last 3 weeks to pretty high levels and bearishness to quite low levels. I was looking at briefing just now and see this:

"Briefing.com contends that the [earnings] reports were solid as a whole, and indicative of an improving profits picture in corporate America... We do not believe that the current pullback in stocks is the start of a new downtrend; rather, it is merely a price correction following the year's strong run...

We continue to expect that stocks will move higher, supported by the low-interest rate environment and strengthening economy...
"

Comments like this make me want to short more. Flip side is that many high fliers with mediocre to poor fundamentals already have very high short interest. Personally I see a public that is extremely bullish right now. For fun I visited a new housing development over the weekend (yea, I know, my idea of 'fun' is pretty odd). First off, the parking lot at the model was literally full (no spaces left) among them I noticed a nice Mercedes and a brand spankin new red corvette. For a mere "base price" of $350k to $372k you get an unfinished TOWNHOME (yes, connected to two other units) with no land (monthly grounds keeping / maintenance fee required). Maybe 2200 sq. ft. if that much. The models were beautiful, but of course you don't get any of those nice things thrown in, like the four fireplaces, Jacuzzi, granite wet bar, and home theater room complete with 12 foot screen and front projector). They are selling too, many already moved in, and as I said the models were filled with interested consumers. These people are buying fools gold and glitter. I didn't have time to look at the half million dollar single family homes in the same development, but I will soon.

Those prices may be reasonable for your area, but I assure you in my area these units would have sold for literally half the price as recently as 3 or 4 years ago (I know because that's when I bought, and I seriously considered buying the land this development is now on, should have pulled the trigger).

Anyway, I walked out of that place thinking, "WOW - there are a LOT of stupid people with credit right now. This is going to end very badly." Same applies to the stock market in my mind... the masses have apparently lost the ability to recognize value. They do not understand that the point of buying companies is to have a claim on future cashflow coming from those businesses. Outrageous P/Es are a pretty good indication that your investment will never pay off.

-- posted by MarketVVizard

Top 416. Oct 24, 2003 1:31 PM

» Normxxx - Re: Re: Re: Got lucky today

In response to message posted by MarketVVizard:

The "comfortable" middle-class are not likely to invest more money into the market, for now. They are busy buying real estate instead. On the other hand, they have not sold out of the stock market (except for the very panicky few). They may not be buying stocks, but they are still "holding;" waiting for their stocks to come back. If you don't know why a stock was selling for $100, and it goes to $1, then back to $10, are you likely to consider it over or under valued? It's called the "anchoring effect."

However, the "hot money" crowd is back in the market with both feet. It's "double or nothing" time! See Alan Newman's comments about the OTC Bulletin Board crowd (second of his comments). "Incredibly, at September's rate, Bulletin Board share volume would be clear off the chart and more than four times the pace in the year 2000."

All sentiment measures are boiling over bullish (= bearish for the market), but they've been that way for about 6 months now. Sentiment indicators cannot be used for market timing. As Keynes said, "The market can stay irrational for far longer than you can remain solvent!"

So beware of taking any but nominal bearish positions until the market is clearly headed down. That is why it is so hard to make money on the bearish side; you can get killed while the market takes its sweet time about making a top, then the drop is so fast that by the time you decide to act, it is over.

-- posted by Normxxx