Andy Swan » Hesitating here

Hesitating here

March 23, 2009 – 4:32 pm

The market is screaming: “I HAVE NO IDEA WHAT ANYTHING IS WORTH!”

I went short some horrible commercial real-estate companies here, and I’m probably wrong to do so. I get the distinct feeling that the market will have the ability to prop up the pricing of these firms beyond my ability to remain negative on them.

In fact, I may cover at anytime, without notice.

In other words, I view myself as one who is capable of being squeezed.

Despite this tomfoolery, it is 100% clear that no one knows what anything is presently worth. On one hand, it seems that the economy is in a great depression, due to the large unemployment numbers and other data dumps coming out weekly. On the other, people are still in line at starbucks waiting for 6 dollar, 8 syllable drinks, with amex in hand.

So…who knows.

Personally, I don’t think the government will do very well at solving our problems. Something about the past 50 years of failed attempts that makes me think that.

I think the real economy will need to flush out a lot of weak hands before we can really start growing again.

But….I’ve never seen 5 years worth of tax revenues tossed at a problem before. At this point, it seems that the government has gone “all-in”, and is hoping for a queen or a 9…on the turn or the river.

So, to sum it all up….after a nice run of trading, I’m starting to get the feeling that I’m losing my edge here. My disdain for the interventionist policies of the Federal Government may be clouding my judgement, and keeping me from understanding that the Dow can go to 15,000 in a horrible economy, via the hands of a nonstop printing press.

In conclusion, if the market continues reacting positively to the Obama administration opening its mouth, I will realize that I am finally out of touch with the market. At that point, I will move to cash until either myself or the market has sucessfully detoxed.

In any event, I see no reason to be chasing stocks higher here…especially those with absolutely unpricable balance sheets. Mind your sectors.

Brian_Crouch

"I’ve never seen 5 years worth of tax revenues tossed at a problem before. " You'd think this would be a more urgent point in conventional wisdom, wouldn't you? I asked our county executive what municipalities are doing to prepare for inflation, and he expressed that he didn't think it was much of a risk-- also that they had "CASH reserves." Umm...

bankdraft/Leigh Scott

Just a few thoughts from me Susie Q. Public...just an outsider looking in at this enigma (to me) called the STOCK MARKET....Let's face it...I have my money (what's left of it) invested in the same place that you all do but it seems to me like "they" as in our fearless leaders are changing the rules everyday.
After reading Andy's honest athoughts here I have decided to stay the course.....I didn't hyperventilate or panic at the first, second, third or subsequent 500 point downturns and I am not going to get overly excited about the first 500 point up tick.......I am just going to continue to breathe...just breathe while hesitating...for now
Disqus is a great forum...I think you all should register
Just my 2 cents...which I think in the current market is potentially a small fortune

JakeGint

Just a timing issue. Who knew Timmy would pull "this business" at such an inopportune moment?

No one. Just re-set at a later date, that's all.

I'm targetting the (SPX) 200 day MA in the meantime.

Pat

Hmmm, needs a Q or 9? It sounds like we have a double belly buster straight draw to me and we are up against top two pair maybe? I imagine the board reading Ah Ks Tc 7h and we have Jc 8d vs. As Kh. So you are telling me our government has about a 16% chance to get itself out of this trap? Someone should have told them to play better starting hands and maybe the wouldn't be in this spot :)

trust

And china holds the As Kh.

andyswan

That is EXACTLY what I meant.

Max Leverage

Eventually the market is going to realize that asset price inflation doesn't help consumers who aren't getting the benefits of wage inflation, and can't get loans with their over-valued assets as collateral. Nevertheless, momentum and trend traders are going to be all over this rally, as is CNBC. The storyline is sure the economy sucks now, but maybe it'll be better in six months and the stock market recovers before the economy. Watch the financial media spin the hell out of every economic datum that comes out, to support this story.

andyswan

Good point!

John Carr

Somehow I managed to get through this whole debacle with a nice positive tilt to my accounts. Right now I'm just waiting for Maria Bartiromo to ask her next guest "how can we ride this rally". Then i'll know when to short em. You guys use Ned Reilly, I use Maria.

andyswan

Nice

andy m

Andy, great post.

Love the insight, and wholeheartedly agree....

Thanks,

Andy

jfredson

By the way Andy, what do you think of investing in gold and other hard assets at this point to offset the governments free-flowing printing press?

somejoe

I'm with you, though I wish I had the trading history to back it up. The markets seem to be on a drunken bender, and this "printing money will fix it all" attitude from the Obama admin is terrifying. I keep seeing signs which appear horrible then I short and get killed while the markets keep whistling past the graveyard. The past couple times I turned out to be right, but it took weeks to get there and I'd already booked the loss. Of course, I was in FAZ today too.

jfredson

I feel the same way about doubting my disdain for government intervention in the market clouding my ability to perceive how the market is actually responding to it. It's frustrating and discouraging to see how much a market can be propped up by a printing press and inspiring speeches. Unfortunately I can't see how this isn't just pushing us into a deeper hole, but hopefully that will provide opportunity for the real producers in the long run.

TraderMark

good job Andy.

A lot more reality with someone who every so often says I dont know versus those who always know

I am looking at DISQUS this week as well; that way people can see inbred comments no matter what blog you post them in.

As for your comments about Starbucks and such, remember it is a very stratified society we now have. Your perspective on life is very different if your job is lost or your new job pays 40,60% below your old one.

See
http://abcnews.go.com/Business/story?id=7111098&page=1

CurtR

I just came from visiting with my banker and she said I would be totally floored by the amount of money being "stashed" in the banks' vaults. I am not one of those stashers so... which one of us is the fool? While I am not a fan of roller coasters (I hate the going down part) I rode this wagon down and I want to ride it back up. I hope this coaster bucks the normal roller coaster trend; I want the unloading station to be on the top!

howard lindzon

great post

andyswan

Register for disqus. Its this cool new commenting thing. I think you'll like it