Mr. Sensitive

August 9, 2011

Did I Expect This?

Filed under: Uncategorized — lbej @ 16:13

The Dow is up 400 and change at the close today after dipping into the red briefly but solidly earlier in the afternoon.  This rally erases about half of yesterday’s loss, and you are wondering whether I expected this rebound.  The long answer: yes, because I knew we were short-term oversold to an extent that was almost unbelievable.  I am much less surprised that we are up big today than that we were down so dramatically yesterday, because we were already crazy oversold at the end of last week.  The short answer: no, I don’t know what to expect and neither does anyone else.  Long-term, I like some parts of the market and I don’t like other parts.  I don’t like financials and I don’t like anything that trades at a high multiple to current earnings based on projected growth.  That means no Netflix, no Chipotle, no Amazon, and no LULU.  It also means no CATY, because that stock has been trading based on its attractiveness as a takeover target, and it’s becoming clear that the wave of consolidation the financial services industry was anticipating when I took my leave of it is not materializing.  I do like anything that trades based on dividend yield, presuming the balance sheet supports that yield.  We don’t have any such stocks in the FSX, and maybe that’s why we stink on ice this quarter.  I should look to add something that pays a handsome dividend for Q4–I’ll put my interns to work on it right away.  Short-term, I don’t think this is a good time to buy.  If you’re buying for the dividend yield, of course, you don’t care so much if the stock drops, so long as you get your income every quarter.  Otherwise, you need animal spirits to get capital appreciation, and the only animals out and about right now are turtles, lemmings, and ostriches.  Bears, too, but you want to steer clear of them–they’ll rip your face right off.  The buy signal you want is an arctic dragon-cat.

I’ll let you know when I see one.

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3 Comments »

  1. I bet you’ll see an arctic dragon-cat soon.

    Comment by euregirlsandboys — August 9, 2011 @ 17:30 | Reply

  2. God I love Yo Gabba Gabba.

    Comment by Charlotte — August 10, 2011 @ 14:23 | Reply

    • Zero is like DJ Lance, only white. And I’m not entirely sure about the white part.

      Comment by lbej — August 10, 2011 @ 14:33 | Reply


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