The Market is Always Right

11/03/2002

Well thank god for that. According to the newspapers and analysts the recession in the States is over and we can all look forward to the US markets surging upwards, taking the rest of the world with them. You can buy those stocks with impunity...NOT. What planet are these guys on. There are some issues that these Muppets seem to have forgotten:

  1. With low interest rates and high valuations, rising share prices will have to come from higher company earnings.
  2. Companies are no longer going to get away with their dodgy accounting scams. Even the scummy Wall St analysts are now starting to shed a critical eye at pro-forma accounting, share option packages and pension valuations.
  3. Homeowners in the States have raised about $80 billion through cash-out refinancing and have spent about $50 billion. More of this spending is unlikely without lower interest rates.
  4. The "shrub" is intent on giving Saddam a damn good kicking. Just the prospect of this will keep oil prices bid and markets nervous.

So how are we going to profit from this? As ever by being disciplined and flexible. We are still long oil stocks and comfortable with them and are now looking for some nice short positions on the indices and specific stocks. British Airways is getting back onto our radar screen and members can expect an entry there over the next month or two. BA has been very profitable for us over the years in both directions. We will also be looking for short entries into some tech players as soon as the signals start to turn. Note WHEN THE SIGNALS TURN. It is not our job to pick tops and bottoms. That's a mugs game. We wait for the market to tell us. It is always right! Discipline is the key to this market.

Live long and prosper

Harry