Friday, October 28, 2011

The Cycle

After my last post about news cycles, it seems that word of European attention to the EU's economic problems has kept the good feelings going.  So, the Dow is around 12,200.  Not that any sophisticated investor believes that the market tracks economic conditions but if you had to pick a general market direction from here what would it be, based on the hand of cards we're holding?  Sure, the stronger players in Europe will backstop the broke (along with China perhaps), but what is the long term prognosis for Europe?  More timely, what if Europe trips in its attempt to halt financial collapse?  These folks have been known to make some mistakes.  What will be the market effect?  And the U.S.?  Typically out-of-touch economists are now pointing to an expanding economy, along with trailing job growth.  Does anyone on the street every day believe that?  What do we have to fill the hole created by the destruction of the housing market and the securitization market that was tied to it?  Job growth since late 2008 gives us the answer:  not enough.  And has anyone in the investing community noticed the civil unrest that is growing in American cities?  This is not to say that the current rally may not continue for a while but I suspect it will come to a volatile end.  I am not fully invested long in this rally but, rather, have kept some limited long positions in CRY and CRWN which I had originally purchased with more of a long term view.    

Tuesday, October 25, 2011

End of a Cycle?

I've been thinking much more about "news cycles" lately.  For the last week or so, the market has been going up, as we've been in a little pocket of what qualifies as good news these days, i.e. some positive earnings results, news that Europe is really moving to shore up its situation.  Then I saw an article this morning from Jim Jubak suggesting that the Greek crisis is much worse than thought.  Then UPS disappoints, you get the idea.  Sure enough, we're down 200 points plus today.  It will be interesting to see whether this day of bad news takes us back into a cycle of bad news.  There is certainly enough to go around.  But for some reason, folks have been ignoring it for the last week.

Thursday, October 13, 2011

Quantum and Pris (QTM and PRIS)

Well, if you bought these stocks (as I did) after my last post, you won.  PRIS closed at $4.15 on September 23, day of the last post, and has gone as high as $5.02 since then.  QTM:  closed at $1.80 on September 23 and closed today at $2.32.  This bad news/good news cycle just keeps going.  The question is when will it end.  Not soon.  There is so much bad news out there because our economic system has revealed deep flaws, among them an inability to put people back to work (or increase wages over time -- a worse problem).  The good news is also assured, as policy makers try to save their skins by continually announcing new solutions to our angst.  The trick right now is avoiding one of two fates.  The first is being fully invested if the half-solutions of the world's economic leadership result in a next time down, such as we saw in late 2008.  The second is that somehow, despite the bungling, things actually right themselves and you're not fully invested when the markets surge upward and stay there for some time.  Right now, the former possibility worries me quite a bit more than the latter.