First of all. Let me say that I’m back in Texas and not a moment too soon. Sure, the weather’s nice and the beaches are pretty, and the food is awesome. But, earthquakes are something that makes me happy to reside in Texas. Even though getting off the plane, it felt like 125 degrees. San Francisco’s a wonderful place to visit but not sure I’d want to live there.
My wife commented while we were there how many foreigners were there. I know it’s a big tourist destination but it seemed like it was heavier than usual. So, we got into a quick discussion on the dollar and why it was cheap for foreigners to come here right now. She said well isn’t a weak dollar good, then. All these people are buying our stuff. I told her that’s where the great debate begins. A plummeting dollar isn’t good but a weak dollar is actually good. I love when she’s interested in this stuff.
Patience Please
It’s amazing to me that just 20 years ago, when you or I wanted to sell a stock, we’d run down to the bank, get our certificates out of the safe deposit box, take them to the broker, and then sell them. What a process that was. Now, we can push a button, sell it, change our mind and buy it back in 2 minutes if we want. Hence, volume has increased quite a bit since those days and the volatility that goes along with it.
But with these conveniences in trading comes a lack of patience. It seems now just like with everything in society, we want everything now, including profits. Maybe the late 1990s spoiled us. Making 40% in a year will do that to you. But, we have to recognize we’re not in that market anymore. We’re in a more traditional stock market where gains are made in specific areas, not just a huge basket of mutual funds. In other words, it’s not a secular bull market. Some things go up and some go down. You have to own bonds, structured notes, private equity, along with stocks.
I have this sense now that investors are not patient enough. I don’t mean buying something and saying I’ll wait 5 years to make money on it. But, if you have a strategy, let it play out. Remember, the stock market isn’t a CD where you ratchet up a little every month. There are times where big money is made in a short amount of time and you have to stay in the game. The ones that got out in 2002 because they couldn’t take it anymore missed a huge runup the following year. That’s the market. Keep your powder dry, protect principal, and eventually, markets run. In the meantime, I’m still long good fundamental companies and sectors with excellent long-term prospects and short the broad market. I think that’s a good strategy in this environment.
Oil Bottoming
I was on Jack Warkenthein’s show this morning and I think I’m the first to say that I think oil has bottomed for now. I have a 3 technical reasons and one fundamental. One of the main technical reasons is oil has pulled back exactly half way down from its big run up this year. That indicator alone works well for something that’s made big moves and the fundamentals are still good.
The fundamental reason is because I hear nobody talking about oil going up, only continuing to fall. So, I’m making a contrarian call but I think for a trade it’s bottomed for now. In fact, it was down $1.50 this morning when I made the call and it’s up $1.15 now. If I’m wrong or when I see changes, I’ll be the first to tell you here.
