Deep Market Thoughts

Posted by Howard
on July 26th, 2007

I am posting way too much on the market. That’s a bad sign in itself. I am enjoying it though and getting many requests.

I am by nature, skeptical, but have long ago decided to look at the good and glass as half full. It’s cheaper than Prozac.

Because I think (opinion, not fact) the market is extremely rigged, I also have learned to take the longest possible view. I have the best chance of being correct and will keep my costs down. Not that complicated.

Because I think that the Brokers and Banks are the biggest, but well dressed, crooks in the universe, I just avoid them. I hate 99.9 percent about them. I don’t avoid American Express because I have been a happy, well served customer for 25 years. It is by far, the best run business on the planet and you should hope this stock drops 25 percent.

When times are good – like have they in the history of the world been better – no group (save the creepy lawyers who just are clueless all the time), thinks they are smarter, nor takes more aggregious money out of their businesses than the banks. This time has been absolutley no different. Therefore, if you have been buying into the banks and broker massive strength this late into their gorging, you have been massacred and rightly so.

One thing (.1 percent) I don’t hate about big banks and brokers, is their ability to make freaking cash. They are playing against you and me, the idiots. So, when the shit hits the fan and panic is in the air, you add financial stocks. The rigging actually will work in your favor. That’s just smart, whether you are a trend follower or not. If you are a trend follower, just find a chart long enough and draw lines that make a trend still seem intact :) .

Stay with me.

When the market gets ugly, like now, and people start freaking out, it’s fun to look at charts. I like to read Trader Mike’s roundup on brutal days because it’s plain awesome. I also check out charts from Brian because he keeps it simple and he is a pro. Most important, as FLY points out:

As you know, “The Fly” thinks technical analysis is the lazy man’s handbook to investing. However, during uncertainty, the idiots who manage billions of dollars gravitate towards straight lines with dots.

Right or wrong – that’s just plain vanilla true.

Therefore, even though I am a trend follower and try to be mechanical as much as possible, I think the market offers up 10-12 AWESOME opportunities a year to be aggressive.

It is important therefore, to do as little as possible so that these moments, you are ready and not reacting to your portfolio, but POSITIONING it for the long-term.

That is why I added homebuilders (too early in hindsight, but very small), put a medium sized semiconductor trade on today and will add some brokers for a trade into another abyss. If I am wrong, I retreat and live to fight on the next big opportunity.

Because I believe absolutely in the long-term phenomenon of the internet, I am most comfortable to have most of my stock exposure in that area as I do now and have for the two years I have written the blog.

You will be first to know if that changes. If it does, I am going back to golf again.

Disclosure – Long GolfNow.com, American Express, MTH, ITB, SMH Calls and lot’s of tech/internet as you know.

Kiss your kids.

The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.