This is still a period to do less in the market.
All professional eyes are on The VIX which is at record fear indicators , but can stocks do what they should when everybody is watching them.
The ‘Oracle’ Mr. Buffett is taking full page op-ed pieces saying stocks are cheap. Problem for me is, he may not live 20 years, so it’s easier for him to be wrong. Seriously. What if we drop 20 percent in the next 12 months, what does his op-ed look like next year.
The fact is that $2 trillion has been lost in 401k’s and that’s a number that is hard to game behavior on…
W.R.T confidence, we are a long way from home. The stock market is a confidence game and there are so many cockroaches in the boardrooms that need to becleared up for real strength to show .
Under Securities and Exchange Commission rules, executives are typically required to disclose insider sales within two days of making them and indicate why they were sold, including as a result of a margin call. But experts say there are no rules requiring that the public be told ahead of time that an executive has pledged stock in a margin loan or how the borrowed money is being used. It might be a loan to buy more shares of the company’s stock — which would indicate a vote of confidence in the shares. Or it might be a loan to buy some other company’s stock or something else altogether — possibly a sign that the executive thinks there are better places to invest.
“The disclosure rule is vague,” said Ben Silverman, director of research at InsiderScore, which tracks the buying and selling of company insiders.
Over the last 25 years or so, investors have come to take on faith the need for executives to own significant amounts of company stock, as a way to make sure the interests of the people running a company are aligned with those of the shareholders. But the ability to use the shares as collateral for a loan may change that dynamic, said Charles M. Elson, a corporate governance expert at the University of Delaware.
“It may be at certain levels de-aligning,” he said. Although individual circumstances may not require public disclosure of an executive’s decision to pledge the stock, Mr. Elson said, he argues that the boards of directors should be told.
This is a no brainer to fix. If your shares are pledged, you don’t own them. Period. Public companies SHOULD forbid executives to use their shares as collateral unless it is fully disclosed.
My biggest concern for the economy comes next JUNE in the commercial real estate market where a trillion or so is due for interest rate ratcheting. Last March I wrote the following post :
I have great office space in Phoenix. My good friend Blair grants it to me as long as I wear socks. I don’t. I WON’T!
Blair is a lender. A good one.
We share the 10th floor with Cushman Wakefield a big Commercial Broker. After a Starbucks, I have my jaunt to our shared bathroom on the floor. It has been getting more crowded. I have suggested a schedule of sorts. Not well taken.
Maybe it’s that I am prone to walk into their huge staff meetings with a pad and paper and fake like an employee. It’s the Costanza in me.
Back to the point…The bathroom indicator is flashing RED.
The bathroom is overflowing with agents. Throughout the last three years as people talked of a bubble I never got that feel. The Cushman people are pro’s and they never seemed too giddy.
Now that I am sharing the toilets with 50 new young guns, I am changing my tune.
There will be some good prices on leases in the next few years. Keep you powder dry, the leases short and your personal guarantees in your pocket. If you have to lease something now, squeeze (no pun intended) together and don’t overextend.
SRS (which I am long) has exploded to near highs and is a proxy for being short commercial real estate. I am not worried about a strong rally at the monet because I know the ETF is volatile and the moves come fast.
Most importantly, you could only be guessing if you think you know how the bailout will play itself out. The best way is to wait for strength and slowly buy new all-time highs. At least that is how I will get fully reinvested. Based on my 10-20 percent juggling of stocks right now, I am a long way from all in.
Not ALL the signs are doom and gloom. My friend Cole has been tuned into signs around the street and sent me this list:
It’s a bottom!
1) The personal trainers at the gym were bragging about how much money they
are making trading put options on futures at options express!
The quote last night was “you want to buy puts because a lot of stuff is
going to go down right now”
2) Our computer programmer put all his money in a long term CD because he
says it better to get 80% of your purchasing power back in 10 years than
lose it all in the stock market. He now thinks the stock market is a
3) Eric’s dad was pounding the table to buy Gold last week. The last time
he called to talk to Eric about an investment was in May 2005 when he
told Eric to do whatever it took to buy house, even sell blood if you
have to, because soon prices are going to be unattainable.
4) Eric’s mom is sending passive aggressive emails showing the drawdown
snapshots of her 401k account
5) My mother in law is asking me what they should do with their money.
The last time she asked my anything was in May 2005 when she asked if I
had ever thought about getting into real estate.
6) Warren Buffett is buying common stocks in his personal account? This guy wouldn’t part with a nickel if it was not a sure thing to
return a quarter. He is the cheapest bastard on the face of the earth. That’s how he compounded his way to becoming the richest man in the world.
If you are not confused by all the signs just outlined in this post, you should be, because these are really good ones culled from a list of thousands from the last week. I will tell you one thing I believe… as my friend Chartreuse points out in a great blog post:
The truth is, no one is walking out of this mess clean.
When the dust finally settles you probably won’t end up rich.
But if you play your cards right you may just end up happier.
And that ain’t a bad trade for a little turbulance.
Take it slow.