Keep Swinging that Bat!
In Barron's this weekend, under Market Watch, there was a brief
synopsis of opinion from Ray Devoe, Jr. of Jesup Lamont which I
thought was quite fascinating.
As he outlines..."No warning can save from people determined to grow suddenly rich." ..."As I felt six yearsago, I think that this is a high-risk stock market. There are so many things that not only can go wrong, but go badly wrong. With the Dow approaching a six-year high, other major averages near five-year highs, long bond yields at a four-year peak, an aging economic expansion close to five years old-and several severe major economic and financial
distortions straining the financial system-this is a time to be cautious in stock selections."
Contrast this with :
Andy Kessler link
Andy appears to be much more open minded to some upside in this market. "Perhaps here’s how the world works these days. No need to borrow billions and build big ethylene plants anymore. You invent something here (chip, movie, iPod, medicine, financial instrument), email the design overseas for manufacture in $1-an-hour factories (OK, not financial stuff), and then ship it back for consumption. Sure, this runs up trade deficits, and our precious dollars leave the country, but that’s only half the story. Those dollars come back and invest in the U.S. Most go into long bonds, 10-years and 30-years."..."When bonds are scarce, foreigners are going to have to buy our stocks, or so the stock market might be screaming." ..."But make up your own mind. The time to load up was three years ago. The stock market is notoriously schizophrenic. Remember, it thought you could sell pet food over the Internet. But it’s more often right than wrong, especially when proving pessimists wrong and optimists
delusional."
Where do I come out in all of this? I am finding it increasingly difficult to find offbeat, smaller cap names. In looking at my portfolios, the predominant weighting is definitely larger cap, easily identifiable S 500 kinds of names. One of the worst mistakes that you can make in investing is letting the overall level of the market determine whether you will look at securities. As they say, it is a market of stocks not a stock market. I too find that money is a little rambunctious to find a place in some stocks. The zeal for ethanol is one of those places where money has gotten silly. Similarly, the zeal for gold stocks makes much less sense to me than the appeal of the metal itself.
An environment of despair and confusion is always easier to deal with when one looks for bargains. But in an environment that remains decidedly positive and optimistic for stocks, do your homework and find your places. Buy on down days and bite your tongue on up days! Don;t lament about missing hot stocks or sectors...like the batting coach told me many years ago, you've got to keep swinging the bat, There's plenty of stocks to consider, especially if you are willing to accept what seem to be mundane, boring, low growth names. Especially if we open our eyes globally, there are plenty of reasonably priced stocks to consider. The real key is to do your own work, don't get caught up in the frenzy, and keep swinging that bat!
synopsis of opinion from Ray Devoe, Jr. of Jesup Lamont which I
thought was quite fascinating.
As he outlines..."No warning can save from people determined to grow suddenly rich." ..."As I felt six yearsago, I think that this is a high-risk stock market. There are so many things that not only can go wrong, but go badly wrong. With the Dow approaching a six-year high, other major averages near five-year highs, long bond yields at a four-year peak, an aging economic expansion close to five years old-and several severe major economic and financial
distortions straining the financial system-this is a time to be cautious in stock selections."
Contrast this with :
Andy Kessler link
Andy appears to be much more open minded to some upside in this market. "Perhaps here’s how the world works these days. No need to borrow billions and build big ethylene plants anymore. You invent something here (chip, movie, iPod, medicine, financial instrument), email the design overseas for manufacture in $1-an-hour factories (OK, not financial stuff), and then ship it back for consumption. Sure, this runs up trade deficits, and our precious dollars leave the country, but that’s only half the story. Those dollars come back and invest in the U.S. Most go into long bonds, 10-years and 30-years."..."When bonds are scarce, foreigners are going to have to buy our stocks, or so the stock market might be screaming." ..."But make up your own mind. The time to load up was three years ago. The stock market is notoriously schizophrenic. Remember, it thought you could sell pet food over the Internet. But it’s more often right than wrong, especially when proving pessimists wrong and optimists
delusional."
Where do I come out in all of this? I am finding it increasingly difficult to find offbeat, smaller cap names. In looking at my portfolios, the predominant weighting is definitely larger cap, easily identifiable S 500 kinds of names. One of the worst mistakes that you can make in investing is letting the overall level of the market determine whether you will look at securities. As they say, it is a market of stocks not a stock market. I too find that money is a little rambunctious to find a place in some stocks. The zeal for ethanol is one of those places where money has gotten silly. Similarly, the zeal for gold stocks makes much less sense to me than the appeal of the metal itself.
An environment of despair and confusion is always easier to deal with when one looks for bargains. But in an environment that remains decidedly positive and optimistic for stocks, do your homework and find your places. Buy on down days and bite your tongue on up days! Don;t lament about missing hot stocks or sectors...like the batting coach told me many years ago, you've got to keep swinging the bat, There's plenty of stocks to consider, especially if you are willing to accept what seem to be mundane, boring, low growth names. Especially if we open our eyes globally, there are plenty of reasonably priced stocks to consider. The real key is to do your own work, don't get caught up in the frenzy, and keep swinging that bat!
posted by Rick @ 2:44 PM
2 comments
2 Comments:
"As they say, it is a market of stocks not a stock market." Booyah to that! Every bull market has lousy performers, and every bear market has good performers ... and every investment is separate from it's market, whether it's a corporate bond, a stock, a rent house, or a coin ...
Yes, but sometimes - as I discuss here
http://confusedcapitalist.blogspot.com/
2006/03/learning-from-newspaper.html - it's better not to even try to walk up to the plate.
Sometimes, it's better just to wait out the game, as Warren Buffett did in the late 1960s/early 1970s
Jay Walker
The Confused Capitalist
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