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An 'Inconceivable' Rally…..

In March, the world was ending. I am proud of my ‘Beach Call ‘ the morning of March 9th.

Today, the stock market will not go down . I am disgusted with my last three weeks of selling and fighting the tape with short sales in the S&P and Retail and my complete miss of the small cap rally.

To most, the decline and the rally have been ‘inconceivable’:

When I get negative as I have the last three weeks, I miss all kinds of opportunity. I know this, I preach this, yet I fell into the trap. Giving back hard earned gains just pisses me off more. The short sellers have been overconfident…’Ghetto Fabulous ‘ as The Fly hilariously recaps.

I am too close to it and although I am paid to make money for my partners, getting too close to the market has always been bad for me. I have pointed out the all-time highs and owned them as I see them, but doing more has just cost me money.

The best poker players WAIT. The best traders WAIT. The best investors pick their battles. April was a clusterfuck for me. Amateur hour. That ends in May.

I have spent the weekend rethinking all what I actually know about the economic landscape as I see it and as usual, I, like everyone else, know little :) .

There are only Seven themes I feel confident about:

1. The consumer is broke.

2. We are going to be MASSIVELY over-governed for a long-time to come.

3. The US reign as ‘THE’ financial superpower is over .

4. Apple and Amazon will continue to rule consumer electronics and retail for many years.

5. Oil is not going to be replaced in my lifetime or my kids.

6. Inflation in many IMPORTANT areas of the economy – Food, Shelter, Energy and Currency – should continue to be volatile with upward slope.

7. The Commercial Real estate Markets are due for a huge interest rate reset .

What sucks about all three of these themes combined is the shitty mood this country will remain in as we adjust to these realities. Moods move markets. It’s not just supply and demand. No matter how great Apple and Amazon products continue to be, the other themes suck major balls and will DOMINATE.

Here is the good news…if you read this blog you are not the government or supremely wealthy and can focus on being ‘Too Small to Fail’. The global themes, as shitty as they are, are OPPORTUNITIES for us. Price action is all that matters if you want to make money in the markets.

Narrowing down the list of themes to the ONE I feel most confident about is the Consumer is tapped. This scares me. I have spent the last 20 plus years in consumer glee. Now, if I am late with AMEX for a week, they FIND me. Actually, to steal a Twitter term, they ‘BLOCK’ me. This despite the fact I have never spent more, earned more or had a better balance sheet. Despite all the money being pumped into the economy, nobody has cash. I don’t have any REAL data because I am a tad lazy to search and would not believe the numbers anyway, but I trust my instincts. I raise money and I just know these things. I also ‘feel’ broke because those around me that are broke are seeping into my business. Phoenix is nothing but an ‘Open House’. The problem with the ‘Open Houses’ I am seeing is they are a waste of time as prices are out of whack. There remains a gigantic disconnect as sellers hang on. I can’t afford the houses I look at. In 1998, I had nothing but no house was too expensive. That’s a disconnect.

The consumer is not just tapped, but wages are going down according to Krugman at the New York Times. That could mean a tapped consumer that is not able to fill the tank anytime soon.

The government can move stocks, even markets, but the true consumer stocks don’t lie. The Federal Express chart is a mess. Mastercard is warning. American Express is in shambles. Visa is catching a small bid, but I don’t trust it in light of the other heavyweights. I am talking my book, but retail looks like the greatest sucker rally of all time. Tonight I had Chipotle’s and a bill for the three of us was $30. That can’t last.

Despite the fact that we are broke and spending is way down, there are ALWAYS pockets of growth. Not all businesses suck together, even in a shitty bear market. Right now, the truly great growth businesses are showing themselves. Amazon, Apple, Research in Motion, Google, Netflix, but not enough to fill my portfolio or make me up my stock allocations.

As bad as things seem, stocks look poised for more gains as setups and breakouts (not all-time highs) abound. I don’t have the time or skill to trade all the styles and great setups being discussed on Stocktwits, but I am glad that many of you can and are. It is truly a mind blowing opportunity platform.

I am a BULL dressed in bear’s clothing the last 15 months. That was not the case on this blog from 2005-2008 on this blog when I was pretty much a drunk bull living off simple upward sloping price trends. The long bear market has definitely messed with my brain and portfolio, but my themes and money management will get me back on track.

Disclosure – I am long Canadian Dollars, Oil, Gold, Silver, Amazon, Netflix, Nintendo, Shanda, S&P puts and short Retail a little Google ($410 is my uncle point).

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