Deep Market Thoughts…Is Dumb the NEW Smart?
- Posted by Howard
- on June 1st, 2009
My last blog post ended with things could get silly to the upside.
That took about two trading days to come to fruition.
Piling on the short side was all the rage through 2008 and the beginning of 2009, but that ended on March 9th. Now it’s revenge of the dumb money.
To be honest, there is no such thing as smart money or dumb money. When you allocate your money to money managers, you are ahead of the game if they are not stealing.
As we found out in 2008 and will continue to do so through 2010 at least, fraud and cheating were at all-time highs. NOBODY was left untouched by financial fraud.
I am enjoying this rally but bothered as I mentioned in my last post, that the thieves and perma bulls of the last great bull market are doing well.
Yes the market is rocking, but the participation in this stock market by the people who need the returns the most – the retail investor – is at all-time lows.
Most retail investors were finally scared out at Dow 8,000 on the way down, laughing at the YUTZ’s who were still long at 6,700 and now confused and bearish at 8,700 on the way up (that’s just 2009).
Basically, we have ensured that a generation of stock market investors will never trust the market and based on our leadership, I would tell the average person to just ignore the market and invest in yourself.
As we head into June 2009, the retail investor and now ‘professional’ (ha) has never been more confused, wrong, broke and just fed up.
Maybe that’s good. I just doubt it.
As the owner of a start-up web site devoted to stocks I hate telling people to ignore the stock market, but most should. The people making consistent money on the stream do so because they have no opinions. They dumb things down. They take small losses and let winners run. They have a GAMEPLAN on each trade and/or position…a certain amount they will sacrifice for a shot at 3-4 times the risked loss.
Those that make the BIG BIG money definitely have opinions, but they have HUGE drawdowns and scary ‘coming to jesus’ moments. For the shortsellers with an opinion on how bad things are, this is one such moment. Today’s shortsellers are extremely versed in all the economic facts and can detail to the minute when civilization will implode, but today are making you broke!
At times like these in the markets, you better f@#^%g have a gameplan or you will be roadkill.
I will offer you up once again one of my biggest market ‘Tells’ – $goog (Google). Google is a freaking amazing company. I have been blogging and tweeting about the $410 level and the YouTube overhang that has plagued this stock for many many months. I truly thought this bear market would keep Google below the price
On Thursday afternoon, $410 was breached and as I tweeted and blogged it was time to get long…or at last cover your shorts. I did both.
In 2006 when Google bought YouTube for priviledge of never ending losses, the stock gapped up bast $410 and never looked back. The fact that shareholders are back for the stock with a vengeance once again – despite the end of the world – is not something you should take lightly no matter what you think of their strategies, management and cafeteria.
The stock market may make no sense to you – it never does to me – so stop thinking and just listen. Your returns will improve. If you must think, make sure your mommy or daddy have given you enough money or your investors can live with gynormous swings in your returns.
PS – When/if Google drops back below $410, all bets will be off once again. In this market, that could be tomorrow.
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.blog comments powered by Disqus
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