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2010 Markets – The First Half – Wait and Weight
Howard Lindzon
July 02, 2010
It was an interesting first half of the year as we waited on data that would show improvement in the war, jobs, housing and politics. Today though, all I feel is the weight of unmet expectations, poor choices by consumers and politicians and an American consumer that has an upside down balance sheet, facing higher taxes and poor wage growth.
My portfolio has become highly weighted to my own business and early stage web businesses (my choice). I wait too, but I don’t yet (hopefully) feel the weight that the American Stock Markets do.
Since I dont own but a few stocks and have been reading more than writing this year, I thought that my friend ‘The Fly ‘The Fly’ who has continued writing and trading aggressively in 2010 (with stunning results) best summed up how I feel about the markets and economy:
Well, we are halfway through 2010 and the markets are reeling. Despite minor year to date losses, the recent trends have been horrific, particularly in commodity related names. As always, there is a fight being played out, live in the markets, between the inflation and deflation crews. On one hand, common sense dictates that we are about to enter some brand of fucked up inflation, based upon the behavior of the Federal Reserve and incessant “bail out anyone” attitude of the Federal Government.
On the other hand, people seem to forget the banks are lying about their losses, thanks to new accounting rules, and will get sucked into the deflationary vortex, hard core, if some of the sovereign debt risk worsens. The losses are too great for the banks to bear. As a result, there will be a seizing up of credit, effectively pushing us over the ledge into the whimsical world of “double dip recession.” Plus, there seems to be a worldwide movement against easy money, vis a vis “austerity” measures and “responsible budgeting” here in the states.
…If forced to guess, I’d say we are going much, much lower. But, you never know what the Fed has up their gay sleeves. Keep in mind, the tougher things get, the greater the likelihood the Fed will intervene. Hell, we may get another stimulus package before it’s all said and done. After all, it is an election year.
We had a fantastic rally off the lows starting 2009. I waited a long time to get bullish and caught some of the move starting February 2010. Unfortunately by May, the momentum was over.
My Stock market allocation remains extremely low as housing and taxes weigh on our pocketbooks and minds.
For me, I will continue to focus on companies ‘Too Small to Fail’ as I have since 2006 when I started Wallstrip. I can’t cut wood, build bridges or offer up much more than a few laughs on Twitter, so I fortunately do what I feel I can control and luckily at the same time love.
For those in denial of their balance sheet and the possible market and political scenarios, the remainder of 2010 will likely shock you.
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