Catch the Dead Cat!

As I mentioned on Facebook yesterday after Wednesday's (NZ time - Tuesday on the DOW))deadcat bounce we are likely to see a fall on markets Thursday or Friday.

What do we have this morning on the DOW?

Well, it is down and had not been positive at all. The DOW closed down 519 points or 4.42% wiping out all of yesterday's gains and then some. This is on news that several French banks could be close to collapse.

What will happen now?

Well, tomorrow is likely to be another down day and after that all bets are off except to say markets will still be choppy and ultra-sensitive to any bad news for the next few weeks.

It is always hard to time the markets but I am looking to buy at some stage but it is just picking the right moment. I am after 10000 or so Fisher & Paykel Healthcare Ltd [FPH.NZX] shares to add to the Share Investor Portfolio and may look at other stocks if I am game.

My portfolio has been up and down (mostly down of course) like a cheap K' Rd hooker over the last 4 trading days and was down by around 10% over Monday and Tuesday after a 4% fall on Friday but up nearly 5 % yesterday. Down is the only way today.

My buy orders for FPH have mirrored the market. A first bid at $2.20, then down to $1.99, then another down to $1.80. I raised the bid to $2.15 for yesterday but will re-bid a few minutes from now back down to $1.99.

Even I am feeling the pressure and have to steal myself sometimes to remain calm and focus on fundamentals (based on business as usual with the larger financial macro theme at play of course) rather than my state of mind.

This bumpy economic ride and the consequent market volatility has more to play out yet and there will be more opportunities in the months and years ahead but the money I am using to pay for the FPH shares is getting about 2.5% in the bank and inflation is running at twice that.

Yep, greed and fear, greed and fear!

FPH is paying over 7.5% gross based on the current share price of $2.34.

Watch the market and be patient, like me....?

2011 Global Market Sell-off @ Share Investor

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Share Investor Portfolio 2: Value @ 5 August 2011

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Discuss FPH @ Share Investor Forum
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Buy Every Bastard Says No - The 42 Below Story, by Geoff Ross & Justine Troy & more @ Fishpond.co.nz




c Share Investor 2011

Time for high fives or time for a pause for thought?

A piece I stumbled upon while looking for something else - boy the internet can sidetrack me - got me thinking pessimistically again about the stockmarket and economy in general:

From EFT Guide, By Simon Maierhofer

A 50% rally, Warren Buffett, extreme levels of optimism, rallies based on vague reports of improvements, etc.; all the aforementioned are parallels between the 1929-1930 bear market rally and the rally from the March lows. If the parallels hold up, a mere rhyme to history (let alone a repeat), will wipe out millions of next eggs. Here’s how to avoid repeating your grand parent’s mistakes.It’s been said (and perhaps you are getting tired of hearing it) that those who don’t learn from history are doomed to repeat it.

If the parallels of the Great Depression continue to hold up as they have (and according to historical indicators they will), history doesn’t have to repeat itself to severely hurt investors. A mere rhyme to the Great Depression would be enough to wipe out tons of portfolios.But who cares about history when the market is up and the forecasts call for better days ahead. The Dow Jones (DJI: ^DJI) and S&P 500 (SNP: ^GSPC) have rallied over 55% while the Nasdaq (Nasdaq: ^IXIC) has soared nearly 70%. Wall Street is anxiously expecting another earnings season, which is expected to be predominantly good.

Reuters reports that “earnings optimism lift Wall Street” while Credit Suisse encourages their clients to buy bullish Alcoa options in advance of Alcoa’s (NYSE: AA) profit reports.

If there is one thing we should have learned from history, it’s that the bear strikes hardest when least expected. Pierre Corneille hit the nail on the head when he said that “danger breeds best on too much confidence.”

Black Monday’s or Thursday’s wouldn’t be called “black” if they were expected. Market tops are always marked by extreme levels of optimism.

In January 2009, with the Dow Jones slightly above 9,000, the ETF Profit Strategy Newsletter noticed elevated levels of optimism and warned of a severe decline with a target of Dow 6,700. Today, sentiment readings are even more extreme than they were in January. The implications are obvious.

If there is just one time you want to take a lesson from history, it is RIGHT NOW. The parallels between today and the Great Depression are numerous and strikingly similar. This 5-minute history lesson might be the best investment you’ll ever make. Continue article here

I was aware of the sucker rally of the 1930s that the author discusses but it certainly gets one thinking about where we might be right now and if the authors research and main points are accurate then it makes for grim reading.

The apparent economic "recovery" (green shoots my arse Mr Obama) that has led to markets skyrocket over the last six months is based on large amounts of State money borrowed from the Chinese or money simply being printed.

Banks and financial institutions in the US, which have made up a large part of the rally, have better looking balance sheets thanks to the aforementioned handouts, not for any concrete economic reasons.

Lets not even go into the massive debt that many Western countries have on their balance sheets - personal and State.

I don't think things are as bad or necessarily the same as what was experienced during the Great Depression - it very well could be worse I suppose - and I have been buying stocks ( 1 2 3 ) before the current rally but the general message from the writer is one that should be taken on board as an added risk factor when considering any type of investment in the current cycle of economic uncertainty.

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c Share Investor 2009

Dead Cats and Vicious Bears

If you are a short termer in the stockmarket of late you would have done well over the last week or so depending on the stock that you purchased.

I am thinking you might want to cut and run soon.

Stocks like Fletcher Building [FBU.NZ] are up more than 20% on recent lows, Mainfreight [MFT.NZ] up by nearly 20%, Sky City Entertainment [SKC.NZ], Goodman Fielder [GFF.NZ], Briscoe Group [BGR.NZ], Hallenstein Glasson [HLG.NZ] and Ryman Healthcare [RYM.NZ] all up over 10%.

The NZX is up nearly 200 points, 43 of them today.

Markets around the world are up dizzying amounts over the last week and a half, the DOW alone leaping around 1000 points off 13 year lows. It gained nearly 500 points today in the third highest ever percentage gain in the indexes history.

Dizzying stats huh?

What does all this upwards activity really mean though?

In my not so humble opinion it means very little at all.

The impetus for all this upwards frenzy is Barack Obama and his manufacturing money supply in the trillions, just over the last few weeks alone to "ease the credit crises". Apparently it is a positive move.

People investing back into the stockmarket now think this is all over so they send the DOW 500 points higher?

Have we all forgotten the reality that the world is in a deep recession?

I believe moves made by Obama over the last few days mean caution flags should be raised in investors minds. His moves will make things worse in the long term.

The market should have gone down.

Once the detail of this is digested, the market will wake up to reality and continue to fall.

It is a sucker Dead Cat rally and it ain't the kind of pussycat one wants to take home.

Disclosure: I own all the shares mentioned in this article.


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