I as of a couple weeks ago, and everyone else and their dog, have become increasingly bullish, which bodes well for December stock gains. Add to that portfolio managers chasing gains, and becoming fully invested before liquidity dries up halfway through December. Then we chop around until 2011 begins.
Moves:
- Added to my position in GS yesterday (financials to outperform in 2011, catalysts 3-fold)
- Bought X for an exposure to a breakout in steel and coal
- Took a position short the Euro while fear subsides in anticipation of further European weakness throughout 2011, and what hopefully equates to a break in the Euro below it's support at 1.30. Sell target being 1.20 (I'll have to moniter this one)
- Bought GGB today. Check out the bust through resistance! Very excited about this one.
- Still long metals, energy, and ag.....when does gold sell off? Is the trade over before 2011 due to portfolio rebalancing out of gold and into silver and energy?
It seemed fairly certain that these tax cuts were going to be extended when sentiment across the nation earlier this year was that nobody should be taxed, not even the rich.
ReplyDeleteMy elementary understanding of the market is that as these tax cuts were about to dry up, the market starts to plan for the effects that the "sunsetting" of those tax cuts would have on businesses and they price it into the market. So even though Obama really hasn't done anything but keep the status quo, it's bullish for stocks because the higher tax rates had been already priced in. (Note.. he did cut payroll tax by 2% and is also allowing for 100% write offs on new busincess investments for a year. These are also bullish for stocks. I'm not sure how they can justify an extension of unemplyment benefits) How long do you think it will take the market to correct itself? I've read that stocks are usually priced at three year projections, is this accurate?
I see you're bullish on the industrial metals. I don't know the details behind move number 2 but number 4 is the Brazil steel manufacturer. Are these metals producers exporting to countries like China/India where it seems there is a lot of growth occuring, or are you seeing trends elsewhere?
Move number 3 I like because it seems that central banks across the world are ready to bailout whatever countries need it. When that happens it creates a moral hazard for creditors to continue to loan to these insolvent countries because they know they will get bailed out. My tipping point for this is if the Euro Bank ever allows one of these countries to default. That will show tough love and a strong currency mandate. But will that ever happen? I will be watching.
Move 5 I love. Even at current prices I'm still buying physical gold and silver which has kept some of my discretionary investment capitol out of the stock market. Historically, oil has also been an inflation hedge along with gold and silver. I think oil has legs to run which is great for my industry. If banks keep bailing out countries and taking on the burden of the malinvestments made, commodities are a good place to be.
I'm not sure if you want comments like this on your page or not, just let me know.
Obama's plan to extend tax cuts and comprimise with the Republicans was totally bullish, and yes so were the additional deductions businesses will be allowed to take. However, today the House failed to pass the proposed plan and has sent it back to Washington to try and pare down some of it's proposals (A day after Obama publicly reprimanded the Dems for failure to comprimise). Obama is having a tough time doing anything in office and is losing his spark.
ReplyDeleteA general rule of thumb, the markets price in information about 6 months in advance (minus headline risk that is always a variable). If we do get a correction, it will be small in size and most likely continue to be a buying opportunity in a secular bull market.
Yep, the Brazilian steel maker. The demand is there for metals because of the demand and NEED of infrastructure spending in emerging economies. Then as rumors of a smaller than expected supply come out, such is the case in copper, you get these grea year long rallies. I am a bit worried about gold though. It offers zero income, isn't used in the production of anything except jewelry, and is typically held as a safe haven against deflation and inflation...basically, we've run up pretty far, and the investment managers may want to take some gains and rebalance into another asset class that produces income.
Talks of $100 oil in 2011 are already out there, so should be good for your work.
Time to drink some booz at the office building holiday xmas party!