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  • larry_dalliapoulos larry_dalliapoulos Jan 11, 2011 6:08 PM Flag

    ot..double dip

    Super I hope things are OK on the family front.

    By double dip I assume you mean in the major stock market indices.
    I will answer that by saying that IMHO,

    the probability of a dip weighted by the downward % of that dip,
    is greater than (>)
    the probability of another 15-20% gain this year weighted by that 15-20% gain.

    That may not make any sense. Said another way, I would prefer to be left outside the party, because it won't be that great from here on out anyway, rather than to get caught inside running for the exits and stampeded, if the place burns down. If you can do both and choose your spots then you must be psychic, uh, nevermind. I can't.

    The greatest probability of all is that we are very range-bound and dull, with little declines and gains here and there. I agree with you that QE2 and the anticipation of inflation are bouying the markets to a large degree, as well as gold, etc.

    Having said all that, I had my shorts on at various spots in 2010 and I 'lost my shorts.' If you are looking at small time horizons, I am not very good at those - perhaps your evil 'pops' has some fatherly advice?

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    • I'm through with trying to pick a short entry point. Did you see the market shrug-off Egyptian turmoil and the possible ramifications for and of instability in the region? Have you seen the almost straight line rise in markets lately? I knew the Fed was holding up the markets with liquidity, but I underestimated them. I thought natural market forces could out duel them, but if those forces are following the Fed not fighting them, then you have no duel. It's a one-sided slaughter, and I don't want to lose any more blood in a losing battle. What's that about Einstein's definition of insanity, or Keynes' quote?

      Also, I heard a radio investment show discussing an article about the market being overvalued, and they countered with the historic P/E ratio of the market being around 15, yet the current forward looking P/E is 13. I don't know how long these earning can last, but you have to admit they are coming in well, if indeed they are being reported accurately and I assume they are.

      Sure, there will probably be a dip, but only when the Fed is ready for it. When? When the banks are re-capitalized? When the troubled assets are shifted/sold off their books and then marked back to market? When all money is off the sidelines and then there are no more buyers? When bears like me finally capitulate? It's just not a game I think is worth playing anymore. I liquidated the majority of my short position and will seek to exit the rest based on next week. It's just safer to not bet too much one way or the other. Perhaps it truly is a stock-picker's market. Now watch it go down!

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