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ABC Investing: "Anything But Cash" Keeps Driving Stocks Higher

Posted Nov 17, 2009 10:30am EST by Peter Gorenstein in Investing, Recession

Investors and pundits have tossed out many reasons over the last few months to explain the epic equities rally. Mark Dow, who manages $2.5 billion at the hedge fund Pharo Management, points to two fairly simple reasons: "Cash pays so little and as we know from history nothing brings out buyers like higher prices."

As he tells Henry in this clip, the only way to make money right now is to follow a simple motto: A-B-C Investing: "Anything But Cash."

Dow says what's happening right now is a fairly common shift in investing mindset from denial, ('this is a sucker's rally that won't last') to migration ('maybe this rally does have legs') and finally capitulation (even the biggest bears start saying, 'It's time to buy. I'm missing out on all this money!')

For now Dow's happy to keep participating even though he points to several factors as evidence the market has entered a topping process:

  • More Volume on the Downside
  • Narrowing Market Leadership
  • Large Caps Are Outperforming Small Caps
This topping process can take sometime but Dow's confident when the rally does finally fizzle, they'll be plenty of retail investors who'll get burned, especially those who came late to the party.

99 Comments

Yahoo! Finance User
Yahoo! Finance User - Tuesday November 17, 2009 10:44AM EST

An AP poll reveals that the majority of Americans support taxing the rich (500K or more) to pay for healthcare reform. Poor fools don't realize that percentage wise there are not enough "rich" to pay for this without having to tax the middle class as well. No wonder our Founding Fathers hated democracy and founded instead a Republic - the masses are ignorant and kept ignorant by the state run media. See Health Care Reform and One World Govn on Youtube!

Yahoo! Finance User
Yahoo! Finance User - Tuesday November 17, 2009 10:44AM EST

An AP poll reveals that the majority of Americans support taxing the rich (500K or more) to pay for healthcare reform. Poor fools don't realize that percentage wise there are not enough "rich" to pay for this without having to tax the middle class as well. No wonder our Founding Fathers hated democracy and founded instead a Republic - the masses are ignorant and kept ignorant by the state run media. See Health Care Reform and One World Govn on Youtube!

beefstu
beefstu - Tuesday November 17, 2009 10:46AM EST

Sad but true. Seniors and those that do hold jobs are getting next to nothing on CD's, money market, and checking accounts. Real estate stinks and the stock market is one of the very few places to get a decent rate of return with dividend paying stocks. This is basically the only thing keeping the stock market moving upwards.

LegalizeMe
LegalizeMe - Tuesday November 17, 2009 10:47AM EST

Want to give our economy a boost? Offer 10% corporate taxes for life to any company willing to move 90% of their employees to the United States and keep them here. Offer this deal for 5 years and unemployment would drop to 2-3% in this country. Any business without 90% of employees in the United States are taxed the regular 30-38%.

Terry
Terry - Tuesday November 17, 2009 10:47AM EST

DELUSIONAL PROSPERITY... Hmmm

LegalizeMe
LegalizeMe - Tuesday November 17, 2009 10:51AM EST

Want to give our economy a boost? Offer 10% corporate taxes for life to any company willing to move 90% of their employees to the United States and keep them here. Offer this deal for 5 years and unemployment would drop to 2-3% in this country. Any business without 90% of employees in the United States are taxed the regular 30-38%.

Yahoo! Finance User
Yahoo! Finance User - Tuesday November 17, 2009 10:51AM EST

Its all a scam, fraud street, no basis for this rally, the numbers are fudged. Look at the real economy people are hurting ask them if the recession is over.

Yahoo! Finance User
Yahoo! Finance User - Tuesday November 17, 2009 10:53AM EST

progressed productivity by SHEDDING LABOR... hmmm? what could that possibly mean.... mmm mmm mmm... gee shedding labor... but but but but obama said HE PERSONALLY CREATED millions and millions of jobs... what??? CHECK THAT???... oh, ya, OBAMA LIED... PROVEN TO BE FALSE NOW... OOPS..... NEVER MIND WHO CARES, LETS GO PLAY GOLF.... WHO'S AT THEWHITE HOUSE PARTY THIS WED??? every wed is a PARTY NIGHT AT THE WHITE HOUSE.. didn't you know that??? it's a fact ... mmm mmm mmm

LegalizeMe
LegalizeMe - Tuesday November 17, 2009 10:53AM EST

Democrats, everyone is their enemy. They are willing to throw anyone under the bus: The rich, health care companies, doctors (remember Obama claiming docs did 30k amputations for not reason?), big oil, big pharma, everyone who makes a damn profit is EVIL. Remove your heads from your asses and realize Democrats do NOTHING but blame someone for ANYTHING that goes wrong. Astounding...

Yahoo! Finance User
Yahoo! Finance User - Tuesday November 17, 2009 10:55AM EST

So... if you are a contrarian, you'd be selling right now (or at least not buying) and holding cash now, right? Then how come all the contrarians think since the 'message boards' are filled with negativity, the contrarian should be buying? Contrarians should be doing the OPPOSITE of what people are DOING, not SAYING. And what people are DOING is buying into the market. Think about it. Cash is king, people.

BullyTheBear
BullyTheBear - Tuesday November 17, 2009 10:58AM EST

NOBODY WENT BROKE TAKING PROFITS!!! LOOSIES WHO GET IN NOW WILL!!!

Yahoo! Finance User
Yahoo! Finance User - Tuesday November 17, 2009 10:58AM EST

chubby and donfurio, the bag holders.

chubby
chubby - Tuesday November 17, 2009 11:01AM EST

All you people who post over and over and over again that the equity markets are just a big rigged game: go buy a bank CD and post your rants on the Bank CD Forum. "Goddam it, I'm only getting 1.875% compounded daily!"

Yahoo! Finance User
Yahoo! Finance User - Tuesday November 17, 2009 11:02AM EST

This rally if a figment of GS's imagination and they are bringing all the pigs to the tough for slutter.

Yahoo! Finance User
Yahoo! Finance User - Tuesday November 17, 2009 11:02AM EST

Little upside, moocho downside. So be on the lookout for going short or buying puts folks. The BIG money is in getting the timing right.

JoeB
JoeB - Tuesday November 17, 2009 11:05AM EST

So this fund manager is admitting that it is guaranteed to be the little guy who gets burned in this market ponzi scheme.

Yahoo! Finance User
Yahoo! Finance User - Tuesday November 17, 2009 11:07AM EST

If you have lost money, go see the movie 2012. Find consolation by munching on popcorn while you watch civilization destroyed - no spoilers here. They spent $260 million dollars on the film, so you get your moneys worth.

Art
Art - Tuesday November 17, 2009 11:07AM EST

The d... democrats and the idiots who vote for them and their support of labor unions have destroyed millions of jobs and thousands of businesses. I want a balanced budget, lower taxes and liberty. I do not want more government "services".

ʞɔɐɾ
ʞɔɐɾ - Tuesday November 17, 2009 11:07AM EST

The rocket to the top is sputtering.I just can't believe how crazy everything has become. At least in the past few years, I could see how someone could massage the facts and convince themselves that the market would always go up, but today there's nothing to massage...................................... How does one explain this? How does one explain a public insanity that's so great that even fantasy reasons don't apply?..................... On CNBC on Monday morning, Art Cashin described the most likely scenario that will end this bubble: "My great fear is that you'll have some sort of geopolitical event, and people will start rushing to the dollar, and a flight to safety, and that will catch all these carry traders flat-footed, and you could have a real problem.... It could happen when you least expect it."

JoeB
JoeB - Tuesday November 17, 2009 11:09AM EST

I'm considering buying in more right now and less in cash. From experience, I can tell you if I am thinking of getting in, it is a terrible time to get in.

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