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sebastoro (22.94)

IT LOOKS LIKE ALMOST EVERYONE IS BEARISH....WHAT A GOOD SIGN...

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August 31, 2010 – Comments (7) | RELATED TICKERS: SPY , QQQ

Sebastian Toro

Economic uncertainty?.....thats true... Slowdown?--- true too--- recession? crisis? i dont think so... time to start buying stocks?.... i think that buffet has the word when he says:  "Be fearful when others are greedy and greedy when others are fearful"

Look at the latest news and opinions posts! it looks like almost everyone is just fearful!

Just make a roundtrip and visit seeking alpha, bloomberg, cnbc, and other media and you will see a lot of opinions and blogs to be very bearish, almost everyone think that market is going down, and it looks like everyone have been selling the market and taking short positions...just take a look at the bonds market bubble and the amount of cash that the companys have not to mention the funds managers that are swimming in cash...

 The most bearish kind are the economist....i also study economics and i have to ask everyone: have you ever seen a happy economist? have you ever seen a bullish economist? a economist that think that everything is ok and there is nothing to be done? and the most curious thing is that every one of them think that he have the cure for the problem but others are wrong...

Have you ever seen mr roubini optimistic? since i remember he is a permabear and always is announcing the doom and apocalypsis..of course sometimes is right...if for 100 year you say  is gonna be a crisis, you cant miss! but, i think is more important to see opportunities that problems... just look at this chart:

http://wallstcheatsheet.com/breaking-news/economy/a-chart-of-roubinis-horrible-trackrecord-in-2009/?p=3513/

that what happen when you are a permabear!

Today roubini is again predicting the doom, as always, so thats has to be good sign.

But the bear sentiment in the market and specially in the media is a better sign, when the crowd thinks one thing, the market make the opposite.

Well today we have seen some data thats looks much better than expected, but thats not all, the economic data for the last few days have been raising in the last month despite a "horrible" slowdown in may,,,,,

 if you take a look at the PMI, you can see a slowdon compared to the last readings, but if you take a look at the historic data from 2007 you will see that this indicator isnt that bad...is signaling expansion, is over 50 and is online with the historic average 60s levels just not sustainable.

If you look at the home prices, they didnt decline as expected, the consumer expending wasnt that bad, and is better that the last month,inflation and industrial production also pick up....so not everything looks that bad...

 Theres a lot of uncertainty, Mr market will move with the data from the next days, but i think that the economy will get a little better compared to may, and the last quarter of the year will be good for stocks if the macro indicators help a little...the bearish sentiment and the lots of cash out the market are a good sign and in the worst case escenario the market can go to 980 (SYP) this year but, it will have nice end year rally.

Thats just my opinion, not recomendations made, i just like to be a contrarian investor, and also if you take a look at the recent economic data and compare to historic levels, you will see that everything is not that bad as says, and things are getting better, at a modest pace, but getting better.

BEst regards and excuses for the language issues!

 

7 Comments – Post Your Own

#1) On August 31, 2010 at 2:27 PM, russiangambit (29.37) wrote:


> Just make a roundtrip and visit seeking alpha, bloomberg, cnbc, and other media and you will see a lot of opinions and blogs to be very bearish, almost everyone think that market is going down, and it looks like everyone have been selling the market and taking short positions...just take a look at the bonds market bubble and the amount of cash that the companys have not to mention the funds managers that are swimming in cash...

These are retail investors and they are barely in the market. This is well known.  They are not the ones moving the markets.

Most pundits continue to be bullish as always and hedge funds are  trying to figure out whether they can break the July low  and then figure out where to go from there.

So, I would say hedge funds have bearish bias at this point. But I wouldn't considetr this a contrarian indicator. 

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#2) On August 31, 2010 at 2:30 PM, binve (< 20) wrote:

Hi Sebastian, I have a different take on the issue http://caps.fool.com/Blogs/everybody-is-a-contrarian/436974. My $0.02. Thanks for the thoughts!

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#3) On August 31, 2010 at 3:08 PM, davejh23 (< 20) wrote:

"The most bearish kind are the economist....i also study economics and i have to ask everyone: have you ever seen a happy economist? have you ever seen a bullish economist? a economist that think that everything is ok and there is nothing to be done? and the most curious thing is that every one of them think that he have the cure for the problem but others are wrong..."

Actually, I have never seen an economist that has not been overly optimistic.  There wasn't a single economist early this year that would have predicted a double dip recession.  Then, the dismal macro news started pouring in...now, after it's clear that a "double dip" is highly likely, SOME of them are admitting that it could be possible.  Private sector GDP has been contracting for almost 3 months.  Reported GDP will likely be negative once stimulus spending winds down. 

"Have you ever seen mr roubini optimistic?"

Yes.  He actually changed his tune last year and is just now starting to predict economic weakness again.

"...just take a look at the bonds market bubble and the amount of cash that the companys have..."

You can't look at corporate cash balances without looking at corporate debt.  Debt is at record highs.  Company's cannot spend the cash they have.  They raised cash while they could in anticipation of potential future weakness.  If companies start spending that cash, it's time to worry...not celebrate.

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#4) On August 31, 2010 at 3:40 PM, davejh23 (< 20) wrote:

This sure doesn't inspire confidence, although it looks like it was meant to:

http://finance.yahoo.com/news/Loan-picture-improves-but-rb-3791454123.html;_ylt=ApPo6U6VzgAj_MhnvqeZIYe7YWsA;_ylu=X3oDMTE1YnFrZWFyBHBvcwM4BHNlYwN0b3BTdG9yaWVzBHNsawNsb2FucGljdHVyZWk-?x=0&sec=topStories&pos=5&asset=&ccode=

"The Federal Deposit Insurance Corp revealed some encouraging figures about the bank industry, saying the sector earned $21.6 billion during the quarter largely due to banks putting away less money to cover expected loan losses."

"While the assets at problem banks declined, the total number of such institutions bumped up to 829 from 775 last quarter."

While large banks have reported "healthy" profits, it's been due to "banks putting away less money to cover expected loan losses"...banks not only set aside less for loan losses in Q2, they removed money from loan loss reserves and reported that "transfer" as income.  This is not a positive.  The number of problem banks is increasing.  Depleting loan loss reserves could set us up for another financial system shock...that could plunge us into depression.

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#5) On August 31, 2010 at 4:06 PM, Dow3000 (< 20) wrote:

The folks over at Yahoo are about as bright as central bankers.  That is very much not a compliment.

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#6) On September 01, 2010 at 11:38 AM, sebastoro (22.94) wrote:

Today data support my theory.

 The ISM came much metter than expected, also the GDP from australia was better and the PMI in china was better...

 

the economy is recovering, we will see a good year end rally, and today the market is up more than 2.5%

 tks for your commentaries, all are welcome and appreciate

best regards

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#7) On September 10, 2010 at 12:45 AM, sebastoro (22.94) wrote:

Japan GDP better than expected.

 Trade balance in the US better than expected

things are getting better

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