One of my two market-timing ideas goes sour.
On Aug 31, I called a bottom at about 1050 and predicted S&P would be at 1200 by November. It closed today at 1183. That was a pretty good call. I was just looking at the valuations and the near-certainty of more printing by Bernanke & Co.
But on Oct 16, I was expecting a 5-6% pullback from 1176 because of the Mortgagegate scandal. However, after a hysterical 2% drop we recovered quickly, as the topic has mysteriously disappeared from the headlines. This brief episode had all the signs of classic Soviet-style media campaign, the one that gets initiated and then terminated by a single phone call to the Pravda editor from the Central Party Committee.
I blew it completely. I did suspect that the media was exaggerating the problem, but I expected the campaign would last at least a few weeks, as the conspiracy theorist in me was convinced that someone was trying to drive down the financials. Instead, it tuned out to be a one-day flash crash in the financials.
Moral of the story: market calls based on valuation are more reliable than the ones based on headlines. Who would have thought?