I can really be an idiot when it comes to market timing. It's just not my thing. I only use it to adjust my exposure incrementally, not to move to the "sidelines." Sidelines are for waterboys and line judges, in my opinion.
But if you've read my bearish commentary on the Chinese market, you may have had quite a laugh if you acted upon it.
I am very positive on this stock market. It is in a clear bull market trend and I would note the following facts:
HPQ has just announced a deal to buy PALM at $5.70 cash per share. The stock is up 25% from yesterday's close (and still off a lot from my recent $10.20 short entry point). I remain short PALM, not because I'm stubborn, just because it makes little sense to cover at a price above the deal price. I'll leave the short on for now, with plans to cover soon. The only risk is a possible bidding war, which seems highly unlikely. All-cash deals are hard to beat.
Some Sunday night/Monday morning food for thought:
I know NFLX stock has a lot of emotional traders attached to it, because whenever I mention that I am looking for an entry to short it, I get flamed on twitter. It reminds me of the old "raging bull" stock board days, but I digress. I still want to short this company, but I never short stocks in an uptrend. It's just a rule of mine. Technical analysis is useful in stock trading. But it's absolutely essential in commodities trading and shorting stocks.
My previous blog was a book review of "Contrarian Investing." Written in 1998, the author laid out an elegant 10 point Mania Checklist that would have certainly described the real estate/mortgage/banking meltdown in the US, a decade before it occurred. I thought today I would apply this framework to the Chinese real estate/stock market situation.
Is China real estate/China stock market a mania? Let’s take a look at our 10 point checklist.
I believe serious investors are always trying to improve themselves. One of the ways to do this is through constant reading. Besides reading magazines and web articles, I think it pays to sit down and read a good book about investing. The problem is so many of these books are just get-rich-quick schemes like the recent "Rich Dad Poor Dad" crap. Even worse is any book written by Harry Dent, who alternates between "Great Boom" and "Great Depression" ahead depending on what's currently happening.
Is Google the next generation Microsoft? Since I've been investing since I was 5 years old, I remember vividly the early 90s when Microsoft employees were buying mansions and Ferraris with their stock-option riches. One of them was quoted saying his $250,000 Ferrari actually cost him a million bucks, because the MSFT stock he sold went up that much the year later.
I see a lot of parallels between Google and early Microsoft:
1. Founders insanely rich at a young age
I'm thinking of running a regression of S&P performance for the month and Stock/Bond Mutual Fund Flows. Take a look at these charts- after a screaming year for stocks in 2009 in which everyone in mutual funds continued to plow money into crappy bond funds what happened? Well, in January, a few intrepid mutual fund investors, armed with the confidence that a new year brings, put a bunch of money into stocks. Then the 13% S&P correction scared them all away in February, as redemptions soared and net of only $117 million went into stock funds.
Some of the more ill-informed members of congress are calling for an immediate 30-40% revaluation in the Chinese Yuan (RMB). Besides their obvious political debt to the unions that put them in power, they are just plain wrong-headed.
![[]](/modules/ubercart/uc_cart/images/bullet-arrow-up.gif "Expand cart block."){kind=icon}
| 1x | The Davian Letter - Level II | $605.00 |
| 1x | DSD: Retail | $0.00 |
| 1x | Dasan's Stock Digest | $250.00 |
| 1x | DSD: Retail | $550.00 |
| 1x | The Davian Letter - Level III | $0.00 |
| 1x | The Davian Letter - Level III | $1,309.00 |
| 6 Items | Total: $2,714.00 |
| (View cart) (Checkout) | |
Copyright © 2010 The Davian Letter, LLC. All rights reserved. Davian Letter, The Davian Letter, TDL, The DL, Financial RockStar, Invest Like a Financial RockStar, Where Financial RockStars Come to Play, Financial RockStar Jam Session, Davian Letter graphics, logos, designs, page headers, button icons, scripts, and other service names are the trademarks of Davian Letter LLC.
Website by SKYCATCHFIRE
