I bought some more SPY midday.
The problem with the market so far was the flattening spreads between riskier and less risky securities. Junk bonds relative to AAA; junk stocks relative to quality. That changed a bit during last week when speculative names crashed but P&G or JNJ not so much. But not enough IMO, so my hunch is that we will go a bit lower.
The January effect is still in effect, at least for small caps. So there is that too.
I am buying quality stocks with the cash I was sitting on, and with profits from being long some volatility. But not ready to buy junk yet - maybe when S&P hits < 1600? SPY right now yields < 10Y treasuries and both are measly. So the QE effect of inflated assets hasn’t popped yet.
Ahh, I can smell the fear and uncertainty this morning, damn I love that smell.
Maybe I am a bad person?
^I felt that way during the financial crisis being 100% cash. Albeit I didn’t have as much money saved anyway back then.
Fear and greed kiddos.
All the bears from last week are now bulls. Long pharotech!!
I’ll never understand why people opt to sell good companies
These thoughts mirror my own…very hard to forecast what’s next in this weird situation, but I think caution is highly reasonable. ----------------------------------------------- Singer Says U.S. Growth Optimism Unwarranted as Data ‘Cooked’ Paul Singer’s Elliott Management Corp. said optimism on U.S. growth is misguided as economic data understate inflation and overstate growth , and central bank policies of the past six years aren’t sustainable. The market turmoil in the first half of October may be a “coming attractions” for the next real crash that could turn into a “deep financial crisis” if investors lose confidence in the effectiveness of monetary stimulus, Elliott wrote in a third-quarter letter to investors, a copy of which was obtained by Bloomberg News. “Nobody can predict how long governments can get away with fake growth, fake money, fake jobs, fake financial stability, fake inflation numbers and fake income growth,” New York-based Elliott wrote. “When confidence is lost, that loss can be severe, sudden and simultaneous across a number of markets and sectors.” Six years of near-zero interest rates and three rounds of asset purchases by the Federal Reserve have fueled economic growth and helped U.S. stocks more than triple from their 2009 low when including dividends. “We do not think this optimism is warranted, and we think a lot of the data is cooked or misleading,” Elliott, which manages $25.4 billion and was founded by Singer in 1977, wrote. “A good deal of the economic and jobs growth since the crisis has been fake growth, with very little chance of being self-reinforcing and sustainable.” Elliott said that the reported growth numbers are too high because the official inflation number is understating actual inflation by as much as 1 percent a year. That’s because economists focus on measures such as core inflation or make “hedonic adjustments” for improvements in the quality of consumer goods. Inflation is also distorted “by the increasing gap between the spending basket of the well-off and that of the middle class,” the firm said. The unemployment rate, at 5.9 percent in September, doesn’t reflect that the workforce participation rate is at a 35-year low, according to Elliott, and that full-time jobs have been replaced by part-time jobs, and high-paying jobs by relatively low-paying jobs. Real wages, the firm said, have been stagnant since the financial crisis. “Our belief is that the global economy and financial system are in a kind of artificial stupor in which nobody (including ourselves) has a good picture of what the next environment will look like,” the firm wrote. http://www.bloomberg.com/news/2014-11-04/singer-s-elliott-says-optimism-on-u-s-growth-unwarranted.html#disqus_thread