Dow - Down for the Millineum

Written on June 27, 2008 by OptionsRopeaDope

I try not to care too much about predicting where the market will head, as my goal is to be in a position that accounts for the market moving up, down, or not moving at all, and to still end up with a profitable position. And of course, to be prepared with a plan should the market move “too much” to still put me in a good position. Still, this is just bizarre.

At heart though I’m a contrarian and try to spot irrational fear, or irrational greed, and there’s plenty of that around right now. yesterday, some of the big brokerages in New York gave a “sell” rating to GM, Ford, and CitiBank. When have you ever seen a “sell” rating from those clowns? 8 months ago GM was at 42, and they have had a “buy” or “hold” on it all the way until it is at 11. If you paid attention to these guys you’d surely be thinking “thanks a million you bastards.”

So to my point - a sell on these things probably marks the point where no one wants to buy. Certainly no retail investors. Panic or after the panic, that’s what the situation is here. Does it apply to the whole market? Who knows. But one lesson I see over and over again is that when everyone seems to have bailed, thats when it is time to get in.

 Conversely, I saw George Soros on the McNeil-Lehrer News Hour a month or two ago saying that Oil is in a bubble, and just like all bubbles, it’s gonna burst. Ever since, that sentiment has been mentioned in more and more places (as well as more predictions of 150, 170, and $200 oil.)

Nevertheless, I wouldn’t be bullish on the market right now. Or bearish on Oil. Not because I don’t believe things wil turn around, but because I don’t know when, and the without a doubt, If I made a directional bet I’d go broke right at the moment it did turn around in a way that would make me rich.

Thank goodness for non-directional strategies!

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