Comments on: YOU GOTTA KNOW WHEN TO FOLD ‘EM….

By: Tom

Tom — Sat, 24 Oct 2009 13:30:00 +0000

I think we’re seeing a change in investor focus and expectations. My guess is that we’ve seen most or all of the bounce from the current earnings season and that investor focus will change from earnings to economic news. With a positive GDP on 10/29, I’m guessing expectations have largely changed from “less bad” to “better” – i.e., investors will be looking for confirmation that the rebound in the economy is continuing, which to me implies improving retail sales, housing starts and new home sales and sustained or perhaps improving positve new sales in the manufacturing ISM. I’m guessing that’s where the risk lies now – i.e., a lack of “better” in the indicators. I also agree that a lot of the upside is already priced in, so the greater risk is probably to the downside.

By: TPC

TPC — Wed, 21 Oct 2009 23:09:56 +0000

It’s all based on comparisons. Of course the earnings and organic growth are still meager. Revenues are not strong at all, but the analysts and the investment community still expect earnings to come in well below where they are actually coming in. It’s an expectations game and I don’t see how one can feel comfortable getting short when 75% of all firms reporting are beating the expectations….

I don’t mean to imply that the underlying fundamentals are superb. Expectations are simply far too pessimistic.

By: AWF

AWF — Wed, 21 Oct 2009 23:06:19 +0000

TPC said:

“I don’t disagree. I just don’t feel comfortable being short when my fundamental analysis says that earnings are going to be strong over the coming 3 weeks.”

I don’t see your “Fundamentals” being strong

If ETN was an example–I don’t buy your take on it.
Plus (20-25) times earnings–in a weak economy??

I will agree some earnings are better than last quarter

But on a yr/yr basis the comparisons are tragic

Some would argue that the last few (3) quarters are abnormal–ok

But you would have to be a “true believer” in the macro future to argue that point

I need more than BS “Green Shoots” “Cash for Clunkers” “Homes for the Hopeless” programs to convince me that the US Economy is in recovery.

Of course I can always rely on the Wall Street analyst for an “honest” evaluation of earnings–that would be the “don’t count the losses and one time charges” program.

It looks like somebody might be taking a second look at the banks earnings/loan losses–whisper-whisper

By: TPC

TPC — Wed, 21 Oct 2009 21:50:01 +0000

A much better set-up than this. Shorting is so much more difficult than being long. I would have to see near parabolic moves and eye popping optimism. I am not a great short seller so I am not the authority on this topic.

By: Tony

Tony — Wed, 21 Oct 2009 21:46:07 +0000

What would it take for you to get short?

By: TPC

TPC — Wed, 21 Oct 2009 21:24:30 +0000

I don’t disagree. I just don’t feel comfortable being short when my fundamental analysis says that earnings are going to be strong over the coming 3 weeks.

By: TPC

TPC — Wed, 21 Oct 2009 21:22:57 +0000

Thought provoking question. I really don’t want to be short into the rest of earnings, but if I were to short something I would probably lean towards consumer names and the retailers. The recovery in the consumer is muted at best, but for some reason the retail index has made a v-shaped recovery. That just doesn’t add up.

By: TPC

TPC — Wed, 21 Oct 2009 20:47:13 +0000

You’re not putting words in my mouth at all. I’ve literally spent lifetimes putting my strategies together and perfecting them. Even after this, my work is highly flawed. To say that it is not appropriate for your average investor is exactly right.

The main takeaways, as VCC said, are applicable to all investors, however. Patience and risk management can’t be stressed enough.

Watch, the market will rally 1,000 points now….

By: JACK

JACK — Wed, 21 Oct 2009 20:43:59 +0000

Not TPC, but I am targeting short banks. they lost leadership when BAC and GS disappointed. Techs have been high fliers but they’ve delivered the bacon with GOOG and APPL blow-out earnings. They still have leadership if money mgrs buy the dips and this is another bear trap set up. Also, if you believe the FED will have raise rates to defend the dollar, I would put a small short oil at these levels.

By: Exertia

Exertia — Wed, 21 Oct 2009 20:37:30 +0000

TPC, if you and when had to get short, which sectors (ETFs) or companies would you be shorting?

Thanks as always!