The other day when I wrote about my hands burning in the night as I slept, one of my readers wrote in the next day with some enlightening and helpful information on my problem. Since, then, I have applied his “prescription” and my hands have been steadily improving. It is good to have folks reading what I write and responding.
- European and Asian shares climbed to two-week highs on Wednesday, with investor confidence getting a boost from upbeat U.S. data, talk of fresh central bank stimulus and diminishing concern over Ukraine.
As to the market … Good news on the economic-data front seems to have given global markets a boost, but, frankly, the movement today in US markets does not strike me as enthusiastic. I still expect that sometime soon we will get a pullback that will allow for more buying opportunity. The VIX is falling, and, generally, when it gets down below 14, I start thinking retreat. It just got there, so nothing is imminent, but be prepared with cash in case we have a sudden drop (think Ukraine/Russia).
In the meantime, the fuel-cell trade has returned for me, and I hope for you. PLUG, BLDP, and FCEL are going up and down as if on a yo-yo. The rises are so high and the falls are just as spectacular. Yesterday’s move was breathtaking and profitable, and it all happened because of a rumor that PLUG and Volkswagen are teaming up. Even though this rumor is old news and dead news, according to Volkswagen, the stock still rose and fell some 20% in one day on the media reporting it. The interesting thing is that when it moves like that, BLDP and FCEL follow right along. Thank you very much.
- I believe stocks are now so expensive that they will likely deliver crappy performance over the next decade. I also believe that there is a decent chance of a 40%-to-50% crash in the next couple of years….This view is based almost entirely on valuation: According to most historically valid and cyclically adjusted pricing measures, stocks are at least 50% overvalued …
Henry Blodget, the author of the above, is yet another “big-name” analyst making wild-eyed predictions about the long-term status of the market. It boggles my mind, frankly, that someone who has been around this game as long as he has, actually believes he has that kind of predictive ability. It also raises the question of why he feels the need to publically state his prediction. I don’t need to speculate about the answer, but it is worth pondering the question.
As to the substance and validity of Blodget’s prediction (and to my own commentary on it), here is an excerpt from the Small Cap Newsletter that sums it up beautifully.
- While a bunch of these high-profile guys make great bearish arguments based on data, the very, very best people in this business – and you rarely hear from them – are the ones who can reassess the market’s health every single day by looking at all the data with an unbiased eye. They’re the people who never make a quick decision even though the talking heads on TV are screaming at them to do so. They’re the ones who recognize there’s no consistent algorithm you can use to trade stocks, or to grade the economy.
It is most likely true that the best of the trading minds out there are quietly making money for their clients and not feeling the need to pop off as if they were oracles. Thus, the conclusion to draw is that those who yell the loudest are not the ones you should follow. Just think back to all those hill-top screamers who were saying back in 2009, “Get out! Get out now!” And think about those same soothsayers telling us all to get out in 2010, 2011, 2012, 2013, and, now, in 2014.
The lesson is this. The market is about fundamentals and earnings, ultimately, and if the fundamentals and earnings are sound (and they are), the market is stable, if not rising. It will take something geopolitically huge or it will take radical fundamental breakdown to bring the market down 50%.
Sure, it can happen “in the next couple of years,” but so might Mt. Vesuvius erupt and bury the city of Naples in the next two years. The point is not to be missed – watchers watch Vesuvius, just as you should watch the market. If the ground begins to tremble and smoke starts seeping out from the cone, get ready to flee. If the ground shakes violently and smoke billows out from the cone, run and run fast. For now, the ground is solid and there is not even a hint of smoke in the market.
- The designers of the forthcoming Moto 360 hope they’ve passed a fashion test. In contrast to the often bulky and boxy smart watches released to date, their device is sleek and perfectly round, evoking the style of a classic analog wristwatch. But beneath the slick design lies even slicker software. A new version of Android, called Android Wear (see “New SDK Shows Google Really Wants to Get on Your Body”), allows apps for the watch to be created using simple tweaks to existing Android apps.
So much to think about …
Trade in the day; Invest in your life …
