Friday, March 28, 2008

It's the ECONOMY, STUPID!

Trading the markets every day and listening to CNBC or CNN or Bloomberg throughout the day I hear a lot of differing info. Analyst after analyst treks out to give their opinions. Most of them are wrong, that's just the nature of the beast. It's kinda like gamblers, most lose. It's always interesting to hear when most come in on the same side of the tracks. That's when I know I should be going the other way. This morning Citibank came out saying you should buy LEH because it's trading at its lowest valuations in a very long time and slapped a $65 target on LEH. Now maybe LEH gets to $65, but I shorted LEH this morning, 3000 shares, at $41, a lot lower than their $65 target. Right now I'm up $1800 and I'll cover some soon, I'm not looking at making $5 a share, though its certainly possible. In this type of "tape" you want to fade these kinds of calls most of the time. The TAPE doesn't lie is a cliche, but it couldn't be truer than it is right now because there are a lot of pundits who keep trying to catch the proverbial falling knife. On Sunday I said I thought we would rally this week, we did and had a nice fat big move early this week and have since fallen off. These are trading rallies, but ultimately the tape says to me that we have a lot more downside overall. Now, if that call is wrong, thats great. I hope it is because I don't normally invest to the upside or downside, so the ability to trade creates the flexibility to be wrong on a long term basis but make money in the face of being wrong. Investors do not have that ability. I think thats a big problem. I always point to the brokerages, GS, MER, LEH and most of them make a lot of their money TRADING the market while telling you, the investor, that you should buy and hold and slapping $65 targets on stocks that clearly are having problems.

There are, however, some analysts who I pay attention to. This Oppenheimer analyst, Whitney, she has called the banks short (said they had issues) for a while. Last night on CNBC she slapped a $30 or less target on MER and said the banks are at least 25% overpriced here with severe issues. She is one of the few talking reality and investors would be wise to heed her warnings. Banks WILL cut their dividends. C, I believe, has a good shot at not existing in 5 years. As a trader this am I saw Citi's upgrade of LEH which moved all the brokers higher. Reading yesterday's tape I shorted LEH and I shorted MER on HER call from last night which most traders and investor saw. This is the type of tape you want to use rallies to sell into, not to add onto positions thinking its over. It's not, sorry. This am just now JC Penny said the consumer is really not spending, they missed HUGE. The futures were flying HIGHER because we had BS economic #s that supposedly were better than expected. I trust JCP missing huge over the #s right now. You would do well to heed warnings rather than latch onto growth. As I write this, my LEH short is now up almost $1 a share. I'm covering 1/2 plus a nice profit and moving my stops to b/e on the rest. My MER short is up about .80 cents and I think I'll ride that a wee bit more with a stop at b/e from here.

I'm not remotely always right. As a trader I've learned that I have to take a TON of losses but as long as I have more gains than losses then I'm doing A-OK. Investors take note, the worst is not remotely priced into this market. Use rallies to sell, hope is for analysts who are worried that if the market goes down enough they will be out of a job.

RULE!

6 comments:

TheITGuy said...

Must be nice to have come so far from your humble beginnings. I hope to follow the same path, with your guidance.

I haven't read though your previous entries, so forgive me if you've already said so, but I would like to hear how you did with the seminar in Vegas.

Mario D'Agostino said...

Waxie, I did buy your 2 books and your courses. they are very good as I have been studying them for awhile. thxs for replying to my concern. maybe you can throw a call or two out to see if you hit them. can't hurt. if not, oh well, that is ok with me anyways. you seem like a really good guy, thanks for the information.

barfman said...

Waxie, I am glad to see you making blog entries daily. That is the only way to make a blog really work for you and you are going to see your readership go WAY up. 2 reasons: You write the truth and you are doing it consistantly. I will check in every day...
Thanks for the help!

mtnwhtn said...

Waxie. I have been reading your comments on the markets for many years now. It continues to a breath of fresh air to read comments that are straight forward and clearly stated. It would seem that we are in for a ride downward for a while. If average Joe would listen to CNN, they can't help but think that everything is hopeless and that life is over!! Thanks for pointing out one of the "talking heads" that might be able to see and call the situations as they really are.

Waxie said...

Seminar in Vegas was AWESOME! People said they made LOADS of money (several people said they made over $25,000 and one person said he made over $50,000 in the two weeks of live trading. I personally did "sick". I nearly tripled my account in the 2 weeks! How's that?

:)

Waxie said...

As far as picks go. Well, I do post some ideas on here, you can read back through the blog and see that I do sometimes, but not often. Remember, we have a lot of people who pay a lot of money each month for that, I can't just give it away and insult my clients, hope you understand. You should take the two week trial, that would give you insight for sure.