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Wednesday, August 11, 2010

Bring 'em out now!!

Remember right before the 4th of July--and right before we had a 1000 point rally in the Dow? We had Bob Prechter, in the NY Times, dressed up, and pimping Dow 1,000.

Here's that story:

The Dow, which now stands at 9,686.48, is likely to fall well below 1,000 over perhaps five or six years as a grand market cycle comes to an end, he said. That unraveling, combined with a depression and deflation, will make anyone holding cash “extremely grateful for their prudence.”

So the Fed downgrades its outlook, and companies like Disney, that beat get sold. But Disney really didn't have such a big beat. If you back out the .05 deferral (with 226 million/revenue earnings were .62.--- ESPN ad revenue was up 31%) but Disney's quarter was still absolutely terrific.

So Wall Street sells the name, so they can try and turn psychology. It's after all, their own Mickey Mouse playbook. If you sell DIS, then you can sell CSCO, because John Chambers, will always have something good to say. But its time to embolden the bears. So where is the Prechter story? Oh--wait--Oh My! It's here already--so the market can discount it!!

So that's the Mickey Mouse playbook, on Wall Street, which is wrong. But if you want to believe it, go ahead!

Because Rosie is already starting!!
So, we had a huge bounce off the lows, but we had a similar bounce off the lows in 1930. The equity market was up something like 50% in the opening months of 1930, and while I am sure there was euphoria at the time that the worst of the recession and the contraction in credit was over, it’s interesting to see today that nobody talks about the great runup of 1930 even though it must have hurt not to have participated in that wonderful rally. Instead, when we talk about 1930 today, the images that are conjured up are hardly very joyous.

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