Thursday, March 23, 2009
markets went wild
on what Secretary Geithner's new toxic assets plan will do for banks.
and the S&P
500 hopped up 98.5
to end the day at 769.
jumped to 53.61,
With today's market action, the Dow has moved above its
equivalent Depression-era level. Mark Hulbert points out that today
saw 41-to-1 up-down buying stampede, which, he suggests, might be a
record. This makes four better-than 9-to-1 up days in two weeks... a very
bullish sign. However. Mark Hulbert throws some perspective tonight on
what's happening: Mark
Hulbert: Bear market rally or new bull market?
So should we buy or not? And if so, what, and how much?
Given the horrendous last 18 months, I would tread
cautiously. If I buy, I'll be nibbling my way back into the
plan: What it means for investors) with pre-defined
stops at which sales occur without debating whether or not to sell. If the
value of an investment rises, you can raise the stops to lock in a profit
if the markets turn down again. I would invest between 5% and 10% of
my available cash tomorrow morning. At some point in the
next two weeks, the markets are going to have to digest today's gains,
though at what point they'll be, I'm sure I don't know except to guess
that it may be above where it is tonight. This is a calculated risk that
could involve modest losses, but at certain points in the markets' cycles,
it may be profitable to take such a (limited) risk.
What to buy? My favorites are UUPIX (the Proshares
Ultra Emerging Markets Fund), FXI (the iShares China ETF), and PBW (the
Wilderhill Energy ETF). However, there numerous good buys out there, and
I'll have to do a little homework to expand this list.
Ill try to update this tomorrow morning.
another sardonic Marketwatch take on Scretary Geithner's "toxic"
assets plan: MarketWatch First Take- Geithner re-brands 'toxic debt' with kinder, gentler term.
Of course, a plan that's detrimental to the taxpayer
may of benefit to Wall Street.
stock market has sizzled today over optimism about the new Geithner toxic
assets buyout plan. Should we be buying?
Yesterday, Paul Krugman published a squib: Permanent Link to Brad DeLong’s defense of Geithner.
He gives the DeLong article a sympathetic review. I think he's examining
alternatives to his point of view to insure that he doesn't let his own
thinking cloud his judgment with respect to alternative possibilities.
Today, he's added this follow-on note: Permanent Link to Geithner plan arithmetic.
He's not alone in his concerns: Risk, yes, but is there
reward?.Marketwatch's David Weidner writes, "Taxpayers
are certain to lash out at the terms. They will get a share of the
profits, if there are any. Investors will get a share of the profits, even
if there aren't any.
even if Treasury Secretary Timothy Geithner can sidestep the backlash, he
may not be able to dodge the sticky issue that has kept the financial
system on the ropes: valuation. "
concludes, "Investors cheered the news Monday.
Dow Jones Industrial Average leapt nearly 4% in early trading. But as the Troubled Assets Relief Program and American International Group
bailout have shown, announcing a program is much easier than running it."
News-driven rallies don't generally last long.
This probably isn't a morning to be a buyer.