torsdag den 26. juni 2008

Oversold - not undervalued - my new theme

Wow, wow and more wow - this is finally turning into a summer of fun! First things first:

This is extremely good news for long term markets, morale, discipline and education.

The basic problem of the Greenspan + Bernanke era has been one of total neglect for fundamental values and discipline.

Greenspan now clearly shows he was more concerned about his name than the real economy - and in total contrast to Paul Volker - who remains my favourite central banker by a huge distance -

The Fed statement yesterday clearly shows a split FOMC - the wording was not even coherent in its langauge - pretty amazing for a FOMC which have made communication the top priority! -

Central bank premise nr. 1: Act on what the central banks do! Not what they say!

Listen to what they say and make your own judgement - like most financial market people today they are 50% lying and 50% hoping - and hope belongs in church not in the market!

(You may think I am exageerating, but trust me the CFO' and CEO'/Chairmen' in all small , medium- and large banks are sending prayers once an hour to get "relieve"from this turmoil - The financial equivalent of Tsunami)

Talking about lying - then I have to admire my hero over at for saying is as it is:

Fintag says: "Bob Diamond told me that all was fine. I now it turns out he lied. Never trust an incompetent bank"

Finally to some strategy - I am in the OVERSOLD not UNDERVALUED CAMP -

What I am trying to say is: Yes, market down, down and down - and there could be small rally, but as long as the banking chief', the central banks and pretty much 70% (down from 98%) of the traders seems to believe in yet another rescue is close by, then the market will go further down.

There is some cyclical low indication yesterday and today, but these could shift to mid-July if we do not see some sort of demand for stocks - it seems market is in buy-curfew mode.

We are long JPY vs GBP, USD - we are very long Dec- eurudollar calls - got some small mini-rally in STOXX50 (less than 1% of capital)

Looking to add: fixed income and mortage in Denmark.

Core value stocks we are long drugs, steel and mining still - looking to buy water.....

The lack of upside spikes indicate to me this is final leg down, and if so confirmed we will take out March low - easily - in the next 3-7 days- by then the market will finally realise how good this is - and how the bad business models needed to disappear. Constructive destruction rules!

Economic data wise July/August will be trough in my farmer opinion - but for the data and confidence to come back we are talking next year 2009- Q2 earliest.

Finally remember: Gray hair is the new in in markets ;-)


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