Musing #1344
“All the miseries of mankind come from one thing, not knowing how to remain alone.” Blaise Pascal
“Be kind to people whether they deserve your kindness or not. If your kindness reaches the deserving good for you; if your kindness reaches the undeserving take joy in your compassion.” James Fadiman
“The quieter you become the more you can hear.” Ram Dass
“Anger dwells only in the bosom of fools.” Albert Einstein
“He who fears the opinion of the world more than his own conscience has but little self-respect.” The Talmud
All of the above quotes were “lifted” from the March 3rd edition of What I learned this week, from 13D research (www.13D.com) It is one of the most remarkable and informative compendiums to which I have access.
I think those quotes are chock full of wisdom and good counsel. The conundrum for me is that if I try to live by the precepts in those quotes I will not be able to write these missives any more.
The teaching from the Talmud suggests that it is a can be construed as a waste of time to pander to the opinions of others.
Most of my inspiration comes from anger. According to Einstein that indicates that I am a fool.
Ram Dass has excellent advice, and I do want to hear more, so I should be much more silent.
If Fadiman is correct then I should be kind to others. That means I could have nothing to say about politics and politicians in general, not to mention specific individuals or groups like Obama, Frank, The Bernank, Pelosi, Progressives, Conservatives, etc. What in the world would I have left to say about Goldman Sachs and many CEO's and investment bankers and their ilk.
And if Pascal is correct, which he may well be, then I am creating my own miseries by communicating with so many others instead of being alone.
The conundrum is overwhelming me!
• • •
The stock market has been in a trading range for about two weeks. It has frustrated both bull and bear.
Although I spent most of my 18 years at Montgomery Securities doing institutional sales, I did do a year or so on the trading desk, as an institutional sales/trader. I sat next to a veteran trader, let's call him Phil. Phil was full of practical advice he had collected in over a decade on the desk. One of the lessons he harped on to me was that the successful speculator and trader never tried to pick the exact top or bottom for an entry or exit point. Phil said, you go for the heart of the move, leave some meat left on the bone for the next guy. That pretty much sums up my sense of this market.
We have had a 2 year bull run in which averages have about doubled off the bottom. Most of the meat has been eaten. Leave whatever may be left on the bones for the next guy.
Lacking a crystal ball, my market forecasts are based on pattern recognition and other factors. I have found that over the last nine months or so the patterns that historically applied to the stock market no longer seem to be of much use. Furthermore sentiment measures have been totally useless. I do not know why this is the case. Perhaps it has to do with HFT (High Frequency Trading, which is computer generated and based on sophisticated and flexible algorithms). Whatever the case may be, I have found trading to be more difficult than at any time in the last 10 or 15 years.
Given that disclaimer, I would note or point out that the character of the market seems to have changed in the last couple of weeks. Mondays have been down, and so was the first trading day of March. Perhaps of greater significance, the high relative strength, momentum driven, ridiculously overvalued leaders, like CRM, NFLX, CMG and others have been rolling over and acting poorly.
The energy sector has been on fire. In general when energy leads that is not necessarily healthy for the broad market. Perhaps the bull market is going though a healthy sector rotation, but I doubt it.
I would say that the probabilities continue to favor that at least some of the major averages will go to new bull market highs in the coming days or weeks. But my guess is that it will be a sucker rally, a time during which the “smart money” distributes stocks to the “dumb money” who will be left as “bag-holders”. The alternative view is that a more serious correction is underway.
In any event I think investors would be best served by moving into cash.
I continue to own my physical gold and silver, but I have sold the last of my mining stocks. My best guess is that gold has not yet seen its high for this move, but it is getting late in the game. Long term I see gold going to $3600 worst case, but it seems likely to me we could see a significant intermediate term correction sometime this year and into next year.
I have been increasing my position long the dollar.