By Todd Harrison May 16, 2003 9:00 am
Remember, Minyans, expiration will create crosscurrents that we can't see!
Good morning and welcome to the city of critterly love. Last night, as we awaited Queen Casey's arrival at the Four Seasons Hotel bar, the Menagerie and I held court with a gaggle of geese and young nurse named Fokker. The room was abuzz with excitement -- not because every pair of eyes was focused on Daisy's fishnets, but because her majesty was gonna walk through the door any moment. As we patiently waited and bantered about, the conversation slowly turned to the Minx. It went a lil' something like this:
Boo: Were you guys on the Dell (DELL:Nasdaq) conference call? It was the same 'ol story of the "have" vs. "have nots." Michael told CNBC that "the industry is experiencing only very modest growth... but OUR growth continues to be much faster than the industry." That's impressive share gain, execution, cost controls... but where's the true end demand? I've heard a lotta tech CEOs talk about the "inevitable" economic recovery and opine that "when" it happens, they'll be well positioned. In the meantime, it's an economic schnitz show!
Hoofy: (yelling) WAITRESS! No more 'toonis for the bear! Shmuck, didn't you take Finance 101? The market is a leading indicator. L-E-A-D-I-N-G. That means it'll turn higher (lower) before business picks up (turns down). I don't disagree that Dell did its typical "me me me!" but remember, that's just a (very) small piece of the bigger picture. There are structural influences, panicky psychology, technical evolvements, political agendas -- don't over-focus on the cracks in the sidewalk again, Boo, you'll forget to enjoy the walk!
Sammy: I hear ya Hoofs but you gotta admit that strange things are afoot at the circle Minx! The macro vehicles -- the dollar, oil, even gold are all over the place. The bonds? Fuggetaboutit! Remember that equities, as an asset class, are a single component of a much bigger global engine and many of the global influences can't readily be identified.
Snapper: But the bottom line is that stocks are rallying, right Sammy?
Sammy: Yes and no. Yes if you've caught it (or even if you didn't)... and no, in as much as we've gotta focus on where we go from here. It's interesting that a fair amount of insiders have been selling into this rally. If things were truly turning the corner, wouldn't they be anxiuous to buy their own stock?
Boo: (nibbling on some cranberries) Well, I suppose if you ingnored the lack of end-demand, forgot about the bull/bear disparity, turned a blind eye to the coiled stochastics and momentum divergences and pretended that there's not a ton of complacency... things would be cool like Fonzi. I haven't, I didn't, I won't and I can't, my friends, so I'll just hang out with the iguanas and bide my time.
Hoofy: Lemme ask you something, cookie. Look at the rally in any of the major indices since the March low. You see the steady series of higher highs and higher lows? That's a bullish and orderly stair step, right? If you're dead set on paw prints, why not wait until some lower lows are put in? Otherwise, you're just spittin' into the wind!
Snapper: Yeah, man, listen to the horny guy! You've gotta respect the patterns in the marketplace even if you don't agree with them. Listen, you wanna dose of perspective Boo? Look at a chart of the Japanese Nikkei (with Yen as a base currency) from 1990 to 1999. Who's to say that we're not traveling a similar path to 1995? If that's the case, you very well might be right in the big-picture, multiyear grizzly thesis... but that doesn't mean that the bullish phase can't last longer than most people expect
Boo: I hear ya, Snapper, and I understand that my time horizon has to match the risk profile I employ. Just do me a favor and keep an eye on the General Electrics (GE:NYSE), General Motors (GM:NYSE) and Wal-Marts (WMT:NYSE) of the world. These are big names and they're starting to show signs of lethargy. Even Microsoft (MSFT:Nasdq) hasn't gotten too jiggy lately, right? Maybe I'm reaching -- it certainly wouldn't be the first time -- but when does the prospect of deflation matter? I'll tell you when it does -- when the S&P is down 10% from here!
Daisy: Just be smart, Boo -- we love you and don't wanna see you spiral back to the psychiatric ward.
Boo: SEE? You guys think I AM crazy! Well, I'm gonna end this discussion by asking you a simple question, Detective Callahan. Do you feel lucky? If you do and believe that this time really IS different, go for it. But you'd bettter make sure that you've got some bullets left in the gun in case you're wrong. Now, if you'll excuse me, I see a honey at the bar who requires my immediate attention!
Boo sprayed some Binaca in his mouth, got up, wrapped his right paw around an apple martini and slowly sauntered his way through the crowded bar. The rest of the critters turned and began staring at me -- as if I had anything to do with it! My eyes danced between the nuts, the menu, the crowd... before finally fixating on Casey! After many hours of delays and missed flights, my main Minyan was standing in front of me. I rose, embraced her in a warm hug and thanked her for coming. The best, as they say, is yet to come.
Good luck today.
position in ge
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