Two Ways To Play: Mixed Messages From Greenspan, Buffett, Dimon
Position your portfolio in good times and bad.
According to Bloomberg, when describing the economy, Greenspan said it looked like a game of "tug-of-war" between cash-rich businesses and money-losing financial institutions, a very unusual situation with neither side winning the battle, he said.
Greenspan added that a recovery won't begin until home prices stabilize which would take the pressure off financial firms to disclose more writedowns on mortgage-related securities.
Meanwhile, billionaire investor Warren Buffett spoke alongside his investment partner Charlie Munger at Berkshire Hathaway's (BRK.A) famed annual shareholder meeting. In their speeches Buffett and Munger lambasted Wall Street and regulators and even accountants, saying they failed to protect the public. Although Buffett did suggest that the worst of the credit crunch may be over, he also reiterated that the U.S. economy is in a recession and he expected there to be more losses.
JP Morgan Chase's (JPM) CEO Jamie Dimon was also on the tape. Dimon said he remained cautious on the outlook for the U.S. and does not expect the U.S. financial crisis to end soon.
On the positive side, Richard Russell published an article in Barron's over the weekend: he's bullish on the equity markets on a technical basis, suggesting that stocks could reach new highs in the near future, possibly in the weeks or months ahead.
For a Minyanville perspective, see Jeff Saut's A Time for Caution.
From the Bull Pen: Those in the bull pen aren't shaken by the comments by Greenspan, Buffett and Dimon, Buffett in particular as he stands to benefit the most in a distressed environment. Nonetheless, bulls looking for upside vehicles can look to plays Professor Quint Tatro mentioned: Homebuilders (XHB), Financials (XLF), and the S&P Ultra Long (SSO).
From the Bear Cave: Which companies are going to be negatively impacted by a weak consumer and slowing demand? Bears see downside opportunities in retail plays like Home Depot (HD), Lowe's (LOW), and Sears (SHLD).
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