The Year-End Bender: Trap Door or Melt-Up?
Pick a side or stand aside.
It was a humdinga of a weekend between our wildly successful Festivus and those pesky Raiders keeping their silver and black helmets in the hunt for a playoff spot. As I spent most of the weekend winding down and the last several hours catching up, here are some top-line vibes as we kick-off our five-session set.
My first reaction when I heard that Groupon spurred a $6 billion offer from Google (GOOG) was that this was the type of news you hear near a top. Then, in a rare Saturday afternoon respite, I saw The Social Network (the story of Facebook), followed later that night by the segment on 60 Minutes.
Facebook was offered one billion dollars by Yahoo (YHOO) a few years ago and turned it down. Now they're worth upwards of 25 times more than that (on the gray market, or so we're told). I suppose the question we must ask ourselves is, "Is GroupOn the next Facebook?" I get the whole "Globalization through localization" idea -- it's sorta like society as the sum of its parts -- but six beans for that puppy?
That seems a bit ironic, particularly given the frugal nature of their audience.
Of course, Big Ben was also on 60 Minutes. As I'm told "compromise" is a big part of cohabitation, I agreed to watch the show between the 1:00 PM, 4:00 PM, and 8:00 PM football games (no seriously, that's the deal).
Perhaps I was sitting too close to my plasma but I could swear I saw a subtle quiver in Mr. Bernanke's lower lip. We won't quibble over the content or his message -- we've done that in spades, and we'll do it some more. The fact that the FOMC PR is in overdrive is perhaps all we need to know.
Some Random Thoughts
- There is a fine line between fighting the tape, as Dr. Hussman touched on, and using price to your advantage. That is distinct for each of us but it must exist somewhere if you hope to stay in the game. Remember please, respect -- but don't defer to -- stock prices.
- S&P 1200-1230 is the new range, with a trap door on one side and performance anxiety on the other.
- I asked at the beginning of the summer Is Quantitative Easing The Last Gasp Bubble? That column is worth revisiting if you're still trying to figure it out.
- Jeff Saut, following up on his Festivus take, sits with Aaron Task to discuss how the economy is doing better than most people think. This, naturally, is a fitting extension to the vibe I scribed after our dinner last week.
- Thanksgiving turns into 2011 in a hurry. Mr. Saut touches on our oft-mentioned performance anxiety as well. We watch the master beta names as a proxy on this front. Thus far, Apple (AAPL), Google (GOOG), and Baidu (BIDU) are suggesting pent-up demand while Amazon (AMZN) is lagging -- for the time being.
- I believe that risk wasn't destroyed, it was simply transferred from one perception to another and from one entity to the next. While conventional wisdom suggests "the financial crisis is over," taxpayer liabilities have shrewdly been shuffled to another line item on the balance sheet of the USA.
- I don't profess to know the timing on that matter -- remember, we suggested "a prolonged period of socioeconomic malaise entirely more depressing than a recession" and that the financial industry was technically insolvent long before others -- including our Fed Chairman who, by his own admission last night, saw it coming.
- So please, dance while the music is playing but keep an eye on the seat. When the song stops, those might experience the biggest short squeeze in a generation.
- Good luck!
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