Tuesday, August 21, 2007

A mixed day on the market though it was mainly positive for the bulls. Less volatility and a good finish on the Nasdaq and S&P though the Dow was down. Stocks as a whole advanced . Airlines were the strongest performers as oil prices fell while energy was a big loser.

The Federal Reserve may be able to avoid an emergency reduction in the benchmark interest rate as some of its steps to increase liquidity show signs of success. Bloomberg
I Don't know if this is good news for the bulls considering speculation of an emergency rate cut is the impetus for this rally.

Yields on U.S. three-month Treasury bills climbed the most since 2000 as demand fell for the safest government securities. Bloomberg

Foreclosures across the US surged in July up 9% from June and 93% from the previous year. Nevada, Michigan and Georgia are at the top with California, Florida and Ohio not too far behind. The real estate market will only get worse( for sellers and owners)while buyers will be the beneficiaries through depressed prices. In the mean time I will be putting together a real estate fund to snap up deals. Plenty of bargains to be snatched up in the next 3 years or so. 30 cents on the dollar or better.

It appears a lot of stock market gurus and bloggers are bullish on the market in the near term. Many feel a bottom is in. I like going against the crowd. Today I sold of plenty of QLD DDM SSO MVV UWM positions that I had (unexpectedly) picked up at bargain levels during Thursdays plunge. I will not be lulled into a false sense of security. All we need is another major blowup and we could be down 500 points in a hurry. Plus, the dimming prospects of a Fed rate cut does not help. I do not want to be short here. But I would like to have plenty of cash to work with. SLV AKAM AMGN NTRI MU DFS CFC all look like great long term buys here.


Matt said...

I agree about the buying opportunities in RE coming up. Stricter lending and lots of foreclosures will limit the supply of available buyers. Who knows, you might be able to buy one that has positive cash flow!

I am moderately bullish, but using small position size until things start looking better. The R2K has been looking good the last couple of days.

TheCapitalGame said...

The window to purchase real estate is going to start opening up next year. Foreclosures will be at record highs and banks will need to start liquidating REOs in a hurry. 2008-2010 will be a great time to buy.

Moderately bullish is the way to go. You don't want to be caught leaning too far in one direction. August and September are not particularly great months for equities though last year proved otherwise.