Wheee!
That was one hell of a bad day, let's not do it again… We were a little too bullish in our smaller virtual portfolios and got smacked around today and we took the opportunity to press our bets but, as the market continued it's relentless march downward I started to question my bullish premise.
As you may have noticed from comments, I did a lot of reading last night and I have come to the conclusion that everybody else is wrong and I am right. The economy IS recovering, the dollar IS recovering, oil IS way overpriced is not the primary but the sole cause of inflation. Since the price of oil has nothing at all to do with any fundamentals of supply and demand then we can expect that situation to correct itself at some point which means that everything the technical guys are pointing to on the charts is based on BS and should be ignored.
I know that is a pretty bold and shocking statement considering how absolutely terrible things look right now but I am simply not buying the premise that CitiGroup, for example, is now worth less money than they were in 1997, when their net income was $6.5Bn. Yes last year they earned just $3.9Bn but their 5-year average earnings were $15.8Bn including that very bad year and over $17.5Bn without it. When did the stock market become a roulette wheel that only values a company based on the last number they print in an earnings report.
TASR is another great example. We have a company that is changing the face of the law enforcement in a multi-billion dollar industry and their sales over the past 3 years were $48M, $68M and $101M in 2007 with Q1 '08 sales up 50% from last year and a bump in the road caused by litigation has sent the stock from $17.50 to $6 in 6 months. TASR is, in fact, still winning contracts and XOM still hasn't paid off the Valdez lawsuit 20 years later, so what makes people think that TASR is going to take this one lying down.
I love this quote from the article about the guy who TASR has to pay: "An autopsy found that Heston died from a combination of methamphetamine intoxication, an enlarged heart due to long-term drug abuse, and Taser shocks." How can this possibly hold up once it gets away from Arizona courts?
There are tons of companies in that situation (CROX springs to mind) as "investors" only love a stock as long as the little squggly lines keep making pretty patterns. No one seems to care about what the company or, heaven forbid, the economy is really doing – it's all about whether Jim Cramer makes bull sounds or bear sounds during the "lightning round" (named that because of his "shocking" reversals in position). I don't want to sound like an old fart but, back when I learned to invest, we used to buy a stock because it was a good company that we thought would grow OVER TIME – not after lunch.
It's madness, madness I tell you and my new pal, Mohammed Al Hameli, agrees with me. The UAE energy minister says "There is no shortage of crude oil in the market. Inventory levels are huge… If you look at prices moving by $10 a day, that doesn’t make sense… That’s crazy. The UAE has spare capacity and is "quite happy" to supply more oil if called upon," he said.
I'm getting tired of talking about how ridiculous the price of oil is but I'm starting to see what looks to me like the Saudis and others making some significant bets on the dollar. Should they decide to short the oil market (meeting is June 22nd) with their $1Tn stockpile of cash, there's nothing T Boone, GE/CNBC or even Bush/Cheney is going to be able to do to support the POO. Just like in Trading Places, when you know the game is rigged then you can turn the tables on the scammers very easily and the Saudis seem to have found a way to make this a PR coup as well.
They can do this now because Bush is a lame duck asset and they no longer care about making him look good, while they have a chance to put themselves in a position of global leadership – this is the end game of this administration literally selling this country out to the Saudis – even our reputation as a global power is theirs for the taking.
It's not just me.. In the latest Wall Street Journal poll, 69% of the readers said "America is in a state of decline" and 79% disapprove of Congress, the worst EVER recorded. Bush made another new record with 70% of the people surveyed saying it's not just the job hes doing they disapprove of – now they don't like him personally either. Bush's approval rating on the economy is down to: 21%, so if you think Bush is doing a good job, chances are you are the only one in the room!
As I said this morning – Change is good and, as much as you "stay the course" conservative types (all 10 of you according to this poll) may not like it, this poll is a great signal to foreign investors that it may be safe to get back in the US waters – yet another positive for the dollar and right in line with my premise that we don't have to have a great economy to attract foreign investors, just one that doesn't suck as much as theirs.
