Weekend 9-30-11

1. The weekly issue of the Economist just arrived in the mail.  The cover is the picture of a black hole with the words:

Until politicians actually do something about the world economy. BE AFRAID.

When a normally circumspect news magazine starts doing stuff like this, there is not that much more to say now, is there.  Except to ask how I can get wordpress to let me copy and paste that image! You will say do FACEBOOK.

2. Apropos the chatter about bear markets,  a 20% decline on the S&P500 (from its April 2011 high when it tagged 1350) brings us to about 1080, which is when pundits decide that we are in a bear market. At 1130, we are not even there yet. By the time we get there (small if), the typical bear market decline is more than half over. Except of course the big one of the 20s. Many will tell you that the present macro situation is not that different and the central banks are out of bullets. If you like that horror story, see this chart from my archives.

3. It wouldn’t do to ignore the other side. The S&P 500 has been down 5 months in a row, stocks must be cheap. We cannot ignore the Fed.  There are even lists of stocks to buy, there are people talking about 3-5% dividend payers and still others talking about going overseas. Fleckenstein mentions Mongolia, the stock exchange there has perhaps a dozen stocks that trade daily (many more listed). they have huge natural resources (aren’t commodity prices falling?) etc.

4. Staying with long opportunities, there are a number of stocks with pre-teen prices, AMTD, SCHW, MS, ACI that are at or below 2009 lows already. FSLR is well below that level and probably going lower still. I am sure there are more, but I would rather wait for more of the unequivocally good firms to get to better levels.  GLD and NFLX are two that bear watching. Curious that turn of phrase, shouldn’t it be bull watching?

More as the weekend unfolds.

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