“Market Seems Broken” After Monster Rally, Lindzon Says
Excerpt:
Both the Dow and S&P hit their highest levels of 2009 intraday Tuesday, and all seems well for the bulls. But Howard Lindzon of Knight’s Bridge Capital isn’t among them and candidly admits to being “clueless” about the rally at this point.
One reason is the big volume in shares of “bankrupt” companies such as Citigroup, Fannie Mae, Freddie Mac, Sirius XM Radio and AIG, which don’t seem to be moving on any fundamental growth, says Lindzon, who is also co-founder of Stocktwits. There are “just no underpinnings of real growth,” he says. “The markets seem broken.”
How about blaming the alleged “vampire squid” known as Goldman Sachs? From “trading huddles” to high-frequency trading, Goldman has been taking an image-beating as of late. Lindzon argues we should be focusing on our policymakers — not guys at Goldman, who are doing what bankers should do — making money. In fact, everyone had the opportunity to buy at the bottom of the market — not just the Goldman gang.
So what’s Lindzon trading now? He’s “mainly watching” but short Capital One and Best Buy and long a few Chinese stocks, oil, Netease.com and US Natural Gas ETF.
August 26th, 2009 at 4:19 pm
In a way, this market has been broken all summer. We all know it’s a squeeze and the only question is: how tight?
August 26th, 2009 at 5:00 pm
Sirius seems to have been trending up due clampdown on naked shorts.
It also seems to have been helped by cash for clunkers sales.
August 26th, 2009 at 8:07 pm
OK, the market’s broken … so how does it get “healed”?
Not “well”, but structurally repaired such than solid fundamental growth is at least possible, where there is a shared framework of values that makes a market of stocks possible.
I can see a couple of ways …
1) be finish the cataclysm, wash away many of the busted companies, and the low prices are so low as to attract sideline capital into solid companies that have no debt, actual sales, and are going to be around going forward, no matter what the rest of the market looks like. But the money that would buy these companies is not going to pay the current prices due to the amount of clear-and-present-danger disasters floating around out there today. We have to flush the disasters, burn down the corporate meth labs and crack houses in order to make the neighborhood safe again. That’s one way, re-testing (at least) the March lows.
2) the other way is the Japanese way, with succeeding generations not knowing any other kind of markets and thus not having the sense to avoid them. Muddling through while continuously pumping monetary salvation, bailouts and clunkers programs, throttling the economy, taxpayers, and consumers for a VERY long time. And even then, there is the likelihood that the markets may not heal, what with terminally ill monsters floating around to distort valuations and expectations. People won’t play in the casino if the house steals too large a percentage, and occasionally mugs/murders innocent corporate citizens. Even under option 2, there will have to be structural reforms, and the longer it takes for them to happen, the longer it will hover at the borders between night and day.
It seems clear that none of the Powers That Be (Obama and his gangsters, Bernanke, the criminals in Congress) are inclined toward introducing (or even discussing) any sort of market reforms or regulation, so it will be (at best) 4, 6, ?? years before we have a chance (only a chance) of replacing them and obtaining some Hope for Change.
Meanwhile, the rudderless ship of the US Economy drifts from one crisis to another — health care, social security, entrenched unemployment and increasing poverty. I don’t think the USofA can survive unless we either intentionally or accidentally take door #1.
August 26th, 2009 at 9:34 pm
Why I do not see the video box to play it ?
Any suggestion.