Media Appearance: The Kudlow Report (4/28/11)
By Barry Ritholtz - April 28th, 2011, 6:00PM
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Back on the Kudlow Report at 7:00 pm this evening with Vince Farrell. We will be discussing Markets, the Fed, and Inflation.
My takeaway:
• We are not bullish, but opportunistic — these are trades (less than 1 year holds)
• We are now 90% long, 10% cash
• Over the past few weeks, we have added, BA, VRTX, HSY, CBOE, VTI (Vanguard Total Stock Market)
• There is a 25% correction coming, but we don’t see any evidence it is imminent . . .
We are looking to add more trades opportunistically, we are now 90/10 long cash, with no shorts (which feels dangerous to me emotionally)
~~~
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April 28th, 2011 at 7:32 pm
…risk on, eh?
hmmm…
…you should feel those emotions
April 28th, 2011 at 8:38 pm
What are your thoughts about hedging with DIA puts? With the VIX at 3/4 year lows, you can get protection out to late September for about 4%. I have a feeling we’ll drop off by then.
April 28th, 2011 at 9:52 pm
…does FusionIQ hedge?…with options?…not last time, maybe next time…
April 28th, 2011 at 9:59 pm
A 25% correction coming…May 2010, may just play out in June 2011
The next big trade
http://www.readtheticker.com/Pages/Blog1.aspx?65tf=192_this-is-the-contrarian-investors-next-big-winner-2011-04
SP500
http://www.readtheticker.com/Pages/Blog1.aspx?65tf=190_this-sp500-chart-is-not-pretty-2011-04
All cycles are toppy
http://www.readtheticker.com/Pages/Blog1.aspx?65tf=180_cycle-review-dont-tell-the-retail-investor-but-2011-04
April 28th, 2011 at 11:19 pm
BR, it looks like you guys are playing the S&P cup/handle break up that targets about 1430 SPX.
There’s still some congestion at around 1380 SPX, and the market is short term overbought. Typically when we see breadth like yesterday when 5-day highs on the S&P 100 are 69-2 we go sideways and consolidate prior to taking the next leap forward.
Also, remember QE2 is around 95% finished now. There was about almost a month lag in the end of QE1 before the market slid back and corrected, so that still looks like we could have warning signs flashing in the end of May or early June.
Obviously the 3rd year Presidential cycle is part of the reason for the long as well. Furthermore, QE1.5 will still have about 9-17 Billion in liquidity per month even after QE2 finishes, down 80-90% from the start of QE2.
April 28th, 2011 at 11:52 pm
Off topic but a CNBC related question, at least: Before Miss Burnett takes her seat at the news desk, will CNN require her to check her tea bags at the door?
April 29th, 2011 at 12:16 am
I’m new to investing, almost all of my investments are in mutual funds in Ira, 401ks, etc.. I could have sworn that this time last year up to end of last year BR was saying that they were mostly cash, but now only 10% and the rest long. Since then the markets are up like 10-20 %, wouldn’t now or in the next couple months be the time to go to cash. I have been following BP now for a little over a year gaining some knowledge as I go but my comfort level to invest in individual stocks, much less commodities, or other alternative invesments is low, not to mention not sure how to do it yet. But just reading about Qe2 ending, high unemployment, gas prices, real estate woes, state budget issues, inflation, and stocks on a roll now for over 2 years, it just makes me wonder when the bottom is going to drop again. This 25% correction that is imminent, that could be next month or two years, I don’t see a ton of positives. Even corporate earnings still seem to reflect cost cutting and only modest revenue growth.
~~~
BR: We have been 100% cash and/or 100% invested at various times the past 12 months. We are not Buy & Hold investors, but tend to be more tactical as conditions warrant
April 29th, 2011 at 5:23 am
I don’t see where the inflows are coming from except from people like you who are looking for
short term movements or who believe the Fed is providing a floor to stock pries. Feels like a suckers
rally to me more and more.
~~~
BR: There are little inflows, and less in terms of sales.
But its also been called a “sucker’s rally” for a 103% off the lows
April 29th, 2011 at 6:29 am
ugnaut – “I’m new to investing . . . ” This isn’t “investing” this is trading, sort of like what people do at flea markets . . one could call it trying to game the system except it is the system.
April 29th, 2011 at 8:32 am
BR reported:
We are now 90% long, 10% cash
reply:
———-
Thank you for your support. I’m still at about 85%. Even David Rosenberg has capitulated. Is this a cause to be cheerful or time to start marking the calendar to see how many days of animal spirits are left?
How many more fence sitters are noticing the sweet smell of rising equity markets? Free money. Right Here. You snooze you lose. Get in now or be left behind. I wonder how many chicken shit pussy hedge funds are still waiting for the sky to fall? I think we all heard BB state, in code, the party is still on and he has your back.
Me, I’m still sticking to plan but unequivocal optimism from the cash on the sidelines is overdue. You can’t win if you don’t play.
Wasn’t that a beautiful wedding. I think I’m going to eat and drink too much today to share the joy.
April 29th, 2011 at 10:45 am
Someone said, “where are the inflows going to come from”.
This is funny. There is massive cash on sidelines. It is earning somewhere between 10bps in Tbills and 30 bps in CP/LIBOR. It is enduring pain due to its low risk position. This will get more and more painful at 1400, 1600, 1800 on SPX (as companies pay 2% divs, raise divs, increase cashflows, etc).
Gradually that money will come out of hiding and take risk. Gradually people will start borrowing to take risk (private sector monetary expansion).
Second source of buying is because jobs pay money every 2 weeks. Personal balance sheets are in good shape and bond funds at 1-2% are also painful. Every 2-weeks deposits are made to 401ks. Houses are very cheap and this will drive better and better liquid investment portfolios for US private citizens. Fidelity 401k balances hit new all time highs some 9 months ago… and logically simply continue to grow.
Jobs are also increasing. See payrolls. Unemployment is down about 1.5% from peak. Another 1.5% and it will clearly be recovery. Who wont be buying then? Do you want to be early or late?
April 29th, 2011 at 11:51 am
How often do 20-25% corrections occur?
April 29th, 2011 at 2:12 pm
So THAT’S who’s been buying. I knew somebody would have to fess up eventually.
May 4th, 2011 at 7:15 am
[...] we are nearly fully invested (like we are now), my cognitive biases become acutely aware of all the things that could go wrong. (When we are [...]