Back from vacation
Nice of me to start a blog and then go on vacation. After a wonderful time away, I have no further apologies!
The capital markets are always full of interesting stuff; today is no different. Stocks have been improving and have caused me to think about scaling back into positions towards a more fully invested profile. Currently we are over 75% in cash & equivalents and up nicely on the year for most long portfolios. The trouble I encounter each time I seriously start to build the buy list is the lack of oomph in stocks. Weakness seems to be punished more than strength and volume is light. However, the advance decline line has improved and is moving higher. If the crowd is thin due to the usual August holiday schedules then what will happen when "they" return?
Perhaps another piece of the puzzle has been put into place: yields are down sharply on the Ten and Five year Treasuries. It was confusing that the market was correcting in May and June and yields were still rising. Now yields have crumbled: ten year 5.24% 5 weeks ago, 4.90% today; 5.26% on the five year, 4.83% today. Credit markets are saying (in a loud voice) that the Fed is done and the economy has weakened. But it is no less confusing as stocks were suggesting good things at the same time. Could be that stocks fell anticipating the weakness that bonds have finally woken up to. Could be that stocks are now looking much further ahead to when the economy rights itself from the malaise that the May-June selloff suggested and that the inverted yield curve has been telling about for months. Finally, after a nice rally this morning that suggested the stock market has this concept under control, prices reversed and are now near the day's lows. Once again volume is light, and the advance decline is almost even on the day, maintaining the murkiness.
It never works to wait till all the lights are green to start investing. The best opportunity to make money exists when questions abound. However, something still feels wrong so we continue to wait.
Resolution - likely add 15% to the stock exposure in the coming week based upon our "Disciplined Approach". If we were wrong to add exposure, we will get stopped out or our stocks will hold up better than most. If we should have been more invested, then we will have greater participation as we play catchup.
Next Blog - large cap vs small cap, what is happening and why.
For more information on our approach, visit our website: www.GellerCapital.com.
The capital markets are always full of interesting stuff; today is no different. Stocks have been improving and have caused me to think about scaling back into positions towards a more fully invested profile. Currently we are over 75% in cash & equivalents and up nicely on the year for most long portfolios. The trouble I encounter each time I seriously start to build the buy list is the lack of oomph in stocks. Weakness seems to be punished more than strength and volume is light. However, the advance decline line has improved and is moving higher. If the crowd is thin due to the usual August holiday schedules then what will happen when "they" return?
Perhaps another piece of the puzzle has been put into place: yields are down sharply on the Ten and Five year Treasuries. It was confusing that the market was correcting in May and June and yields were still rising. Now yields have crumbled: ten year 5.24% 5 weeks ago, 4.90% today; 5.26% on the five year, 4.83% today. Credit markets are saying (in a loud voice) that the Fed is done and the economy has weakened. But it is no less confusing as stocks were suggesting good things at the same time. Could be that stocks fell anticipating the weakness that bonds have finally woken up to. Could be that stocks are now looking much further ahead to when the economy rights itself from the malaise that the May-June selloff suggested and that the inverted yield curve has been telling about for months. Finally, after a nice rally this morning that suggested the stock market has this concept under control, prices reversed and are now near the day's lows. Once again volume is light, and the advance decline is almost even on the day, maintaining the murkiness.
It never works to wait till all the lights are green to start investing. The best opportunity to make money exists when questions abound. However, something still feels wrong so we continue to wait.
Resolution - likely add 15% to the stock exposure in the coming week based upon our "Disciplined Approach". If we were wrong to add exposure, we will get stopped out or our stocks will hold up better than most. If we should have been more invested, then we will have greater participation as we play catchup.
Next Blog - large cap vs small cap, what is happening and why.
For more information on our approach, visit our website: www.GellerCapital.com.
posted by David Geller at 1:26 PM
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