I just got back from Tampa and Orlando, and while I did not post any comments for a few days, I do have some interesting observations.
1) DESPITE THE RECENT ACTION IN THE STOCK MARKET, THE ECONOMY IS SLOWING:
After catching the Yankees and Cardinals in Tampa on Tuesday, we drove to Orlando to watch the Braves and the Dodgers. Wednesday morning, I woke up to a headline in the Orlando paper talking about the light crowd for spring break this year. And the reason? The hotel and condo prices have scared students and many families away. This does not bode well for the Real Estate market.
When I viewed the latest Real Estate listings in Orlando, I was shocked to see homes listed, and advertised as "interest only" mortgages. A few other listings had rebates for customers purchasing homes. I had to do a double-take, I wasn't sure if they were trying to sell a home or a car. As I drove through Orlando on I-4, one guy went to a sign company and purchased a car magnet advertsing the sale of his condo. This real estate market is in trouble.
I had planned to return on Thursday, and I was sure there was no way I would be able to secure a hotel for Thursday and Friday. I was wrong. I not only secured a hotel, but was able to stay in my current hotel and keep the same room. For those familiar with hotel availability during spring break, you know this is no easy task.
2) GASOLINE PRICES JUMPED .20-.30 SOMETIME BETWEEN MONDAY AND FRIDAY:
I was shocked when I went to fill up my rental car and saw that regular unleaded was $2.63. On Monday, just before I left I filled up at $2.21. This is insane (But good for our portfolios).
Gas prices are still fluctuating like the internet stocks of 1999. Oh, and the timing couldn't be more obvious. Its amazing how manipulated we are.
3) MORE MIS-INFORMATION FROM THE TAKING HEADS:
I heard some more spin from guests on the financial channels pertaining to the "low" unemployment rate. One guy said that despite the current debate over outsourcing, unemployment was near a record low. This is a very misleading statement.
As I have said before, the unemployment numbers do not count jobs lost from outsourcing in their reporting. So, if companies replace 2 million U.S. workers with 2 million Asians, the 2 million that lost their jobs are not counted as unemployed.
Here is a viewer question:
QUESTION
john, i find your comments invaluable. Thank you and enjoy your break. The volatility of these markets is tiring.
Regarding your post expecting that the March /April correction is not the "big one": could you elaborate? is that a technical view or a feeling that the higher interest rate scenario will take longer to play out and impact on underlying confidence ? I have positioned for a correction since the start of this year, but all i can say is that a "big one is overdue. I am interested in your more precise outlook.
No one likes to wait, and this includes me. The most important lesson that I learned, I learned from the famous Investment Biker, Jim Rogers. Jim once told me that the biggest mistake investors make is they always feel like they have to be doing something. Nothing could be truer.
Sitting and waiting is not easy. Either is getting creamed when the investment bankers get together and pull the plug all at once.
My forecasts come from several sources that incorporate technical analysis, and fundamental analysis. None of this is an exact science, so we need to incorporate a healthy dose of comments sense into the mix as well.
On the common sense side, we do not need to be told that there is no inflation; you and I experience it every day. Add to the mix that insider selling is outpacing insider buying by 3-1, and sometimes 4-1, and you'll see that the worlds smartest investors (corporate insiders) are selling stocks in mass.
I am expecting 11,500 or higher on the DOW before the real sell-off begins. I think the summer and fall will bring the peak selling pressure, and we will probably go below 9000 to the 8500 level.
Here is a good website to follow also; Marc Faber is a regular on the Barron's Roundtable.
As for being in or out of the market, we still have a 50% invested position, albeit concentrated. I just can't get real excited about owning anything more than we already have.
I will have more on Monday. Have a good weekend.
Comments (1)
John, when you post " unemployment numbers do not count jobs lost from outsourcing in their reporting. So, if companies replace 2 million U.S. workers with 2 million Asians, the 2 million that lost their jobs are not counted as unemployed."
Is there a reference to this methodology? I'd be interested in seeing where this info comes from.
Thanks
Mr Solo
Posted by Mr.Solo | March 20, 2006 2:22 AM
Posted on March 20, 2006 02:22