Scorecard for Stock Markets, Economy & Financial Press

This quote is from my new book (available in bookstores but might have to order it, or you can get it online at Amazon):
“The stock market will begin rising even before the economy has reached the bottom. I’ve mentioned a few signals in previous chapters that will get an investment maverick’s senses tingling. When the general mood of investors as reflected in the press or analyst reports is doom and gloom, but the stock market seems to be going up, then change for the better is afoot.” (A Maverick Investor’s Guidebook by Mal Spooner, copywrite 2011, Insonmiac Press.)

I’m a bit of a fan of Simon Avery’s column in the Globe & Mail (At the Bell). He says this morning:
“Anyone who blinked missed the buying opportunity brought on by the cavalcade of global crises this month.”
If you read my past postings (below the election rant) you’ll find that I didn’t blink – but it isn’t latent genius that inspired me to raise cash prior to the correction, and then deploy it after the Tsunami. It’s just common sense. In my book I discuss the reality – market ‘experts’ have an uncanny ability to predict what just happened. David Rosenberg (in same Avery column) is quoted as saying “Perhaps a bit of a reality check is in order when the ratio of economic surprises to the downside exceed those to the upside by a factor of four in the span of a month at a time when the major averages go bck to retest the highs.” he wrote in his Friday note to clients.”

Read the book and you’ll discover that it’s “because” the economic “good” surprises are spotty at best, and there’s plenty of uncertainty that the market was and is trending higher, and still has room to go – but it will be a rocky ride nonetheless (as always).

I suggested in the “Telecom Yes…” posting below that new sectors are benefitting, but nobody seems to care. This is from Canaccord’s Morning Coffee note:

Micron Technology (MU) boosted tech stocks after the maker of
computer memory chips reported better-than-expected second-quarter
results. Red Hat (RHT) also rallied after the software company reported
fourth-quarter revenue that beat forecasts. Video game retailer GameStop
(GME) said its fiscal fourth-quarter earnings rose 10% on rising revenue,
driven by new e-commerce and digital offerings.

The sell off was the beginnings of a shift in market leadership away from energy, golds and other early cycle plays.  The market average is just that – an “average.”  If those falling out of favour carry more weight than those coming into favour (sectors) then the average is down….at least until new leadership is weighty in the index and firmly on the uptrend at which point the average will also trend up.  It’s just arithmetic.

Invest to Live, Live to Ride

About Mal Spooner

Malvin Spooner is a veteran money manager, former CEO of award-winning investment fund management boutique he founded. He authored A Maverick Investor's Guidebook which blends his experience touring across the heartland in the United States with valuable investing tips and stories. He has been quoted and published for many years in business journals, newspapers and has been featured on many television programs over his career. An avid motorcycle enthusiast, and known across Canada as a part-time musician performing rock ‘n’ roll for charity, Mal is known for his candour and non-traditional (‘maverick’) thinking when discussing financial markets. His previous book published by Insomniac Press — Resources Rock: How to Invest in the Next Global Boom in Natural Resources which he authored with Pamela Clark — predicted the resources boom back in early 2004.
This entry was posted in Random Thoughts and tagged , , , , , , , , , , , , , , , , , , , , , , , , , , , . Bookmark the permalink.

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s