We totally concur. We have learned that when we feel really happy about our profits in a position, we just have to sell. Whenever we don’t listen to this emotion of ours, we have ALWAYS lost our profits. As Denise Shull said. this is very hard to do. Heck, we did not listen to this emotion this Tuesday afternoon and paid very dearly for it on Wednesday. So we completely concur with the concept of using your emotions as data for your investing. In fact, we think your emotions are your best and most reliable indicator. Read what Shull said:
Editor’s Note: In this series of articles, we include important or interesting videoclips with brief comments. Our Web Software does not permit embedding of the clips into our articles. So we shall have to be content to include the links to the actual videoclips. We are very happy with the tremendous response from readers to this series of articles. We thank them sincerely and profusely.
This is an article that expresses our personal opinions about comments made on Television and in Print. It is NOT intended to provide any investment advice of any type whatsoever. No one should base any investing decisions or conclusions based on anything written in or inferred from this article. Investing is a serious matter and all investment decisions should only be taken after a detailed discussion with your investment advisor and should be subject to your objectives, suitability requirements and risk tolerances.
What a week it was in financial markets! In the USA, this was the best week since March and the Emerging Markets celebrated to even a greater extent. We have to credit the smart and famous financial analyst Meredith Whitney for the launch. On early Monday morning, the S&P 500 was sitting precariously on its support line near 870, the consensus was heavily bearish and most of the fast money was heavily short. The tinder had been gathered, the fire was ready. It needed a match and Meredith Whitney provided it
Meredith Whitney upgraded her rating for Goldman Sachs and raised her estimates for Q2 earnings that were due the next morning. She also made very positive short term comments about Bank of America and other banks stating that it would be the mother of mortgage quarters. This lit the fuse and the market exploded. After all, the bear market of 2007-2008 was created by the massive problems in the financial sector. When Meredith Whitney, the most bearish and most accurate analyst on this sector, went bullish, market worries were dissolved and fireworks began.
The second big worry about the markets was the sustainability of growth in China. As we have said often, belief in secular long term growth in China is the religion of this faith-based market rally. On Wednesday, China announced that its foreign exchange reserves had exceeded $2 trillion for the first time. All doubts were resolved, faith was restored and the second stage of the market rocket was launched.
The other great bear on the economy has been Nouriel Roubini. On Thursday afternoon, a story crossed the tape quoting Roubini as stating that the recession was over. That was the third stage of the market rocket and the S&P 500 went to its orbit near the earlier high of 946. The fact that Roubini claimed later to have been sort of misquoted did not matter much.
You have to expect our friends at CNBC to become giddy and they did on Wednesday. The Fast Money Editorial Producer, John Malloy, posted an article making China’s premier Wen Jiabao the MVP of this market rally. This time, we will not begrudge Fast Money, their mandatory worship of their religious icon. In the same article, John Malloy quoted Fast Money Trader Tim Seymour as saying that the FXI, Chinese ETF, was getting toppy and that a better way to play China was to buy Nokia. This shows that religious faith should be directed towards the original icon and not towards substitutes. FXI rallied the next 2 days but Nokia was crushed after posting disappointing earnings.
We also expected our CNBC Anchor friends to sound trumpets for the march of inflation and shorting treasuries. Surprisingly, they did not as a group. Except of course, Sue Herrera and Erin Burnett, the leaders of the anti treasury jihad. On the China day of Wednesday July 15, Sue Herrera warned of “rampant inflation down the line” and suggested buying commodities and Erin Burnett said that many large investors had “the belief that uncontrollable inflation was on the way”. Guess these two anchors do not read CFTC position statistics which showed that large speculators had covered their shorts in Treasuries during the previous week’s rally. Naturally after large speculators covered their shorts, the Treasury market sold off. How do you become a small speculator? You begin as a large speculator first and then buy high, sell low.
Finally this past week was notable for two anniversaries – the 50th anniversary of Rio Bravo, the John Wayne – Dean Martin classic and the 40th anniversary of Butch Cassidy and the Sundance Kid, the Paul Newman – Robert Redford classic. Rio Bravo was a very successful film and the success of Rio Bravo prompted them to make El Dorado, the greatest western of them all, in our opinion. The story is classic, the dialog is superbly witty and the roles of John Wayne, Robert Mitchum are great with that of young James Caan as “Alan Badelian Turhern” or simply as “Mississippi”. As we said, this is the best western ever made.
This week, we feature the following videoclips:
1. Three-part Interview with Meredith Whitney on Squawk Box – Monday July 13
The pole position of the week clearly goes to the Meredith Whitney interviews. You can see the three clips at:
Meredith Whitney explains why is raising her earnings numbers on Goldman Sachs to a level much higher than the street consensus. She also explains why she is short term bullish on banks including Bank of America. The market responded as soon as she made her comments. You had plenty of time after the market opened on Monday to buy Goldman Stock in mid-140s and sell it in mid-150s merely a couple of days later. What a call!
While Meredith Whitney and Squawk Box made people money, the Fast Money Trader crowd lost people profits. As a bloc, these Fast Money Traders advised viewers to sell Goldman stock immediately after the release of earnings on Tuesday. Bad call. This call is not merely worthy of Fast Fire but Fast Purgatory.
2. Housing Troubles and Bubbles – Robert Shiller with Becky Quick – Wednesday, July 15 – 7:32 am
Robert Shiller, Yale Professor and the co-creator of the Case-Shiller Home Price Index, has been prescient on the US Housing market. If you believe as we do, the key to the US economy is housing, you must watch this clip. Some excerpts are below:
Are you listening Sue Herrera and Erin Burnett with your rampant, uncontrollable inflation talk? But, we forget, CNBC Anchors do not watch CNBC. They should. It is not a bad network and they get bright minds like Robert Shiller.
Mr. Shiller also talks about his deep concerns about income inequality in America. As we said, watch this clip.
3. Is the Rally for Real? Gary Shilling & Bob Doll with Larry Kudlow – Thursday, July 16 – 7:45 pm
These are two market stalwarts. Bob Doll worked at Merrill Lynch for many years and came over to BlackRock in the BlackRock-Merrill transaction. Gary Shilling of A. Gary Shilling & Co. is a proven investor. He has been prescient on the US Economy and US Bond market for the past few years. These two experts offer different outlooks and prescriptions.
Watch this clip.
We learned about Gary Shilling by watching Larry Kudlow’s show. For that Larry, we owe you.
4. Trader Talk – Art Cashin and Peter Costa with Maria Bartiromo
Art Cashin is a respected and loved figure on the NYSE. He always comes up with a memorable quote as well as a unique way of looking at the market. He exceeded himself in this clip.
When we were much younger and much more sure of ourselves, we had disdain for the ancient Indian science of “Jyoti-Shastra” or a study of astronomical phenomena. Our Patrika (predictive horoscope) was written when we were 2 years old. When we read it today, we are amazed at how many predictions in our Patrika have come true. The Pandit never met us and he wrote what he thought based on his science decades ago. We have read and heard famous Wall Street Strategists but their batting average pales in comparison to the track record of our Patrika.
So, we are more amenable to listen to Art Cashin.
5. Jing Ulrich,chairman of China Equities at JP Morgan on Power Lunch – Tuesday, July 14 – 1:14 pm
This clip is a clear enunciation of the China faith from an bullish expert. The clip is informative and covers the growth in China and the potential trade problems between USA and China. What caught our attention is the difference in reaction of the 3 CNBC people – Sue Herrera, Michelle Caruso Cabrera and Ron Insana.
Nice and gentle Sue Herrera listened in rapt adoration as she does whenever her guests talk bullishly about equities while Michelle Caruso Cabrera waited like a cougar to pounce with a sharp question:
Remarkable in an understatement. Also remarkable is that Sue Herrera could not think of a single real question like her colleagues. But of course, she worries about “rampant inflation” in America down the line.
6. Jordan Kotick of Barclays Capital with Maria Bartiromo – Wednesday July 15 – 3:50 pm
It seems every week we feature a clip by Jordan Kotick. But then, he has had a hot hand and Chuck Daily taught us to keep running the play until they learn to stop it.
This interview was near the close of the second huge up day in the markets this week. His comments in brief:
We concur.
7. A Psychological Approach to Trading – Denise Shull, Founder & President of Trading Psyches with Erin Burnett & Mark Haines – Wednesday July 15 – 10:50 am
This is a very important clip and is a must watch for every investor, especially for every individual investor. Ms. Shull describes her work which is based on psychology and her understanding of Neuroscience. Her three key points are:
Again, we totally concur. The fear and the shame being left behind as markets fly upwards leads individual investors to never sell near the highs but actually buy the markets near the top. They do not sell because they are convinced that as soon as they do, the markets will go up. They buy at the top because they feel if they do not, they will miss a wonderful opportunity.
Enough of serious talk. After the above serious discussion with Denise Shull, the lovely chemistry between Erin and Mark took over. The conversation went towards whether men are less in touch with their emotions than women and accusations of sexist crap flew between Mark and Erin. It was good entertainment.
In that vein, we shall revisit the topic of the Haines bottom that we discussed seriously last week*.
This was fun banter and in this spirit, let us share a comment of Erin Burnett that made us wonder. During this show, CNBC ran promos of their new documentary Porn; Business Of Pleasure. One promo showed a woman gyrating her bottom on stage like she was in one of those videos on www.watchmygf.sex. Erin Burnett looked at that clip and remarked “That woman’s got nothing on the Haines bottom”.
Hmmm! Is that jealousy? Or is that loyalty to her partner? We tried to locate this promo on the CNBC website to show you but could not find it. If you saw this promo, you would wonder about Burnett’s comment as we did.
8. U.S. Biz Betting On India – Erin Burnett – Monday July 13 – 2:28 pm
Erin Burnett talks about the article in the Washington Post about the new Walmart store in Amritsar, India. She also discusses the potential for US business in India. We encourage all readers to view this clip.
9. Not Just Any Port in the States – Chiefs of Long Beach, Houston and Boston Ports with Erin Burnett – Tuesday July 14 – 2:00 pm
This was a novel attempt to get a read on the US economy by examining the traffic at America’s three leading ports. We encourage readers to watch this clip. What caught our ear is the following comment by Jim Edmonds, Port of Houston chairman.
This is the unsung story about America’s economy. In addition to being the most developed economy on earth, America is one of the youngest societies in the world, a world in which China, Japan, Europe, Russia are all aging rapidly. We believe that demography shapes economy and so this augurs well for the American economy.
* See clip 5 in our article Intersting Videoclips of the Week (July 5 – July 11)
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Interesting Videoclips of the Week (July 12 – July 18)
