Friday, March 04, 2005


From what I can gather, Bill Cara is a smart, experienced and successful market trader. I have had his site book-marked for a couple of weeks and try to read it daily. The following is a copy of a post he made today.

Flashing across the TV screen is the CNBC message: "Breaking News". On screen, there is Maria Bartiromo, just beside herself in excitement with Dow 10,950. And, I'm surprised Dylan Ratigan is going along with the skit.

Ladies and gentlemen, you are being subjected to the same hype job as the CNBC crew went through in late 1999 and early 2000, right at the top of the last equity market cycle, just prior to the bursting of the Internet bubble. They didn't get it then, and they're not getting it now.

What they'll call this one is anybody's guess. One thing I do know is that this is all about greed, plus a little too much cash in the system sitting atop inflated expectations, put there by you know whom.

These histrionics are too much for words. New York doesn't need a theater district when it has Ft. Lee across the Hudson.

CNBC people ought to be licensed, so the lawsuits could begin in a couple months. And anybody on the buy-side who really is following their lead ought to be committed.

That's my take on it anyway.

Clearly, Bill and I disagree about the current market. Maybe we are both partially right. I believe the next big top is still a few years away. I am hopeful that today's action was the start of a break-out. I do not need huge numbers to be happy but I am quite optimistic for the earnings outlook. Not like the last two years but at least the same direction. The streets numbers are too low. Seven percent growth in this economy; no way. Probably double that or let me have a little wiggle room at 12 to 15% on the S&P 500.

Obviously, if one needs 12 to 15% to be happy, it does not have to happen in March. Bill is probably right. The talking heads have boring jobs and have to get excited about something and everything. This sideways market has worn out a number of traders and announcers alike.

On the other hand, the history is that some of the best stock market moves ever have started in years when earnings slowed after one or two great years. Perhaps the most positive news of all today was the response of the US Dollar to the numbers.

Yep, down again. There has been a lot of talk about a real estate bubble. It is not here yet! It may still be a couple of years to the top. The resumption of the fall in the dollar may lead to the real bubble. This time it will not be the Japanese purchase of Pebble Beach that marks the top. I read a statistic somewhere last night and failed to write it down. Correct me if you know the number, but I believe 36% of all homes sold last quarter were second homes!

A friend of mine just made $184,000 on a pre-construction deal on which he never took title! The next many months the stock market should go along for the ride while investors buy and flip or buy and hold second homes. If the template holds, the stock market will peak a year or two after the real estate market peak.