I’ve followed money manager and financial commentator Doug Kass for quite a while. He’s plenty smart, savvy, and often takes gutsy moves in advance of the herd (like when he shorted Berkshire Hathaway early last year).
Kass predicted the current decline long before most mainstream media did. He now says the stock market will bottom out this week.
Why? because the federal bailout will work and because sentiment is so overwhelmingly negative.
The investment pyramid consists of the three angles of fundamentals, sentiment and valuation. I made this market bottom call based on my expectation of an early 2010 stabilization in the economy (making the 27-month recession the second-longest in history) coupled with an extreme sentiment and valuation swing.
He shorted Berkshire Hathaway (BRK-A) when it was about $130,000 a share (that’s not a misprint) and people mocked him for doing so. He cashed out about $90,000 a share. That’s what I mean by gutsy. And he was right. So, while I think his bottom call may be early, discount it at your peril.
Besides, I certainly hope he’s right. And for being irrationally exuberant in the face of mounting doom and gloom, he gets the Polizeros Perkypants Award of the Day.
(“Perkypants” is what Sue christened me as after one of my unwarranted outbursts of optimism…)
If you want a second opinion, ask Jim Cramer. Whatever he says, it’s the opposite. Kinda like the financial version of the groundhog or Dan Marino.
Doug has been a bull for quite a while now. Take his call to buy WFC in the 30’s, BAC in the upper 20’s, and another bank that might have been Citi. He cited Dick Bouve as one of his reasons. I wrote him and said that you should disclose Dick’s call to buy C at 60 with a target of 65. That was back in December 2005 or 6… Doug might be right, he’s no dummy, but so might a coin toss…
Freudian Slip
If I were bullish on the markets, which I am not, and trying to convince others to that increasingly dubious position, I would rigorously avoid using “pyramid” and “investment” in the same sentence. In fact, I would banish “pyramid” from my vocabulary, probably for the next 10-20 years.
Unfortunately for all of us, bulls and bears alike, words of ill omen are easier to banish than ominous reality.
Hmmm…
He seemed to have been cut-off on the CNBC “Fastmoney” show today and I wanted to be clear about his position…
I’ve been building short…maybe I’ll get run over and find myself talking to myself somewhere downtown…
I’m not sold…we’ll see how it plays…lots of debt next week to move…
I’m looking for Obama to pull one of his “Crazy-Ivine” bashing moves again soon to pull the rug out once more…
I agree all of this is a coin flip…squirrel’s and nuts…
Citing the stimulus package as a reason for a market bottom seems wildly absurd to me. The stimulus package, housing rebates, cash for clunker deals, etc are nothing more than upward blips on the radar in most econometrics. The Greek default and further neighboring analysis has shown the EURO to be highly unstable. China’s currency is now rising with the American Dollar’s rise and their market is tanking. This could be a good time for Chinese small caps if one was to actually be bullish. I use MicroCapReports for international small cap research or Finviz if your brokerage doesn’t solicit anything.