I'm having an exceedingly difficult time finding value here. Many of the stocks that came up on a value-fundamental screen just last July have doubled or even tripled. A 200% to 300% run in a matter of 9 months is pretty significant, and I'm just wondering what it reflects in terms of prognostication based on historical data.
In the morning, Ye Jinyong works as a part-time cook at a government office in Shanghai. In the afternoon, the 57-year-old goes to his broker's office to "stir fry" stocks -- one of a legion of small-time investors lured by the country's stock market boom. "I don't make a lot of money from my work. I'm trying to supplement my income," Ye, wearing a white chef uniform, said in an interview at the kitchen where he works. The value of his holdings, he added, has doubled since early last year. To many economists, analysts and investors, however, Ye's fervour could be a sign of trouble. "When the bubble bursts, there are serious social consequences," Andy Xie, an independent economist formerly with Morgan Stanley, wrote in the South China Morning Post this week. He said companies were abandoning their core businesses and some retail investors were even mortgaging their apartments to raise money to buy stocks. While authorities so far are refraining from heavy-handed tactics like those used to deflate a speculative bubble in the 1990s, fund houses and other worried institutions are tightening their grip on trading practices and information exchanges. Investors, undeterred, are finding ways around them. Securities regulators are warning fund managers not to trade stocks for their own account, which is banned in China, after media reports that a veteran fund manager was being investigated on suspicion of violating the rule, industry sources said. Sources at several fund houses said their firms had begun monitoring internal e-mails, instant messages and phone calls over the past week, in some cases by installing new software. "Staff are not allowed to talk about information on individual stocks or listed companies or you will be punished seriously," said an internal e-mail distributed last week by a fund company to all of its staff. STOCK CODES IN DISGUISE One industry executive said some fund managers were now disguising stock codes by using "800" instead of "600" or "000" -- the first three digits of stock codes of all China A shares -- when sharing stock tips via instant messaging, to avoid being tracked by computers. Their zeal is not hard to understand. China's A-share market has tripled in value since the start of 2006, bolstered by structural reforms and the listing of large, relatively well-run state companies, as well as rapid growth in China's fund sector. The surge is drawing hundreds of thousands of investors to the market every day, from college students to pensioners, who are keen to "stir-fry" stock -- Chinese slang for speculation. More than one-10th of China's 90 million-plus stock accounts were opened this year, compared with just 5.2 million opened in all of 2006, while turnover in Shanghai's A shares hit a record 202.7 billion yuan on Tuesday, 10 times the year-ago level. Many fund managers, analysts and economists are worried by the pace of the rises -- chiefly led by shares of small firms with poor earnings records, as was a rally in the late 1990s. China's A shares are trading at an average of more than 40 times their 2006 earnings, compared with around 14 times for Hong Kong's benchmark Hang Seng Index. The Communist Party has kept largely silent on the bull run -- which is also fuelled by ample fund supplies from China's massive trade surplus -- and a string of hikes in interest rates and bank reserve requirements have failed to cool the market. Talk of another rate hike knocked stock prices down sharply last Thursday, but they have since recovered all their losses. Shanghai's main index climbed 0.63 percent on Wednesday. Some analysts said Beijing was trying to avoid using administrative measures to intervene, as it needs a relatively strong market to absorb a flood of large stock issues this year. But even the ordinary citizens piling into the market are starting to worry. "The bubble is too big now. Nearly every stock has skyrocketed. Only a fool would put money into stocks now," said a 73-year-old man, who gave his surname as Wu, at a Shanghai stock trading hall packed mainly with pensioners. (Reuters)
I agree, this is very very odd. EVERYTHING now trades in a fairly tight range, it's going up, or it's going down, there's no intraday UP and DOWN and UP and DOWN as there used to be. Has a very 'artificial' feeling to it doesn't it? In either case, I don't agree that this is the most bullish sentiment since 1999. I do not see 'mass' retail participation. I do not see EVERYONE hopping the bandwagon. This whole week, even here, BuyLo and others were posting article after article about black swans and crashes and recessions and scary graphs. Another thing, NASDAQ peaked at OVER 5000... and how close are we to that? After nearly 8 YEARS, how close are we to the 'top'? Not very. In the meantime, the dollar is worth less and less. In today's dollars, even the DOW doesn't look so great. Yes, we've had a bull run for 4 years, but it's been a pretty pathetic run if you ask me. In value adjusted dollars, we barely had a bull at all, we've traded sideways for the last 4 years. People are flipping out that AMZN did that $12 run today... in 1999, 1/4 of the stocks in the NASDAQ did that, regularly. And 2 days later, they lost the $10 again. No one bat an eye. The fact that people were so astonished at this piddly event just goes to show what a shitty bull market this has really been. Further, last time, in 1999, the DOW was the red-headed stepchild. Warren Buffet was nearly a laughingstock, with articles daily about how he was getting ready to fold Berkshire because its performance completely missed the boat (NASDAQ boat). Everyone trading in 1999 remembers the humiliation he suffered, almost daily. He got the last laugh, but it was a while coming, and I'll bet he never forgot the drubbing. Does this mean NASDAQ will make a run for 5000 seriously? I thought so 4 months ago, and I've made a lot of $$ with that thinking. But now, I'm not so sure either, and prefer to take it one day at a time, because the 'irrational exuberance' last time cost me more money than... oh god, you don't even wanna know how much money, and I don't want to remember either. I think the biggest difference between this time and last time may be that everyone who traded through 2000 will be ready to snatch the marbles off the table in 2 keystrokes. So when the fall comes, it will be swift and unrecoverable. But BECAUSE of that possibility, you have to make every bit you can during the good times, because if you make say 50% total, if the fall is 50%, you are even. If you do the 1/2 assed approach, and say only gain 10%, you lose 40% of your capital. How dumb is that?
ladies and gentleman, there is no way we are going to see a 15,000 run on the dow through peak driving season & potential oil demand shocks. this is simply smoke & mirrors where hedge funds are marking the close on end-of-quarter. look at the chart.. last april.. then the following month.. last may. get real. buy the rumor sell the news. make money like the heavy weights who are 98% contrarian live or die. trade in or trade out.
Who the hell is left to buy.....find more fools to distribute to and we can go higher.....but the bottom line when the boat is full and everyone is standing on one side...than we is big trouble. This upthrust after distribution in Fed is classic and gives the smart money time to sell and make a boat load when last sucker has moved in. Look at March of 2000 on that massive down day, V bottom and where we went two months later than they pulled the plug on the market and left the last retail fools buying the high. I am not MIT material and a simpleton in this game. But the smart money is selling and waiting for the reversion to the mean. Lets see where we are this summer. keep the gun powder dry>>>>.you can make a ton on this trade when the fire alarms sounds.........trade well and dance next to the door when late to the party.
I am making my bets now and I'm sticking with it. I'm out. I detest this quick ramp up since last July on deteriorating U.S. fundamentals, and ff it costs me opportunity lost, so be it. At least I'm not risking it costing me cash. The only caveat is that I'm converting my two long positions into call option positions tomorrow (which will supplement my existing option positions). I do like these positions, as they are international (European and Japanese), and so I want some exposure, and I can get that, with more leverage, and less absolute dollar risk, with call options, rather than outright ownership of the underlying equities now. As far as being a China bull, I am still am, long term. That won't change. But the SSEI is insane right now. Speculation has reached a fevered pitch. And I see nothing that could convince me that the economic fundamentals support the type of rise in the equity markets, that has occurred. As far as U.S. markets, they've had a crazy run in the last 9 months, whether anyone is brave enough to admit it or not. I have watched these 200% to 300% gains take place in many equities, when there is no fundamentally rational reason for such a run, because conditions simply have not improved nearly enough to justify such moves (and in many cases, have actually deteriorated). I know that the markets can stay irrational longer than one can stay solvent, but that'll never be the case if one is not running with the pack. It is a painful thing to see opportunity lost. But is more painful to see absolute loss, and alas, I am not a gambler. I am a mere investor at heart. Staying with call options, while retaining my gains from the last 9 months in yield bearing cash, gives me the piece of mind I need, until the inevitable corrections lure me back in, whether that's in 3 months, or 18.
this contrarian trade will work. seriously, let's evaluate nothing other than what the media is spewing, "14,000 to 15,000 NEXT?" 1000 to 2000pts? Certainly if you read the fine print you'd see that 44% of the corporations already posted outstanding profits - keyword ALREADY - Near term 2000pts? No way. Not even 500 points per week X (times four weeks...) nope. I'm sorry but those of you reading this message will take profits before then. Those of you who think you are deep seated will get shaken into unwinding your position. You will press the button like anyone else who fears loosing the green you just made, and when everyone exits I'm gonna be counting my profits by the hundreds by having the balls to "PLAY" the game that was designed to play me.
Cramer is uber bullish. He said DJIA will be 1000 pts higher this summer and 14450 or so by Dec 31. Food for thought...
we might go parabolic here for a short while. I have alot of friends here in socal who didn't work quite as hard as I did. I OWN my house. I have worked on both the buy and sell sides since I got out of school (1993) I work on ZERO leverage. I am about as bearish as I have ever been and am UP 34% ytd. The mkt is an ATM for those who don't know how to trade during this kind of euphoria, it's not too hard to lift offers. Those of us who know how to HIT BIDS will laugh last, as always. I will not name names, but I GUARANTEE I will be more than solvent when this bs period comes to a close. I am about 59% short here and in the green on a daily basis. When joe and mary six pack get long the spooz I will be 200% SHORT. Traders trade, imposters cheerlead.