Money Talk

I have not had much news to celebrate about the US economy inspite of the 6 continuous weeks of stock rally that pulled the US Stock Market up by about 22%, atleast that's what Dave Ramsey said in today's live TV program at 8pm EST watched by an estimated 1 million people. Check out http://www.townhallforhope.com/. Great communicator that Dave Ramsey is, he is a fiscal conservative and a practical Christian. He is just a great package. I travelled 25 miles to listen to this telecast. If you listen the same talk online, you may agree that he drives home a powerful message of the example of how he wants people to be like baby eagles who need to flap their wings hard when pushed from a nest (when the going gets hard). That he says is akin to realizing your hidden potential when you work hard in a difficult situation.

http://krugman.blogs.nytimes.com/

Did you know the once touted Carbon Cap and trade concept has lost more than 50% of its value in investments on carbon credits. What went wrong? Its lack of clarity in policy. Many people hopped onto this bandwagon thinking it would be a 10-bagger in less than a couple of years only to realize that they have lost more than 50% or more in that many years. I am thinking this concept will catch up only when all countries sign the Kyoto accord on climate change. America hasn't and is not showing signs of signing in the near future. So its difficult to see it would succeed as a profitable investment as of now.

There is a short term negative correlation of stocks to house prices which normally never exists. But why is it so now? Well, home values can't go up unless the unsold house inventories come down and inventories can't go down enough because of one major reason - Growing Unemployment. As for stock prices, they are on the so called 'bear market rally' but what surprised many was its month-long strength. That should tell something, and in my view its signaling the bottom which many are waiting for. This housing-stock market disconnect seems to be a new phenomenon yet to be named and I want to call it the "Jason Effect" named after its discoverer "me"! How about that. I would be a buyer at any pullbacks, but I am lucky that a bucket of my stocks I bought between Dec 2008 and Feb 2009 are up a handsome 38% and some even above 50%. I expect the trend would continue albeit gradually. I hope for a high percentage return going forward 6-12 months.

Any idea? Well I have some....here it goes.....'concise trading' blogger states going forward financials and energy are going to be looking very bad with their numbers. I can't agree more. There are others that are not going to be pretty either. Reasons aplenty....unaudited intentional leaks about increased earnings from citi can't be trusted......AIG behemoth is still rolling at the cliff thats about a mile below the first one it came off. Employment numbers won't improve until jobs can be profitably created.... housing sector?...better left unsaid....and so goes on the list. But there is money to be made yet....one would be in looking at puts on options and the other would be shorting the real weak ones in the weak sectors. Cherry picking is key and not every cherry picked would be a cherry!!

Solar stocks are soaring particularly STP is up about 50% in just the morning session. This sector was beat up pretty bad and STP came down to $7 from its high of $80 during the last 15 months. STP announced a flat past quarter and that was the only news I saw....but....its up ! The movement is volume based and that's significant I feel perhaps indicating entry of some big money funds.

Wall Street was full of smiles today with a near 500 point, 7.5% rally! Most of the rally was because of Treasury Secretary Tim Geithner's release of "bad bank" details. Some was due to the 5% increase in existing home sales .... but 50% of the homes sold were short sale or foreclosed homes. And some was due to short covering of stocks. Paul Krugman, 2008 Nobel Prize winner in Economics thinks Geithner's plan is a recipe that can fail as it emulates the same path paved by his predecessor Henry Paulson. But when quizzed more he admitted that his thinking may prove wrong if the spending increases as a product of credit flow. Some of my bank related stocks of Indian companies rallied as high as 18%. They are however down by 50% from a year ago.