Saturday, July 12, 2008

Don't Let the Bears Get to You (Or the Bulls)

Its a tough time to be an investor. In true bear markets, nothing works. We're entering that phase right now. Energy worked for the first part of the year, but now oil stocks are dropping even though oil prices are elevated. Any rally we see cannot be trusted right now because its based on short covering and bottom fishing in financial stocks.

Barron's led with a Bullish cover on real estate of all things. They say there are signs the market is improving (although just bearly). Here's an interesting quote from the article:

"Other than Larry Kudlow of CNBC, none of the journalists who interviewed me after the latest release seemed at all interested in any of the positive developments," says David Blitzer, chairman of the S&P Index Committee. "They seemed focused on the bad year-over-year number."

This is the biggest reason to be bullish right now. EVERYONE IS BEARISH. Barry Ritholtz writes a great blog, be he's become so bearish that its hard to read his posts anymore. That's the case with almost everyone. They get so far down a path that they don't even consider any other outcomes. And the bears could be right; there could be a lot more to go. But I'd rather be flexible and buy some stocks as they become more attractive, while not falling into the trap of buying speculative names (poor performing financials).

The week ahead brings some promise. Earnings are the best chance for a positive catalyst for this market.

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