Thursday, March 12, 2009

Positive News From the Banks?

Hey, the market is moving higher on consecutive days. Can anyone remember what it feels like? It is certainly nice to see, although I still have my doubts as to the substance behind it. We're seeing some positive news from the banks. Something didn't seem right in the memo from Citigroup saying they are running a profit in 2009. I'd be interested to see where those numbers are coming from. Now, Bank of America's CEO said today that they won't need any more capital. But lets face it, we can't believe that. These guys are doing anything in their power to save their stock right now. If their stock stays above water until things bounce back, then they can make it. Who cares if they tell a few stretchers about their capital positions? Perception is reality.

No matter where its coming from, stocks are rising. Even if no reason other than they got too cheap. The only sector I see not rising is agriculture.

Am I a buyer of this rally? Yeah, a little bit. I'm not going in with everything, but I think its okay to dip a toe in. Will we go lower? Likely. But the downside risk is much lower than a few months ago.

I wrote a new article for Personal Dividends magazine today about risk tolerance and investing for retirement. Click here if you're interested.


Rosann said...

Hey Mike,

Your article on Personal Dividends gave me a lot to think about--the issue of what to do next has had me worried.

I wonder what you think about the Cramer/Stewart melee.

Stewart had some insightful indictments against not only Cramer--but other news media outlets. Do you think it is justified?


Michael said...

Its an interesting debate, because although the media has a lot of influence, CNBC is a whole different animal. People are actually taking this advice and applying it to their personal finances. The problem is people need to realize that you can't do that (or if you do, you have to be very careful). CNBC is mostly market cheerleaders that are trying to attract capital to Wall St. Cramer is kind of the head cheerleader. He gets people interested in investing (which is a good thing), but he's so all over the map that people don't know how to take his advice (which makes him dangerous).

As for Stewart, I don't really know what he's adding to the debate. I mean, its real easy to dig up video footage to make people look foolish. If you want you can do that on Bush, Obama, or almost anyone in the public eye. The truth is no one really saw this crisis coming, and CNBC deserves as much blame as anyone when they are supposedly market experts. This just shows that they aren't. The bottom line is CNBC's job is to talk about the market every hour of every day. Thats a lot of time to fill up, and so they go with what drives ratings. They are part of a large corporation (GE), and maybe that's the problem.

I view Stewart as an entertainer more than anything. He's niche is sarcasm, and its easy to see why he's popular.

Thank you for your comments! Its an interesting debate.