Comments on: October 1 - 5, 2007: Week in Review http://thecuriousinvestor.com/2007/10/05/october-1-5-2007-week-in-review/ Learn to invest in the stock market. Thu, 07 Aug 2008 23:28:53 +0000 http://wordpress.org/?v=2.5 By: Mark U Runta from Smart Investing & Money Management http://thecuriousinvestor.com/2007/10/05/october-1-5-2007-week-in-review/#comment-5965 Mark U Runta from Smart Investing & Money Management Mon, 08 Oct 2007 01:08:10 +0000 http://thecuriousinvestor.com/2007/10/05/october-1-5-2007-week-in-review/#comment-5965 Dan: The fact that something is amiss is obvious. Red flags are going up and many are scratching their heads about the bullishness of the markets. As a trader I have some bullish bets but would like to entertain the option of hedging my portfolio against a correction. Agree that the next correction could be nasty. Lets see how the Q3/Q4 earnings turn out - that would help set market direction. Recommend the article "Some Warning Flags Fly ...(WSJ)" -Mark Dan:

The fact that something is amiss is obvious. Red flags are going up and many are scratching their heads about the bullishness of the markets.

As a trader I have some bullish bets but would like to entertain the option of hedging my portfolio against a correction.

Agree that the next correction could be nasty. Lets see how the Q3/Q4 earnings turn out - that would help set market direction.

Recommend the article “Some Warning Flags Fly …(WSJ)”

-Mark

]]> By: Dan Hung http://thecuriousinvestor.com/2007/10/05/october-1-5-2007-week-in-review/#comment-5960 Dan Hung Sun, 07 Oct 2007 13:51:41 +0000 http://thecuriousinvestor.com/2007/10/05/october-1-5-2007-week-in-review/#comment-5960 I wouldn't say it was just one economic indicator which drove the market back to its record highs. I would say it was likely whole generality of September with the rate cut, the lack of any more powerfully bad news, and continued strength in global growth. Truth be told, I think earnings over the last quarter were not as bad as the news make it appear. I read a few articles saying that over 60% of S&P stocks had earnings beats or something like that. Expectations are very high and there are many stocks trading at higher multiples than they likely should so a correction due to the repricing of risk was imminent and I think that's kind of what we just had. I agree that we once again had a very quick correction which leaves me a bit uneasy. In February, the market dropped about 5% and rebounded within weeks. This time, we had a psychologically significant 10% retracement and had some help from the Fed to rebound within two months. I don't know what will bring about the next correction, but I would agree that the next one could be the scary type that takes a bit longer to come out of. But, I see at least a half year before this catches up with us. Long story short, I don't know that I would necessarily get to shorting just yet. I wouldn’t say it was just one economic indicator which drove the market back to its record highs. I would say it was likely whole generality of September with the rate cut, the lack of any more powerfully bad news, and continued strength in global growth. Truth be told, I think earnings over the last quarter were not as bad as the news make it appear. I read a few articles saying that over 60% of S&P stocks had earnings beats or something like that. Expectations are very high and there are many stocks trading at higher multiples than they likely should so a correction due to the repricing of risk was imminent and I think that’s kind of what we just had.

I agree that we once again had a very quick correction which leaves me a bit uneasy. In February, the market dropped about 5% and rebounded within weeks. This time, we had a psychologically significant 10% retracement and had some help from the Fed to rebound within two months. I don’t know what will bring about the next correction, but I would agree that the next one could be the scary type that takes a bit longer to come out of. But, I see at least a half year before this catches up with us. Long story short, I don’t know that I would necessarily get to shorting just yet.

]]> By: Mark U Runta from Smart Investing & Money Management http://thecuriousinvestor.com/2007/10/05/october-1-5-2007-week-in-review/#comment-5948 Mark U Runta from Smart Investing & Money Management Sat, 06 Oct 2007 23:57:22 +0000 http://thecuriousinvestor.com/2007/10/05/october-1-5-2007-week-in-review/#comment-5948 One economic indicator was enough to change the mood on the street from recession to record highs. Amazing! Outside of the issues you mention in your post I would also like to point out the following challenges facing the US economy - Housing woes keep getting worse. Read how bad it is in the current issue of Business Week. - Earnings growth is slowing and as profits reduce so will valuations. - Credit issues are yet to be worked out and it will be a while before the write-offs, LBO deals and liquidity issues are resolved. I agree with you that this market presents some trading opportunities. In a recent post I was contemplating what kind of shorting strategy to use. A correction seems imminent. One economic indicator was enough to change the mood on the street from recession to record highs. Amazing!

Outside of the issues you mention in your post I would also like to point out the following challenges facing the US economy

- Housing woes keep getting worse. Read how bad it is in the current issue of Business Week.
- Earnings growth is slowing and as profits reduce so will valuations.
- Credit issues are yet to be worked out and it will be a while before the write-offs, LBO deals and liquidity issues are resolved.

I agree with you that this market presents some trading opportunities. In a recent post I was contemplating what kind of shorting strategy to use. A correction seems imminent.

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