Comments made in the year 1957:
"I'll tell you one thing, if things keep going the way they are, it's going to be impossible to buy a week's groceries for $20."
"Have you seen the new cars coming out next year? It won't be long before $2000 will only buy a used one."
"If cigarettes keep going up in price, I'm going to quit. A quarter a pack is ridiculous."
"Did you hear the post office is thinking about charging a dime just to mail a letter?"
"If they raise the minimum wage to $1, nobody will be able to hire outside help at the store."
"When I first started driving, who would have thought gas would someday
cost 29 cents a gallon. Guess we'd be better off leaving the car in the garage."
"Did you see where some baseball player just signed a contract for $75,000 a year just to play ball? It wouldn't surprise me if someday they'll be making more than the president."
"It's too bad things are so tough nowadays. I see where a few married women are having to work to make ends meet."
"I'm just afraid the Volkswagen car is going to open the door to a whole lot of foreign business."
"Thank goodness I won't live to see the day when the Government takes
half our income in taxes. I sometimes wonder if we are electing the best people to congress."
"There is no sense going to Lincoln or Omaha anymore for a weekend. It
costs nearly $15 a night to stay in a hotel."
"No one can afford to be sick any more; $35 a day in the hospital is too rich for my blood."
I got this list of quotes from 1957 in my email box today and it inspired the introduction to my first post. While this list was meant as a testament to the American economy, I feel that these statements ring true today (although you need to multiply everything by at least 10). The prevailing sentiment among market players is that the market shouldn’t go higher right now because the economy will be crushed with $3.00 a gallon gas. It seems that our economy is filled with problems right now, and to list them would consume far too much of my time; however, over the past two weeks the market has rallied consistently (with the exception of today). Why? Some say it’s because the Fed won’t raise rates next week. Maybe that’s true, maybe George Bush and Mr. Greenspan’s Pow-Wow after Katrina instilled a sense of self control in Alan. I beg to differ. When has the Fed ever yielded in their rate hiking (or for that matter cutting) binges?
It is from this perspective that I offer my first trading idea. If the market is holding on to its gains right now because of a Fed pause, what happens if they hike? My guess is a down day to remember…or ideally profit from. Who would get hit the hardest if the Fed hikes? Retail, Homebuilders, Banks? Why not short them all. I don’t see any reason why anyone wouldn’t have some sort of a hedge on in any one of these areas heading into Tuesday.
Maybe I’m wrong about this, maybe, Alan takes a break. So cover your shorts and wait for oil to hit $80 to break the markets back. Either way in this situation I see far too much reward for a small amount of risk especially if you cover quickly. Admit that the plan was wrong and move on. Always have an exit strategy. All I can do now is hope the market rallies for the rest of the week to give me the perfect set up for Tuesday.
This was my first post and I hope some found it of value (if anyone read it.) I hope you did, and if you have any questions about anything (markets, specific stocks, strategies) send me an email at randommarketthoughts@gmail.com I will be happy to hear from you and hope that I am able to make you money in any way possible. Thanks for reading, and if anyone has any suggestions on what they would like to see on this blog email me as well.
