Energy Burst Take Two
So this week it was all about oil, infrastructure and all the other types of tangible commodity stocks. Letter X had surged around 200% off of it’s low and multiple other names had posted similar strong gains. That is what you call a bear market bounce. I mentioned earlier that I am waiting for these names to retreat back before I take a position in them but I have to say that it is not easy doing so.
What I mean is that a Depression scenerio is definitely still on the table. Mr. Dimon from JPM himself expressed skepticism over the possibility that one could occur but he would be the last person if he truly believed one was iminent that would just come out and say, “oh yeah, we’re definitely going down much further.” I further believe that because he had expressed, almost in the same breath, that he thinks housing prices will fall another 20% that he’s not telling us what he really believes.
That last comment of his sparked me to revisit Realtor.com and do my weekly real estate homework. I’ve been hitting this website just about once a week for over three years now. I link it with the local property appraiser web site to see what the home owner paid for his or her house. You know what? Prices are definitely going down and inventory is up. Yeah, it’s a bummer to see the same house for sale for years now but I’m not bummed out when I see the same homes on the market and when they are priced well above (sometimes 200%) of what the owner paid. It’s a strange sense of entitlement that a home owner believes that they must make a profit on their home. Interesting. Nevertheless, in my new search yesterday, I’ve noticed that local prices have come down and are becoming rather tempting. However, if you believe a new Depression is around the corner and that a push for even lower mortgage rates wont’ help the situation, it might just be worth waiting a bit longer. My point is, and I’m trying to tie this into my equity purchasing list, is that I’m not ecstatic about adding to my portfolio and I’m not sure I’d be willing to add to my portfolio if we drop 500 or more points from here. Well, maybe I’d add just a little but if, psychologically speaking, we do drop big again, but then the notion of breaking the 7492 level becomes a reality again and I would want to wait and temper my new purchases. For example, psychologically speaking, it becomes less plausible to get to the level and let alone breaking it, when we are over 1000 points away. I know that seems really obvious but it’s the truth. The closer we get the more depressing the thought of making the lows and new lows becomes. We start to bust out our long term technical charts, begin to revisit the macro fundamentals and convince ourselves once more that a DJIA below 6000 is feasible. If so, do we get there hard and fast or painfully slow?
