The Broad Market Portfolio was up a little less than 50 basis points today.? Leading the charge were Dow Chemical and Sappi.? Trailing the pack were? Grupo Casa Saba, Industrias Bachoco, and Deerfield Triarc Capital.
One of the things that I debate about as I write for RealMoney is how public to be when I disagree with Cramer.? I’ve had a very good call on the FOMC for the past four years, with very few mistakes, and Cramer, in his view that the FOMC will loosen because of the present weakness in the stock market, because of subprime lending, seems misguided to me.? I differentiate between what I would do if I were the Fed Chairman, and what I think the current Fed Chairman will do.? My use of a political pain avoidance model has worked well for me over the last six years.? I no longer assume that the FOMC will want to do the right thing; they do what leads to the least political risk.
Also, I want to avoid becoming so bullish or bearish that I don’t listen to reason.? This is a pit for those that write about the markets, particularly if one is sensitive about being wrong.? Well, I will be wrong, hopefully just every now and then.
The course of action that is the most intellectually lazy is becoming a perma-bull or perma-bear.? It makes life simple because you can dismiss a large amount of the data.? It’s easier to write when you can focus on the same likely future difficulties/successes again and again.
I choose the hard route, trying to be fair about likely outcomes, and not overstating the case.? It doesn’t make for good journalism, but it makes for good investing!
PS — I will post on the last phase of my portfolio reshaping tomorrow.
Full Disclosure: long DOW SPP SAB IBA DFR
Great post David. I always try to identify potential inflection points where the consensus is likely to be very wrong. Currently, the subprime scare and weak manufacturing/inventory numbers have brought recession fears back. However, ECRI’s leading indicators are now showing an ACCELERATION in growth in the back half of the year. I think this will produce 1 of 2 outcomes. 1st – the Fed doesn’t cut rates and people grow manic about them being behind the curve and the current correction deepens. 2nd – the Fed panics and cuts and the markets rally based on the cut but then the dollar tanks and long yields spike higher. I don’t think Bernanke will panic but would appreciate your input.
Also, ECRI’s leading home price index has stabilized and their construction index has actually bottomed and turned back up. I know you are working on portfolio adds – let me know what you think about GGC which we already own!