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Goldata Financial
Dedicated to above average returns in the stock market.
STOCK MARKET COMMENTARY
July 13, 2009
From Elliot
Goldberg, Registered Investment Advisor, Goldata
Financial
Last week, the correction in the market
averages continued. Seeping back into the minds of punters was the fear of economic
slowdown and/or deflation which allowed the 10-year Treasury to close at
3.32%, down from a high of 4% a few weeks back. In addition, oil had one of
its worst weeks recently trading down over 10% in sympathy with the view
above. Not to worry --- These fears come after the type of market action
we’ve had over the last few weeks (down 4 weeks running), which has
consisted of slowly digesting the gains of the three previous months, quite
normal. “Green Shutes”, the explanation
for the rise from the March lows, has been replaced by other less optimistic
euphemisms, as gratification was not immediately realized. It continues to be
a trader’s market and there is no reason to adjust course at this time.
Washington provided another excerpt of expensive entertainment for us, the
latest being Vice-President Joe Biden’s acknowledgement that the current
administration “misread how bad the economy was” as if that were
the reason the policies implemented in the spring have not helped, especially
on the job front where unemployment currently sits at 9.5% and they told us
that their $787 billion stimulus would cap it at about 8%. Note to Joe- If you want jobs created (that are
non-government), they have to be in the private sector and your
administration and Congress have done everything to dissuade private capital
from forming to create these jobs, from abusive and arbitrary tax policy (90%
tax on AIG bonuses) to potentially forcing unions (card check bill) on them.
Even some private capital has backed away from participating in some
government programs as the calculation of potential government retaliation
outweighs the potential profit. In the “It’s not until the tide
goes out that we find out who is not wearing a bathing suit” category,
Lenny Dykstra, ex-Met and ex-Phillies baseball player, filed for bankruptcy
protection last week. If you’ve not followed Lenny’s career after
leaving baseball, he taught himself investments in a few short months and
rode the 2003-2007 bull market to remarkable reported wealth. Unfortunately,
the tide also goes out and Lenny’s current assets of $50,000 currently
outweigh his liabilities, which number in the tens of millions. Conclusion: The
correction continues until it doesn’t and a trading mindset continues
to be the best bet. Mr. Market’s change in sentiment mentioned above
seems overdone. Therefore, I look for the drop in oil and Treasury yields last
week to morph into opportunity this week in a contra play in these areas.
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