Don’t be a Bear…Be a Real Value Investor

Investors hate bears.  In the classic book, “THE BEAR BOOK” written by John Rothchild in 1998, his number one rule is not to tell anyone you think the market is too expensive, keep your thoughts to yourself. 

In reality, investors should look at the markets as places to buy when things are priced inexpensively or when the trend is obviously pointed higher and someone will buy your position at a higher price.  When neither condition exists, cash is king.   

Markets on a basic level can be viewed three ways: 1) as a function of the direction of trend of the economy, 2) as a function of the direction of the stock market trend, or 3) as a function of the direction of the trend in P/E ratios.  All three of these measures on a macro level point toward lower stock prices.

Being short is a play for traders only, as it is doubly painful when everyone else is euphoric and you are losing money.

So we advocate making yourself a real value investor, not a traditional value investor that is always long and is searching for stocks that are cheap based on some comparative basis.

From a MACRO TECHNICAL standpoint yesterday the market validated the 1580 to 1240 to 1440 sequence in the S&P 500.  In the shortrun we could see a retest of the 1440 swingpoint but the main activity will be the fundamental events that put the next down move in play,