At Bespoke Premium we continue to publish in-depth reports that give investors market perspective during these tough times. This week we published the note below that members seemed to find very helpful. To become a Bespoke Premium member and receive our unique research for just $1 per day, click here. We promise the Premium service doesn't come with any CDO or CDS exposure, naked short positions, or leveraged positions to unwind.
From Bespoke Premium: One of the hardest things for traders and investors to do when markets are declining as they are now is keep perspective. The first chart below highlights the performance of a security over the last year. Owners of securities that rally like the one below enjoy the ride up, and all too often, they hold shares way too long without taking profits. Owners fail to recognize when shares get extremely overbought and fundamentals no longer support the price movements. It happened with stocks during the Internet bubble, the homebuilder bubble, and most recently, oil. Most rational investors would look at the chart and highly recommend selling some if not all shares. In actuality, the chart represents the inverse of the S&P 500 over the last year. Putting this into perspective makes buying at current oversold levels a little more rational.
The next chart compares the inverse of the S&P 500 over the last two years to the actual S&P 500 in the two years leading up to the March 2000 peak. The range on the S&P 500 over the two 2-year periods is 700 points, but in opposite directions. If you thought the bubble should have slapped you in the face as a sell signal when things got as extended as they did in early 2000, then the current declines should do the same on the long side.
Click here to subscribe to Bespoke Premium today.
I'd like to be a premium member but I hate paypal. Give me an alternate means to pay and I'm all your's. How about Google checkout.
Posted by: Bespoke wannabe | October 10, 2008 at 09:37 PM
I have been saying that we are in an irrational exuberance negative bubble (similar to a recent oil bubble or internet bubble of 2000, only in reverse -- shorts are as complacent today as the longs were during the internet bubble). It is a shame that Cox has made the bear raids more violent by removing the uptick rule. I agree with McCain, we need to get rid of Cox and investigate him for the possible bribes he has been getting from the Wall Street crooks.
P.S. I agree that PayPal sucks -- judging from their childish policies it makes me think that the company is run by a bunch of arrogant immature teenagers. They had frozen my funds and stolen my money from my bank account without my authorization. It took me six months and filing a lawsuit to get my money back.
Posted by: Mike | October 11, 2008 at 07:30 AM
You guys are the bomb. This is a really helpful post. It really does shed perspective on what's happening.
Posted by: Greg Feirman | October 11, 2008 at 03:48 PM