Buy the Rumor, Sell the News
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Buy the rumor, sell the news, or in this case sell the rumor, buy the news, is wise market advice born from time-tested trading experience. The market often prices in change before it occurs. Then, when it does occur, the market surprises the herd by moving in the opposite direction than was expected.
(Stocks in article: NYSE: ABK, NYSE: C, NYSE: GFI, Nasdaq: GNCMA, Nasdaq: MRVL, NYSE: NSM, NYSE: EJ, NYSE: VE, Nasdaq: EBIX, Nasdaq: APPX, AMEX: DIA, AMEX: SPY, Nasdaq: QQQQ)
The Employment Situation Report was nearly as bad as the worst end of the expectation range. The consensus of economists was forecasting an increase of 25,000 jobs in February, but we received news of 63,000 jobs lost in the month. In an interesting aside, unemployment measured 4.8%, against expectations for 5.0%. Still, the tone of the report was inarguably negative, and the implications it offers to GDP are concerning.
On top of that news, the RBC Cash Index offered a reading of 33.1 for March, a record low. This compared with measures of 48.5 in February and 56.3 in January. The index measures consumer attitudes and spending by household, so it offers good reason to be less confident in our economic future. A component of the index, the RBC Expectations Index, which measures confidence in future economic conditions, read -41.6, compared to -7.0 in February. The RBC Investment Index, which measures confidence in stock and real estate investment, measured 56.7, down from 62.6.
What we take out of this report is further evidence that while Americans consider their current economic situation troubling, and even see the future outlook bleak, they still see a chance for stock market rise. By now, most investors understand that the stock market is a leading indicator over the long-term. Also, we must not miss the fact that the market has already discounted recession, in our view. So, is bad news good news now? Have we sold the rumor, and should we buy the news? This is a topic we will cover over the weekend, so be sure to return and catch "The Greek's Week Ahead."
Buy the rumor, sell the news, or in this case sell the rumor, buy the news, is wise market advice born from time-tested trading experience. The market often prices in change before it occurs. Then, when it does occur, the market surprises the herd by moving in the opposite direction than was expected.
(Stocks in article: NYSE: ABK, NYSE: C, NYSE: GFI, Nasdaq: GNCMA, Nasdaq: MRVL, NYSE: NSM, NYSE: EJ, NYSE: VE, Nasdaq: EBIX, Nasdaq: APPX, AMEX: DIA, AMEX: SPY, Nasdaq: QQQQ)
The Employment Situation Report was nearly as bad as the worst end of the expectation range. The consensus of economists was forecasting an increase of 25,000 jobs in February, but we received news of 63,000 jobs lost in the month. In an interesting aside, unemployment measured 4.8%, against expectations for 5.0%. Still, the tone of the report was inarguably negative, and the implications it offers to GDP are concerning.
On top of that news, the RBC Cash Index offered a reading of 33.1 for March, a record low. This compared with measures of 48.5 in February and 56.3 in January. The index measures consumer attitudes and spending by household, so it offers good reason to be less confident in our economic future. A component of the index, the RBC Expectations Index, which measures confidence in future economic conditions, read -41.6, compared to -7.0 in February. The RBC Investment Index, which measures confidence in stock and real estate investment, measured 56.7, down from 62.6.
What we take out of this report is further evidence that while Americans consider their current economic situation troubling, and even see the future outlook bleak, they still see a chance for stock market rise. By now, most investors understand that the stock market is a leading indicator over the long-term. Also, we must not miss the fact that the market has already discounted recession, in our view. So, is bad news good news now? Have we sold the rumor, and should we buy the news? This is a topic we will cover over the weekend, so be sure to return and catch "The Greek's Week Ahead."
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posted by The Greek | 1:46 PM
4 Comments:
Greek----your way too positive. I would love to share your sentiment...but I think we have a painful 2-3 years of taking our medicine we never took in 2001.
"Also, we must not miss the fact that the market has already discounted recession, in our view."
That has to be the finest prediction of 2008! Would you please be my financial adviser? As Uncle said way too positive... Clearly.
Actually, I was right. Look at the performance in March my friend.
http://finance.yahoo.com/echarts?s=%5EGSPC#chart1:symbol=^gspc;range=1y;indicator=volume;charttype=line;crosshair=on;ohlcvalues=0;logscale=on;source=undefined
Remember, I'm on record daily, so if you go back and read through, I did a good job of not just providing long-term advice, but short-term trading advice as well. When I called a bottom in in early '08, I was very clear that it was "a bottom" not "the bottom". And I was right.
If you go further back, you'll see that when everyone was still buying homes to turn over, I was warning of the demise of housing and finance.
I am out there every single day, writing my opinion. If you go back and pick out one phrase from one article and try to make a point, all I can say is, you should try working for a political campaign. There's a future in it for you.
And, my track record as a stock analyst, over five years, speaks for itself. I was the second best stock picker in a firm of 90 analysts, and my performance was +23% on an average annual basis, versus a horrible S&P 500 performance from 2000 to 2004. Plus I was up 21% halfway through 2005. So, you actually would want me to be your advisor, if I was working full-time picking stocks.
Do you want to know what's coming up next that every economist is missing? Keep reading the blog.
God bless
The last time I saw a mouth like that... it had a hook in it!
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