Thursday, August 4, 2011

Altucher: Buy This Market

I'm with James Altucher. He writes:

You can’t argue with the market. It’s pointless. But I’m hearing people say, “Now is the time for capital preservation. Go into bonds.” etc.

This seems silly to me. The time when I wish everyone was in bonds (including me) was 10% ago on the S&P.

Now is the time to buy. When there is blood in the streets. I follow about 30 stocks on my screen. They are all red. Statistically, when 10 stocks are down for every one up, the market tends to be higher one week later. Here’s more facts to ponder:

- The debt ceiling crisis has passed.

- 75% of companies beat earnings estimates.

- Household debt obligations (rent, credit card bills, car payments, etc., divided by income) are at lows since 1992.

- Manufacturing and service sectors are still expanding.

- GDP growth is still expanding.

- Many commodity prices at at historic lows.

- Car sales are up 5.8% YoY.

- The effects of QE2 + Japanese stimulus are not yet baked into the economy.

- Market indices are market-cap weighted, so are we really going to sit on our hands when AAPL has $79 billion in cash and trades at 12x forward earnings? INTC at 10x forward earnings? MSFT at 10x forward earnings? Meanwhile AAPL has 92% YoY growth.

And yet, some headlines were: “U.S. could default.”

It’s IMPOSSIBLE for the nation to default. Even without the debt ceiling, we were allowed to roll over debt. Every newspaper and TV station was lying when they said we might stop making Social Security payments. Its lies and fear that the media continually spreads. I honestly don’t understand why I get fact-checked on every little number while the headlines continue to lie to the masses.

Meanwhile, the market trades for 12x forward earnings. And companies will continue to beat them.

What happens to the billions of shares short when AAPL finally declares a dividend?

I don’t know, but it will be enormous. For myself, I nibbled on a little bit of DNDN an hour ago. The company fell 65%. It’s a volatile stock. I’ve been playing it ever since it was $4. I know how it behaves. It acts violently both on the downside and upsid, but even at $93,000 a month, Provenge, its prostate cancer drug, is still the best thing out there and Medicare will continue to pay.

And guess what? More men are turning 65 than ever. You know what that means? More prostate cancer (I should check this out myself). So I am nibbling, and I’ll eat more if it goes even lower.
Most important is the fact that money growth is accelerating. This money will works its way into the markets. Europe is a different story. They are just now starting to print money. It will take time for them to turn things around.


  1. Interesting. Jimmy Rogers and Marc Faber are both calling for a decline in the stock market, and they have been very accurate in the past. Any comments?

    S&P does look attractive at this 1215 level (which happens to be a major support), but there seems to be too much selling at this point. Sure it could advance to 1250/1270, but then what? It would be poised for another collapse. Or not?

  2. Is medicare really paying $93000 for provenge?

  3. He made the same 10:1 ratio comment on Monday...guess what? We're not up and won't be. IMO, Altucher is a moron of the highest order. Watching him on tv is literally painful and he's been so wrong for so long that I really have no idea how he has any credibility.

  4. I can't imagine a worse time to be a buy and hold investor. The US is falling back into recession after the stimulus has run out.

    There is no more stimulus andd the fed is out of bullets. March 2009 this is not.

    Unless you know how to day trade successfully, staying liquid in this environment is very wise.

  5. Buying at 1215 looks pretty stupid now at 1182 and still going lower.

    Don't buy. Wait. Wait for the dust to settle. If you miss the first 2%, so friggen what.