Sunday, February 5, 2012

Week Ending on 2/3/2012

I really should never have boxed myself in writing weekly posts as some weeks, there is just nothing to write.  Do people really want to read about Greece again?  I can't even eat gyros anymore.

I closed out everything except my 43% core allocation.  It's not that I don't trust this rally, it's just that I'm a cheap bastard and I don't think a share of SPY is worth 134. 

Some thoughts out of left field: I think Treasury yields will begin to rise (and I will be correct sooner or later LOL).  I think the catalyst will be the yen, which will weaken this year and beyond, along with an increase in their government bond yields.  This will spook our Treasury market as Japan is really just us 20 years in the future.  Without fear, investors will begin to demand real returns especially since we don't feel it's a personal duty to buy government debt, like the Japanese do.  This doesn't mean stocks will do well either.  Stocks is the ultimate trust game.  Fundamentals don't matter if everyone keeps buying in.  So hypothetically, if everyone just put in some of their monthly paycheck in stocks every month, they will go up forever.  Today I see the opposite of that, a whole generation scarred by the stock market.  Nobody wants to be in stocks.  They have to be because every other asset class returns nothing.  With increasing yields, people will rather seek fixed income than playing in Bernanke's Casino.

Bottom or consolidation?
Jam of the Week: