Three Conditions On Who Should Listen To Warren Buffett

1. If you own stocks which were the top recipients of bailout money.
2. If you want to take advise from a billionaire whose company Berkshire Hathaway overall stock performance is down 10% over the last three years.
3. If you need a folksy patriotic advise from someone whose own personal life investment horizon might be measured in days but has a personal fortune of more than 45 billion.

Top Ten Riskiest

From Naked Capitalism

Figure 1. Systemic risk top ten (as of 20 February 2011)

How Investors Have Done:Source QRiskValue

QRiskValue Analysis
Since Jan 1 2008, how on average, trend, bargain hunters, and buy the dip investors have done. Data QRiskValue.com

Economic Slowdown

U.S. economic recovery threatened by events in Midwest, Middle East

Washington Post Neil Erwin and Michael A. Fletcher

Just when the economic recovery seemed to gain momentum, two new threats have emerged that could undermine it. One has flared in the Midwest, the other in the Middle East. (Entire Article)

Government Shutdown

Policy Paralysis

By Jonathan Bernstein

Up until now, a government shutdown because of a stalemate over the budget was a strong possibility, but it didn’t appear inevitable. That’s because House Speaker John Boehner stands to be badly hurt by the train wreck a shutdown would be, and I’m confident—from what he’s said and because he was around the last time it happened—that he realizes it. But his decision last week during House consideration of the must-pass spending bill to open up the floor to unlimited amendments reframed the issue in a way that gives Boehner much less room for compromise.
(From The New Republic) Entire Article

Bull Market Now 18 Months Old

Bull Market now about to enter its 19th month matching almost exactly the oscillation extension created at the end of the Bear run. If the top is in, it is a long way to to flat line. That is before you enter a Bear phase. (Data from QRiskValue.com)

Price Headwinds Data

Rank	Stock	Fat	P/E
1	F	215%	7.3
2	AAPL	160%	19.26
3	IBM	54%	14.17
4	GOOG	31%	23.62
5	GS	10%	8.7
6	MSFT	0%	11.32
7	PFE	0%	26.29
8	CME	-4%	0
9	BAC	-60%	0
10	C	-80%	0

The Data above provided by QRiskValue shows percentage (FAT) gains or losses of 10 stocks from the price point where accumulation or liquidation began over the last 3 years. The P/E Ratio is shown to demonstrate how many dollars it takes to buy one dollar of return. Ford has been the best bargain but like AAPL is clearly a brand stock and more likely to attract investment dollars. Unfortunately, price headwinds develop because it gets harder to advance the stock when longs have such powerful gains. On the other hand, BAC and C have damaged brand names but ultimately less resistance although they might have less opportunity without crowd appeal.

Valuations

A scary reality lurks beneath the fantasy

By James Mackintosh

Published: February 20 201 (FT.com)

The US cyclically adjusted price-earnings ratio, which measures share prices relative to the 10-year average of inflation-adjusted profits, is very high. It stands at 23.7, way above its 16.4 average over the past century or so.

It is now almost exactly at the level reached at the peak of equity valuations in 1966, and very close to the 25 reached in 1901. Only twice has it been higher: in the mania of 1929, and during the dotcom bubble and the ensuing decade. (Entire Article)

Revisiting The Economic Crime Scene

Rethinking the Great Recession

by Robert J. Samuelson

We Americans turn every major crisis into a morality tale in which the good guys and the bad guys are identified and praised or vilified accordingly. There’s a political, journalistic, and intellectual imperative to find out who caused the crisis, who can be blamed, and who can be indicted (either in legal courts or the court of public opinion) and, if found guilty, be jailed or publicly humbled. The great economic and financial crisis that began in 2007 has been no exception. It has stimulated an outpouring of books, articles, and studies that describe what happened: the making of the housing bubble, the explosion of complex mortgage-backed securities, the ethical and legal shortcuts used to justify dubious but profitable behavior. This extended inquest has produced a long list of possible villains: greedy mortgage brokers and investment bankers, inept government regulators, naive economists, self-serving politicians. What it hasn’t done is explain why all this happened. (Entire Article)

The Lady Doth Protest Too Much, Methinks

Bernanke defends QE2 on global stage

Fed is not cause of destabilizing capital flows, he says

WASHINGTON (MarketWatch) — Stung by criticism about the negative spillover effects on the global economy of the Federal Reserve’s $600 billion bond-buying program, Fed Chairman Ben Bernanke issued a strong defense of the policy Friday as central bankers and finance ministers gathered in Paris for this weekend’s Group of 20 meeting. Entire Article

Thank You Sir Can I Have Another?

SAN FRANCISCO (MarketWatch) -- Investors bought U.S. stock mutual funds at the strongest pace in almost two years, according to data released Wednesday from the Investment Company Institute, a fund-industry trade group. An estimated $4.9 billion flowed into domestic stock funds in the five trading days through Feb. 9, the highest weekly total since a net $5.7 billion poured in during the week ending May 13, 2009. Interest in international stock funds was anemic, with the group receiving $928 million in new money versus inflow of $346 million a week earlier. U.S. municipal bond funds continued to see an exodus, with a net outflow of $1.5 billion in the period, in line with the prior week's $1.2 billion outflow. Taxable bond funds saw $3 billion in net inflow, a sharp increase over the prior week's $1.8 billion take.

More Good News

SAN FRANCISCO (MarketWatch) -- Fund managers are more bullish towards global equities than at any time in the past decade, according to a survey released Tuesday. Of the 188 fund managers polled around the world, a net 67% say they are overweight global equities, which is the highest reading since the survey began asking the question in April of 2001, according to the Bank of America Merrill Lynch Fund Manager Survey for February. The survey also noted an increase in risk appetite with only a net 5% of fund managers overweight global emerging markets equities, down from January's net 43%. A net 70% of investors now see the Federal Reserve raising rates in the next year, up from 62% a month ago.

You Are Here

The MO for this rally has been more pathetic than most MO and always a weak sister to the MO of breaks, which are always monsters. But regardless of just how pathetic the Fed subsidized lifting has been in the DJIA, SP500, and NQ100, lets take a look back at the last great End of MO event.

On November 20th 2008, the downside MO which started in October of 2007, ended. Lows for the markets would not come until March of 2009 but the speed of the break ended on November 20th with the Vix high of 81.48. It closed yesterday at 15.84, 80.5% off the November MO Event. The DJIA's low on 11/20/08 was 7552 with a high yesterday of 12188 or 62% higher. The S&P500 augured into a low that November day of 745 and punched a new high for the move yesterday at 1320, of 77% higher. The Nasdaq, where all dreams become poo, slammed into End of MO with a low 1031.25. Yesterday saw a high of 2360 or a 128% higher.

The nature of recent rallies has seen fish feeding at the top as retail and long only managers suck in equities faster than downtick. They along with the usual suspects will flail into a buying stutter step in the coming days as this rally decides to take some MO twists.