I have been making the reading of Hussman a weekly tradition as he has pretty much been absolutely right for the past 18 months. This week he makes two interesting observations (October 27, 2008 - Risk Management and Hooke's Law):
1. The market is positioned for a sharp bear market rally of 20 to 25% taking the S&P to 1100.
2. Traders are very antsy right now and are selling every rally (he wrote this on Monday morning before the Monday and Wednesday rallies were sold-off). This does have the potential short term to drive the S&P to the 700s (a cold water splash he says).
He is buying as he doesn't know if #2 will happen, but he feels good about #1. He doesn't think it is necessary at today's prices to catch the absolute bottom. Something for all of us to ponder.
I am now fully invested, having put the money I took out 3 weeks ago back in, albeit a bit away from MFI stocks and into OKS, VR, ENHPA, EGY and STP (I could not believe it went to $14). EBAY looks very tempting, but I would either have to sell something or go on margin... we'll see.
So many MFI stocks (PCR, QXM, CHCG, EGY, KHD, KBR... the list goes on and on) are selling so extremely cheap compared to their fundamentals that I fully believe that they could easily go up over 50% by the end of 2009. We'll see. I gotta head out. Have a great day everyone!