Bill O’Neil was born in 1933, the dawn of an inflationary boom from which he'd make a fortune. His investment philosophy was simple: take a stroll down Main Street and see for yourself what is going on.
As we watch deflation ravage Bill's trusty portfolio, devastate corporate earnings and pump major index P/Es towards 200, sometimes it's hard to witness, firsthand, the stress in business offices behind locked doors. But there is one terrific transparent leading indicator that is lit up on signs all over the country: gas prices.
Because gas stations are the last link in a very long supply chain, they need to sell out. So they are forced to charge what ever the masses will pay. Often, you'll see a significant discrepancy between gas prices in the struggling neighborhoods and wealthy sections of the same town.
What are gas prices showing us today?
A nation in deflationary distress:
http://www.zerohedge.com/article/281-bps-2s10s-hit-another-all-time-record-wide
ReplyDeleteAny idea when the high p/e trade will end? Buying calls in the highest p/e stocks is working again just like in the tech bubble. I keep hitting the well in CREE and AMZN, buying calls on every dip and they keep exploding higher. I find buying calls a much safer way to play the upside ramp in everything so as not to get caught in common stock when this whole shit show ends one day. I find myself nervous to hold money in the bank yet know the only way to increase my cash position is to keep buying calls in these high p/e stocks. You can double your money every week. This has to end, it is getting too easy and that is usually a pretty good sign.
ReplyDeleteGS proclaims the worst case scenario for 2010 is priced into equities here. Am I insane or is everyone else?
ReplyDeleteFDR,
ReplyDeleteIs it me or the gas chart that you are presenting ALSO shows very clear waves 1 and 2??
If so, and just by looking at that chart, during wave 3 gas prices might come down all the way to +/- $1 per gallon.
Is this correct?
Thanks
"Is it me or the gas chart that you are presenting ALSO shows very clear waves 1 and 2??"
ReplyDeleteYes, all markets are simply reacting to the draining of excess liquidity.
http://finance.yahoo.com/tech-ticker/the-rally-has-legs-dow-eventually-headed-for-15000-says-value-investor-charles-lemonides-395422.html;_ylt=AtgIQPC4rE_jR634DX8QMOlk7ot4;_ylu=X3oDMTE3ZDgybnRvBHBvcwM0OQRzZWMDYXJ0aWNsZUxpc3QEc2xrA3RoZXJhbGx5aGFzbA--?tickers=ba,lm,lly,dia,spy,QQQQ,pfe
ReplyDelete