I think I can now understand a few aberrations in the market. I would like to believe that funds are smart but nope! I disagree! not all! 1.) Underperformers which you should be accumulating for next year are continuing to underperform because of CAREER risk. Some funds who are performance-based are FORCED to keep buying winners regardless of the valuation risk on how much upside is in store for the stock. Do you remember when #MBT #BDO #BPI #SECB were all sold down after massive earnings disappointment outlook for 2014? Seems a long time ago but do you also remember that they never fell when they did indeed report those negative earnings? Do you remember your friends or your brokers or analysts say (IT HAS BEEN PRICED IN, the DOWNSIDE HAS BEEN PRICED IN.) 2.) Outperformers which are running with high PE multiples are having a craze effect (perhaps a 30%-50% overvaluation) to their mean and will continue to be overvalued because of the perceived safety that the drops or (BTFD) Buy that F*CKING dip will be bought by your big whale supporter (i.e. some mutual funds.) - and so naturally stocks like #NIKL, #URC, #ALI, #BDO, #MARC, #CMT , #DNL , #FGEN, #EDC, #JFC , #BLOOM to name a few will continue leading the pack. You see, an index running up at 7300---reveals many things. It reveals funds who have to chase performances and the rest who have held some wrong stocks (in this case hoohoo #PGOLD , #COSCO which while its downside could be priced in, will continue to be in the doldrums UNTIL it makes a move similar to what #AGI did when earnings also tanked, but the owner put up a fight.) Until then, we know where the short term money is and where the longterm money lies. :) If funds truly believe that the companies that are lagging behind are not worth lagging behind --- then it should see some form of a catch up. See how #LR, #PCOR , #BEL, #MCP are fighting back :) Similarly, the sector - financials in general) ---are all lagging behind and finally catching up with its leader #BDO leading the sector! :P cheerios!
Posted on: Mon, 08 Sep 2014 10:26:53 +0000
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