Monday, March 23, 2009

Buy stocks now

We are rallying, based on a hyper flawed plan by our revered Treasury secretary.
Some easily identifiable flaws in the plan are here.

In short it is more of the same old story of piling Wall street-risks-gone-bad onto US tax-payers. On top of that wall street traders who usually suffer from some severely acute form of short term amnesia (recent wall street trading philosophy: forget all long term indicators, data points about the recession/economy but lets focus on that one thing, Geithner today, baltic dry index last week, china hoarding commodities and preparing a surge a week before that and so on, which though bad/meaningless, atleast sounds nice), immediately go bonkers and gung-ho on the bull side and thus shit like bank of america, citigroup, morgan stanley are up 15%+.

The other shitty basket also known as REITS are also surging, again for no real reason in particular, well essentially based on a spin that home sales increased month-over-month by about 5% (in reality they are down 4.6% YOY!!!). These are prime short candidates based on their huge debt, problems with their revolving credit lines, secured debt facilities and the immensely tight credit market. Goldman Sachs has an extremely bearish outlook on the REITs and rightly so. I myself will try and short these in the next couple of days, primarily via shorting the IYR ETF.

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