As David Tepper pontificates why he didn't clear the deck of all his financial
holdings - consider this contrarian thought.
Is buying the banks here at the very least a hedge?
You will notice that during the early bear market days of the past decade
the banks actually outperformed the swooning SPX by a wide margin. This was
in part due to their complicity in the housing bubble. It remains to be seen
where their business model will take them today, considering the housing market
is still bleeding.
However, we know that corporate America is flush with capital and will eventually
turn to the banks for distribution. And yes, it will all be quite eerily similar
to the easy money days of the housing bubble. But instead of your 24 year old
nephew Jimmy buying an apartment building in Newark - it will be Groupon buying
GE.
Although I am an active trader, I have always taken a broad perspective when
approaching the markets. I respect the Big Picture and attempt to place each
piece of information within its appropriate context and timeframe. I have found
that without this approach, there is very little understanding of ones expectations
in the market and an endless potential for risk.
I am not a stock picker - but trade the broader market itself in varying timeframes.
I want to know which way the prevailing wind is blowing, where the doldrums
can be expected and where the shoals will likely rise. I will not claim to
know which vessel is the fastest or most comfortable for passage - but I can
read the charts and know the risks.
I am not a salesperson for the market and its many wares. I observe it, contextualize
its moving parts - both visible and discrete - and interpret.
I practice Market Anthropology - Welcome to my notes.
Erik Swarts is not a registered investment advisor. Under no circumstances
should any content be used or interpreted as a recommendation for any investment,
trade or approach to the markets. Trading and investing can be hazardous to
your wealth. Any investment decisions must in all cases be made by the reader
or by his or her registered investment advisor. This is strictly for educational
and informational purposes only. All opinions expressed by Mr. Swarts are subject
to change without notice, and the reader should always obtain current information
and perform their own due diligence before making any investment or trading
decision.
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