The New York Stock Exchange surprisingly started off with a bit of a bang. I thought we were gonna head south after seeing Amazon’s 31 point implosion after hours but I guess the market just kind of shrugged it off. The moment the bell rang, I took a look at the flurry of activity and there is definitely buying going on. Now, I’m not saying that this is a BULL MARKET but this is definitely bullish behavior. Let me use this segue though to talk about something that worries me about the market – at least in the short term (and I’ll keep it brief):
There were two things that gave me a bit of a pause yesterday and made me reflect on what I label as the “hysteria phase of the market”:
a.) Amazon’s P/E is like 105 to 106. Now, I’m no fundamentalist guy – although I am a proponent of long term intrinsic value (cash flow discounting against the long bond ala Warren Buffett) – but that is like….absurdly high. I know Amazon is a great business. I am, after all, a power user but a P/E like that is a bit worrisome. Maybe this is why they’re going on the spending/acquisition spree that they’re going on – to bring things into balance maybe. I don’t know. Still, it’s a high number. And when I extrapolate it into the similar valuations of the broader market, it’s kind of disconcerting.
b.) Henry Blodget, yes, that Henry Blodget (spelling?) was interviewed on CNBC yesterday and he came out and said that Facebook might be relatively undervalued. Maybe I heard it wrong but holy sh*t, if he says that then he may very well have kicked off the next wave of mass market hysteria. I have no idea how in f*ck’s sh*t Facebook commands the margins they do but to come out and say something along the lines of it being undervalued – especially from Henry Blodget of all people – it sends a chill down my spine because we all know what happened the last time he was making thinly veiled recommendations to buy stock.
Moving on, I survived this Friday and I came out in the green. I took a trade on Feeder Cattle and even though it didn’t move all that much from my open price, it moved enough to give me something and I’m thankful for that. The big winner for me though was in the cash open where I was able to make a decent amount of ticks going long and short. This is one of those days where I’m glad the market wasn’t in hyper-killer mode and it just eased into buyer and seller paradigms. It gave traders enough time to get their feet planted in the ground and accumulate their positions without them having to overconsider their risk profiles if the market was moving quicker. There are just times when things work out the way they are going to work out and all you’ve got to do is adapt to it. That’s not to say that I possess some type – or even some degree – of tangible brilliance to decipher the market. In fact, the opposite would be a more accurate depiction. The market can only go two ways and in respective amplification. There are literally a million ways to profit.
The bottom line is that I am fortunate and I am grateful to God that I am fortunate especially on a Friday. Now, I can go into the weekend relaxed and conscious that I have that much more to be thankful for.