Speculators Won't Go Away

The problem with selling everything because of froth is that froth can continue forever, as we can see today. It just rotates.

One of the froth stocks, CIT (CIT - commentary - Trade Now), issues a "reports progress in restructuring" memo that will make it so the common can live to play again. AIG (AIG - commentary - Trade Now), the sexiest spec, reports a number that is basically all bookkeeping, but do you think the bulls care? Meanwhile, the bears who have put out so much stock here just get overrun.

The banks do so well if the stress tests get put away because of unemployment improvement, which means we might be out of secondaries, except for the potential government secondary of Citigroup (C - commentary - Trade Now) which I believe will be lapped up because it is below book value, and people love to buy banks below book value that are making money.

We got the truth about Fannie (FNM - commentary - Trade Now) and Freddie (FRE - commentary - Trade Now) today -- there's nothing left, so they get hit.

So the speculators find something else to love. That's the pattern. And it makes it real hard to sell on account of the notion that low-dollar stocks are flying.

Sure, Citigroup shouldn't be able to go up a dollar in a week. But what happens if you are a big institution and you missed Bank of America (BAC - commentary - Trade Now) and Goldman Sachs (GS - commentary - Trade Now) and JPMorgan Chase (JPM - commentary - Trade Now)? Are you going to risk not taking 50 million shares of Citigroup?

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