In the "change is good" department, I have recently accepted a promotion to be managing editor of
. I'm excited about the opportunity, as I believe we have amassed the best collection of analytical talent anywhere, and most certainly online. The beauty of the site, I believe, is there's literally "something for everyone," regardless of your investing style and taste.
Of course, that's not to say the site is perfect, and I hope to implement some new features and attract some new contributors in the coming weeks and months. As always,
I welcome your feedback and suggestions. After all, the site is nothing without you, our readers and, to paraphrase The Kinks, we want to give the people what they want.
One of the best parts of my job as a contributor to the site has been the relationships I've developed with readers. I certainly hope we can continue the dialogue as I move into this new role, and I thank you for your continued support of
For Every Action
Naturally, my new duties will preclude me from writing as often as I have in the past. That said, I do hope to resume writing on a semi-regular basis once I get settled into the new role. One feature I'd like to revive is the "Guru Vision" columns, because some readers are seemingly always interested in the latest comments of certain pundits. I've been getting such requests lately, so here's a quick update on some gurus I've quoted in recent weeks and months.
July 16, I quoted Don Hays of Hays Advisory Group: "My tea leaves tell me that ... the big rally is within just a couple of weeks of blasting off."
Technically speaking, he'd be right if a "big" rally started shortly (even Tuesday), but obviously you're starting from a deficit if you bought July 16 based on Hays' bullishness. Since then, the
Dow Jones Industrial Average
are off more than 3% each as of Monday's close, and the
by more than 5.5%.
Obviously, many individual names have fallen more, including
Research in Motion
, all names on Hays' "watch list," which currently has an overweight recommendation in tech and telecom. (That said, he's got some winners in there too, which raises a longstanding caveat that the only way to truly know what any guru is doing is to subscribe to his or her services.)
On Monday, Hays was admittedly eating some crow. But he also stuck with a view that fundamentals augur a rally and sentiment indicators -- such as Friday's spike in the put/call ratio and Arms Index -- suggest the bottom is close at hand: "I certainly thought, as expressed on our July 23 report, that the last low had been made," he wrote. "Does that change my opinion that the rest of this year will produce a strong recovery? No, but there is no doubt that we will have to bob and weave until the panic of Thursday and Friday is digested and the downward momentum is reversed."
On June 23, I quoted Paul Desmond of Lowry's Reports as being fairly resolute and upbeat: "The path of least resistance is to the upside," he said at the time. "If we were about to break down, you should see signs of increasing selling. Instead, we're seeing signs of sellers retreating."
Obviously, the sellers have become more aggressive in the weeks since June 23, but "in the past six months very few of the classic signs of weakness typically seen in advance of major market tops have been in evidence," Desmond commented Friday. "Thus, the probabilities still do not favor the start of a true bear market."
Desmond views the recent declines as within the realm of a normal correction, particularly following such a massive rally as occurred from the October 2002/March 2003 lows. "If investors ran for the sidelines at every 10% correction, they would often be getting out when they shouldhave been getting in," he wrote.
Still, the veteran technician acknowledged the market's recent message. "In summary, it appears to be too early for major defensive positions. But, investors should consider holding back on all new buying temporarily, and use periods of rally to cull out their weakest holdings," Desmond concluded.
The optimism expressed by Desmond and Hays (among others) was among the reasons for my own bullishness, as expressed here in June and early July. Clearly I was wrong, as were a number of
contributors who were stressing the bull case at the time.
I can't speak for anyone else, but my forecast for a "summer rally" was based largely on a belief that expectations for aggressive
tightening would prove unfounded. I detailed that rationale here on
June 30, when futures were predicting a 3.50% fed funds rate by year-end 2005. The irony is I was right about monetary policy: The Fed is now set to go ahead with a tightening Tuesday that it'd probably like to avoid if it hadn't painted itself in a corner (a specialty of Greenspan's Fed).
Obviously, I was wrong about how unprepared market participants were for a tempering of economic growth (which is trumping any boost from the potential for a less-aggressive Fed) and certainly didn't factor in the ongoing spike in oil prices. Again, I'm not alone on that front. On June 20 Alan Greenspan testified in Congress on June 20 that "inflation also seems to have been boosted by transitory factors such as the surge in energy prices." (Crude futures have risen an additional 10% since June 20.)
In hindsight, I should have listened more closely to some of the more bearish/cautious members among my regular stable of gurus. These include
Bernie Schaeffer of Schaeffer's Investment Research,
Thomas McManus of Banc of America,
Tobias Levkovich of Citigroup Smith Barney, and
Rick Bensignor of Morgan Stanley.
As the new gig permits, watch this space for a forthcoming update on what those folks are saying now. (If you're not a subscriber now,
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Aaron L. Task is the new managing editor of RealMoney.com. He doesn't own or short individual stocks, although he owns stock in TheStreet.com. He also doesn't invest in hedge funds or other private investment partnerships. He invites you to send your feedback to