I Didn’t Realize the Reversion was Going to be so Mean!

Ugh! The market is getting hit hard for the second day in a row. The S&P 500 was down -2.82% yesterday and we’ve been down by as much as -1.17% today. Some buyers seem to be crawling out from their hiding places, but we’ll have to see what happens.
Clearly, investors were spooked by this week’s Fed decision, plus some poor economic reports and Cisco’s results. Let me caution you to wait this one out. The fact is that interest rates are already so low, there’s not much place else for investors to go but stocks and gold—and the latter trade is looking very crowded.
The 10-year T-bond dipped under 2.7% recently which is just…nuts. That means that the government will pay you just 27% over the next ten years for the privilege of renting your money. I think this isn’t so much a statement on the U.S. government’s finances and it’s one about the level of anxiety of investors. A 10-year at 2.7% is basically throwing in the towel and refusing to play anymore.
For individual names, I really like Intel (INTC) below $20 a share.

Posted by on August 12th, 2010 at 10:40 am


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