Diary of a Financier

Should We Buy Today?

In Capital Markets on Fri 29 Jul 2011 at 10:40

We spent our morning discussing this: Should we buy today?

I’m now short EWI @ 15.75, and I’ll add to it throughout the day.* My firm line on whether or not to buy today… NO! But the calls and the questions keep arising, so here’s my answer:

Hard to buy going into the weekend. A few of these Senators are saying Tuesday is the real last chance. They’re going to wait until last minute, it’s like me doing a paper in college: I could have a month, but I won’t think about it until the night before it’s due.

If the Boehner plan is voted on today, it’ll take the weekend until something develops. If it’s passed, that’s not grounds for the big rally we’re looking for (S&P announced $4tr in cuts needed over 10 yrs to keep AAA). If it’s not passed, they regroup for 24 hours until the House gets a stab at Reid bill—a last resort, but the better of the two plans.

You’re catching a falling knife by buying today. There’s no science/estimation to support buying today… other than the notion that if you throw a dart at a dartboard blindly, you have a chance of hitting the bullseye. You can dollar cost average if you have a lot of cash, but even a 200 pt Dow rally doesn’t get us back to Wednesday’s levels, so you’ll have a chance to buy on the upswing.

–Romeo

*Doubled-down at $16.00.

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