February 24th, 2012

Wall Street = Lottery Recently?

The stock market always seems like it should be easy when “Monday morning quarterbacking”, when we look at what we could have, should have, would have done if we only could have seen the charts as we see them now in retrospect.  It’s always frustrating and disconcerting to see the opportunities slip by if only we had acted when we were afraid to act.  A perfect example is what happened since the market hit bottom after its 17.27%, 20-day mini-crash that began on July 8 and ended on August 7.

We continue to hear that the market is up a whopping 8.64% so far this year, an advance that’s respectable by most standards given the short period of time it took to log.  Add to this year’s huge move, add the advance from August 7 to last year-end and you get a total move of 21.8%.  Even more impressive was the 27.39% move in the Russell 2000 Index.

However, as I scroll through my charts, what stands out the most is the larger of stocks that have achieved huge run-ups since last summer.  Although 25% of stocks experienced declines, 42% had gains of 30% or more.  When you look at some of these charts, you can’t help but think “Bubble?”  Here are a few examples (click on symbol for chart):

  • BVSN (Broadvision): 265.10% – Internet Software
  • CIE (Cobalt Intl Energy): 232.46% – Independent O&G
  • PATK (Patrick Industries): 221.43% – Lumber, Wood Products
  • ACAT (Arctic Cat): 199.10% – Recreational Vehicles
  • KTCC (Key Tronics): 167.00% – Computer Peripherals
  • LF (Leapfrog Ent): 154.76 – Toys and Games

Ah! If we only had the guts to put it all on red or black or knew which number to pick or which team to bet on.  But we don’t need to.  It seems like the Street has been like the lottery or Las Vegas for the past several months and all we needed to do was to have the nerve to put some money into the market at the bottom last August and we would have felt like we were either extremely lucky or real geniuses.

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