WASHINGTON, May 21, 2012 – Wall Street futures look half decent this morning with major averages pointing to an up opening bell, at least as of 8:52 a.m. Dow futures were up a healthy 59 points when we opened a blank MS Word document, but have dropped a bit to 51 now, indicating that any positive opening is still subject to the dominant bearish sentiment.
As we mentioned in our companion column, Prudent Man, we took a position in Facebook (FB) yesterday afternoon near the close, less than a scant two pennies above its $38 IPO price. It was a crapshoot just to see what happened. And it looks like craps is what we’re going to get.
FB rolled snake eyes this morning in pre-market trading, down nearly one and a half points. Pre-market trading is notoriously, umm, dicey however, so it’s unclear how the stock will officially open at 9:30 a.m. EDT. We suspect we will exit our fun-and-games position sometime today, leaving some money on the table.
It appears that not even newlywed Mark Zuckerberg, the financial media’s latest anointed wunderkind, has enough of an aura to overcome Greeks bearing unpleasant gifts. Yes, Greece is still on the grid this morning, even after the Europeans, at the G-8, “pledged” that Greece would stay in the Euro. Word is that Greece’s leftists have even “pledged” the same.
We’d like to point out that Congress has “pledged” to reduce the Federal deficit for at least three years now, and President Obama and VP Biden have “pledged” millions of “high-paying” jobs for the same period of time. We’ve seen how that’s worked out here, and it’s likely how the latest round of “pledging” is going to work out over there. Meanwhile, we hear there are at least a couple dozen “high-paying” openings for greeters at a few local Wal-marts. Little hope, and no change.
Commenting over at CNBC, FCStone stock analyst Ed Meir is quoted as writing that “any early gains will eventually be rolled back, as the markets refocus their attention on the more pressing problems at hand, and ones that cannot be easily papered over by well-intentioned communiqués.”
Looks likely. We shall see.
In the meantime, yours truly won’t be giving his small Facebook position much room to tank. If you have any shares, particularly if you’re a little guy, we advice extreme caution. But as always with our comments, you’re on your own. We don’t have a “Get Out of Jail Free” card.
We’re also continuing to pare positions and now have a small position in SH, a slow-moving ETF that tracks the inverse of the S&P 500 average. I.e., it’s short the average. We are also considering winding out of a few REITs we currently own. The yields are incredible—one REIT, Bethesda-based AGNC, currently boasts a yield in the high teens.
But all these swell REITs can tank with the rest of the market, albeit more slowly. And if you lose more in principal than you’re gaining in yield. Well, you can do the math. Additionally, some of these REITs are under pressure now as some pundits have begun to question how well some strip shopping mall holdings are going to bear up under continued banking, lending, and spending pressures.
While all markets now appear to be hugely oversold, in this environment, any reactionary bull run is likely to be short lived. Greece and now Spain continue to vex the markets, and Facebook’s miserably-received IPO, instead of helping improve sentiment, appears to have dampened things instead.
As we’ve been saying, at this point, your mattress may be the safest bank in town.
Disclaimer: The author currently holds positions in FB and AGNC. Comments in this column are not meant to be construed as advice to buy or sell any position.
The author of this column maintains several active trading and investment portfolios and owns residential and investment real estate.
Illustrations, charts, commentary, and analysis are only the author’s view of current or historical market activity and don’t constitute a recommendation to buy or sell any security or contract. Views, indications, and analysis aren’t necessarily predictive of any future market or government action. Rather they indicate the author’s opinion as to a range of possibilities that may occur going forward.
References to other reporters, analysts, pundits, or commentators are illustrative only and do not necessarily represent an endorsement of such individuals’ points of view. If specific investment vehicles are mentioned in any article under this column heading, the author will always fully disclose any active or contemplated investments in said vehicles.
Read more of Terry’s news and reviews at Curtain Up! in the Entertain Us neighborhood of the Washington Times Communities. For Terry’s investing and political insights, visit his Communities columns, The Prudent Man and Morning Market Maven, in Business.
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