Thursday, March 5, 2009

Is It Obama? Or Something Else?

Everybody's blaming recent market performance (er, lack of thereof, to say the least) on our President. Or, more to the point, on the proposed budget. Well, I agree with critics on almost everything. It has more pork than entire state of Minnesota, it has a lot of new taxes some of which are business-killers or even industry-killers.

Maybe they (including Jim Cramer) are right. Maybe this budget will get accepted as is and make this depression much worse. But I don't believe it. This is not how budget moves through Congress. This budget will be changed in committees. The most stupid taxes will be blocked by Republicans in the Senate. Pork will stay, of course, but it's the way of this country. Anyway, final budget won't be as bad as market makes it look.

Maybe there are other factors at work? Hot money was in gold lately. Significant part of it should've came from stock market. Maybe redemptions from hedge funds started again. Maybe individual investors sell. I don't know. But the drop looks way too big to blame it on one reason only, even as big as US Government.

Let's wait and see. It's hard to understand direction of market when reasons are not clear.

Of course, on a day like today I had to buy something. Amazingly enough, nothing on my shopping list hit the target price. With one small exception: I bought Jim Cramer's recommendation, Allos Therapeutics (ALTH). It a speculative stock, but might be a winner. And by the way, I'm not recommending to buy or sell any stocks, just telling what I do.

Full disclosure: at the time of publication author had a long position in ALTH. Positions can change any time.

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