Top of the Curve

Goldilocked

Over brunch I had a pretty interesting conversation with someone who worked at a private equity firm. I didnt think they paid much attention to the economy or the market and just figuring out how much they could spend on a company and then how to pay for it by leveraging someone elses money.

Anyway

He was saying that the way he looks at it the economy is perfect. Market is strong, inflation contained, economy growing and people are out spending money. Here in new york there is tons of construction and hotels look packed. Just like goldilocks whos porridge (i had no idea thats how you spell pour-age) was juuuuust right. i pondered on this - and thought about my trading. The biggest mistake I have made shorting into his rally (and losing a decent chunck of change after having a great year) was that I wasnt trading based of what the market was thinking I was trading based off of what I was thinking. Housing? the market doesnt care. Financing? the market doesnt care. Its only two things that seem to be a big deal. 1)Inflation 2) Whats the fed going to do with rates?

The housing story I continue to believe will hurt the economy. But its not until after the election - thats maybe when it will shift into focus and well see if its doing any damage. Because right now it has a large bark but not much bite.

posted by BKo @ 9:02 PM