Why We’re Buying in this Market: Part Ten

From Cale’s June 2010 letter to Tarpon Folio investors. Find the rest of this series here.

A Qualifier of Sorts

The burden of proof in macroeconomics seems to be, essentially, on those who argue the consensus is wrong. In that light, I should point out two things.

1 – The consensus among the vast majority of professional economists is still that we are in a recovery. So, I am not being particularly subversive or original in any of my previous conclusions.

2 – None of my prior posts should be interpreted as predictions or forecasts of my own design. I review macroeconomic news and opinions to confirm or dispute the implicit assumptions the stock market makes when pricing in that news. If I knew the next recession was to begin tomorrow at 8 a.m., it would not change how I invest in the slightest.

I am in no way qualified to independently and accurately forecast any macroeconomic trends of significance. Fortunately, all I am trying to point out here is that it is highly likely that the market is temporarily confused about the macroeconomic data that has been released lately – and for good reason.

As the fear of a double dip recession begins to diminish, as I believe it soon will, then market prices will move to accurately reflect underlying values. And in the case of our companies, that move should be significant.

Cale Smith

About Cale Smith

Portfolio Manager at Islamorada Investment Management.
This entry was posted in Our Portfolios. Bookmark the permalink.