I'm not normally the one to go against the trend. But I have to call this one like it is: Absolute Madness.


No question, there is demand for stocks, and who am I to go against that. If ther're more buyers than sellers, one of those extra buyers will probably pay 10,000 times earnings if you let him.


And of course the economy will recover. Most of what people measure as contraction actually is the recovery - like an auto company that produces fewer horse-and-buggy whips is actually growing.


But CSCO? LAB? The buying has been indiscriminate, definition of a bull market I guess. If these were the companies that were going to make money this cycle - the same companies that made money last cycle - there would have been no downturn. These are the same companies that got it wrong, and saw their earnings collapse.


So when the economy grows, somebody makes money. But riding the lightning of buying the handful of stocks everybody else is buying is not the way to do it. The best thing I can think to do is to buy the S&P 500 minus the top 100 stocks, or even the Russell 2000 or something. That way, you're not just gambling on a liquidity expansion which could turn around as quickly as in 2000. You're betting at least slightly more on an earnings expansion.


Trading short into demand is dumb. But timing investment entries based on outlier events in liquidity is equally dumb, at least if you were one of the people who would have had the money even if other people didn't, and have the choice. Most of the big tech blue chips of the last cycle will NEVER see that kind of earnings growth again. It will be different companies, with names I cannot name today.


Of course, this is the same thing I have been saying since the September low, which puts me way behind the game in a lot of stocks I wouldn't touch as an investment, stocks like GS and ARBA. But as a trader, who knows, I say buy the list, let it ride! But the difference is, as a trader, you sell the moment it "turns," and never a moment sooner. Few investors ever time it right.


larue