A NEW YEAR

Authoring a blog can be more trouble than its worth, but an alteration in my career path and recent encouragement from a friend/blogger has me writing today.  The investing and sports punditocracy (idiocracy?) is already quite crowded, but these (not too dissimilar) subjects are my twin passions so I'm throwing my hat into the ring.  Truly a new year's resolution.

A Little Philosophy

Our culture's embrace of technological innovation is a double-edged sword.  Information continues to become commoditized at a rapid pace reducing all sorts of barriers to entry, which invites healthy competition, and thus innovation.  The incessant creative destruction seems to be a positive public good, but is extremely exhausting on a personal level.  To wit, what education/career path is "safe" enough for people to safely reach retirement nowadays? Certainly company loyalty is a laughable concept.  Everybody is "burdened" with heavy demands on continuing education whether you accumulate sheepskins or not.

Normal people (irrespective of intelligence) don't handle volatility well, which is why "deep insights" (e.g. LT trends) is a goal that many pursue, as do I.  The aforementioned is an important intellectual exercise, but tasting reward might not be timely enough.  Since we must live on a human timeframe, I think the more important question is, "What's the intermediate term (e.g. weeks/months) reality?" These days it seems this is the only "sweet spot" that a hybrid qaulitative/quantitiave-based strategy has a chance to deliver.

Glimmer of Optimism

On the heels of the worst global market selloff since the Great Depression, I expect a tremendous amount of volatility in 2009. Without the benefit of the longest secular bullmarket in history providing a tailwind, most investment advisors will be at a complete loss how to service their rapidly fleeing customer base.  Considering the prototypical incentive schemes and an utter lack of risk tolerance by investors, it won't be surprising that plenty of tears are to come for those less than nimble.

That being said, howver, I believe the market faces a low-risk for disaster at least until the U.S. presidential inauguration on Tuesday, January 20 when Barack Obama becomes the 44th POTUS.  The FED, Treasury, and incoming administration have been aggressively implementing short-term stimulus plans to avert another Great Recession (or Japanese-style deflation).  Knowing what mistakes to avoid repeating is ostensibly provides a great template, and many are loudly forecasting we should be coming out of recession by 2H09.  Since "everybody know's" the market discounts events 6-9 months in advance, clearly going long the market is "right."

Due to the context of this recession I'm very skeptical the global recovery will adhere to that timeline, which is why I offer such a ST positive view, but sitting on the sidelines when I expect the S&P500 index could threaten 1000 (+10.7%) on a solid foundation of hope means I advocate full positions in selective areas: growth stocks like large cap biotech (GILD, CELG), and industries with favorable y/y comps (US airlines ex-LUV) are favorites.

Meanwhile, infrastructure stocks (FLR, JEC, URS, ACM, GVA) have already run up, and probably worth riding longer, but these are at risk of "selling on the news" after inauguration. I'd like to hear more concrete (no pun intended) details materialize from Obama before recommending something beyond a momentume trade.

Disclosures: No position. 

LINE OF THE DAY:

[Rose Bowl] Penn State vs. USC (-9). 1 unit.   I expect the Trojans to romp over the Nittany Lions.  The mental letdown against Oregon State cost them at a shot for the BCS championship game, but is a scenario unlikely to be repeated with Coach Pete Carroll at the helm.  It also doesn't hurt that the starting 11 on both sides of the ball for USC is chock full of pro talent, and they have dominated opponents consistently all year.  Playing at the Rose Bowl, essentially a USC home game, is a psychological advantage that makes PSU's task all the more insurmountable especially since they don't have a good enough running game to "manage" a victory.   Besides the standard disclaimer of avoiding giving up defensive TDs, this game should otheriwise be fun to watch as an early preview of future NFL talent if not for its competitiveness.  Follow-up: One funky high snap on a punt while running out the clock was the only cause for concern.