SHREVEPORT, La., May 17, 2007 (PRIME NEWSWIRE) -- DonHarrold.net says investors can make more money in this market than any time in the past, but savvy traders will not follow the lead of mainstream Wall Street.
"There is no way to spin this. The markets moved up Wednesday. And, there was a new reason," says http://www.donharrold.net founder, Don Harrold.
"Investors were told that some very rich people are buying right now. And, that must mean it's time for them to buy stocks at 'all time highs," chortles Mr. Harrold.
"The 'news' was that, '...billionaires Warren Buffett, Edward Lampert and Carl Icahn were upping equity investments...' (source: AP)," reports Mr. Harrold.
"In corporate news, Citigroup Inc., one of the 30 (companies) in the Dow industrials, rose $2.12, or 4 percent, to $54.91 after billionaire hedge fund manager Edward S. Lampert said he acquired more than 15 million shares of the financial services conglomerate,
"Warren Buffett's Berkshire Hathaway Inc., meanwhile, reported in a regulatory filing that it doubled its stake in Johnson & Johnson, also a Dow component. Johnson & Johnson rose $1.23, or 2 percent, to $63.05,
"In another sign that liquidity is high and likely to keep buoying (equities), Carl Icahn's fund disclosed a new 3.1 million share stake in oil and gas producer Anadarko Petroleum Corp. and a new 2.7 million share stake in CSX Corp. Anadarko rose 73 cents to $47.20, and CSX Corp. rose 66 cents to $46.40." (source: AP)
"Investors should read these 'news items' with a critical eye. For example, Lampert bought a large amount Citigroup (NYSE:C). That's one company that he may have inside information on. The inside information Lampert may have is beyond the average traders ability to know and may or may not be meaningful to an individual's portfolio. If an investor wants to follow Lampert, they should buy C. But, they should not be fooled into believing Lampert's buy of C means they should buy some Petsmart, Amazon, or Sirius Satellite," asserts Mr. Harrold.
"Warren Buffet increased his stake in Johnson and Johnson (NYSE:JNJ) - a company he already owned a stake in. Warren's reasons for owning companies are sometimes at odds with common sense. Sometimes Warren buys at the wrong time - over the short term. The Omaha-based business genius is, after all, human. During the 'dot com' days from 1998 to 2000, Warren's stock (NYSE:BRKA) dropped almost 50%. BRKA is flat for the year (2007) and down from its highs of December 2006. Warren's a smart guy - no doubt - but his investments are not fool proof. Sometimes Warren is contrarian indicator. Astute market watchers will understand Warren's expertise in the 'real world' is running companies. He likes to turn companies around from the inside. That's not what investors should use to guide their trades," adds Mr. Harrold.
"Carl Icahn bought an 'oil and gas' company, Anadarko Petroleum (NYSE:APC), and a railroad CSX (NYSE:CSX). The key point about these two (and this is VERY important) is that WHILE THE MARKET SOLD OFF in 2000 - 2001, APC and CSX MOVED UP. APC and CSX are not plays on a market about to move higher, rather a market ready to move LOWER. They are probably 'save havens', not an indication that the market - as a whole - is ready to move up," contends the investing Maverick.
"There is nothing about the 'news' today that indicates this is the time to start buying. If you look at what these billionaires did recently it doesn't say anything that contradicts the bottom line: The markets are overbought technically, and fundamentals continue to be terrible," says Mr. Harrold.
"Traders should recall the 'resilient consumer'. The 'resilient consumer' was supposed to prop the market up. Well, the 'resilient consumer' keeps being less resilient. Today, gas prices hit an all-time high at $3.10 a gallon on average, nationwide. More news that was 'shrugged off', but it will not be 'shrugged off' forever," Mr. Harrold says.
"Home building permits were down to levels not seen for a decade. That means that less and less people are even PLANNING to build homes. Seems the 'resilient consumer' isn't willing to plunk down for that new house just yet," argues Mr. Harrold.
"The point is that these two OTHER news items today - the ones that speak directly to the 'stories' investors were told to push them into the market last year (where the 'resilient consumer' would spend like a drunken sailor forever, and that would prop the market forever) are warning signs," Mr. Harrold states emphatically.
"I was right about the market correction before last summer. I was right about the bottom in 2006. I was early on my sell call last November but proven right in 2007 when the Dow pulled back below 12,000. I was right when I called for buys at THE BOTTOM this year," the DonHarrold.net founder recalls.
Don adds, "I could be early on my call now but the fundamentals (stories, yarns, and reasons-du-jour) plus the technicals (charts, indicators, and logic-based trading rules) say this market will correct hard."
The logic-based trader adds, "I understand how hard it is to go against the grain but, trust me on this, the mountain of consumer debt, margin debt, and rising consumer prices (yes, I know the lie about no inflation, but do the math, prices are up across the board on things you actually USE DAILY like food, energy, education, and health care) cannot be ignored."
"The big 'surprise' 'news' today about the billionaires has been spun so many ways. But, smart traders will look at it with a LOGICAL eye and see that it's just another bit of fluff that allows mainstream wallstreet to dump shares into the weak hands," concludes Mr. Harrold.
Don says, "If you want to play with the billionaires, buy Citigroup (NYSE:C), Anadarko Petroleum (NYSE:APC), CSX Corp (NYSE:CSX), and Johnson and Johnson (NYSE:JNJ). Just don't play the game of 'guess why the billionaires bought'."
"You can't win that game," Mr. Harrold says.
Investors can get Don Harrold's next full-length, money-making video report free at http://www.donharrold.net