In response to:

This May, Don’t Sell…Buy Protection and Walk Away

jamesbloom Wrote: May 01, 2012 9:57 AM
A good contrarian look at the markets. I think you might be on to something here. It seems to me that if the market is trading at the same levels but making double on an earnings basis, then valuation is cheap. I also agree about China and your analysis of liquidity and the Fed...but Europe is a different story. I'm still not convinced the worst is over,I hope you're right.

I love the ‘Lowering of Expectations Season’ which precedes the release of corporate earnings. It gives those of us who are bullish the ability to use market needed drawdowns - such as the 4% pullback we experienced - as a way to add to profitable positions and shake out the weak longs. 

For the last few years, ever since Sarbanes Oxley was introduced into the capital market structure a decade ago, companies have ‘lowered expectations’ with vigor in order to avoid the perception of a violation of the rules. It’s a pattern that has repeated itself quarter after quarter.

...