Wondering when this market will finally break? Strategic investor Doug Kass has some insights.
He says, “a patient suffering a massive heart attack does not get out of bed and play three sets of tennis.” Sounds like he’s not looking for the market to make any healthy moves for quite some time.
“I remain of the view that we are in a broad trading range of approximately 825 to 1,025 on the S&P 500, an exquisite trading backdrop but an uncertain investing environment.”
Well he certainly doesn’t mince words. Of course, the natural question is why?
Kass, who’s a celebrated bear, just doesn’t think there will be a whole lot of lending going on. And without lending, he just doesn’t see the market moving higher.
“Given the abuses and absence of due diligence in lending/borrowing over the last decade, it should not be surprising that the pendulum of credit (from easy to hard) will delay recovery. History shows that that the economic transition will require patience on the part of investors.”
So how should you trade?
“Stay away from energy, materials, commodities and infrastructure; all the sectors that have outperformed from the December lows," counsels Kass. "I don’t think the (gains) will be sustained.”
What’s the bottom line? “There is no quick fix," Kass says. "It will take time,”
See our entire conversation with Doug Kass. Watch the video now!
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Trader disclosure: On Jan. 7th, 2008, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Adami Owns (AGU), (BTU), (C), (GS), (INTC), (MSFT), (NUE); Najarian Owns (CSCO), (MSFT); Najarian Owns (XME) Calls, (NVLS) Calls, (NVDA) Calls; Najarian Owns (XLB) Call Spreads; Najarian Owns (EEM) Long Call Spread; Najarian Owns (ERTS) Long Call Spread; Najarian Owns (MSFT) Short Calls; Seymour Owns (AAPL), (BAC), (EEM), (F), (FXI); Karabell Owns (CL), (DRYS), (FCX), (GOOG), (JPM), (NOK); Doug Kass Is Short (TLT)