Current valuations cause concern.

 We find ourselves in a minority here and it will be so until events or circumstances change our mind. The continued chasing of stocks, and most notably dividend stocks is pushing valuations beyond what we consider prudent. Many of the stocks in our hedge fund portfolio are reaching limits we are uncomfortable with as well.  The markets are currently ignoring European worries, US budget concerns, and continue to trade on the greed side of the fear/greed equation. As earnings season begins this week in earnest we will get our first indications of the economy going forward. Concentrate on expectations going forward by companies, not what earnings were the past quarter. 

Doug Kass, who is followed by many traders, came out this week with a all is clear and buy away posting which is likely pushing this move upward.  Doug is a committed bear and anytime he sees positive trends many believe is must be true with his credentials.  It also helps he made good calls twice before in the last three years. So use this info as you will.

As the markets move upwards here we are pleased that the fund is positioned strongly to the fear side of the equation. Maybe we will be proved wrong, but good sleep and profits here go hand in hand.  We find very few bargains or even good valuations here so we will stay put through the end of next week's derivatives expiration day. 

The one point that plays in the favor of the greed side is that SCCO has begun to make a move out of it's lower trading zone.  SCCO, the copper producer, is a direct play on the world economy getting better.  If SCCO moves up into the mid-30''s that could signal the currentuptrend is correct. 

We still consider GG and the agency reits here as the only place to place new money.