Sunday, May 23, 2010

Finney is concerned

Kizziah Finney, senior stock strategist at Evermay Securities, tends to be optimistic and risk tolerant. Yesterday found him somewhat restrained. While he is still in the camp that sees long term values aplenty in the market, his view of the near term is tempered by market statistics that are in many ways negative. We met at a bench outside Strawberry Fields in Central Park, myself toting sandwiches and salads from the 57th Street Mangia. Finney talked pretty much non-stop as is his wont.

"Good food. This roast beef on French bread is terrific. Could use a few gherkins or something but otherwise just right. And this lentil salad may be good for me but it's also perfectly tasty. Thanks. Now we need to get down to business as my clients are crying and cringing at every market turn in these all of a sudden volatile days. What's happening, the big event, is that credit markets are showing sign of seizing up, liquidity and interbank trust is under pressure. The foundation of equity markets is a functioning liquidity mechanism and what's going on today is a mini late 2008. All in one frigging week or two."

I asked Finney if he dared make any equity market projections near term.

"NO, I have no idea where this is heading near term. Friday's late short covering rally meant nothing except that big money wanted to spend their first great Hampton's weekend without worrying about open exposure. There are enormous values in small cap and mid cap land today and great plays in large caps with solid dividends that you can't match in any fixed income security. That's the truth, but you can't go there until underlying liquidity is assured. Europe is a mess, our Congress is a mess, North Korea is not a small distraction, and China is a wild card of overbuilding and uncertain market regulation. Tell you the truth I started nibbling at some small caps Friday. I already had positions in four companies with no debt and promising products so I bought more. Who knows if that was wise but there is something in the American genetic make-up that believes in the future so there I go."

I thanked Finney for his time as he was anxious to get back to his desk and clients at Evermay. We stood and he added,

"What's happening in today's market should be a minor interruption. Problem is that we cannot predict the harm that the U.S. Congress, or Angela Merkel, or other political players will inflict. Uncertainty kills markets in the short term, and that's what we have. Thanks for lunch. Next time add a raspberry tart to your order please. Let's catch an espresso as we walk down Fifth."


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