I love to travel, but with two young children (5 and 2), I don’t get to do much of it. When I do, one of my favorite parts is chatting up the cabbies from the local town.
This week, I am traveling to Las Vegas for the Money Show. I arrived late last night and my cab ride did not disappoint.
“Buy the Baht,” he said when he learned I was here for a financial trade show.
“What in the world are you talking about?” was my reply.
Ah, it turns out my ride for the night, was a recovering day trader who apparently likes to still dip his toes in the water. More importantly, he enjoyed sharing his wisdom and war stories of being tied to a computer trading the market without much to show for it.
I humored him by listening to his tale, but I did not get much from his logic for making the trade. What I did garner from the conversation was the realization that my cabbie was providing me with an important lesson regarding investing.
When the Cabbie Says Buy…
When the cabbie says buy, it’s time to sell, and vice versa!
Generally speaking a cabbie is a cabbie for a reason. Understanding markets, valuation, economic analysis and everything else that it takes for successful investing requires a certain background that does not generally lead to schlepping travelers from one destination to another.
Instead, the cabbie is the central repository for an entire community. They interact with a large portion of the population, and in a way, they have their fingers on the pulse of what is happening in the world.
From an investing standpoint, one way to view the cabbie (to all of you cabbies out there, I do not mean this in a derogatory way) is that they are the “chief sheep.” They hear ideas from passengers, usually the hot stock tips, and in an effort to change their lot in life chase the trend.
Taking this observation to my ride last night, I am struck by the applicability of this little rule of thumb. In this case, the cabbie is suggesting…>a trade against the U.S. dollar.
Well, he may have a point, but it would appear to me that he is a day late and possibly a dollar short.
A Day Late and a Dollar Short
The Federal Reserve appears to be finished with the weak dollar policy of interest rate cuts. In its place may be rate increases needed to fight inflation. If so, the dollar could be strengthening across multiple currencies including the Thai baht.
What was conspicuously absent from my cabbie was any mention of stocks.
Does the absence of enthusiasm for stocks suggest bullish times ahead? I think it does.
In fact, it has been that way for some time. The sheep are tired of losing money in the market and they appear to be a defeated herd. Gone are the days of easy money made during the dot com craze.
In its place is a world that Warren Buffett describes as underwhelming at best from a performance standpoint. Such a conservative outlook combined with a lack of interest from the sheep, may in fact be an important signal for the market.
I would be looking long and hard at stocks to buy at the moment.
Richard Young, in his Intelligence Report, has a list of several stocks to buy now. I think even my cabbie would be impressed with this list.
One intriguing name on the list that captured my attention is General Electric (GE). GE has been having a tough go of it for the last several years. Even worse, the company recently missed expectations, something that has rarely, if ever, occurred.
Fueling the growth for GE will be places like China. I for one take note of the recent announcement that China will be building its own aircraft manufacturing company. GE has done an excellent job of penetrating this important market.
Will it be a driver for future growth? I think so. Certainly it is worth a look!
What is not worth a look is to bet against the dollar like my cabbie suggested. He was a nice guy and well intentioned, but he needs to stick to doing what he does best–driving a cab–not making investment recommendations!
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