The Price Is Right?

 | Nov 13, 2012 | 1:00 PM EST
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This commentary originally appeared at 7:59 a.m. EST on Nov. 13 on Real Money Pro -- for access to all of legendary hedge fund manager Doug Kass's strategies and commentaries, click here.

"Price is what you pay, value is what you get."

-- Warren Buffett

As I wrote yesterday, from my perch the fears of the economic, political, geopolitical, fiscal and tax (capital gains and dividends) cliffs are overblown.

I recognize my analysis yields a contrary view of buying when many are selling today, when the influential media and other talking heads are fearful and, at times, even hyperbolic. But remember the general optimism as the S&P 500 breached 1480 on the upside a few months ago and the confidence on the part of strategists that a performance chase would yield 1500-plus on the index by year-end that would carry through to continued strength in 2013? Or the optimism when Apple (AAPL) rose above $700 a share and the pushback I received when I wrote a negative assessment of the company's shares?

It is funny how we don't hear (and receive mea culpas) from those observers that were so glib and confident in their optimism back then only to be so wrong now. (By contrast, I have promised and always admit my own mistakes.)

They will still have their platforms and still haven't admitted that they were wrong and will not reimburse you for your losses if you have followed them.

These examples above are why you should do your own homework, ignore the confident musings of talking heads -- and that includes me! -- and recognize that only you are accountable for your investment performance.

From my perch, analysis trumps emotion and provides opportunity (as long as that analysis proves to be solid).

With better clarity of the above, as discussed in my lengthy series on Monday, I have begun to add to my net long exposure, within reason -- it now stands at about 40% before my outsized bond short position.

I am far more certain that an investing opportunity is being afforded long-term investors in the recent meltdown: While I believe we also face a near-term trading opportunity ahead, I am less certain of its immediacy.

The charts certainly speak brokedown palace, but, as you all know, I view charts as a history lesson of what happened in the past not as providing a course of prices in the future.

As an investment manager, I don't worship at the altar of price momentum -- and I don't believe you should either -- rather, I see the risk/reward of stock prices at any point in time as an opportunity to buy, sell or sell short. Again, my decisions are based on assessing upside/downside through fundamental analysis.

What is not overblown are the fears of an earnings cliff that will likely limit the market's upside, though above current levels, over the balance of the year. This potential cliff we will monitor over the near term and into early 2013.

A successful solution to our economic challenges could lead to an upgrade in economic growth and profits.

I am a buyer of the market because the risk/reward ratio, based on my macroeconomic and microeconomic analysis, supports a better upside than downside to the markets -- right now.

Buying into fear and lower prices is not for everyone -- as I write, the decline in S&P futures has halved to -6 handles -- it takes those who are really committed and, to some degree, emotionless.

But never lose sight that, to long-term investors, fear is the friend of the rational buyer.

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