Tuesday, February 24, 2009

Why a bear market rallye hurts new clickers more...

Baby boomers are learning one of the toughest lessons of aging. Nothing works quite as well when it has been used for a long time.
Having easily done more than 300K trades in my life, I am always amused by all the would be stock traders out there thinking that because they can open an account and click on e-trade, it now empowers them as investment gurus.
The landscape has changed more on Wall Street in the last 18 months than in the last 70 years. Computers and programmers are now replacing complete trading pits and trading rooms. What is left is unemotional program trading,the equivalent of slot machines, waiting for fools to open accounts, turn on their PCs or cell phones and click their money away into "investments"... It's the New Las Vegas and I am surprised we haven't heard ex-mortgage brokers aka ex-pizza delivery boys going into this action. Let's face it, there is supposedly $7.1 Trillion dollars waiting on the sidelines... There must reactionaries who feel empowered by their thinking that because "THEY" haven't lost 50% of their money in the stock market , they are collectively smarter than the people who saw the DJIA hit a 12 year low yesterday and seen their 401K barely able to fund a daily caffeine fix at Blackholebucks...
Well let me give you some really GOOD advice in point form:
- IF you open an electronic account and hope to trade against a person, odds are that you are trading against a machine with no emotion and contrary to you IT makes money on a penny spread
- More stocks fall by 25% or more than stock rises by 20% in a single day in a bear market. This means the odds of having a blow-up are squarely against you
- Hard assets and commodities have a tendency to have higher gyrations when the pie has shrunken by 50% and spreads widen accordingly

CAUTION IS IN ORDER: if you don't have stops, options coverage and hope to pick up some GE like Warren Buffett did at 21.75 , be ready to buy even more at $8...!

Some of the damage I have seen in this market, is extraordinary and thinking you can catch a falling knife is not that great strategy! But every day the talking heads on CNBC, insist a bottom is near, well I tell here and NOW , the market cannot hit a bottom UNTIL AIG is allowed to fail...


Buying PGF.UN at these levels (6.75) after my first return at 10 (ouch), seeing gold hit the 800 before the next rallye, dump silver.

Good trading to you

P.

Monday, February 9, 2009

Further Signs that Obama is fed Pablum!

What a dismal site: There, the commander in chief, earnestly, trying to show empathy in a town hall meeting. Just like Bush, reciting a litany of grievances on previous administrations, ghosts that need to be exorcised and the big man imploring support for his rituals. As forewarned, it did not take long before the powers that be, have corrupted the true understanding of the last days of the republic.
If the Republicans can be commended for delaying by all tactics available to them, the ratification of the spending bill, we are of the belief that it is more in spite that they don't get to spend it themselves and are just planning their 2012 campaign by showing their disdain for this folly rescue package.

We are of the belief that a 50% fall in aggregate demand for a fraction of consumer products will ultimately be met with a 25% fall in supply over the medium term which in turn will spike up inflation while keeping up high unemployment.. THE LAST thing you want to do is throw $8TB that will eventually end up creating hyper inflation when demand in 18 months will outstrip supply!

we are already seeing that the Obama administration has lost its way in the foggy swamps of economic half truths. While the road to indebtness is paved with rearview mirrors, please Mr. President avoid the rhetoric and anecdoctal evidence and let us live in fear for 18 motnhs rather than regret for the next two generations.

Wednesday, February 4, 2009

And What If...

I have been talking to three good friends in the money management business this week and the consensus amongst us four was that sooner than later long term rates would rise. A commodity based hedge fund manager, a bond guru, a full service retail broker seem to agree with my thoughts and outlook. That got me thinking. IF we all agree, why isn't the DJIA at 5K yet? Why with all the dire news of 50K layoffs every day, drops in demand of 50% for cars, why can't I buy a brand new Chrysler for $5K?

What if Geithner and Bernanke instead of continuing to be history majors somehow became master poker players? Mind you It's a far stretch but read on!

Congress approves $835BB BUT the SENATE especially the REPUBLICANS get to be the saviors by sending back to el Presidente a scaled back $400BB-$500BB plan. Mkt was bracing for the whopper and they get a diet meal. Obama plays along... USD rallies DJIA coughs up a little because foreign earnings will suffer but all of a sudden, the mother of all short squeezes prays upon the naysayers... GREED is back and that is good as everybody I talk to has only fear and THAT is not GOOD for anybody!

On that note took some nice profits on TBT at $49.01, sold my SU flat ( too much debt), Sold DNR for very nice gain (16%), bought some UUU (keeping fingers crossed) and now TIM and BEN get the hill to cut the pork and let's have a PARTY!

Good trading to you!