Added some India

I bought some India stocks this morning around 10 AM. I want to get my India exposure up to 6.7% of the value of my core Krypto Fund assets (that excludes overweight plays like India, energy, miners, etc.) I was at 5.1% and am now at 6%. One more add & I'll be there. I was waiting for a pullback and the prices of many of the India plays are at last summer's lows, so I bought some here.

Re-buying Gold

I am averaging back into some gold here around 666 (uh oh, that's a worrisome number), 1/3 position. I also bought some cocoa, coffee, sugar & December cotton pre-market, fwiw. Those are intermediate term trades IF my plan works out. I like their fundies & charts.

Beefer Panic Attack

Those non-believers in the concept of beefers got a dose of reality yesterday. The action sure seemed like a beefer panic attack. Those with profits panicked & sold indiscriminately. The bears pressed long suffering shorts. The excess of money in beefer trading funds has made the stock markets act more like commodity markets - wild, irrational swings. All the ETFs make shorting easy. Massive sums speculating via computer trading programs run on "automatic". Madness. All this reminds me of the line by C3PO in "Attack of the Clones" (from memory), "machines making machines ... madness".

I'll be looking to re-load stocks, gold & corn soon, but will wait to see what happens over the next couple days.

Uh Oh. Iran Launches "Space Rocket"

Bad news - I see Iran launched a "space rocket" - purportedly for "peaceful" reasons. Yeah, sure. I guess I'd better check the food stockpile in the bunker. The line between a missile that can launch a satellite and an ICBM that can hit the east coast of the US is a nonexistent line.

I'll have to find my nuclear attack survival material and post some of it. Most people have little idea that one can dramatically increase survival with a few simple techniques. Maybe I'll do it later this week after my business trip to NYC - the "belly of the beast".

Grrrr. Tax Robbers. Lying Politicians. Scum.

I just did my father-in-law's taxes. He's retired and lives on some pensions, social security and income from some investments. So interest rates go up and he makes a few extra thousand. The marginal tax rate on that money for him is .... 46%. Yes, 46%. His adjusted gross income is under $50,000 and his marginal tax rate is 46%. Incredibly unfair. Do we hear a peep from the lying politicians (both parties) about this gross unfairness. Nooooooooooooooooo.

The cause: more regular income moves more of Social Security into taxable income. So you don't just pay tax on the extra $1,000, but on up to $1,850. So in much of the broad 25% tax bracket, the real marginal rate is 25% x 1.85 = 46% Arggggggghhhhhhhhhh.

These stinking politician scum are taking 46% of a retiree's extra income. And no one - not the so-called press watchdogs who are really lapdogs - is talking about it.

Don't be Too Quick to Buy this Dip

As indicated before, I think we could correct here. Don't buy this dip quickly - I'm not. I may even short futures on a rally for a trade. If so, I post my technique.

PS: guess I was too fast selling gold. Well, that's what the long term gold coins & silver bars are for. I just trade around that long position. I buy dips, sell rips; when I think they are topping, I short & cover. I try to trade long side below my idea of "fair" trend and short side when way over it.

Why I Sold Many Trading Longs

When one trades aggressively over an intermediate time frame using much margin, it's very important NOT to be 200% long at the start of a correction. Corrections in a bull market are scary & fast & one can lose a lot of the profits one made over a long period of grinding higher in just a few days.

So when that bearish CPI number came out, my assessment of the risk of a real correction went way up. Hence, I'm off margin (aka "butter" from the humorous brokerage commercial). I used the S&P futures short to offset the margin temporarily, while I sold individual stocks as the market rallied during the day. That worked well and I covered the short today for a small profit.

Market Re-re-re-update

Kryptonite sell program is over. All big caps gone. Still have the S&P futures short. Only stocks now are many energies, deep water drillers, a couple other oil service, miners like BHP, some other "alpha" stocks like YUM, AAPL, India stocks and a few gold stocks. These are long term holdings for me.

FWIW, this selling does does not apply to the Krypto Fund, my very long term holdings - only to trading stocks. I am completely out of short & intermediate term trading stocks. I have only my longer term holdings in a few "alpha stocks" & key overweights like energy, the miners and India.

I am also short the dollar, long deferred lean hogs & cattle, December oats & May barley. I am just posting this to give you an idea of what I'm doing.

Today was a very busy day as the CPI number & reaction changed my near term outlook. I hope to take 1/2 days off for the next couple weeks.

More updates

Sold all my corn futures & DE stock. Sold all my big cap stocks except energy and AAPL. I really don't like this rip up on the CPI number. Seems like beefer panic - performance chasing. And I don't see why stocks are holding up. I thought that number this AM was bearish news. In my mind, that is the "relief" order I was waiting for.

And my private weather guy says he expects a warm dry spring so the farmers can get the big crop in. So I think a corn pullback might occur & I'll buy it, for a hot summer play. I expect much volatility in corn this spring. I have a cheapy option straddle in December corn & will swing trade it. I am keeping all my deferred livestock positions.

Gold trade update III

I am going to sell the rest of that gold trade before the close today. Gotta obey the "buy dips, sell rips" tactics.

Gold trade update II

I am flipping that 1/3 I re-added early this AM. "Buy dips, sell rips"
Over 690 & I'll probably sell the rest, fyi.

Market Re-update

I didn't like the CPI numbers this morning. I think we might correct here, so I sold enough S&P futures to go from 200% long to 100% long, basically to offset the stocks I hold on margin. I also didn't like how people were making excuses for the CPI number.

Gold trade update

I am planning to re-add that 1/3 I flipped soon. I have no particular buy point as I will just watch the 5 minute chart & pick a spot. Anywhere around 660 seems OK to me. I think this pullback is just beefers taking advantage of Chinese New Year causing Asian buyers to be absent, so they can run some stops.

Market update

Re-read the post below of February 14 - it's appropriate.

It's a Bull Market

That's from "Reminiscences of a Stock Operator", the super trading book. The line sticks in Larry Livingston's mind (aka Jesse Livermore) as a young man, given by a successful investor as various big talkers keep mentioning trades, contrary moves, technicals, etc. Then there's "I made most of my money sitting" (quoted from memory). So today we get new highs on all three Dow indices - nixing the worry-mongers about the Transports (who seem never to have read the fine old bible of chart work by Edwards & Magee, "Technical Analysis of Stock Trends"). It's amazing what passes for a guru today. Gurus can miss a beautiful seven month trend & still blab / write like one was a stock market genius.

Buy dips. Hold until relieved - namely, real news imputes a change in the economic trajectory. Stay long & strong.

Two favorite quotes come to mind today:
“Everything is proceeding as I have foreseen.” -- The Emperor, Return of the Jedi.
“I just love it when a plan comes together." -- Hannibal Hayes, The A Team.

Oil Inventories

This weekly focus on oil inventories is dumb. Except in unusual market conditions, the oil companies can make those inventories anything they want by importing crude, gasoline and / or distillates. The demand numbers are what's important. Watch the weekly demand numbers by product & the comparison of them to last year. DOE gives a four week average demand comparison to last year. You'll see steady increases. Over time, that's bullish for oil & oil stocks as long as it continues.

Gold trade update

If you're still in this gold trade with me, good job. Without the beefer analysis and if one used hard stops, one would have gotten stopped out at the low. I flipped 1/3 on the poparoo three days ago & wish I had reloaded yesterday, but missed it. I thought I'd get it a little lower. For now I'm holding my last 2/3 position. A good chart reader says 695 is the next target for April gold. Sounds OK to me. Remember, for gold the operational tactic is "buy dips, sell rips".

Failed War Leadership

The Lyndon-McNamara war leadership (aka GWBush-Rumsfeld) was a disaster on so many dimensions it's hard to conceive how they could have been be so wrong & delusional. In many ways they just repeated the mistakes of Vietnam. They had no concept of victory or doing whatever was necessary to win. They wanted to be loved by history, but will certainly be despised. Here's a couple examples.

Very early after the Iraq government fell, I remember reading in Army Times ( see www.armytimes.com ) that a general was reprimanding soldiers for not wearing seat belts. He had so little knowledge of the situation they faced, in having to bail quickly when under fire. Later he became head of the entire Iraq operation. No wonder it failed.

Then there's Fallujah - a fine example of letting a cancer grow without being excised. And Ramadi. The current issue of Army Times has a story how US units are "Fighting to Gain a Foothold There". Uh, we've been in Iraq almost four years. We won World War II in less time.

Here's an example on how to WIN, from a first hand account of World War II. British tank & infantry units were advancing on a town in Belgium under German occupation. (Remember, Belgium was our ally.) This account is from the tank troop commander. "I told the nearest platoon commander, the only other officer I could see, that if he followed closely behind me, I would put a shell into every house on either side of the street: this would reduce the danger from the Spandau fire [German machine gun fire] that was always such a nightmare for the infantry." (from "By Tank into Normandy", by Stuart Hills, MC).

Extreme Right = Extreme Left

The Extreme Right and the Extreme Left are substantially identical in their ultimate states, both being the same totalitarian beast with different colors. National Socialist Germany and Marxist-Leninist Soviet Union were both totalitarian, brutal, oppressive regimes with mechanisms to control every aspect of human life under their authority. National Socialism had its Fuhrer and Leninism had its General Secretary. Even the regimes' tastes in art and music were similar, as were their propaganda tools & secret police.

Current political dialog uses "extreme right" to refer to political groups who want to use state authoritarianism to control social & cultural aspects of modern life, while "extreme left" is used to refer to those who want to control economic aspects with positivist government power.

Being both socially "liberal" yet preferring minimal government economic power (minimal, not zero) makes me hard to classify. I'm definitely not a moderate. I tried "libertarian populist" once, but learned that "populist" seems to have evolved to refer only to disreputable elements seeking power. I'm still seeking a "label".

The Unreliable Media

Beginning over 25 years ago, I have informally surveyed a variety of people for their experiences with the press in general. By "press" I mean any major media - newspapers, TV, etc. I asked them how accurate was the coverage of events or stories for which they had PERSONAL experience. These people included corporate executives, celebrities, scientists (social & natural), financiers, academics, and others. The NEAR UNANIMOUS result has been that the media coverage is either misleading or inaccurate or just wrong. So the concept of a "reliable" press is a null set. One must always PRESUME the story is wrong or just a promotion of an agenda or just a reporter trying to get the story past an editor or some similar reason for being unreliable. One needs to be highly skeptical of every media source. There are no safe media sources - not The Wall Street Journal, not the New York Times, not the Washington Post or Washington Times, certainly not any TV news. I think one can only listen for facts, get multiple sources (especially non-media ones) and form one's own conclusions. Distrust authority and the press at all times.

Lincoln's Birthday

I celebrated Lincoln's birthday by attending a function of Sons of Union Veterans of the Civil War ( see http://www.suvcw.org/ ). They had a fine speaker (Thomas J. Craughwell, author of "Stealing Lincoln's Body") & an Abraham Lincoln re-enactor who also gave a humorous speech. Too bad the current federal holiday is this amorphous "President's Day", as if all Presidents deserve celebration. We should return to the old holidays of Lincoln's Birthday and Washington's Birthday - they meant something and celebrated true giants of leadership.

Monday Morning Rambles

I read Barron's every weekend. The Market Laboratory section has some good facts. Electric power production for week of Feb. 3 was up about 3% over the prior week and up 15% over the same period last year. That's a lot, but I suppose cold weather has something to do with it. From memory, the year-over-year increase was a lot last week, too. A strong economy & consumer means more power consumption - computers & the Internet use a lot of electricity.

Medium grade bond yields were lower vs. last week, and slightly lower than last year. I guess the soft landing or "touch & go" economic trajectory seems very likely now.

The Krypto Fund

The Krypto Fund is my name for our core investments: these are our long-term, mostly retirement oriented investments. We don't plan tapping these until retirement. These exclude speculation & trading accounts, "Alpha" accounts, short-term savings in banks and similar funds. I'm going to describe the basic style here & will write a lot more over time about variations, taxes, withdrawal issues, why I do what I do, etc., but I think short/medium posts work best. For 2006, the Krypto Fund was up 17.1%; year-to-date it's up 2.8% - pretty good compared to the averages & hedge fund averages.

Krypto Fund contains almost all index funds in different asset classes: the allocations NOW are 30% US stocks, 20% foreign stocks, 20% real estate funds, 10% bonds, 10% inflation-protected bonds, 10% gold & silver. I use a spreadsheet to compute the asset class %'s weekly based on Friday's prices. The US stock funds are Vanguard Total Market Fund, the corresponding exchange traded fund (ticker VTI), or the CREF Stock Account. [Mrs. Bunkerman is a scientist, so her retirement savings from work go to TIAA-CREF funds. Their "Stock Account" has some foreign stocks, so I reallocate these out in the spreadsheet based on annual percentage components]. The foreign stocks are Vanguard Pacific Index, European Index and Emerging Markets Index Funds (& corresponding ETFs) - I allocate 1/3 of the total foreign stocks component to each, hence these are really 6.66% of total Krypto Fund each. The real estate asset class is the Vanguard Real Estate Index Fund and the TIAA-CREF Real Estate Fund. The bonds are the Vanguard Total Bond Market Index Fund and the TIAA traditional fixed income account. The inflation-protected bonds are Vanguard or TIAA-CREF inflation-protected bond funds, as appropriate. Gold & silver are mostly American Eagle gold coins and silver bullion bars. One can use the ETFs for gold & silver (tickers are GLD and SLV, respectively).

I use the corresponding Vanguard Admiral funds if I can as their fees are slightly lower, but with various old accounts spread over two of us over the years, that's not always possible. The Vanguard Real Estate Index Fund invests in REIT stocks, by the way, while the TIAA-CREF Real Estate Fund invests in actual buildings, etc., so they perform somewhat differently.

The spreadsheet computes the % size of each asset class each week. IF an asset class is more than 5% off its target percentage, I look to reallocate some funds to top it off if it's low or take some out if it's too large. For example, if the US stocks are over 31.5% of the total Krypto Fund, that's 5% of the target 30%. So I look to see what's low & move the excess 1.5% to other asset classes. One has to consider fund restrictions for frequent moves, but since we have multiple accounts, I have always been able to figure out a way to reallocate.

See David Swenson's great book, "Unconventional Success" for a description of why this type of personal investing works well. I have done long-term investing along this strategy for over 20 years. When I read his book, I was happy to see he agreed with me (joke haha) and I learned about the value of the inflation-protected bonds. So I added that asset class. I also adjusted my rebalancing trigger to 5% from 10%, as I realized from his book I had been missing many good re-balancing opportunities with a 10% trigger. My percentages were pretty close to his, otherwise. Also, I have some gold & silver for many reasons.

I love that name, The Krypto Fund. I like to think my dog, Krypto, pushes the computer key every week to do the reallocation. She accepts dog biscuits as payment. :-)

Where are the Viking SUVs?

I found a fine summary of some climate history of the past 5,000 years. See http://climatesci.colorado.edu/2007/02/08/ - it's written by a highly respected scientist. The archaeological and historical record for the past 5,000 years indicates the current climate warming is indistinguishable from natural cycles / trends returning climate to the condition the Earth has had numerous times in that period. For example, Viking records indicate Greenland ice was LESS circa 900 CE than now. Where are the finds of Viking SUVs if carbon dioxide & man are the only important variables? There are other examples on the link. So many contradictions to the "consensus view" exist. The "Blame Man" crowd is in the throes of a mass delusion, similar to medieval witch hysterias where witches were blamed for cold, stormy weather.

Addendum: here's another link to some fine information about this foolish anthropocentrism on the Earth's climate - http://motls.blogspot.com/2007/02/papers-challenging-geocentrism.html

Hold Until Relieved

Those should be your thoughts about your long position in the stock market. Today was a prime example of ignoring beefer ping pong games when there is no significant "new" news. The beefer bears (probably underinvested & underperforming) hit the market hard on the HSBC report of subprime mortgage losses. That was "non-new" news, expected for months. Heck, what would one expect from "sub-prime" loans - you expect to lose some money in a turndown. Why else are they getting those fat rates? So they take the market down as the real buyers are patient, waiting for dips to deploy cash. And as the day ends, stocks recover mostly.

"Hold until relieved" - those were the orders for the reinforced elite company of Major John Howard of the British 6th Airborne Division on D-Day, for the final phase of their daring night glider landing in German occupied territory near Caen, France. They were ordered to take the two bridges over the Orne River and the Caen Canal and "hold until relieved" by the units landing at dawn on Sword Beach. That great movie, "D-Day" covers this well, being faithfully based on Cornelius Ryan's great book of the same title. The scenes of that unit's commander are inspiring as he ponders those orders, "Hold until relieved".

You need to remember that scene when the markets get rough as the beefers attack. For us, "relieved" means some real news about a change in economic outlook. Nothing has changed.

"Reliable" Newspapers

A comment to the "Princess of San Francisco" post a few days ago proposing that the New York Times and the Washington Post are America's most reliable newspapers was probably a bit of a tease, but I always enjoy replying to reader ideas. "Reliable" ... hmmmmmm ... I doubt that. Let's turn to some facts. Bunkerman has a good memory. Remember Jayson Blair who plagiarized stories for the New York Times (see http://en.wikipedia.org/wiki/Jayson_Blair )? How about Janet Cooke, who won a Pulitzer Prize for fabricated stories for the Washington Post (see http://en.wikipedia.org/wiki/Janet_Cooke )? The most notorious is Walter Duranty, an apologist / defender of Stalin (see http://en.wikipedia.org/wiki/Walter_Duranty ). Writing for the New York Times and winning the Pulizer Prize, he denied the Stalin-created famine in Ukraine that murdered millions and defended the famous show trials. My favorite book, "I Chose Freedom", by Victor Kravchenko, contains first hand experiences of that horrible period. Duranty appears to have been a racist in his denigrating view of Slavs. I think these counterexamples mean that the hypothesis that those two newspapers are "reliable" is false. QED.

The Cold February

This February might become the coldest since 1979 according to the private weather service I receive. I offered to wager Mrs. Bunkerman that within 30 days we hear a major news story blaming the cold on .... global warming and man. She declined the offer - she's too smart.

Global Money Supply

A post by a reader started me re-thinking about the global money supply. See the first comment to my post of February 1, 2007, titled, "When is a Breakout Confirmed?" He referred to an article by the famous bond investor, Bill Gross (see http://www.pimco.com/ and look for the Featured Market Commentary for February, 2007). For background, I've read many books about the early development of the modern financial system, money & credit instruments in the 19th century, and financial panics. I also vividly remember Fischer Black in a business school class at MIT when monetarism becoming widely accepted, as saying, "What's your definition of the money supply?" to challenge us. I've been noodling over the Bill Gross article, as it had excited my "little grey cells" and finally after being energized by this AM's workout I can articulate my thoughts for this post.

Before World War I, the global money supply was firmly tied to gold and silver. Temporary large deviations in regions (such as in the US during its Civil War) were either soon reversed or led to excess money & credit creation & financial panics. The Panic of 1819 occurred after years of money and credit growth from land speculation in the US west after specie payments were suspended in 1814 due to the War of 1812. In that example, money came to be created by state banks (banks printed their own banknotes then - I have one in my money collection) based on loans on land. When the US government refused to accept state bank notes for discharge of debts, the credit system collapsed.

Roll forward. The US trade deficit floods the world with US dollars and many / most of the dollars are reinvested in US Treasury securities by the world's central banks. These US Treasury securities are the foreign reserves for those central banks and are a primary monetary base for their own currencies. Few have significant gold assets and some are buying Euro-denominated bonds of European countries. [aside - confidence in the Euro took a hit when the proposed European constitution was defeated, so obviously it's no substitute.] So the global money supply is principally based on US debt and the growth in the world's monetary base is tied to the US trade deficit.

Bill Gross was wondering what would happen "when" this spigot of cash was turned off. I have to agree with him there. Although I disagree with many points in his article, I think he's right that a reversal or cessation in the US trade deficit could have enormous negative repercussions on the global economy & monetary system. More later re my ideas on the "when"; this post is long enough.

Ya Gotta Exercise

Run, run, run on my running machine;
I'm a lean, mean thinking machine.

That's a cadence I composed for laughs. I run on a Star Trac elliptical machine - the "Natural Runner" model - in my basement in the early morning, either to Bubblevision news or to military cadence tapes (aka, ("Jody calls"). See http://www.startracusa.com/ or do a Google search for many dealers. It's great & I highly recommend it - mine has lasted years.

A few months ago, I read an article in The Wall Street Journal that reported clinical evidence that 30 minutes of daily aerobic exercise both stops & reverses brain shrinking as one ages. That re-motivated me to hit that running machine in the AM. I always feel better after a workout. I have more energy and can think more clearly. By the way, power walking works OK, too. I stick to the running machine since on winter days, the roads might be icy, and on early summer days the mosquitos might carry me off. :-)

So hit that workout!

Oil & Gas

If you took any crude futures around the time of my January 17 post where I said I was starting to average in, I wanted to let you know I flipped my crude position this AM early in e-trading. I think the cold story is well known now and am not sure crude can move a lot higher now. Ditto natural gas - am out of those contracts now, too (didn't post as it's too volatile - just a weather trade now). Lots of resistance is above. The frigid winter will drain excess inventories in heating oil & natural gas, so I think we can consolidate a base around these levels. Then the next wave of bullish news can take them way up.

I am keeping all my energy stocks for the next move up. I hold them a lot longer as I want long term capital gains treatment. Sometimes I buy calls on dips & flip them on rips, but have none now. I think a hot summer will rip natural gas & the summer driving season will move oil up. We needed this winter weather to eliminate the short term commodity surplus of both to set up the next big bull move for the energy stocks. We got it.

The Princess of San Francisco ???

Nancy Pelosi acts like a Princess, demanding access to military flights for herself, staff and relatives. You see, now she's in the line of succession to the throne now & wants to be treated as such. See http://www.washingtontimes.com/national/20070201-122225-1157r.htm for details. These aren't spartan flights our servicemen take - "The planes are staffed with stewards who serve meals and tend an open bar." We plebians stand in line for security & pay $5 for a beer. No surprise - the story says Prince Hastert used military planes often, too, but not for family. He's been deposed now as his courtiers & party were too corrupt. We've already seen how Princess Nancy wanted to deny the Samoan serfs of one of her petty barons a rise in their minimum wage, too, until such greed was publicized. Too bad term limits were never imposed. I suppose real reform has to come from the States or a true populist electoral revolt. Until then, the parasitical politicians in DC will loot & loot & suck the blood from the people.

Investing / Trading Syndromes - "-itis's"

Have you noticed lately several syndromes prevalent among the trading / investing classes and the chattering nabobs on financial TV?

Contrarian-itis: Taking the opposite side of every movement, no matter how short in duration or small in amplitude. Very dangerous to one's financial health because long trends DO exist. Bull markets can last for years. People with this syndrome think themselves unique, whilst in reality they are massed in crowds of contrarians missing the main movement.

Bubble-itis: Thinking every big move is a bubble of the proportion of the Japanese stock & real estate markets of the 1980s and the US tech stock bubble of the late 1990s-2000. This syndrome sees bubbles everywhere. The bubble-itis minor prophets speak fervently on Bubblevision and, similar to messianic figures, foretell imminent doom. They infect their victims, causing them to miss major sector and asset class moves.

Guru-itis: Seen among formerly successful investors and traders, who become anointed (or self-anointed) as a "guru" whilst they proceed to cost their followers large sums. They may hawk themselves on Bubblevision, through paid web sites, or in newsletters - very recent malperformance notwithstanding. Admitting an error is rare because they would lose followers.

World's Finest Martini

The Wall Street Journal article about Pink Gin (aka Gin Pahit) in the British Empire motivated me to post my World's Finest Martini recipe. Take three parts gin, one part vodka, one part white Lillet, and one lemon twist, mix in a shaker with lots of ice, and serve on ice. This is derived from the original James Bond martini recipe in Ian Fleming's book, "Casino Royale". I prefer more Lillet than Bond ordered. I've taught the bartenders at a club where I stay on business trips to New York City to make my recipe - we call it, "Golden Kryptonite". I keep my gin & vodka in the freezer door in pint bottles and my Lillet in the refrigerator so they are very cold. I also make up an entire weekend's supply (three stiff drinks, one each for Friday, Saturday and Sunday evenings) in a cocktail mixer on Friday and put the second two days' drinks in a large, thick glass (no ice) covered with plastic wrap in the freezer to store.

Fried Eggs & Spam

Mmmmmmmm. I just had breakfast - I cook breakfast on the weekends. Fried Spam (the "lite" version lol), two eggs fried over medium in olive oil, a multi-grain bagel with pumpkin butter, three organic dried figs and black coffee. An excellent, very tasty breakfast it was. By the way, the eggs are high omega-3, laid by cage free, organically fed happy chickens. The woods are beautiful this morning with the frozen snow on the trees and the sunlight glittering through gaps in the canopy. The forest here has both conifers and deciduous hardwoods. I've imported a few unusual conifers, including a Giant Sequoia grown from a seedling that is now 30 feet tall.

Gold trade update

Uh oh. This is not evolving as I foresaw. :-( I am thinking out loud here. I added the last 1/3 position at the 9 DMA and am regretting the 1/3 position add on the initial pullback. Gold closed under the 9 DMA and a bit under the breakout line. I probably should have just sold & moved on, but didn't. Reason: the news about the metals hedgie in London having trouble. I wonder if Friday's weakness might have been beefers hitting gold (and other metals) to take advantage of that news and possible liquidation. Of course the dollar was up a little, so that could have been a reason for beefers to hit gold, too. They are like that - they play ping pong & bounce markets around to create volatility & shake out weak hands & run stops. Friday's COT reports shows the funds added to gold positions, but still are only about 56% of their record net long. I'm going to hold on for now, but might close it on any adverse action.

Superbowl Shpooperbowl

OK, I'll watch - at least the first half. The second half is past my bedtime (8 PM EST - hey, I get up at 4 AM EST), so I'll skip it unless the game is exciting. A better game is RUGBY. [Stick with me, I get to the stocks angle.] I finally found a way to watch rugby games. One can get an "All Access" pass to the Rugby Channel on http://www.mediazone.com/ for around $99 for a year. So I did & downloaded some games. Being an American with no access to scores, etc., I have no idea who won these games - some happened six months ago. So they are great to watch. Lots of action - fine runs, kicks, scrums, mauls, rucks. No pads, no oxygen, very physical. I played "prop" in college and grad school many moons ago. The downloaded games are big files - 500 to 1,000 MB and took a long time to download. I have the highest speed the cable company offers - about 8 Mbps, but they took about 30-40 minutes each on Sunday. And the resolution of the files as played on Windows Media Player 11 made them only viewable at about 15" diagonal size. So I watch them on a computer monitor when the business news is boring or the market is quiet. This made me think about all the hype over downloading movies. That would be great, but unless one has Verizon FIOS at a very high speed, download times will too long for full screen high definition video. Technology or new products to make downloading high def video fast and getting it seamlessly to one's big screen TV is needed. We have to find the winners in that.

Bought some Gold

I added some more gold this AM (April E-futs) on the pullback from yesterday's poparoo. This is just a trade, but it looks like the funds was to own more gold. A good chart guy I read says 685 basis April is the target. I'll add my last 1/3 for the trade if we pullback to around the 9 DMA (9 day moving average - simple MA). I will probably sell on a close [NB "close"] under the breakout line or if something else changes like the chart pattern.

Breakout Confirmation

"Stick your biscuit in that gravy while it's still hot" -- Paul Newman as "Hud" in that great movie, one of my favorites (quoted from memory). We have a confirmed "second mouse" breakout. The S&P made a second consecutive close over the nine week rectangular consolidation pattern, signaling a confirmed break up to start the second leg, aka second phase, of this bull move. If you are on the sidelines, you should start to deploy your capital. The real buyers have been buying the dips on the move, so that's what you should do. The Russell small cap index looks like a confirmed breakout, too, out of an 11 week consolidation pattern. Get to work - find stocks that fit your style. I'll write more later on deploying capital. If you are already in, hold on until the stock or the news gives you a reason to sell. Ignore the beefer ping pong game.

Do Your Own Thinking

A comment today on a post reminded me of another blogger's post a few months ago. See the May 26, 2006 post on http://www.theideallife.blogspot.com/ . Doing my own thinking and evaluating the news has helped me hold onto a very long position for months now, in the face of numerous bear raids by the beefers. For the flip side, IF-IF-IF you every think this about a position, "well, it's down so much I own it now", SELL immediately as you are doomed to suffer a huge loss. I've been there and have seen it in others. Second, IF-IF-IF a little birdie is whispering to you, nagging you about some little tidbit of news you read/heard, follow Cromwell's advice: "I beseech you, in the bowels of Christ, think it possible you may be mistaken. "

Hedge Fund Addendum

If you want to invest in hedge funds - and David Swensen, the top money manager at Yale, said in his book that normal people don't have the access or resources to do it - find three small funds in areas you want exposure. There ARE lots of good hedge funds out there and good money managers running them. Check them out & give them a try. Be realistic - a short only fund won't beat the S&P in a bull market - that's not why you would invest in it. And don't bet the farm on them - keep it under 10% of your total investable assets until you get confidence & learn more.

When is a Breakout is Confirmed?

I use the close for two consecutive days over the breakout / trend turning point level as a confirmation. So often in the past few years, a breakout is met with heavy selling by beefers that day or the following day. I think the program traders' computers hit those automatically, so only a very strong breakout can push them aside in one day. Or a "breakout" can just be beefers trying to run stops, hence false. Last week's breakout was hit hard the following day. The "second mouse" pattern that I wrote about a few days ago uses this caution as a trading / investing tool. Yesterday's S&P move over the ascending triangle upward break line might be the second mouse move. A close over that line today would confirm the second leg / second phase move is underway. Still holding 150-200% long & strong.