First the eisegesis, viz. what I think the Fed "should" do today. This is quite easy. Inflation is under 2%. So the overnight funds rate "should" be 4%. Employment growth is weak. Unemployment has ticked up recently while inflation has been ticking down for months. The Fed's statutory mandate is (1) to maintain price stability and (2) maximize employment. So they are failing in standard #2, as they kept rates too high too long. I just heard another commentator screeching about the dollar. The Fed has NO statutory authority to maintain a value to the dollar. The dollar has been falling for years and inflation has been coming down for a couple of years. Finally, clearly with the SIV hubbub, more liquidity is needed for some types of asset-backed securities.
The eisegetical conclusion: Cut the overnight rate by 50 bps to 4.25%, cut the discount rate by 75 bps to 4.25%. Signal more cuts in the overnight rate in the statement, while saying that inflation risks have moderated.
Second, the exegesis. The Fed still seems infatuated with its inflation fighter merit badge. And the bankers and economists running it are susceptible to all this dollar screeching. They have to recognize, though, that inflation has come down and that employment growth is weak. Plus they are involved with Paulson and the banks on the SIV problems. So I conclude the Fed "will" cut the overnight rate by 25 bps to 4.5% and cut the discount rate by 50 bps. to 4.25% also. The statement will acknowledge that inflation has come down, but will still consider future inflation as a risk. And they will continue to stress weakness in housing as a drain on economic growth.
PS: Deutsche popping up on earnings.
PPS: Goldman yesterday said sell longs in oil. And oil fell over $3. Uh ... do you suppose the in-house trading funds were long or short oil at that time ? Lololololol :-)))
Word of the Day: autarky [$10]
"Autarky" means (1) a policy of national self-sufficiency and non-reliance on imports or economic aid, or (2) a self-sufficient region or country.
Sentence: Public statements by politicians that the US must become an oil "autarky" are either delusional or sheer buncombe, and the persons making those statements are fools or knaves, respectively, as any cursury look at the data will prove instantly such is impossible in our lifetimes.
"Buncombe" is a word dividend today ... hehehe ;-) and is the original spelling of "bunkum" and is naturally pronounced "bunk um" and means "empty or insincere talk, claptrap". The word derives from Buncombe Co. in North Carolina from a remark made circa 1820 by its congressman who felt obligated to give a dull speech "for Buncombe". I saw it first reading in the Memoirs of Gen. Sherman, a book I highly recommend along with those of Gen. Grant.
All that from my word card file I've had and added to since being about 16 years old !
Wednesday, October 31, 2007
Tuesday, October 30, 2007
Consolidation Tuesday ?
Markets will likely consolidate today and early tomorrow in anticipation of Wednesday PM's Fed announcement. That's fine. More stock needs to move into stronger hands for the next big move up.
Babblevision and Bloomberg keep talking about "decoupling", viz. the world economic growth "decoupling" from the US consumer and complete dependence on US economic growth as a driving force. I think it's happening. For a few years I've written about the creation of a "Asian Co-Prosperity Sphere" using the old propaganda name of the WW II era Japanese empire as a subtle joke. This does seem to be happening, but Russia, Eastern Europe, the Persian Gulf and Brazil are part of it, too.
The question in my mind for over a year has been whether the world economy could continue to grow as the US trade deficit was reduced. The US trade deficit has been pumping the world money supply with dollars that are used as bank reserves for all those growing nations. With reserve growth, they can expand their own money supplies and grow. As the US trade deficit really does seem to be shrinking, this question moves from the virtual thought phase [a geddanken experiment] to reality.
The world needs other monetary reserves to keep expanding as net US dollars flowing to the world are reduced. So far it seems the Euro is stepping up. That's a start. I'll keep studying this development and the trends. I think for the very long term examining the pressures on the world money supply as the conjoncture* of economic growth and long term stock market gains is crucial.
Word of the Day:
*Conjoncture: this is a French word that is moving into English and is not even in the Oxford English Dictionary yet so I can't value it yet.
"Conjoncture" was originally coined by the famous historian Fernand Braudel to describe the second tier of forces that drive history. By "second tier" the definition means not the kings, dukes, religions and wars that so often seem to dominate writing about the causes of historical events, but measures of the economic sphere of the "common man" that seem to explain major trends in history.
From "Europe: A History" by Norman Davies, page 425, "conjoncture" is a term of economic structuralists meaning "the foundation onto which all other historical facts are to be fitted." The example in that book was the trend and changes in Paris rents during the Middle Ages and later. A modern example might be the money supply. The book, "A Monetary History of the United States" that I've written about before uses the US money supply as the conjoncture for US economic growth and cycles, panics and depressions.
PS: I have sheep herding class today ... uh ... I mean that I am taking Sky & Krypto to sheep herding classes today ;-) I'll be out from about 8AM to 1PM EDT.
Babblevision and Bloomberg keep talking about "decoupling", viz. the world economic growth "decoupling" from the US consumer and complete dependence on US economic growth as a driving force. I think it's happening. For a few years I've written about the creation of a "Asian Co-Prosperity Sphere" using the old propaganda name of the WW II era Japanese empire as a subtle joke. This does seem to be happening, but Russia, Eastern Europe, the Persian Gulf and Brazil are part of it, too.
The question in my mind for over a year has been whether the world economy could continue to grow as the US trade deficit was reduced. The US trade deficit has been pumping the world money supply with dollars that are used as bank reserves for all those growing nations. With reserve growth, they can expand their own money supplies and grow. As the US trade deficit really does seem to be shrinking, this question moves from the virtual thought phase [a geddanken experiment] to reality.
The world needs other monetary reserves to keep expanding as net US dollars flowing to the world are reduced. So far it seems the Euro is stepping up. That's a start. I'll keep studying this development and the trends. I think for the very long term examining the pressures on the world money supply as the conjoncture* of economic growth and long term stock market gains is crucial.
Word of the Day:
*Conjoncture: this is a French word that is moving into English and is not even in the Oxford English Dictionary yet so I can't value it yet.
"Conjoncture" was originally coined by the famous historian Fernand Braudel to describe the second tier of forces that drive history. By "second tier" the definition means not the kings, dukes, religions and wars that so often seem to dominate writing about the causes of historical events, but measures of the economic sphere of the "common man" that seem to explain major trends in history.
From "Europe: A History" by Norman Davies, page 425, "conjoncture" is a term of economic structuralists meaning "the foundation onto which all other historical facts are to be fitted." The example in that book was the trend and changes in Paris rents during the Middle Ages and later. A modern example might be the money supply. The book, "A Monetary History of the United States" that I've written about before uses the US money supply as the conjoncture for US economic growth and cycles, panics and depressions.
PS: I have sheep herding class today ... uh ... I mean that I am taking Sky & Krypto to sheep herding classes today ;-) I'll be out from about 8AM to 1PM EDT.
Monday, October 29, 2007
Update & More
Red Sox Win !!! Yayyyyy !!!
O'Neal out at Merrill Lynch !!! Yayyyyy !!! Finally a CEO pays for failure.
Gold at $795. Oil over $93. Asia and Europe up.
I thought that I should update on my Alpha Fund holdings. I've sold a bit to cut my overall exposure as the gains got that fund outsized. Strategically, I like to have low or no margin debt near highs, and increase margin debt on dip buys of new stocks or adds.
Here it is, with group weights and positions with largest few listed first:
Select small caps: 0% - I sold EDU in the Alpha fund - too soon. My Mom's account still has it, though as I like it. I just had to made some choices.
Select big caps: 5% - BNI, DOW
Technology: 12% - AAPL, GOOG, CSCO, ORCL. I sold a bit of ORCL after earnings as I had long term gains.
Financials: 22% - BAC, WB, C, JPM
India: 4% - HDB, IBN, SAY. I'll sell SAY when it has LT gains treatment in mid November.
Energy: 38% - DVN, CVX, XOM, COP, CHK, SU, BTU, HES, MRO, VLO, NOV, DO, GSF, RIG, NE.
Miners: 19% - PCU, BHP, RTP, RIO, AA, CCJ, FCX.
My recent adds were BNI (a new buy) and some BAC, WB and C.
My Alpha Fund is still too large. The daily swings are quite large and I need to cut down the size more. I had sold a lot in September, but need to cut back more. I just pick stocks that qualify for LT gains treatment. So I've trimmed a lot of quite large positions in every group. I'll just pick away at these. Recent sales were CLF, some SAY, EDU (darn), and some SU and some BHP.
The Alpha Fund is at an all-time high as of Friday. The financials are not contributing to gains yet. I think they will perform well as the housing problem works it way out of the mess and the Fed lowers rates more.
PS: I went to buy a Mac 24" computer Saturday - they were sold out. I guess I have to wait a couple weeks. But the store was really packed. Obviously business is good.
PPS: Word of the Day - "adduce", a $10 transitive verb meaning "offer as an example, reason, or prof in discussion or analysis" or "cite as an instance or as proof or evidence". I've been unable to remember that word for 35 years. The handwriting in my card file for it is very old. Here's a sentence: "Bunkerman adduces the current real rate of interest and the low year-over-year inflation rate to infer the Fed will cut the overnight funds rate Wednesday by at least 25 bps."
O'Neal out at Merrill Lynch !!! Yayyyyy !!! Finally a CEO pays for failure.
Gold at $795. Oil over $93. Asia and Europe up.
I thought that I should update on my Alpha Fund holdings. I've sold a bit to cut my overall exposure as the gains got that fund outsized. Strategically, I like to have low or no margin debt near highs, and increase margin debt on dip buys of new stocks or adds.
Here it is, with group weights and positions with largest few listed first:
Select small caps: 0% - I sold EDU in the Alpha fund - too soon. My Mom's account still has it, though as I like it. I just had to made some choices.
Select big caps: 5% - BNI, DOW
Technology: 12% - AAPL, GOOG, CSCO, ORCL. I sold a bit of ORCL after earnings as I had long term gains.
Financials: 22% - BAC, WB, C, JPM
India: 4% - HDB, IBN, SAY. I'll sell SAY when it has LT gains treatment in mid November.
Energy: 38% - DVN, CVX, XOM, COP, CHK, SU, BTU, HES, MRO, VLO, NOV, DO, GSF, RIG, NE.
Miners: 19% - PCU, BHP, RTP, RIO, AA, CCJ, FCX.
My recent adds were BNI (a new buy) and some BAC, WB and C.
My Alpha Fund is still too large. The daily swings are quite large and I need to cut down the size more. I had sold a lot in September, but need to cut back more. I just pick stocks that qualify for LT gains treatment. So I've trimmed a lot of quite large positions in every group. I'll just pick away at these. Recent sales were CLF, some SAY, EDU (darn), and some SU and some BHP.
The Alpha Fund is at an all-time high as of Friday. The financials are not contributing to gains yet. I think they will perform well as the housing problem works it way out of the mess and the Fed lowers rates more.
PS: I went to buy a Mac 24" computer Saturday - they were sold out. I guess I have to wait a couple weeks. But the store was really packed. Obviously business is good.
PPS: Word of the Day - "adduce", a $10 transitive verb meaning "offer as an example, reason, or prof in discussion or analysis" or "cite as an instance or as proof or evidence". I've been unable to remember that word for 35 years. The handwriting in my card file for it is very old. Here's a sentence: "Bunkerman adduces the current real rate of interest and the low year-over-year inflation rate to infer the Fed will cut the overnight funds rate Wednesday by at least 25 bps."
Friday, October 26, 2007
Stompin' at the Savoy
The beefer traders seem to be partying bigtime with Ms. Market with their stomping tactics, swinging her around in a wild jitterbug. "Stompin' at the Savoy" was a great 1934-36 era Jazz song first popularized by Chick Webb and later Benny Goodman. The Savoy Ballroom was a large 10,000 sq. foot dance floor in Harlem in New York City where many great jazz tunes & great performers were showcased [ see http://www.jazzstandards.com/Test/stompinatthesavoy.htm ].
They are really enjoying the wild life without the Puritanical uptick rule. For a third day they shorted like a sailor on leave drinks, trying to push the markets down and perhaps create a breakdown and panic. But it failed again and they had to cover. By the close stocks were mostly unchanged except some sectors under recycling selling like the Nazz 100.
An AIG rumor caused some panic, but it was denied. I don't like AIG and don't trust them, so think there might be something smoldering there. I shorted a bit - not a lot - and will keep it until they report earnings. I also added to BAC, C and WB and started a position in CFC.
Oil is now at $92. Coal producer BTU is back to its recent highs at $55. I have a good bit of that for the long term.
I don't see anything new. The housing overcapacity will be worked off over a year. Markets will start to see that soon and then react up for a new bull leg. Market do anticipate events. I've lived through a housing downturn in the late 1980s. It has zero affect on almost all people who own homes as they never got the money from the paper gains and simply don't sell. If they do sell, they re-buy a home elsewhere for a net zero effect. Recent buyers who overleveraged can be hurt, as are speculators. Lenders can get hurt. That's it, though.
Gold is at $780; silver is over $14. I think physical demand of both is creating a long term bull market in my view. Big swings occur as beefers make dollar related trades, but the trend is up. I have big positions in both in the Krypto Fund - 10% of my invested assets.
PS: CFC reported good numbers and guidance so the stock is up $3 premarket. Out of respect for the trading gods, I flipped my position. I am sure I would be punished severely if I held long term. I also covered the AIG short - I just don't feel like playing that game now.
They are really enjoying the wild life without the Puritanical uptick rule. For a third day they shorted like a sailor on leave drinks, trying to push the markets down and perhaps create a breakdown and panic. But it failed again and they had to cover. By the close stocks were mostly unchanged except some sectors under recycling selling like the Nazz 100.
An AIG rumor caused some panic, but it was denied. I don't like AIG and don't trust them, so think there might be something smoldering there. I shorted a bit - not a lot - and will keep it until they report earnings. I also added to BAC, C and WB and started a position in CFC.
Oil is now at $92. Coal producer BTU is back to its recent highs at $55. I have a good bit of that for the long term.
I don't see anything new. The housing overcapacity will be worked off over a year. Markets will start to see that soon and then react up for a new bull leg. Market do anticipate events. I've lived through a housing downturn in the late 1980s. It has zero affect on almost all people who own homes as they never got the money from the paper gains and simply don't sell. If they do sell, they re-buy a home elsewhere for a net zero effect. Recent buyers who overleveraged can be hurt, as are speculators. Lenders can get hurt. That's it, though.
Gold is at $780; silver is over $14. I think physical demand of both is creating a long term bull market in my view. Big swings occur as beefers make dollar related trades, but the trend is up. I have big positions in both in the Krypto Fund - 10% of my invested assets.
PS: CFC reported good numbers and guidance so the stock is up $3 premarket. Out of respect for the trading gods, I flipped my position. I am sure I would be punished severely if I held long term. I also covered the AIG short - I just don't feel like playing that game now.
Thursday, October 25, 2007
What's New ?
Hmmmm ...
O. J. indicted.
Energy traders to be indicted.
Greenies say shrubs and bugs yes, homes no.
Big Street firms show big losses in market turmoil, layoffs planned.
China grows at double digits.
EU-Russia tensions.
Nothing new there.
Is there nothing new under the sun ?
Yes, there is !
Bunkerman has the iPhone and yesterday loaded it with many old songs from the 1910-1935 period plus Julie Andrews and Judy Garland. Gosh, this thing holds a lot of songs. So far I'm not even 1/8 full and I have over 9 hours of great music.
And Bunkerman is going to buy a new Mac this weekend or next week with the new Leopard operating system.
I'm modernizing myself ... a bit !
OK: stocks.
Yesterday was a distribution day, but the reversal neutralized some of that technical negativity. Europe is up this morning. Futures are flatish. The S&P cash index held the 50 DMA yesterday. Oil is up this morning to the high $88s.
Not much new there. Yesterday was beefer ping pong. They shorted everything early to scare the common man and the weak-willed and then had to cover. Nothing new in those antics.
O. J. indicted.
Energy traders to be indicted.
Greenies say shrubs and bugs yes, homes no.
Big Street firms show big losses in market turmoil, layoffs planned.
China grows at double digits.
EU-Russia tensions.
Nothing new there.
Is there nothing new under the sun ?
Yes, there is !
Bunkerman has the iPhone and yesterday loaded it with many old songs from the 1910-1935 period plus Julie Andrews and Judy Garland. Gosh, this thing holds a lot of songs. So far I'm not even 1/8 full and I have over 9 hours of great music.
And Bunkerman is going to buy a new Mac this weekend or next week with the new Leopard operating system.
I'm modernizing myself ... a bit !
OK: stocks.
Yesterday was a distribution day, but the reversal neutralized some of that technical negativity. Europe is up this morning. Futures are flatish. The S&P cash index held the 50 DMA yesterday. Oil is up this morning to the high $88s.
Not much new there. Yesterday was beefer ping pong. They shorted everything early to scare the common man and the weak-willed and then had to cover. Nothing new in those antics.
Wednesday, October 24, 2007
Are the Rich Stupid ?
Financially, the answer is clearly yes.
They invest trillions in thousands of hedge funds, overpaying for mediocre performance in total. Maybe that's a fad and they want something to brag about at the "club".
Last quarter I see hedge funds got another $43 billion to invest. Hmmm. the beefers lose billions for their investors with numerous blow-ups, but the "rich" get suckered into ploughing more money into them.
And the fees they pay for private banking and private wealth management are simply ludicrous. They pay 1% of assets or more for ... nothing. The dog biscuits paid to Krypto run a perfectly good, diversified fund that is run according to the methods of #1 money manager, David Swenson of Yale. And last year it crushed the hedge funds.
Of course, the beefers' pumpsters and shills point to big numbers by some funds. Hmmm. There are 7,000 hedge funds or more. Why would one think that "some" of those couldn't do quite well just by ... luck ? Maybe some have truly exceptional talent. I suppose some do. But those funds are ... closed.
Why bother ? Picking a good hedge fund from 7,000 possibilities is hard. Then again, so is picking a good mutual fund from 7,000 mutual funds. Then again, so is picking a good stock from 7,000 stocks.
So if one is picking, why not stick to stocks? The returns are much better.
I keep most of my investment money in the Krypto Fund and then run my Alpha Fund by picking stocks. The Krypto Fund is managed for dog biscuits using a mostly mechanical asset allocation among diversified index funds. The Alpha Fund has large positions in groups and stocks I like. I keep its size at a level that I can bear the swings in value. If a stocks can't earn me 30% in a year in my estimation, I get rid of it.
I manage the Alpha Fund to realize long term capital gains as long as I think the major trend is up.
Recent adds: BNI reported a blowout quarter and looks OK now. GOOG is doing great after bouncing around awhile. One needs patience when buying individual stocks if one is not a trader. The big cap banks are down some. I'll give them some time, as I did GOOG.
Futures are down this AM. I've heard nothing significant so it's likely more beefer stomping and ping pong. They never stop.
They invest trillions in thousands of hedge funds, overpaying for mediocre performance in total. Maybe that's a fad and they want something to brag about at the "club".
Last quarter I see hedge funds got another $43 billion to invest. Hmmm. the beefers lose billions for their investors with numerous blow-ups, but the "rich" get suckered into ploughing more money into them.
And the fees they pay for private banking and private wealth management are simply ludicrous. They pay 1% of assets or more for ... nothing. The dog biscuits paid to Krypto run a perfectly good, diversified fund that is run according to the methods of #1 money manager, David Swenson of Yale. And last year it crushed the hedge funds.
Of course, the beefers' pumpsters and shills point to big numbers by some funds. Hmmm. There are 7,000 hedge funds or more. Why would one think that "some" of those couldn't do quite well just by ... luck ? Maybe some have truly exceptional talent. I suppose some do. But those funds are ... closed.
Why bother ? Picking a good hedge fund from 7,000 possibilities is hard. Then again, so is picking a good mutual fund from 7,000 mutual funds. Then again, so is picking a good stock from 7,000 stocks.
So if one is picking, why not stick to stocks? The returns are much better.
I keep most of my investment money in the Krypto Fund and then run my Alpha Fund by picking stocks. The Krypto Fund is managed for dog biscuits using a mostly mechanical asset allocation among diversified index funds. The Alpha Fund has large positions in groups and stocks I like. I keep its size at a level that I can bear the swings in value. If a stocks can't earn me 30% in a year in my estimation, I get rid of it.
I manage the Alpha Fund to realize long term capital gains as long as I think the major trend is up.
Recent adds: BNI reported a blowout quarter and looks OK now. GOOG is doing great after bouncing around awhile. One needs patience when buying individual stocks if one is not a trader. The big cap banks are down some. I'll give them some time, as I did GOOG.
Futures are down this AM. I've heard nothing significant so it's likely more beefer stomping and ping pong. They never stop.
Tuesday, October 23, 2007
Stabilization ?
Ms. Market gave us a bit of stability yesterday. This morning's futures are up a bit.
APPL had good earnings - that's still my biggest position even thought I sold 1/3 last month for money management. I think AAPL will get about 25% of the PC market. Now that AAPL can run Microsoft Office, their is really no reason for any home computer to be Windows-based. Macs are far superior for ease of use.
India markets are roaring back.
I think this economic softness is a lagged effect of the Fed's overtightening up to May 2006 - they went too far. They should have cut in June but didn't listen to me ;-)
Foreclosure bottom fishers are clustering to scoop up those deals and loans are starting to be worked out. Old beefers invested in those subprime debt securities will be liquidated by year end from redemptions. I think the very end is near for this correction, which is a second phase re-test of the summer correction.
Seasonal strength for November-April period is quite strong. A consolidation base here at the old S&P highs makes sense and I think that soon Ms. Market will be thinking about Spring fashions and a new bull leg up will begin.
I still like my Alpha Fund stocks: AAPL, big US oils, miners, deep water drillers, select Internet related tech, and big banks.
APPL had good earnings - that's still my biggest position even thought I sold 1/3 last month for money management. I think AAPL will get about 25% of the PC market. Now that AAPL can run Microsoft Office, their is really no reason for any home computer to be Windows-based. Macs are far superior for ease of use.
India markets are roaring back.
I think this economic softness is a lagged effect of the Fed's overtightening up to May 2006 - they went too far. They should have cut in June but didn't listen to me ;-)
Foreclosure bottom fishers are clustering to scoop up those deals and loans are starting to be worked out. Old beefers invested in those subprime debt securities will be liquidated by year end from redemptions. I think the very end is near for this correction, which is a second phase re-test of the summer correction.
Seasonal strength for November-April period is quite strong. A consolidation base here at the old S&P highs makes sense and I think that soon Ms. Market will be thinking about Spring fashions and a new bull leg up will begin.
I still like my Alpha Fund stocks: AAPL, big US oils, miners, deep water drillers, select Internet related tech, and big banks.
Monday, October 22, 2007
Monday in the Bunker
A bunker might be a good place today to avoid more shelling and protect oneself from the bears. Futures are weak, Asia was down big except China & India and Europe is down.
The WSJ had an interesting story about high home prices in Europe hurting consumers.
I plan to just wait and think.
The Tribe lost games 6 and 7, so the Red Sox go to the World Series :-(( I'll be rooting for them since I always favor the American League over the fuddy-duddy, old fashioned National League. Go Red Sox !!!
I'm going to wait and am thinking about moving up a planned addition to my Krypto Fund. I'll do it on this dip likely.
The S&P cash is on the 50 DMA and the rough uptrend line. The 200 DMA is a bit lower, just under 1480.
After completely making a cluster FUBAR of my oft-preached time diversification, I'm a quite annoyed at myself. Expecting an October pullback and then missing it is quite inexcusable. I'm still susceptible to "buck fever", which is a hunter's term for getting excited and rushing a shot, causing a miss. That's a pretty good explanation for what I did.
So I'm being patient and am not going to rush this next add. The beefers are stomping around and looking for their payday. I suspect they are really hurting this year. I'll wait for a base consolidation and continuation pattern to form. But I think I'll send the money into the account to be ready to buy stocks at the right time.
The WSJ had an interesting story about high home prices in Europe hurting consumers.
I plan to just wait and think.
The Tribe lost games 6 and 7, so the Red Sox go to the World Series :-(( I'll be rooting for them since I always favor the American League over the fuddy-duddy, old fashioned National League. Go Red Sox !!!
I'm going to wait and am thinking about moving up a planned addition to my Krypto Fund. I'll do it on this dip likely.
The S&P cash is on the 50 DMA and the rough uptrend line. The 200 DMA is a bit lower, just under 1480.
After completely making a cluster FUBAR of my oft-preached time diversification, I'm a quite annoyed at myself. Expecting an October pullback and then missing it is quite inexcusable. I'm still susceptible to "buck fever", which is a hunter's term for getting excited and rushing a shot, causing a miss. That's a pretty good explanation for what I did.
So I'm being patient and am not going to rush this next add. The beefers are stomping around and looking for their payday. I suspect they are really hurting this year. I'll wait for a base consolidation and continuation pattern to form. But I think I'll send the money into the account to be ready to buy stocks at the right time.
Sunday, October 21, 2007
Ms. Market
I like to think of the markets as personified by a sultry, impetuous, flighty "Ms. Market" - that's my bit for animism ! She's a knockout and has innumerable bull and bear suitors who vie for her charms and her company.
Friday Ms. Market kicked the bulls out of bed, perhaps for insufficient earnings vigor ? Or is she tired of their action longer term ? Or did he forget their 20th anniverary ? Did the bears "get lucky" for just a one night stand or maybe it's the start of a longer, torrid affair ? Or perhaps both the bulls and bears are in for a bit of "Lysistrata" denial for a few weeks ?
Time will tell.
I think there are just too many beefers - bulls and bears - and they are suffering by underperforming ... hehe ... and Ms. Market is really tired of their antics.
A solid base needs to be built with some consolidation and some news to relieve some of the anxiety. Some beefers need to be liquidated and funds moved to longer term investments. Ms. Market wants a longer term relationship with a solid, vigorous bull.
Let's watch & see if one can arise ;-)
Friday Ms. Market kicked the bulls out of bed, perhaps for insufficient earnings vigor ? Or is she tired of their action longer term ? Or did he forget their 20th anniverary ? Did the bears "get lucky" for just a one night stand or maybe it's the start of a longer, torrid affair ? Or perhaps both the bulls and bears are in for a bit of "Lysistrata" denial for a few weeks ?
Time will tell.
I think there are just too many beefers - bulls and bears - and they are suffering by underperforming ... hehe ... and Ms. Market is really tired of their antics.
A solid base needs to be built with some consolidation and some news to relieve some of the anxiety. Some beefers need to be liquidated and funds moved to longer term investments. Ms. Market wants a longer term relationship with a solid, vigorous bull.
Let's watch & see if one can arise ;-)
Friday, October 19, 2007
Memories of the Crash of 1987
I was a heavy stock and option and commodity trader in the 1980s. So I have a lot of memories of the Crash. I was also a follower of the Elliot Wave then, and actually still use the theory some in chart interpretation.
So I was minting money bigtime until August when the Elliot Wave gave a sell signal with the Dow up around 2700, I turned around to the bear side. I continued to mint money in puts on the OEX - that's the S&P 100 index which was a big trading vehicle in the 1980s. I couldn't short then since I worked for a big Street firm and the house had rules against that. But puts on indices were fine. [By the way, commissions were quite high - even for employees, so day/week trading was costly. ]
By mid October I was up over 100% and had maximal hubris. The Bear side was ruling and I was a bear. All the stars were aligning for the dark side. The Fed was raising rates (#1). During the week before the crash, Congress started threatening to stop LBOs and takeovers (#2). The dollar started to freefall (#3). Reagan shelled an Iranian oil platform in the Persian Gulf (#4). Oil prices spiked (#5). So all that week the market went down by big steps. The signals were a five pointed star - a Pentagram - the sign of the werewolf lol ;-) Friday, October 16, was a big smash down day on huge volume. The Dow was at around 2200, down 500 pts since the August high. I thought that was the bottom or at least a bounce signal.
Sooooooooooo ... I cashed out all my puts and went long in stocks & calls on margin, thinking I was a modern era Jesse Livermore. He had down that in some early Panics - covering shorts and going long after a big smash down.
Monday. October 19, I had to attend a meeting in midtown NYC for a conference of the Japan Society on real estate - the Japaneses were buying US real estate bigtime and I wanted to learn more. Remember, then there were no cell phones, etc. So around midmorning I heard the president of Nomura speak rather worriedly about how the Japanese markets would open later. Uh oh. :-(
During a break around 11:00 AM I went to a pay phone on Seventh Avenue and called my broker. He was quite worried but said it would work out. He sounded shaken. I sold some stocks and calls at the market - the prices and tape were delayed some then as volume was huge.
Early in the afternoon I called again and learned that slide was continuing. So I sold more, about 2/3 of my positions, at big losses. After the close I learned more - the Dow was down 500 pts. Ugh !!!
Well, early the next morning at my desk with a Quotron to see prices, I decided to sell all. I was shaken up and didn't want to "play" in that game for awhile. By then I just had some calls and some OTC stocks left. I got good prices on the calls as the volatility was so high, they had some value left. And selling the OTC stocks then was good since those stocks were quite illiquid and continued to slide down for many days.
The net result was I lost every dollar of my 100% profits and was flat for the year. Nine months of hard work wasted. :-(( It could have been worse, of course, had I not made partial sells and quick decisions. I could have gotten wiped out.
My investment banking business got very active soon thereafter, so I was out of the market during the rebound and for months afterward. But the memories were burned into my brain. I've told this story to many friends over the years. I suppose the Greeks had it right - my hubris was punished by the trading gods.
So I was minting money bigtime until August when the Elliot Wave gave a sell signal with the Dow up around 2700, I turned around to the bear side. I continued to mint money in puts on the OEX - that's the S&P 100 index which was a big trading vehicle in the 1980s. I couldn't short then since I worked for a big Street firm and the house had rules against that. But puts on indices were fine. [By the way, commissions were quite high - even for employees, so day/week trading was costly. ]
By mid October I was up over 100% and had maximal hubris. The Bear side was ruling and I was a bear. All the stars were aligning for the dark side. The Fed was raising rates (#1). During the week before the crash, Congress started threatening to stop LBOs and takeovers (#2). The dollar started to freefall (#3). Reagan shelled an Iranian oil platform in the Persian Gulf (#4). Oil prices spiked (#5). So all that week the market went down by big steps. The signals were a five pointed star - a Pentagram - the sign of the werewolf lol ;-) Friday, October 16, was a big smash down day on huge volume. The Dow was at around 2200, down 500 pts since the August high. I thought that was the bottom or at least a bounce signal.
Sooooooooooo ... I cashed out all my puts and went long in stocks & calls on margin, thinking I was a modern era Jesse Livermore. He had down that in some early Panics - covering shorts and going long after a big smash down.
Monday. October 19, I had to attend a meeting in midtown NYC for a conference of the Japan Society on real estate - the Japaneses were buying US real estate bigtime and I wanted to learn more. Remember, then there were no cell phones, etc. So around midmorning I heard the president of Nomura speak rather worriedly about how the Japanese markets would open later. Uh oh. :-(
During a break around 11:00 AM I went to a pay phone on Seventh Avenue and called my broker. He was quite worried but said it would work out. He sounded shaken. I sold some stocks and calls at the market - the prices and tape were delayed some then as volume was huge.
Early in the afternoon I called again and learned that slide was continuing. So I sold more, about 2/3 of my positions, at big losses. After the close I learned more - the Dow was down 500 pts. Ugh !!!
Well, early the next morning at my desk with a Quotron to see prices, I decided to sell all. I was shaken up and didn't want to "play" in that game for awhile. By then I just had some calls and some OTC stocks left. I got good prices on the calls as the volatility was so high, they had some value left. And selling the OTC stocks then was good since those stocks were quite illiquid and continued to slide down for many days.
The net result was I lost every dollar of my 100% profits and was flat for the year. Nine months of hard work wasted. :-(( It could have been worse, of course, had I not made partial sells and quick decisions. I could have gotten wiped out.
My investment banking business got very active soon thereafter, so I was out of the market during the rebound and for months afterward. But the memories were burned into my brain. I've told this story to many friends over the years. I suppose the Greeks had it right - my hubris was punished by the trading gods.
Thursday, October 18, 2007
The Greater Fool Theory
This theory is seen at work in many real asset bubbles. People overpay for an assets, such as a house or a commercial property or even an LBO, which cannot pay its debt service and is cash flow negative, but they expect to sell all or part of the assets at higher prices to a ... greater fool and reap large returns/profits on little equity.
But it's like musical chairs - don't be the last man standing. And eventually someone is left standing - that is a metaphysical certitude.
This morning's WSJ story about investors defaulting on numerous house mortgage loans that they bought to flip shows that the house market had a lot more "investors" that many think. I suspect that statement required on many mortgage loan documents pledging that one would occupy the home as a principal residence had quite a high rate of prevarication. And I suspect that many/most affected mortgage brokers were complicit in these lies.
So now a wave of bankruptcies can be expected as these greater fool theorists get chased by lenders with losses to recover. And then we can expect fraud lawsuits as lenders figure out that they were the object of lies. I wonder if the "greater fools" realize that making false statements on mortgage loan documents is a federal felony crime? I suspect not.
Oh well. Nothing is new under the sun. All this has happened before many, many times. If you have been paying attention to markets and are over 50, you can remember them.
Back to stocks:
Yesterday was hard ping pong by the beefers. Nothing was new and the earnings were good, but the bears hit the morning rip hard, drove prices down to run stops and them the real buyers picked up some cheap stocks. Some beefers are rotating groups frantically to make their numbers for the year. I'll be interested in the XLF short interest when the numbers come out soon.
The charts look OK. Yesterday's S&P reversal was on higher volume, possibly indicating a local bottom. A continuation - consolidation pattern might form. This is a logical place as it's near the old top region. The Nazz looks quite strong with a good uptrend and yesterday's move was a 1-2-3-4-5 upmove. [I'll describe that useful pattern later.] The Nazz 100 is quite strong, too.
Options expiration is Friday which is also the 20th anniversary of the Crash of 1987, so maximal nervousness is to be expected.
Nothing has changed in the bullish economic trajectory.
PS: BAC big miss earnings. Yuck! I knew I'd get punished for that add Monday. Darn. Phooey!
PPS: I didn't practice time diversification as well as I preach it. I had planned to wait until earnings to load the last slug, but got impatient. Bad mistake. But I think this will work out. The dividend is great and over time I'll make good money here. BUT I wish I had a better entry. If we get to frosty's 45, I might buy more.
But it's like musical chairs - don't be the last man standing. And eventually someone is left standing - that is a metaphysical certitude.
This morning's WSJ story about investors defaulting on numerous house mortgage loans that they bought to flip shows that the house market had a lot more "investors" that many think. I suspect that statement required on many mortgage loan documents pledging that one would occupy the home as a principal residence had quite a high rate of prevarication. And I suspect that many/most affected mortgage brokers were complicit in these lies.
So now a wave of bankruptcies can be expected as these greater fool theorists get chased by lenders with losses to recover. And then we can expect fraud lawsuits as lenders figure out that they were the object of lies. I wonder if the "greater fools" realize that making false statements on mortgage loan documents is a federal felony crime? I suspect not.
Oh well. Nothing is new under the sun. All this has happened before many, many times. If you have been paying attention to markets and are over 50, you can remember them.
Back to stocks:
Yesterday was hard ping pong by the beefers. Nothing was new and the earnings were good, but the bears hit the morning rip hard, drove prices down to run stops and them the real buyers picked up some cheap stocks. Some beefers are rotating groups frantically to make their numbers for the year. I'll be interested in the XLF short interest when the numbers come out soon.
The charts look OK. Yesterday's S&P reversal was on higher volume, possibly indicating a local bottom. A continuation - consolidation pattern might form. This is a logical place as it's near the old top region. The Nazz looks quite strong with a good uptrend and yesterday's move was a 1-2-3-4-5 upmove. [I'll describe that useful pattern later.] The Nazz 100 is quite strong, too.
Options expiration is Friday which is also the 20th anniversary of the Crash of 1987, so maximal nervousness is to be expected.
Nothing has changed in the bullish economic trajectory.
PS: BAC big miss earnings. Yuck! I knew I'd get punished for that add Monday. Darn. Phooey!
PPS: I didn't practice time diversification as well as I preach it. I had planned to wait until earnings to load the last slug, but got impatient. Bad mistake. But I think this will work out. The dividend is great and over time I'll make good money here. BUT I wish I had a better entry. If we get to frosty's 45, I might buy more.
Wednesday, October 17, 2007
Tribe Wins ! Yayyyyyyyyy !
Heap big 5th inning put Red Sox in the dirt as the Tribe scalped them again, 7-3. Gosh, can the Tribe go to the fall classic? Can the ghosts of 1954 be vanquished? It's been many moons since the Tribe won it all.
Go Tribe !!!
Frosty suggests BWLD as a Tribe World Series play - I bought some and might buy more today. See yesterday's comments for details. I've seen their ads on TV here in Massachusetts, too.
US electricity demand is rising faster than supplies. [WSJ today] I think that the current infatuation with "renewal" sources will lead to brownouts and worse over time. Coal and nuclear are the only logical sources for base power. The renewables are tax subsidized delusions for the environmentalist theology. They seek a miracle. It won't come.
I'm long BTU [coal] and CCJ [uranium].
Tech earnings were good last night. Futures are up this morning. CPI numbers come out at 8:30 AM EDT. Those can be important.
India put on some kind of restrictions on derivatives that were being used by beefers to sidestep investment rules. I don't see any big deal there. I only own the Indian banks [HDB, IBN] now and a bit of stock I'm waiting for long term gains treatment. Any more extensive capital requirements would be a big negative.
It's quite remarkable how much bearishness I continue to hear. I think bearishness became a required attitude for market seers after the Nazz crash so they could keep their jobs. And they haven't been able to adapt to new conditions. But I guess they are getting paid by clients for those views, no matter how wrong they have been for years.
Perhaps it's a matter of them performing self-delusional eisegesis of markets and the economy and not true exegesis.
It's a bull market. Buy dips on good stocks & strong groups. Hold until something changes.
PS: JPM beats earnings and increase earnings yoy. Uh, bears ... I guess the delusionalists will say they didn't mark down enough. But the WSJ articles says the accountants are very tough. And I believe that since they don't want to be sued. They have a cartel now and can be tough.
PPS: Boone says $100 oil within 1 year. The dumbness of the press stuns me. Boone says 85 million barrels per day is the limit of production. Boone says demand is 88 million barrels per day. And they ask him, "won't prices come down once demand is cut?" How stupid! Demand HAS TO COME DOWN TO 85 MILLION BARRELS PER DAY. THAT'S ALL THERE IS! AND PRICES HAVE TO STAY UP SO DEMAND IS RATIONED! Sheesh, doesn't anyone learn the most basic principle of microeconomics anymore? Maybe $100 oil cuts demand enough. But the price will have to continue rising slowly once the equilibrium is hit as people find more productive uses of oil. Marginal profit has to hit marginal cost and stay there.
P^3S: Year over year core CPI was 2.1% flat with last month. That's a good number.
P^4S: I don't see how Chuck Prince of C can survive now that JPM posted good numbers.
Go Tribe !!!
Frosty suggests BWLD as a Tribe World Series play - I bought some and might buy more today. See yesterday's comments for details. I've seen their ads on TV here in Massachusetts, too.
US electricity demand is rising faster than supplies. [WSJ today] I think that the current infatuation with "renewal" sources will lead to brownouts and worse over time. Coal and nuclear are the only logical sources for base power. The renewables are tax subsidized delusions for the environmentalist theology. They seek a miracle. It won't come.
I'm long BTU [coal] and CCJ [uranium].
Tech earnings were good last night. Futures are up this morning. CPI numbers come out at 8:30 AM EDT. Those can be important.
India put on some kind of restrictions on derivatives that were being used by beefers to sidestep investment rules. I don't see any big deal there. I only own the Indian banks [HDB, IBN] now and a bit of stock I'm waiting for long term gains treatment. Any more extensive capital requirements would be a big negative.
It's quite remarkable how much bearishness I continue to hear. I think bearishness became a required attitude for market seers after the Nazz crash so they could keep their jobs. And they haven't been able to adapt to new conditions. But I guess they are getting paid by clients for those views, no matter how wrong they have been for years.
Perhaps it's a matter of them performing self-delusional eisegesis of markets and the economy and not true exegesis.
It's a bull market. Buy dips on good stocks & strong groups. Hold until something changes.
PS: JPM beats earnings and increase earnings yoy. Uh, bears ... I guess the delusionalists will say they didn't mark down enough. But the WSJ articles says the accountants are very tough. And I believe that since they don't want to be sued. They have a cartel now and can be tough.
PPS: Boone says $100 oil within 1 year. The dumbness of the press stuns me. Boone says 85 million barrels per day is the limit of production. Boone says demand is 88 million barrels per day. And they ask him, "won't prices come down once demand is cut?" How stupid! Demand HAS TO COME DOWN TO 85 MILLION BARRELS PER DAY. THAT'S ALL THERE IS! AND PRICES HAVE TO STAY UP SO DEMAND IS RATIONED! Sheesh, doesn't anyone learn the most basic principle of microeconomics anymore? Maybe $100 oil cuts demand enough. But the price will have to continue rising slowly once the equilibrium is hit as people find more productive uses of oil. Marginal profit has to hit marginal cost and stay there.
P^3S: Year over year core CPI was 2.1% flat with last month. That's a good number.
P^4S: I don't see how Chuck Prince of C can survive now that JPM posted good numbers.
Tuesday, October 16, 2007
Go Tribe!
Cleveland won last night, and now lead the Red Sox 2 games to 1. Yayyyyyyyy!!!
Chinese bank Citic wants to invest in Bear, Stearns. Dopes! Good, let them get eaten by those pirahnas.
Oil still moving up - over $87 this AM. Global demand must be very strong.
Gold up again this AM.
I have to sell partial positions in a few stocks this AM and the next few days - just re-balancing in my Alpha Fund as I added to the big cap fins yesterday. I'm too long. I just pick them based on allocations to groups and which stocks qualify for long term gains for taxes.
Otherwise, nothing has changed in my humble opinion.
Chinese bank Citic wants to invest in Bear, Stearns. Dopes! Good, let them get eaten by those pirahnas.
Oil still moving up - over $87 this AM. Global demand must be very strong.
Gold up again this AM.
I have to sell partial positions in a few stocks this AM and the next few days - just re-balancing in my Alpha Fund as I added to the big cap fins yesterday. I'm too long. I just pick them based on allocations to groups and which stocks qualify for long term gains for taxes.
Otherwise, nothing has changed in my humble opinion.
Monday, October 15, 2007
Monday Morning Rambles
Tribe and Red Sox split - series moves to Cleveland, that pearl on the lake ;-) I wonder if the Tribe is getting the bugs ready to swarm over the Red Sox relievers ? Go Tribe !!!
World Rugby Cup final will be England v. South Africa on Sunday. Rugby is the greatest sport in the world, no doubt.
Chinese Communist Party Congress is ongoing now. Those familiar words - Politburo, Central Committee - and all those military uniformed members - seen in the press. Hmmmm ?
Superfund for commercial paper conduits is being created - this sounds like a private sector solution to what the Bank of England did for Northern Rock. It won't buy subprime. This sounds OK to me - those assets are good and can roll off with little or no losses. After that, we'll see it the SIVs can continue to exist. Hmmm is this sign of the "End of the End" ? Maybe, but recognition of subprime loan and home asset solutions are still being worked out.
Gold is up strongly this morning.
Earnings season hits full speed this week.
The charts look fine across the board. Ignore beefer ping pong games it you're a long term investor. Wait for real news that can influence the real buyers and sellers, and that has meaning for the world economic trend.
It's a bull market. Buy dips on good stocks and strong groups. Hold until something real changes.
PS: Another doomster on Babblevision. What a dope! These guys seem to know nothing about the world markets or demographics.
PPS: I heard Trichet, the ECB central banker, speak about the Euro-Chinese yuan level today. He seemed to think it was more significant than the Euro-Dollar level. European exports must be getting really hurt as the dollar falls, dragging the yuan down, too.
P^3S: Hmmm ... it looks like the bears are using this financial superfund news to hit the big cap fins. I'll be patient, but I might use this weakness in a few days to top off my position in them.
World Rugby Cup final will be England v. South Africa on Sunday. Rugby is the greatest sport in the world, no doubt.
Chinese Communist Party Congress is ongoing now. Those familiar words - Politburo, Central Committee - and all those military uniformed members - seen in the press. Hmmmm ?
Superfund for commercial paper conduits is being created - this sounds like a private sector solution to what the Bank of England did for Northern Rock. It won't buy subprime. This sounds OK to me - those assets are good and can roll off with little or no losses. After that, we'll see it the SIVs can continue to exist. Hmmm is this sign of the "End of the End" ? Maybe, but recognition of subprime loan and home asset solutions are still being worked out.
Gold is up strongly this morning.
Earnings season hits full speed this week.
The charts look fine across the board. Ignore beefer ping pong games it you're a long term investor. Wait for real news that can influence the real buyers and sellers, and that has meaning for the world economic trend.
It's a bull market. Buy dips on good stocks and strong groups. Hold until something real changes.
PS: Another doomster on Babblevision. What a dope! These guys seem to know nothing about the world markets or demographics.
PPS: I heard Trichet, the ECB central banker, speak about the Euro-Chinese yuan level today. He seemed to think it was more significant than the Euro-Dollar level. European exports must be getting really hurt as the dollar falls, dragging the yuan down, too.
P^3S: Hmmm ... it looks like the bears are using this financial superfund news to hit the big cap fins. I'll be patient, but I might use this weakness in a few days to top off my position in them.
Friday, October 12, 2007
Ping Pong
Yesterday was a beefer ping pong game. Some beefers run prices up and then others hit them down. Ping pong. There was no news that meant anything important. So ignore it. Days like yesterday are just virtual trading froth in the vacuum of trading space without news.
The drop filled a gap in the Russell 2000 cash index. The Nazz cash gap still exists. Gaps matter since ... everyone thinks they do. Perhaps there is some "reality" to them as no market participants have positions based in the gaps by definition, hence causing a vacuum pressure to pull back to fill them. They definitely exert strong psychological pressure from traders, though. So one must respect nearby gaps.
And one needs to respect October as a psychologically important month. Don't be a hero. Be patient. Buy dips in good stocks & groups. It's a bull market. The big money is made in buying good stocks and holding them for a big move.
I might add to my BNI position on this pullback if I can get the stock under 83.
PS: Good numbers out of GE. No surprises. No economic drop off. Global expansion continues.
PPS: McDonald's raises guidance and reports great sales comps. No matter what people say, they make great food! Quarterpounders rule !!! :-))) Mrs. B owns MCD in the Sky Fund.
P^3S: ORCL hostile for BEAS at $17 cash. Holding ORCL - they know how to do acquisitions & grow them.
P^4S: Core year over year PPI was 2%. Sighhhhh. Disinflation rules.
The drop filled a gap in the Russell 2000 cash index. The Nazz cash gap still exists. Gaps matter since ... everyone thinks they do. Perhaps there is some "reality" to them as no market participants have positions based in the gaps by definition, hence causing a vacuum pressure to pull back to fill them. They definitely exert strong psychological pressure from traders, though. So one must respect nearby gaps.
And one needs to respect October as a psychologically important month. Don't be a hero. Be patient. Buy dips in good stocks & groups. It's a bull market. The big money is made in buying good stocks and holding them for a big move.
I might add to my BNI position on this pullback if I can get the stock under 83.
PS: Good numbers out of GE. No surprises. No economic drop off. Global expansion continues.
PPS: McDonald's raises guidance and reports great sales comps. No matter what people say, they make great food! Quarterpounders rule !!! :-))) Mrs. B owns MCD in the Sky Fund.
P^3S: ORCL hostile for BEAS at $17 cash. Holding ORCL - they know how to do acquisitions & grow them.
P^4S: Core year over year PPI was 2%. Sighhhhh. Disinflation rules.
Thursday, October 11, 2007
I Wonder ... ?
I read briefing.com - a subscription news service. I get the Platinum edition and read "Live In Play" in real time and overnight. So mirabile dictu ! This morning I see that Cramer says "a non-conservative but rational price estimate would be $900" for GOOG. I think that proves that he must read this blog [ hehe ;-) ] since I smacked him recently for being a wimp with that $701 price target. For many moons I've posted that GOOG is worth $900. Oh well, he's right this time :-)
I got a bit embarrassed pumping that stock so often here for many moons when it was around $500. It just bounced around awhile, but that's what stocks do as all remaining sellers are slowly erased. From the weekly chart you can see it's in "blue sky" country now and is coming off a huge multi-year base with multiple bullish continuation patterns [ascending triangle and cup & handle]. I have a good bit of it and plan to hold them awhile That's how the big money is made in a bull market.
Yesterday the beefers were playing ping pong with the energy stocks. They like to play with those, probably since the ETF is liquid as are its big cap components. XLE reversed up midday and closed in "blue sky" country, too. The weekly chart shows a multi-year base from 50 to 60 and the move this year cleared that base and the uptrend continues as a bullish cup & handle formed on the weekly chart and broke up yesterday.
I started a position in BNI [1/3 of a full position], the railroad stock, yesterday. See yesterday's "PS" comment for details. The chart formation is a bullish pennant after a break up out of a consolidation base. So now I'll wait and try to get a good entry for the rest the position using the time diversification principle to reduce my risk.
It's a bull market. Buy dips in strong stocks & groups. Hold them until something changes.
PS: Here is the strategy I laid out in response to a question yesterday in the comments. This is intermediate term thinking for the next three months or so. I added some [ ... ] clarifications.
"I'm as long as I want to be. When I sold some stocks in September when I posted them [the sales], I was about 200% long [before the sales]. Now I'm about 140% long. I have a few stocks I plan to sell into this move to get me to a point to 125% long.
"At that point as I close down my commodity account as the T-bills roll off [to cut "retirement" stress], I will be 100% after adding the commodity cash to my stock account.
"If we get dips in stocks I like I'll buy some. Or if I identify more strong stocks or groups. So I'll ride the trend as long as it looks OK and my thinking is not changed by news.
"I plan to sell some stocks that are becoming long term gains in a few weeks. I have big gains in them. [These sales refer to my cutting from 140% long to 125% long mentioned above.]"
I got a bit embarrassed pumping that stock so often here for many moons when it was around $500. It just bounced around awhile, but that's what stocks do as all remaining sellers are slowly erased. From the weekly chart you can see it's in "blue sky" country now and is coming off a huge multi-year base with multiple bullish continuation patterns [ascending triangle and cup & handle]. I have a good bit of it and plan to hold them awhile That's how the big money is made in a bull market.
Yesterday the beefers were playing ping pong with the energy stocks. They like to play with those, probably since the ETF is liquid as are its big cap components. XLE reversed up midday and closed in "blue sky" country, too. The weekly chart shows a multi-year base from 50 to 60 and the move this year cleared that base and the uptrend continues as a bullish cup & handle formed on the weekly chart and broke up yesterday.
I started a position in BNI [1/3 of a full position], the railroad stock, yesterday. See yesterday's "PS" comment for details. The chart formation is a bullish pennant after a break up out of a consolidation base. So now I'll wait and try to get a good entry for the rest the position using the time diversification principle to reduce my risk.
It's a bull market. Buy dips in strong stocks & groups. Hold them until something changes.
PS: Here is the strategy I laid out in response to a question yesterday in the comments. This is intermediate term thinking for the next three months or so. I added some [ ... ] clarifications.
"I'm as long as I want to be. When I sold some stocks in September when I posted them [the sales], I was about 200% long [before the sales]. Now I'm about 140% long. I have a few stocks I plan to sell into this move to get me to a point to 125% long.
"At that point as I close down my commodity account as the T-bills roll off [to cut "retirement" stress], I will be 100% after adding the commodity cash to my stock account.
"If we get dips in stocks I like I'll buy some. Or if I identify more strong stocks or groups. So I'll ride the trend as long as it looks OK and my thinking is not changed by news.
"I plan to sell some stocks that are becoming long term gains in a few weeks. I have big gains in them. [These sales refer to my cutting from 140% long to 125% long mentioned above.]"
Wednesday, October 10, 2007
Back in the Saddle
I'm back from the heartland. I thought that traffic was a bit lighter than normal in Connecticut, but I did get on the road up earlier than usual [5AM] so hit CT a bit earlier, too. But there were quite a few trucks on the highway.
McDonald's got plenty of business - whatever some say, I think they make good quality, tasty food. My dog, Spikie, likes it, too. She had a classic grilled chicken sandwich, no mayo, for lunch. Spikie loves McDonald's food!
I see Ms. Market continues to take good care of the long term investor. Sometimes tortoise-style investing does quite well. Simply holding long if conditions are good means one gets a piece of the action on these periodic one day moves in a long stairstep move up.
Yesterday's move confirmed the break up. Sayonnara double top bear! A few weeks ago I observed the inverse H&S bottom pointed to at least S&P 1600 cash. The weekly upper uptrend line points to 1700. That was my "target" for the year. Whether we get there this year or in 2008 will depend on news and events to come. But the economic trajectory is good and investment conditions are in the sweet spot.
It's a bull market. Buy dips in strong stocks & groups. Hold until something changes.
PS: I started a position in BNI, the train stock that has routes in the northwest. I like the chart, Warren Buffet position and that they should move a lot of lumber next year if/when housing industry turns up. The stock is about 85 at 14x 2008 earnings. I think it can hit 120 as the economy re-accelerates late next year. The monthly chart shows a good, long base.
McDonald's got plenty of business - whatever some say, I think they make good quality, tasty food. My dog, Spikie, likes it, too. She had a classic grilled chicken sandwich, no mayo, for lunch. Spikie loves McDonald's food!
I see Ms. Market continues to take good care of the long term investor. Sometimes tortoise-style investing does quite well. Simply holding long if conditions are good means one gets a piece of the action on these periodic one day moves in a long stairstep move up.
Yesterday's move confirmed the break up. Sayonnara double top bear! A few weeks ago I observed the inverse H&S bottom pointed to at least S&P 1600 cash. The weekly upper uptrend line points to 1700. That was my "target" for the year. Whether we get there this year or in 2008 will depend on news and events to come. But the economic trajectory is good and investment conditions are in the sweet spot.
It's a bull market. Buy dips in strong stocks & groups. Hold until something changes.
PS: I started a position in BNI, the train stock that has routes in the northwest. I like the chart, Warren Buffet position and that they should move a lot of lumber next year if/when housing industry turns up. The stock is about 85 at 14x 2008 earnings. I think it can hit 120 as the economy re-accelerates late next year. The monthly chart shows a good, long base.
Monday, October 8, 2007
The Long Drive Home
I'll be driving home to Massachusetts Tuesday. If all goes well, I'll be having #3 breakfast meal around 7AM near the Ohio-Pennsylvania border and then again around 9AM about 130 miles into Pennsylvania along Interstate 80.
After that, around Noon it's a double quarterpounder with cheese for me for lunch and a grilled chicken classic, no mayo for Spikie for lunch. :-))
With any luck, then I'll have another double QP with cheese in Connecticut, then home after 750 miles.
Monday was just the real buyers being patient with low bids. Beefers are rotating out of oil & oil stocks. This happens every few months. I'm keeping every share.
After that, around Noon it's a double quarterpounder with cheese for me for lunch and a grilled chicken classic, no mayo for Spikie for lunch. :-))
With any luck, then I'll have another double QP with cheese in Connecticut, then home after 750 miles.
Monday was just the real buyers being patient with low bids. Beefers are rotating out of oil & oil stocks. This happens every few months. I'm keeping every share.
I've Heard That Song Before
That's the title of a fine Harry James song from the 1940s His band performed it best, but the musics and lyrics were written by Jules Styne and S. Cahn and the vocal was performed by Helen Forrest. That's why 1940s recordings are superior to anything that has been done since 1954. The 1940s era recordings combined the best of four difficult skills.
Anyway, the title stuck in my mind as I listened to it yesterday and I thought it applied to the stock markets and the economy. This morning it applies even more.
Babblevision has Sutty on again - he's still a bear. Beutel is still an oil bear. Another "strategist" was talking ... recession. Another was talking about divergences. A few days after the Fed rate cut and subsequent rally, I remember a hedgie calling the bounce up a "sucker's rally". Hmmm. Need I point out the S&P closed at an all-time high?
Back to basics. We need a second close in the new high territory to confirm the move as the pop Friday could have been beefer shorts covering. IF we get if, the bump and ground higher can last a long time as so many beefers are underperforming and aren't long enough. Moderate growth and low interest rates and disinflation is an extremely bullish environment for stocks.
It's a bull market. Buy dips on strong stocks & groups. Hold until something changes.
Anyway, the title stuck in my mind as I listened to it yesterday and I thought it applied to the stock markets and the economy. This morning it applies even more.
Babblevision has Sutty on again - he's still a bear. Beutel is still an oil bear. Another "strategist" was talking ... recession. Another was talking about divergences. A few days after the Fed rate cut and subsequent rally, I remember a hedgie calling the bounce up a "sucker's rally". Hmmm. Need I point out the S&P closed at an all-time high?
Back to basics. We need a second close in the new high territory to confirm the move as the pop Friday could have been beefer shorts covering. IF we get if, the bump and ground higher can last a long time as so many beefers are underperforming and aren't long enough. Moderate growth and low interest rates and disinflation is an extremely bullish environment for stocks.
It's a bull market. Buy dips on strong stocks & groups. Hold until something changes.
Saturday, October 6, 2007
Go Tribe !!!
How about those Cleveland Indians ?! My boyhood team wins in the clutch !!! Lolol even beating the despised Yankees !!!
In ancient times, people would definitively see the Indians as a blessed team, as the gods of Cleveland sent swarms of pesky gnats to distract the Yankee's Goliath pitcher, Joba. Now the tribe has to go to the belly of the Beast, New York City, to finish them off.
Go Tribe !!!
Scalp those Yankees !!!
PS: yeah, yeah, I root for the Yankees ... sometimes ... EXCEPT when the Indians are a contender. The Tribe has always been my team since I attained consciousness of baseball :-))
In ancient times, people would definitively see the Indians as a blessed team, as the gods of Cleveland sent swarms of pesky gnats to distract the Yankee's Goliath pitcher, Joba. Now the tribe has to go to the belly of the Beast, New York City, to finish them off.
Go Tribe !!!
Scalp those Yankees !!!
PS: yeah, yeah, I root for the Yankees ... sometimes ... EXCEPT when the Indians are a contender. The Tribe has always been my team since I attained consciousness of baseball :-))
Friday, October 5, 2007
The Heartland
Here in the hill country of southeast Ohio, the common man is celebrating the harvest with their county fair. Those are lots of fun - I might try to go. I like seeing the animals. The 4H kids do a fine job. Unharvested corn is tall and dry in the fields.
Traffic on the 750 mile drive was moderate. The double quarterpounder with cheese was superb! As was the #3 breakfast meal: bacon, egg and cheese on a biscuit, fried potatoes and black coffee. McDonald's makes good coffee.
Spikie had a grilled chicken, no mayo. She loves that sandwich.
The jobs number today will be significant. Jobs are a lagging indicator and the economy was softening for months under the Fed tight money policies. I'd like to see a moderate number - 50K would be fine - and a positive revision to last month to get it over zero.
The Feds are starting a criminal investigation of the two Bear Stearns hedge funds that cratered. No surprise to me - I can't post why, but I'm not surprised.
It's a bull market until something "real" changes.
PS: Tribe scalps Yanks !!! Yayyyyyyyyyyyyyyy !!!
PPS: Good jobs number and a solid positive revision to last month. Now the average is about 100K gain per month. Good news - no falloff in the economy.
P^3S: So the jobs number eliminates another part on the bears' recession case. Without weak jobs growth, the consumer won't cut back. I'd still like the Fed to cut once more to 4.5% to keep real rates neutral.
Traffic on the 750 mile drive was moderate. The double quarterpounder with cheese was superb! As was the #3 breakfast meal: bacon, egg and cheese on a biscuit, fried potatoes and black coffee. McDonald's makes good coffee.
Spikie had a grilled chicken, no mayo. She loves that sandwich.
The jobs number today will be significant. Jobs are a lagging indicator and the economy was softening for months under the Fed tight money policies. I'd like to see a moderate number - 50K would be fine - and a positive revision to last month to get it over zero.
The Feds are starting a criminal investigation of the two Bear Stearns hedge funds that cratered. No surprise to me - I can't post why, but I'm not surprised.
It's a bull market until something "real" changes.
PS: Tribe scalps Yanks !!! Yayyyyyyyyyyyyyyy !!!
PPS: Good jobs number and a solid positive revision to last month. Now the average is about 100K gain per month. Good news - no falloff in the economy.
P^3S: So the jobs number eliminates another part on the bears' recession case. Without weak jobs growth, the consumer won't cut back. I'd still like the Fed to cut once more to 4.5% to keep real rates neutral.
Thursday, October 4, 2007
Driving to Ohio
I'm driving to Ohio today - 750 miles, 13 hours. There's no airport near my hometown, so with airport delays and rental car delays, a drive is more workable. I'm taking my dog Spikie for company. I know where all the McDonald's are, so I should be well nourished!
The markets seem to be setting up for a grind higher with this consolidation. Ms. Market is at the natural resistant point so will likely play it coy awhile. She might encourage the beefers to make advances on the dark side, but I expect at some time this month, barring news, that she'll reject their evil advances and return to the bump & grind higher.
Real buyers are patient, waiting for dips and wary of October. At some point they'll get good entries and the bears will be back to the caves.
It's a bull market. Buy dips in good stocks & groups. Hold until something changes.
The markets seem to be setting up for a grind higher with this consolidation. Ms. Market is at the natural resistant point so will likely play it coy awhile. She might encourage the beefers to make advances on the dark side, but I expect at some time this month, barring news, that she'll reject their evil advances and return to the bump & grind higher.
Real buyers are patient, waiting for dips and wary of October. At some point they'll get good entries and the bears will be back to the caves.
It's a bull market. Buy dips in good stocks & groups. Hold until something changes.
Wednesday, October 3, 2007
What! Me Worry?
That's Alfred E. Neuman's signature line in Mad Magazine. He's the goof-ball loser 12 year old character that Mad uses to introduce stories & parody people & movies.
I subscribe to Mad and read it occasionally - it's great fun! I like "Mad Look At ..." and the "Spy vs. Spy" and the fold-in back page best. Hehehe, yes, I read it as a pimply-faced 12 year old, too :-))
So I thought about the signature line this morning. It's October - always a dangerous month. In pre-war years [i., e., pre World War II] , this was due to the stress on the banking system as money flowed out of the money center banks in cities to the countryside as crops were harvested & sold. So any weakness was exposed and many, many panics & crashes occurred in October.
In modern times, the agricultural money flows are minor. But the October risk remains. The Crash of 1987 occurred in October 19, 1987 - almost 20 years ago. I don't know why October is still dangerous - maybe it's psychological - but it is.
So we have to worry and respect October. The stress on the banking system in Europe is a concern. US housing markets are a concern. Deutsche Bank reported a $3 billion charge for the usual suspects - leveraged loans, credit products, and mortgage backed securities. The US economy has momentum and the Fed rate cut helped it immeasurably in my opinion as before it their tight money policy was exacerbating a weakening trend.
But the charts are bullish, being at or near all-time highs in the DJIA and S&P 500. With the big stud - the Fed - on our side, the bulls have the edge.
Don't Fight the Fed. Don't Fight the Tape. Those were Marty Zweig's well known maxims. I think they still work.
It's a bull market. Buy dips. Hold until something changes. Worry and watch, but don't fold your hand.
PS: I read on briefing.com [Live Update on Platinum] that China became a net importer of coal for the first time in January 2007. That's bullish long term for BHP and BTU.
I subscribe to Mad and read it occasionally - it's great fun! I like "Mad Look At ..." and the "Spy vs. Spy" and the fold-in back page best. Hehehe, yes, I read it as a pimply-faced 12 year old, too :-))
So I thought about the signature line this morning. It's October - always a dangerous month. In pre-war years [i., e., pre World War II] , this was due to the stress on the banking system as money flowed out of the money center banks in cities to the countryside as crops were harvested & sold. So any weakness was exposed and many, many panics & crashes occurred in October.
In modern times, the agricultural money flows are minor. But the October risk remains. The Crash of 1987 occurred in October 19, 1987 - almost 20 years ago. I don't know why October is still dangerous - maybe it's psychological - but it is.
So we have to worry and respect October. The stress on the banking system in Europe is a concern. US housing markets are a concern. Deutsche Bank reported a $3 billion charge for the usual suspects - leveraged loans, credit products, and mortgage backed securities. The US economy has momentum and the Fed rate cut helped it immeasurably in my opinion as before it their tight money policy was exacerbating a weakening trend.
But the charts are bullish, being at or near all-time highs in the DJIA and S&P 500. With the big stud - the Fed - on our side, the bulls have the edge.
Don't Fight the Fed. Don't Fight the Tape. Those were Marty Zweig's well known maxims. I think they still work.
It's a bull market. Buy dips. Hold until something changes. Worry and watch, but don't fold your hand.
PS: I read on briefing.com [Live Update on Platinum] that China became a net importer of coal for the first time in January 2007. That's bullish long term for BHP and BTU.
Tuesday, October 2, 2007
The End?
Is the Rich Man's Panic of 2007 over?
The Dow Industrials closed well over the July high. The S&P 500 cash is a bit under the old high. The Nasdaq composite closed over the July high and the Nazz 100 is way over the July level. The Russell 2000 is well under July, but broke up out of a bullish flag pattern signaling a continuation of the older break out of the ascending triangle. The NYSE composite is slightly under the July level. The Dow transports are well under the July high. So the "no" vote wins so far: 3 yes to 4 no. I think that's a maybe.
October brings earnings and the lots of worries. Ms. Market really needs to perform a bit more and get the big S&P and NYSE indices over the July levels to truly signal the "end of the end"
Right now, I'd call it the "Middle of the End"
And due to the antics of the innumerable virtual players in the markets, we need two closes over each level to rely on the signals.
Another hopeful sign is the decline in short interest. I think that means the recent years' infatuation with selling short might be ending. All that beefer money in 120/20 and 130/30 long/short funds might just go to long only funds. And the decline might also signal redemptions from beefers, particularly those silly market neutral and trading funds. We need more real investors to get a sustained bull market to record levels way over today's levels. Without them, it will be long bump & grind performance by Ms. Market.
The Dow Industrials closed well over the July high. The S&P 500 cash is a bit under the old high. The Nasdaq composite closed over the July high and the Nazz 100 is way over the July level. The Russell 2000 is well under July, but broke up out of a bullish flag pattern signaling a continuation of the older break out of the ascending triangle. The NYSE composite is slightly under the July level. The Dow transports are well under the July high. So the "no" vote wins so far: 3 yes to 4 no. I think that's a maybe.
October brings earnings and the lots of worries. Ms. Market really needs to perform a bit more and get the big S&P and NYSE indices over the July levels to truly signal the "end of the end"
Right now, I'd call it the "Middle of the End"
And due to the antics of the innumerable virtual players in the markets, we need two closes over each level to rely on the signals.
Another hopeful sign is the decline in short interest. I think that means the recent years' infatuation with selling short might be ending. All that beefer money in 120/20 and 130/30 long/short funds might just go to long only funds. And the decline might also signal redemptions from beefers, particularly those silly market neutral and trading funds. We need more real investors to get a sustained bull market to record levels way over today's levels. Without them, it will be long bump & grind performance by Ms. Market.
Monday, October 1, 2007
Monday Morning Rambles
The fourth quarter commences. Many beefers are hurting, underperforming. So they need a really good quarter to save their jobs and fat fees.
UBS reported a $3.4 billion writedown and fired its CEO. Mortgage losses. Perhaps this was one of the European problems that was causing the LIBOR problems.
Futures are up for now. The charts are fine as the market consolidates and creates bullish continuation patterns.
As usual Congress can't do its job on time. All they do is try to get earmarks now - payoffs for supporters. What a bribe mill ! Despicable.
I'll post numbers for the end of the quarter later. I'm a bit behind from all the sheep herding and dog agility events. Krypto did very well, collecting many first place ribbons and the more important green "qualified" ribbons. Both Krypto & Sky showed much ability on the sheep. I think we'll give then sheep herding lessons twice a week now.
PS: C warns for Q3 earnings, writedowns; says back to normal in Q4.
PPS: Year to date, Krypto Fund +9.2%, Alpha Fund +55.3%.
UBS reported a $3.4 billion writedown and fired its CEO. Mortgage losses. Perhaps this was one of the European problems that was causing the LIBOR problems.
Futures are up for now. The charts are fine as the market consolidates and creates bullish continuation patterns.
As usual Congress can't do its job on time. All they do is try to get earmarks now - payoffs for supporters. What a bribe mill ! Despicable.
I'll post numbers for the end of the quarter later. I'm a bit behind from all the sheep herding and dog agility events. Krypto did very well, collecting many first place ribbons and the more important green "qualified" ribbons. Both Krypto & Sky showed much ability on the sheep. I think we'll give then sheep herding lessons twice a week now.
PS: C warns for Q3 earnings, writedowns; says back to normal in Q4.
PPS: Year to date, Krypto Fund +9.2%, Alpha Fund +55.3%.
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