Friday, July 31, 2009


Not much news today.

Sellers came out at S&P 1000 as predicted in this blog. But it doesn't take a genius to figure that out. I suppose the market will base or grind up. I'd guess a huge number of beefers and individual investors are on the sidelines and now, hearing about the S&P being up about 10%, will get some courage. Or is that greed ? Maybe greed will start to gain some area from fear in the emotional phase space.

FYI, "phase space" is a two dimensional space of position and velocity - really six dimensional if one uses the true three dimensional position and velocity vectors to create it. Well, classical physics had a number of interesting theorems about phase space and it was a good concept for understanding the dynamics of objects. So I'm using that concept to think about investors' emotional state - a sort of phase space made from fear and greed. Lots of these analogies from physics help me think about markets. The mathematics describing them is actually the same as the math underlying much modern finance so the analogies can be quite valid.

REITs showed strength, perhaps as some investors who actually think about the future and not just trading patterns also foresee relief in the commercial real estate financing markets. That sector can really explode up if or when the economy gets back to normal. I mean the "old", real normal, not this new syndrome of "perma-bear-itis" called "the new normal".

I've got a good bit of those in Krypto Fund, so will wait until the Fed's TALF for CMBS really happens.

Word of the Day

"Semiotics" - noun [$10]; "Semiotic" - adjective [$10]
Semiotics means (noun) 1. the study of signs and symbols in various fields, especially language; 2. Med. symptomatology.
Semiotic (adjective) means pertaining to semiotics.
Sentence: Technical analysis uses semiotic study of patterns from stock charts - viz., the high-low-close price plus volume chart - for its foundation. The classic book, "Technical Analysis of Stock Trends" by Edwards and Magee is that field's original scripture. Modern computers use the same data to create many more signs and symbols.

Das Wort der Woche

"Denken" - verb, regular
Denken means to think.
Der Satz: Ich denke, deshalb ich bin.
Sentence: I think, therefore I am.

Thursday, July 30, 2009

The Fig Leaf

Let's rename the so-called "Blue Dog" Democrats as the Fig Leaf Democrats. As a label, it fits better. Most of them have no principles except their selfish priority to get re-elected in a conservative district. In the latest example, they are grabbing onto some minor fake "cost cuts" to find a way to keep negotiating with Obama's capos to find a fig leaf for themselves to survive a vote for his national health insurance scheme.

The first fig leave is a switch in the small business mandate from requiring them to pay for health care - i. e., act as workers' mothers - to "require that payments to health-care providers under a new public health plan not be pegged to Medicare ... " Huh ? What's the difference ?

Then we see the "cost cuts" that purport to be $100 billion over ten years. Gosh, that less than Congress spends every year in earmarks to pay off supporters. And is even that pittance a "cut" ? No. "The cuts would be achieved in part by asking states to share in a planned expansion of Medicaid, which offers health insurance for the poor ... " So the states pay, not the Feds. Some "cut".

I guess lying and fooling the public is so ingrained in DC that they can't see how silly these claims look. Or perhaps they expect the Obama propaganda machine to provide good concealment for their betrayal of promises to their voters.

Perhaps they should talk to the voters, as more and more don't trust Obama's health care scheme.


I re-bought MT and a bit of FCX yesterday in Obama Fund. I have a couple more names that might give me the targeted profit potential. The US and European markets seem to have a bid to them almost every morning. It could be overseas money. I'm cautious as I have a lot invested in Krypto Fund and Fido Fund already. Until and if Obama re-appoints Ben, I'll probably stay just lightly invested in Obama Fund.

Word of the Day

"Yawp" - noun and verb [$10]
Yawp means (noun) 1. a) a harsh or course cry; b) loud raucous cry; 2. (US) foolish talk; (verb, intransitive) 1. utter a yawp; 2. (US) talk foolishly; 3. talk continuously and noisily.
Sentence: The Fig Leaf Democrats yawp incessantly to fool voters in their districts. I think they will betray their districts, but will fail to fool the people.

Latin Word of the Week

"Cognito" - verb
Cognito means to think, reflect
Sentence: Cognito ergo sum. I think, therefore I am.

[My Latin is just beginning to be re-learned so I don't know the words for 'sentence' or 'word of the week' yet. Soon ...]

Wednesday, July 29, 2009

The Last Piece ?

Most commercial real estate loans are written to have a term of about seven to ten years with an amortization schedule of 20 to 30 years, hence at maturity have a balloon payment due. That balloon payment must be satisfied by a refinancing or a sale of the property. That's a risk that so many participants brushed aside when times were good and money freely available. Now those balloons are causing pain for both the owners and the lenders.

Battleship Ben sketched out some plans to provide enough support for the commercial real estate loan market to help it get over this crunch, but nothing significant was done. Today's WSJ reports that a first step might occur soon to open the market for commercial real estate loans.

From "The Wall Street Journal reports Vornado Realty Trust (VNO) is planning on raising between $550 mln and $600 mln through a bond sale that would qualify for a key government program aimed at resuscitating the commercial-property market, according to people familiar with the matter. The potential deal, along with two by shopping-center giant Developers Diversified Realty (DDR), would be among the first batch of offerings of commercial mortgage-backed securities that will take advantage of the TALF program. Those deals are expected to hit the market in the fall, these people say."

This is the last piece needed to clear the financial markets of debris from the last year's wreck and bring about normal conditions. If it works or seems to be going to work, I expect commercial real estate and REITs to move up strongly. I need to add some money to that asset class. I'll be watching closely.


Nothing. I'm back to looking for a few good stocks that can go up at least 50% in six months.


I decided to re-learn Latin, too. [I had three years of Latin in high school many moons ago.] I pondered trying ancient Greek, but I had enough pain 37 years ago with Russian to know that a language with a different alphabet is another level of difficulty that I don't need now.

Word of the Day

"Prevenient" - adjective, formal [$10]
Prevenient means preceeding something else.
Sentence: Saving is necessarily prevenient to investment. Obama's proposed huge increase in taxes on people having the most disposable income to save must cause a drop in investment. This lesson was learned in the 1970s. Do we have to re-learn it ?

La Palabra de la Semana

"Pensare" - verb, regular -are conjugation
Pensare means to think.
La frase: Io penso, perciò io sono. [I left the pronoun "Io" for emphasis.]
Sentence: I think, therefore I am.

Tuesday, July 28, 2009

Is Anything New Under the Sun ?

Not much since 1920, except for some new inventions.

I've been reading some classic modern American novels which my high school 40 years ago negligently or intentionally did not require. That fact makes me think my education in literature then was a bit of a fraud on the students, perhaps part of an indoctrination effort by the state Board of Education.

Here's why I think I (and every other student) was gypped. The classic American novels, Main Street, Babbitt and Winesburg, Ohio bring to light social controversies of the era of 1910-1920s of women's rights, social conformity and the nature of economic growth that were huge controversies in the 1960s, too. So as a student, I and many other young persons were deprived of solid classics of literature that might have helped one better understand and cope with those trends, that were repeating after 40-50 years. It's truly ridiculous that the novels of the first American winner of the Nobel Prize in Literature were not assigned reading for high school students.

Why ? I suppose the dominant ruling classes wanted to suppress those independent thoughts. That effort failed in the 1960s and 1970s, but it had succeeded before in the Depression and World War II postwar eras. I suppose I could have found them on my own, but I was too busy learning mathematics, physics, and western philosophy and cultures. The humanities were not interesting, I think, due to the horrible literature classes where I was forced to read crap like "A Separate Peace". Oh well, I'm making up for it now.

Is the Glass Half Full Again ?

FT: “German shoppers are showing surprising strength in adversity with consumer confidence in the eurozone’s largest economy hitting its highest level for more than a year, even as evidence mounts of a credit squeeze across continental Europe. ... The unexpectedly steep increase will strengthen expectations of a significant rebound in Europe’s largest economy in the second half of this year. Last week, the German Ifo business confidence index also rose strongly, hitting the highest level since October.”

Every morning lately it seems that European stocks are strong.

You Heard It Here First

WSJ: “The Commodity Futures Trading Commission plans to issue a report next month suggesting speculators played a significant role in driving wild swings in oil prices -- a reversal of an earlier CFTC position that augurs intensifying scrutiny on investors.

In a contentious report last year, the main U.S. futures-market regulator pinned oil-price swings primarily on supply and demand. But that analysis was based on "deeply flawed data," Bart Chilton, one of four CFTC commissioners, said in an interview Monday.

The CFTC's new review, due to be released in August, adds fuel to a growing debate over financial investors who bet on the direction of commodities prices by buying contracts tied to indexes. These speculators have invested hundreds of billions of dollars in contracts that were once dominated by producers and consumers who sought to hedge against oil-market volatility.”

The old Bushite libertarians running the CFTC and SEC were knaves or fools.

Another Half Measure From a Corrupt SEC

WSJ: “The Securities and Exchange Commission issued new rules to govern short-selling, promising investors fresh information about the volume and velocity of negative bets placed against companies. ... But it dropped a requirement that hedge funds disclose details of short positions to regulators. ... Sen. Ted Kaufman (D.-Del.), who has prodded the SEC to take additional steps, said in a statement that he was disappointed it didn't go further to restrict naked short selling. "Instead of proposing action today to deal with the problem, the SEC apparently is content to let potential solutions sit on the shelf for another two months," he said.”

Aw, Shucks

WSJ: "While regulators debate how to curb excessive speculation in commodities markets, exchanges are moving to impose limits on natural-gas trading, sparking outrage among traders. In the face of pending restrictions, natural-gas prices have swung wildly and trading volume has declined, highlighting the dilemma facing regulators: how to heighten oversight without introducing adverse consequences."


I sold BHP and UNP yesterday as further gains seems limited. I also exchanged some more US total stock market fund money for TIPS in Krypto Fund. Today I plan to buy some GLD with teh stock sale proceeds as my asset allocation model wishes it. Here's another dog biscuit for your fee, Krypto. Good doggie !

Word of the Day

"Planish" - verb, transitive
Planish means to flatten (sheet metal, coining metal, etc.) with a smooth faced hammer or between rollers.
Sentence: Social pressures planish much independent thinking.

Słowo Tygodnia

"Myśleć" - verb, imperfective, conjugation 2
Myśleć means to think.
Zdanie: Myślę, dlatego jestem.
Sentence: I think, therefore I am.

Monday, July 27, 2009

Common People vs. Ruling Class ?

Reading history broadly, I've been struck by how many great empires and nations were slowly destroyed or debilitated by the growth in power of the aristocracy (aka ruling class) at the expense of the common people. The most stable and prosperous nations have a strong class of common people and a strong central government, but a relatively weak aristocracy. As the aristocracy grows in wealth and power, the government and people become weaker and eventually the government falls either internally or from outside enemies.

The various aggressive employee job actions in France last month were indicative of a trend towards the common people trying to get a better deal from the bosses. Today news arrived of similar, but more aggressive and violent actions happening in China

FT: “The privatisation of a state steel group has been scrapped after an executive was beaten to death by workers angry at the threat to their jobs from a takeover of their company, according to a Hong Kong rights group.

The violent riot in north-east China late last week involved up to 30,000 workers, a reminder of the ongoing sensitivity about lay-offs from state companies in industries targeted for consolidation.”

I’ve been reading “Babbitt” by Sinclair Lewis, which has a chapter describing how the people and George Babbitt react to a large, multi-industry employee action in moderate-sized city which is the setting for the book. These industrial actions in France and China are a bit reminiscent of the strikes and other job actions of the early 1920s and 1930s. I’m wondering how far this trend will go.

Russia continue to evolve and solidify its gangocracy.

FT: “A Moscow court has freed on bail Semyon Mogilevich, a suspected organised crime boss who is wanted by the FBI for alleged racketeering and fraud, 18 months after his arrest by armed commandos in Moscow on charges of tax fraud, the Financial Times has learnt. ... The release of the [man], who [was] arrested in January 2008, is unusual for Russian courts where suspects are often held in pre-trial detention long beyond the legal expiry date of one year. Another high-profile prisoner, Mikhail Khodorkovsky, the former Yukos tycoon, has spent 2½ years in detention since a second set of charges were brought against him in February 2007, while the court case continues. ... Mr Mogilevich had been living freely in Moscow until the January 2008 arrest despite being on the FBI’s most wanted list since 2003. Robert Mueller, the US bureau’s chief, had accused him in a 2005 speech of setting up “a powerful organised crime ring” that “engaged in drug and weapons trafficking, prostitution and money laundering”. Mr Mogilevich has denied any wrongdoing. “

You can see his photo in the walls of your post office or local police station.

Russia criminals with likely government nods kill dissidents and human rights activists worldwide, just like the Mafia tries to silence those who break omerta.

Did We See Another Portfolio Insurance Debacle in September 2008 ?

Reading the gloating of variable annuity promoters over the weekend, I realized that part of the huge wave of selling that hit the markets in September 2008 might have been from selling by variable annuity managers. They had sold billions of such variable annuities promising fixed minimum annual gains and a percentage of stock market gains from the date of sale. Looking at charts, one can see that the rough average “minimum” market average guaranteed was around S&P 1200-1300. So those managers would have had to hit the sell buttons for stocks and derivatives, either directly or via their Wall Street brokers who sold them derivatives that matched their guarantee structure.

Perhaps that partly explains the “air-pocket” from S&P 1200 to S&P 950 ? It was eerily similar to the waves of selling in September and October 1987.

This is another reason to regulate strongly ALL derivatives.


I turn 55 soon, so am re-evaluating my Krypto Fund asset allocations. One should do this every 3-5 few years to make sure one is not over weighted in equities compared to your retirement cash flow needs.

I'll probably be selling some US equities and moving the moving the money to TIPs, but nothing is certain yet.

The press says analysts now expect the S&P 500 earn about $75 for 2010. Hmmm, it was suggested last month by a normally erudite commentor that I was delusional for thinking 2010 earnings could hit $80 in 2010. The numbers are moving my way. Putting a cap of 15x on that $80 forward earnings gives me my year end optimistic target of S&P 1200.

Unfortunately, Obama is trying to do a lot of things that will likely create stagnation after a return to normalcy in 2010. So gains past S&P 1200 might be hard. This era is sure looking like a 1970s redux. If so, stagnation and inflation are coming. If Obama does not reappoint Ben, I fear that will happen.

Word of the Day

"Bodeful" - adjective [$10]
"Bode" - verb, transitive [$10]
Bodeful means ominous.
Bode means 1. portend, foretell; 2. foresee, foretell (evil).
Sentence: Numerous Obama efforts collectively are bodeful for US economic growth beyond a simple return to normalcy.

Le Mot de la Semaine

"Penser" - verb, regular -er conjugation
Penser means to think. For "to think about something", use penser à. To ask an opinion of something, use penser de.
La Phrase: Je pense, donc je suis.
Sentence: I think, therefore I am. This is a famous expression of Descartes which was the basis for his philosophy that was a crucial part of the 17th century movement from Scholasticism and reliance on religion and received authority to using reason and empiricism.

This week I plan to express this concept in all five languages that I am studying, viz., French, German, Italian, Polish and Spanish.

Thursday, July 23, 2009

Tidbits for Thursday

More evidence emerges that China is run by a corrupt oligarchy in alliance with the Army. Read this story - what they try to hide shows the true nature behind the regime.

And the press stupidly pays attention when they talk about a new reserve currency. What fools.

Here's another interesting tidbit.

Read down the story and you will see the order for Korean dictator Kim's yachts was placed through a Chinese company. What a surprise ! China plays enabler for Kil Jong-Il while he tries to extort money from the US. Typical for those two gangster states.


I got buck fever yesterday and re-bought FCX for Fido Fund. I took the pain and accept the 10 point error when I sold it for about 47 with the rest of the Obama Fund. I'm still looking for the next screaming buy. I suspect that will be commercial real estate in the form of REITs. Once some door of refinancing starts to open, I think those stocks can move up strongly as the undervalued assets also typically perform well in the inflationary environment that many fear. It's a matter of timing.

Second Amendment

Later this afternoon I will go to this annual event to celebrate the Second Amendment to the US Constitution which is the ultimate bulwark for our liberty.

I'll put a part of my collection through some extensive work. The blog will return on Monday with fresh thinking.

Word of the Day

"Ferruginous" - adjective [$10]; a Mencken word
Ferruginous means 1. of or containing iron rust, or iron as a chemical constituent; 2. rust colored, reddish brown.
Sentence: After using his collection in the rain, Bunkerman is extremely vigilant for any ferruginous stains. The items are quite rare in the US in a fully legal, transferable form and often are worth well over $10,000 each.

Le Mot du Jour

"Mitrailleur" - noun, masculine - means machine gunner;
"Mitrailleuse" - noun, feminine - means machine gun;
"Mitrailler" - verb, regular -er conjugation - means to machine gun;
"Mitraillage" - noun, masculine - means machine-gunning.
La Phrase: Mitraillage, c'est un passe-temps très agréable. L'homme du bunker est un mitrailleur expérimente. L'homme du bunker mitraillera de vieilles voitures demain. Les mitrailleuses légals sont très chéres.
Sentence: Machine-gunning is a very enjoyable hobby. Bunkerman is an experienced machine gunner. Bunkerman will machine gun some old cars tomorrow. Legal machine guns are very expensive.

Wednesday, July 22, 2009

La pomme d'or

That's "the golden apple" in French. Reading some headlines in the major French newspapers this morning online, I was struck by their clarity and perspective on the earnings report from Apple yesterday after the close of the market. Here are the headlines:

Pour Apple, "la récession n'existe pas" - Le Monde

Apple snobe la crise - Le Figaro.

Translations are "For Apple, the recession does not exist" and "Apple snubs the crisis".

Rather positive, no ?

Here's FT: Apple profits soar on strong iPhone sales - "Apple blew past all but the most bullish predictions in the fiscal third quarter, driven by sales of 5.2m iPhones, more than seven times the volume of a year earlier.

The sales figure is all the more remarkable because the period ending June 27 took in the introduction of the Apple 3GS and the halving of prices on the older 3G models, to $99, with both occurring in the last month of the quarter."

Here's WSJ: Apple Net Up 15% on iPhone Surge - "Apple Inc. continued to buck the recession, posting a 15% jump in quarterly profit and saying it was unable to supply enough iPhones and Macintosh computers to meet demand."

Apple delivers year-over-year profit growth in a severe recession.

What can one conclude ?

People will spend money for a high quality, well-designed premium product that delivers its promises. If one listened to the US press, one would think everyone in the nation was brown-bagging it and buying only store brand items. True, they are doing that more often, BUT they also have the money and desire for good, new products. Putting this together, one can see that people are being smarter buyers. That's not pessimistic - just smarter.

The world is not ending - people are slowly learning to be smarter. There is a bright side.

Mrs. B owns AAPL in her Sky Fund.

In my "humble" opinion, AAPL will eventually get 25% of the PC market as Windows continues to deliver crappy operating systems. People will get more comfortable buying Macs as they get experience with their iPhones, iPods and other small computers to come. That means huge earnings growth for years.

Word of the Day

"Encomium" - noun [$10]
Encomium means 1. glowing and warmly enthusiastic praise; also an expression of this; 2. a formal expression of praise: tribute.
Sentence: Apple's operating performance deserves universal encomiums, but the doomsters will find something to gripe about.

Le Mot du Jour

"Pomme" - noun, feminine
Pomme means apple - the fruit. La pomme de terre is the potato. "Pomme" can also mean a sucker and is used in a number of other expressions.
La Phrase: La tarte aux pommes est un dessert délicieux.
Sentence: Apple pie is a delicious dessert.

Tuesday, July 21, 2009

Looking for Screaming Buys

Over the past nine months investors had the opportunity to buy three ridiculously cheap asset classes: municipal bonds last fall and winter, stocks in February, and corporate bonds early this year. I got two of those, viz. the municipal bonds and stocks. I missed the corporate bonds since I already had an overweight position in the fixed income class.

One strategy long term investors can use, in addition to simple asset allocation, is to wait for screaming buys to appear to deploy new money. Just keep the money in cash or bank accounts or solid money market funds until a screaming buy comes into view. Then deploy that cash in a few (2-4) blocks into the cheap asset class. One's asset allocation model for long term investments might help identify this class, or not.

Now my asset allocation model is again telling me to buy commercial real estate assets. It's also signalling a simple re-balancing into Treasury inflation protected securities. A few months ago it had me sell some of those to buy stocks. Now it wants me to reverse that very profitable trade. With my distractions, I've waited but am now noodling over it.

For now, I wait.

California claims to have made a budget deal. I'll read the details before commenting.

Yesterday was a good rally to the top of the consolidation range. I wonder if any real buyers are left to take it higher barring good news ? Maybe if earnings and guidance this quarter are good.

I put some money into Fido Fund to take advantage of any dip in the price of FCX. I have serious seller's remorse on that one. I should have simply put it into Fido Fund, instead of selling out in Obama Fund. But the distractions clouded my thinking. Oh well, perfection is a high bar to clear.

Word of the Day

"Entelechy" - noun [$10] Philosophical
Entelechy means 1. realization of potential; 2. the supposed essential nature or guiding principal of a living thing.
Sentence: To avoid going nuts in retirement, Bunkerman released the intellectual entelechy of the verbal half of his mind to study the humanities and languages. So far, its working.

Le Mot du Jour

"Se méfier" - pronominal verb; takes 'de'
Se méfier means to not trust, to distrust.
La Phrase: L'homme du bunker se méfie de l'autorité.
Sentence: Bunkerman distrusts authority.

Monday, July 20, 2009

Back from the Heartland

While in my hometown, I had a pizza from the same shop where I used to get them in high school days. It was as good as ever and practically free: an extra large, 14" pie with everything, including bits of sweet pineapple. Mmmm tasty. All that for $11.75, the same price holding for several years. There never was any inflation - that was a beefer & pension fund induced bubble, thanks to the usual suspects. I guess they aren't "suspects" anymore, though. Almost everyone not in the pocket of the Street now sees that hot money bought all the oil in the world and ran the price to $140/barrel, far, far beyond a real clearing price based on supply & demand.

But nothing has yet been done about this systemic problem. No serious regulation on derivatives or hedge funds. Sham "investments" like ultrashort ETFs and commodity ETFs are sold to the gullible public. At least some 401K administrators and pension fund managers are stopping the "vig" payoffs by going to cheap index funds for most of their equity investments. But a lot more should be done.

Meanwhile, La Grande Boucher (aka Obama) seems to have decided to declare war on small business. The health care plan wants to force business owners to become mothers of their workers by mandating payments for the workers' health care. And he wants to tax them massively, which will inhibit their growth by destroying their ability to amass savings to increase equity capital. He and his lackey, Sheila Bair, refuse to provide some support to CIT, which lends to innumerable small and medium sized businesses. I suppose that's due to their assessment that most small business owners are Republicans.

What other "unintended consequences" exist for Obama's schemes ? The national health care program will increase outsourcing to Asia. As will the "cap & trade" carbon cartel. The Bloviator-in-Chief has a jobs plan, all right: it's a jobs plan for China, India, Korea, Malaysia and the rest of Asia.

Sigh ... it's clear that no one in the Obama administration knows how a business is actually run.

All this troubles me. And the other little "birdie" singing in my ear is this insidious attack on Battleship Ben Bernanke. Until and IF Obama reappoints him, I will be quite troubled and might be unable to get very long again in Obama Fund.

The market needs to set a new intermediate term high (two consecutive closing days in the S&P 960 area) or a pattern of lower lows and lower highs will give the chart a serious negative slant. The recent pullback in the S&P - probably mostly beefer selling and short selling that ended the past few days in a wave of covering) - DID make a lower low. So the S&P really needs a higher high to cancel that poor pattern.

By the way, although Obama Fund missed the recent rally, Fido Fund did participate and is back to 60% up year to date.

Word of the Day

"Booboisie" - noun [$10 or $100, depending on your dictionary]; coined by H. L. Mencken in 1922.
Booboisie means 1. a class of people made up of the gullible and stupid; 2. a segment of the general public composed of uneducated, uncultured persons.
Sentence: After attempting to watch a bit of TV (cable) in Ohio, there is no doubt that the booboisie is now the dominant class in America. And it must even be the growth market for CNBC, as the formerly useful channel is now simply a game show comprised of 15 second bits of fluff.

Le Mot de la Semaine

"Démentir" - verb (transitive), conjugates like partir and sentir.
Démentir means 1. to deny, to refute, to contradict; 2. to belie, to disappoint.
La Phrase: Les actes de l'administration d'Obama dément ses paroles.
Sentence: The actions of the Obama administration belie its words.

Thursday, July 9, 2009

Off to Ohio

I'll be in my hometown in Ohio for awhile, perhaps until late next week, It's a 13 hour drive, so I'm getting an early start. GOLD MIST is prepped and in top condition.

I'll be listening to a CD course titled "Great Minds of the Western Tradition" on the drive. The Teaching Company produces these courses and nearly all of them are excellent.

I wonder how many of Obama's "shovel-ready" projects I'll run into ?

The bears must not have found too many sellers lower, so it seems they covered yesterday afternoon. I don't expect a panic, just a nervous grind lower until more good news arrives.

Enjoy the fun.

Wednesday, July 8, 2009

In the Mud

The market is stuck in the mud, waiting for a tow truck in the form of some more good news about the economy. That will come, but when ? More real buyers are needed to overcome trader bearish "bets". Now we see the cost of the poorly designed Obama stimulus plan. Perhaps the word, "designed", overstates its organization. The Obama plan was mostly a hodgepodge of bureaucratic grabs at money. The hogs at the trough in DC elbowed out the real job creation spending.

The roads in Massachusetts are a mess of potholes, yet repair activites seem rare. What has been done for Internet infrastructure spending ? Talk.

China put its money to work quickly and has gotten results. DC dances around the maypole.

New tax increases on the "wealthy" are talking points to "pay" for health care.

New "carbon" tax would be huge over time, but it's just tilting at windmills. [That metaphor comes from the fine book by Cervantes, Don Quixote.]

The Pickens wind farm craters.

France gets 70% of its power from nuclear power, yet the US can't just copy France for a realistic, long term energy program.

G8 dopes talk about global warming - such hot air.

China top dog goes home to deal with rioters. Gosh, and yet talk of a new global reserve currency abound. I dealt with that nonsense here a few weeks ago. But the talk does probably scare off some real investors.

CA heads to oblivion. The pain to suppliers of services & goods to the state will soon kill businesses.

The Fed still does the job, but has just one more mission. Dear Ben: put together a plan to fund commercial mortgage refinancings. Plenty of good loans to good buildings with adequate income can't find a refinancing takeout. Your aid is needed. I had thought the TALF would do it, but the details are lacking. A five to seven year loan term is needed.

Eventually this will get worked out - maybe the fall. But the sloppiness of Obama's efforts to date are hurting now.

ISM data does show improvement. So not all is bad. People want to work to improve their lives. We still have that tailwind, unless government screws them too badly to wipe out hope.


I wait in cash in Obama Fund. Fido Fund is about 110% long. At 830 on the S&P, I will start looking again unless the news flow changes sooner.


Tomorrow early I drive to Ohio for an stay of uncertain duration for family matters. I do not have Internet access their with any consistency, so will not post new blogs until I return.

Word of the Day

"Provender" - noun [$10]
Provender means 1. dry food for domestic animals; 2. food, victuals.
Sentence: The big hogs in DC are getting most of the provender from the stimulus plan, so growth in the herd of common people is weaker than it would be had the food been better distributed. Thanks, Obama, for doing a lazy job tending your flock so far.

Tuesday, July 7, 2009

The New Normal

That's the 2009 version of "it's different this time". Of course, it's not and normal is the same old normal. People are the same. The "new normal" is the same old normal with lots of excesses tossed onto the dustbins of history.

I thought I'd toss out a few ideas I've mentioned here over the past few years for the "new normal".

People will prepare and cook more of their own food. Food is practically free if one buys simple ingredients and prepares the meal at home, saving the leftovers to spread the labor over a second meal.

McMansions in exurbia will have little demand. Why own such a big home that requires "help" to maintain and forces a lengthy commute.

Central city and small town living will be the trend. Suburbs will be stagnant.

Shopping centers must be re-invented to offer something that is not available online. Services are one possibility. The Apple stores with their service centers make a lot of sense.

Microsoft will stay in its lengthy decline. Vista stinks, Vista Explorer 8 is both nosey and crummy.

Overpaying will be seen as the killer of companies and investments.

The home will be seen as a place to live, not as an investment or as a piggy-bank.

This is a hope: Companies will start to cut or cap the pay of the top executive suite.

Another hope: Education in real learning and real skills will get a re-birth, and less novel and entertaining subjects.

Today's silly infatuation: green jobs.

World economic growth will be led by the emerging markets and eastern Europe, with the US, western Europe and Japan providing the same old 2-3% growth. Soon this will be recognized and the stock market will return quickly to the long plateau on the 100 year wall chart, viz. around 1200 in the S&P.

The structure of the world was set in the early 1920s in both economic and social contexts. All we see now are incremental changes and technologies. That great song by Julie Andrews, "Thoroughly Modern Millie" makes the point.

I'm open to other ideas & will post any "good" ones.


Obama Fund is now all cash. I locked in a 31% year-to-date gain. Those stocks in Obama Fund are really good ones for "trading" a return to the plateau as they make huge percentage moves. In hindsight, I should have traded them a bit more on an individual basis.

Once my distractions end, I'll look for re-entries on a stock-by-stock basis.

I also sold GE in Fido Fund. That stock looks like still water until financial regulation clarifies the status of GE Capital.

Word of the Day

"Conceit" - noun [$10 - meaning #2]
Conceit means 1. personal vanity, pride; 2. (literary) a. a far-fetched comparision, especially as a stylistic affectation; a convoluted or unlikely metaphor; b. a fanciful notion.
Sentence: The great overused conceit of modern environmental leftism is the conceit "green" for their hair-brained schemes. Brown would fit better, to match the color of the manure they favor instead of efficient, white nitrogen fertilizer. Most "green" ideas belong in the outhouse.

Słowo Tygodnia

"Gówno" - noun, neuter
Gówno means s*** (vulgar, very informal) [pronounced 'guvno' with the 'u' as in 'put', not 'putt']
Zdanie: Energia zielona ? To jest gówno !
Sentence: Green energy ? That's s*** !

Monday, July 6, 2009

Monday Rumblings

California moves toward default.

Europe is down early.

Riots in Xingiang province in China.

Short interest rising.

An intermediate term H&S is forming on the S&P 500.

I worry that big money beefers who bought the lows are about to exit, and that others are going to push the bear side again. With limited positive cash flows, there really isn't much support if this consolidation range is broken to the downside.

And I worry about that fellow riding in my chariot [figuratively] who was whispering to me when Obama Fund was up 65% year to date, saying "you are not a god".

I also have many distractions. Perhaps these are affecting my will to be steadfast. Or not.

Nothing is certain until done, but I might cut back Obama Fund's long position today.

PS: As posted in the comments early, I did sell out Obama Fund to cash, locking in a 31% year to date gain. The way I read the chart, a red close breaks the H&S neckline down (it tilts a bit). With futures so weak early, it seems clear little or no new cash came into stocks in the start of the quarter. I also sold GE in Fido Fund. That stocks seems dead for a while until the financial regulation clears up the status of GE Capital.

On a decent pulback, I'd re-load unless the news gets worse.

Word of the Day

"Sang-froid" - noun
Sang-froid means composure, imperturbability.
Sentence: Trying to maintain snag-froid in the face of numerous distractions and demands can be quite difficult.

Thursday, July 2, 2009

Will the Sun Ever Shine Again ?

Living here in northeast Massachusetts, the question should be taken literally. For two weeks it has been cold and rainy every day. My small yard will soon be a mushroom patch. At least I live on a hillside, so flooding is not a worry. My position was well-selected for defense against man and nature.

Listening to financial news, that question takes on sardonic meaning. Bad news is met by renewed gloom. Good news is re-interpreted as either bad or merely temporary. Pundits and some Nobel laureate economists look for a new wave of weakness upon any positive uptick.

Let's look at few facts - from FT, of course.

"The global downturn appeared close to a bottom on Wednesday after manufacturing figures from across the world suggested the worldwide recession was running out of steam in all big economies.

"The welcome news comes after nine months of the sharpest contraction in global manufacturing output since the second world war and a dramatic plunge in world trade as buyers of capital goods and consumer durables effectively went on strike. ...

"The June data on Wednesday came from a series of surveys of purchasing managers in the manufacturing sector, the area of the global economy hardest hit by the recession. Although the headline figures were positive only in China, the manufacturing output element of the data was positive in the US, the UK and Japan as well. "

I suppose I'll be accused of data mining. If so, it's a world-wide mine.


Yesterday was a typical day. Real buyers stepped up early, trend-followers piled on, some shorts covered. Then real buyers used patience and the beefer traders bailed and a few shorts became bold. A solid gain, if unimpressive. Beefer antics are tiring.

Word of the Day

"Salacious" - adjective [$10]; an old one from the card file
Salacious means 1. arousing sexual desire or imagination; 2. lecherous, lustful
Sentence: The salacious behavior of another Bible-thumping Republican politician is symptomatic of the decline of that party.

Le Mot Du Jour

"Chômage" - noun, masculine
Chômage means unemployment.
La Phrase: Le taux de chômage haussera aujourd'hui.
Sentence: The unemployment rate will rise today.

[By the way, when I'm unprepared, I fall back on French as it's my best foreign language.]

Wednesday, July 1, 2009

More Freeedom Now !

The endless, bit-by-bit increase in restrictions on the freedom of people in the US has to stop. The excuses which government uses to grab power are ... everything. The crypto-fascists are using any crime by one or a few criminals, or any problem seen or suffered by some groups, to seek to impose restrictions and limitations on the freedom of everyone. This philosophy of crypto-fascism is best seen by example.

A crime occurs using X. Let's ban X, even if X is owned by millions of people.

A group suffers from allergy to Y. Let's ban Y or impose limits on Y, even though 99% of people do NOT suffer from Y and even enjoy health benefits of it.

A group gets fat easily. Let's ban some types of foods from restaurants.

A terrorist event happens. Let's require every to carry an ID card.

Some parents can't control child TV viewing choices. Let's require a censorship chip in every TV.

Do you understand how this crypto-fascist ideology works ? An isolated event or problem of a few is used by the crypto-fascists to impose limitations on the freedom of everyone.

Bunkerman is leading another revolution against Crypto-Fascism. I'll now capitalize it as a recognized ideology - an insidious form of fascism itself. Crypto-Fascism hides in both major political parties in the US. The left uses crime by a few to forbid people from owning guns, etc. The right uses failed parents to censor everyone, etc.


Bears attacked yesterday after the slightly weaker consumer confidence number came out. We all know actions in spending mean more than talk, and signs of stabilized and increasing consumer spending abound. But bears used the news to attack. The raid stalled later in the day as no real selling appeared or was sparked. Overall, yesterday was a good one for the forces of light.

Word of the Day

"Comstockery" - noun [$100]; a Mencken word. After Anthony Comstock [1844-1915] US author & reformer.
Comstockery means overzealous moral censorship of the fine arts and literature, often mistaking outspoken, honest works for salacious ones.
Sentence: In the 20th century until about 1970, Crypto-Fascists engaged in comstockery to control ideas and thought in books and schools, and some still do. The US founders saw the dangers of government power and wrote the Bill of Rights. The courts finally jettisoned WW I era expediency and belatedly decided to enforce those constitutional provisions starting around 1950.

Das Wort der Woche

"Kartoffelsalat" - noun, masculine.
Kartoffelsalat means potato salad. It's a compound word. The German and American languages have thousands.
Der Satz: Bunkermann hat Bratwurst, Kartoffelsalat und Brokkoli gestern abend gegessen.
Sentence: Bunkerman ate bratwurst, potato salad and broccoli last evening.