Tuesday, November 10, 2009

It is Wednesday ?

Nothing is happening - it sure seems like a typical Wednesday.

The Dow hit a recovery high yesterday. Yawn. The S&P 500 got to within one sneeze of its recovery highs. Why ?

The bears and doomsters fail to realize that returning to a prior know condition or state is much easier than growth into a new domain. They use growth rates appropriate for "new growth" applied to recession earnings levels and moan, "too far, too fast". But they are simply using the wrong method for assessing the changes.

I suppose an extended metaphor might help illuminate this concept. Suppose you are digging a hole in "virgin" earth (undug previously). That ground is going to be firm and hard. You'll have to really put your foot on the shovel and push it into the ground, and break the adhesion of the earth to itself. Now fill it in, and dig again. It's easy now - you probably don't even have to use your foot to remove the dirt with the shovel.

Another metaphor. Suppose you had many years of Latin in high school. And 40 years later, you decide to re-learn Latin. Guess what ? It's a LOT easier to recover that knowledge than it was to learn it first. This is something I now have personal experience with, as I am doing just that.

This is why "return to normalcy" can occur with great rapidity. Everyone already knows how to do what they were doing three years ago. So everyone (worldwide) can simply to revert to "normal" behavior once the panic is over. A bit of government stimulus helps regain the psychological confidence. Once that hits, the race begins to reclaim old business everywhere.

Actions

I sold the S&P call options yesterday, booking a 50% gain on quite respectable size. Although I still expect S&P 1200 soon (year end), who knows what the future will bring ? And with the beefers out there, maybe they'll attack and let me re-buy at lower levels.

As I posted in the comments upon the sale of the final chunk, "Je ne suis pas un goinfre" - I am not a greedy pig.

I still have some calls on HBC, MT and BA. HBC reported in Europe today and is trading up. HBC says loss provisions are decreasing - that's good. I'll read the report and decide later whether to sell or hold a few more days.

Word of the Day

"Quondam" - attributive adjective [$10]
Quondam means that once was; sometime; former.
Sentence: Returning to one's quondam state or condition is usually much easier than changing to, or learning, something new.

14 comments:

Spin-em said...

Bunk will you be learning Mandarin like jimmy rogers?...Its the future ya know..lol

Bunkerman said...

nfw

I think that unless one learns taht as a young person, being able to learn the "tones" is next to impossible.

Also, China has seven very different languages. Mandarin is only one.

Besides, teh Chinese will learn English to be able to talk to the rest of the world.

maverick said...

Guns, gold , ammo, and food. I believe it more and more every day.

Bunkerman said...

yup, mav. Gotta be ready ...

Frosty said...

HBC let us know...very interested your thoughts there bunk,

Bunkerman said...

with a solid base, one can be bold.

Bunkerman said...

HBC looked OK to me, but sold my calls - 50% gain.

Je ne suis pas un goinfre.

Mrs. B has a good bit of the stock - a good emerging markets play, imho.

Bunkerman said...

just BA and MT calls left from the Sept. play one better earnings

Frosty said...

BA thought I pounded you out of that one...oh well...will get short of BA again this morning, see if I can break you.

Frosty said...

stone legs a real struggle with those monkey bars I guess...they just don't give away those al qaeda merrit badges.

Bunkerman said...

nope re BA - rolled forward to Jan - stock pops when Dreamliner flies

in reality, not my dreams.

Bunkerman said...

going to MG range this PM - gotta stay ready ...

Frosty said...

Bunkerboyz...my email is down again, just getting returned mail.

Bunkerman said...

excellent as usual.

made those metal targets sing ...