Bill Cara’s Blog for February 12, 2010 [See post-close report]

Good morning.

AAPL - PT Raised from $235 to $280 @ Needham. Buy

PG - Credit Suisse Initiates Coverage with an Outperform. PT = $74

Wish I could just trade the first half hour and the last hour of the day, fade the amateurs in the first 30 minutes and see what the pros do the last hour. Oh, well.

Anyway, also wished I had sold more into yesterday's rally. I had picked up a bunch of stuff in last Friday's kangaroo tail reversal.

I'd be looking at the midpoint between the open and the low of the day for last Friday for potential, lower (note I said lower, not low) risk entry points.

I still believe the big boys are testing the lows of the range.

FWIW,
JMO.

the irrational ratio is one ive been following for years...

gold miners have faced a tough sledding the past few years, and there was always a hope in the back of the goldbug's mind that this relationship would one day reverse course and the miners would return to their previous gloy atop the gold pie.

i dont see that tide turning just yet, but there have been some encouraging developments.

these types of sea changes tend to take time to play out imho, id be convinced of a change of course if the GDX didnt fall as much as the SPY during the next plunge, and if the GDX continued to move up higher %-wise during any periods of strength in gold.

things are starting to get interesting...

baz, in modern civilization, both gold and food are derivatives of oil. Without oil, we have very little food, and certainly no gold mining.

Furthermore to suggest gold won't have value - while possible, you have to go pretty far back in history to find a similar situation. If our society moves to a place where food is the main item of value, I suspect we won't be discussing this on an Internet, or trading anything on an Exchange.

You may well be right that food will climb in value - but my belief is that will likely be because of oil scarcity issues. We'll hit Peak Oil before we'll hit Peak Topsoil, or Peak Phosphates, IMO.

I believe we are one bad wheat/corn harvest away from really big rises in food prices. Given the weather lately, a cold, wet, long spring may just do it. last year providence smiled on us.

Interestingly, both Europe and Japan are going very much against that population trend you talk about. Germany's pop growth rate is -0.053%, and Japan's is -0.191%. More people die every year in those countries than are born. How did this happen? I have no idea, but its an interesting phenomenon, one that goes against the common understanding of "how things will always work."

Just throwing that out there as a wild card. I'm sure the poor countries of the world will more than make up for this, but I discovered this the other day and thought it was interesting.

True, but advances in medicine are making for a longer life-cycle. But, if a ' couple ' have more than 1 1/2 children, worldwide, the expansion will continue. Enjoy your input, Dave.

QCOM - Standpoint Initiates Coverage with a Buy. PT = $48

"Inventories at U.S. Companies Unexpectedly Fall as Sales Rise "

this is what is being used today as the ammo. U.S Consumer engine trumps all.

I tweeted something earlier on the train, thinking Asian markets successfully sprung their trap, maybe a bit too early.
http://twitpic.com/12rpdg

>>>"Inventories at U.S. Companies Unexpectedly Fall as Sales Rise "
this is what is being used today as the ammo.<<<

I think the ammo is U$D rising again on the new wave of Euro selling due to PIGS fear. Are there many sellers of Euro left? No bailout for Euro?

Agree on the bear trap though.

darn, gotta git to work. LOL.

Lots of opportunities this AM.

Both above have kangaroo tail reversals last Friday.

Have FAS with buy limit @ 62.25 and AGQ with a buy limit @ 42.92. Good for the day. Missed FAS by a couple pennies but we'll see.

Do your own homework.

GL

"With the world wide reflation at some point won't gold not be pegged to any currency, but rise in relationship to all major currencies like the USD, Euro and Yen."

I'd say that "some point" is now and we are seeing that scenario playing out in real-time. IMHO the genie is out of the bottle. There will surely be attempts to stuff him back in, but we all know how that goes.

this would be a welcome metric mr. sundance,

the principal difficulty investing in miners as a group via ETF's is that Barrick is the elephant in the room, in terms of market share, market capitalization, influence and complex share structure and hedging program that obfuscates the picture of whats actually happening.

nevermind the issue that Mr. Sinclair has brought up repeatedly regarding shadowy non-recourse loans and short positions embedded in their projects and other smaller miners trapped in their web.

ABX is to precious metals what AIG was to mortgages.

Had a huge spike up this morning, which scares me a little bit because I have seen these tops before. It looks like it's pulling back and testing the $2.89 52 week closing high. Lots of volume in this today.

I'm yet to make some good money on options. I suspect money are mostly made by option selling. I'm yet to master those skills.

How accurate are the price objectives on Point & Figure charts?
P&F on UXG shows a bearish price objective of $.75.

Man, you really know how to rain on someone's parade ;)

Bill -

Part two is scheduled for tonight. It's amazing that Paul Solomon dared air such an honest report as last night's.

ALOHA !!

Bill ... As this was exactly the ploy for the lawsuit against JPM and ABX in the Blanchard Coin lawsuit whereby tons of information could be secured via "discovery" it was not to be. JPM was immune from prosecution as they were acting on behalf of the US FED and ABX was also found immune as it was an agent for the US FED acting on the instructions of JPM. I have no doubt that GS would fall into that same precedent setting status, otherwise we would have seen class action suits flying right and left by now just like the cigarette and asbestos legal melee. These guys operate on the old Rothschild mantra that controlling the money puts you above the law. To me the US FED is the definition of a monopoly that needs to be broken up like the oil monopoly was via anti-trust laws that already exist. Problem there is the lack of political will.

That people will get tired of it, and move on to other things... just like Madoff, Tiger, Greece ... people in this ' Springer ' society move on to other drama's.... In Goldman's case, I hope not... but, out of sight, out of mind... and that would be one of the greatest injustices of all time, because it is the Mom & Pop's, and their children that will bear the theft of the others,.. that still eat what they want, travel where they want, do what they want.. simply because these Cowards are not man/woman enough to allow any self-doubt as to the importance of their existence..

Remember last June CPST spiked to 1.29 on showing of a Ford-UK prototype hybrid which used a CPST micro-turbine. Apparently a new manufacturer in US is working on one too:

“…The SOLO will be a lightweight electric crossover with an on-board 30-kilowatt Capstone microturbine that will charge the crossover’s batteries and super capacitors while in operation or at rest.
“Velozzi has included microturbines in their car designs since the company’s inception,” said Jim Crouse, Capstone’s Executive Vice President of Sales and Marketing. “It’s an extremely progressive company committed to producing environmentally friendly, powerful and practical electric vehicles. With a Capstone microturbine, they’ll ensure drivers have the range and reliability to drive a Velozzi anywhere.”
Current plug-in electric vehicle driving ranges are extremely short between battery charges. A microturbine dramatically extends the driving range of the vehicle. According to Velozzi their cars will operate on 100 percent battery power in zero-emissions mode for a range of up to 200 miles. Then, when the batteries reach a pre-determined state of discharge, the Capstone microturbine quietly and efficiently recharges the batteries on the fly to extend the driving range up to 1,000 miles.
The diesel-fueled Capstone microturbine produces ultra-low emissions and requires less maintenance than the traditional combustion engine found in today’s hybrid-electric vehicles. Capstone microturbines can run on diesel, bio-diesel, ethanol, methanol, jet fuel, propane and compressed natural gas. Capstone was recently awarded a Department of Energy grant to develop a flex fuel turbine that will operate on agricultural syngas and hydrogen.
“Capstone’s fuel system gives the driver the flexibility to use a multitude of energy sources available today and in the future,” Velozzi said. “You don’t have to wait years for plug-in infrastructure or a new fuel infrastructure to be developed to charge or power Velozzi vehicles because our vehicles can use many fuels available today,” added Velozzi…”
Here’s the full press release (rather cool looking cars too!) http://money.cnn.com/news/newsfeeds/articles/globe...

CPST’s costs on auto applications of their turbine technology have to be driven down, but can be on volume, according to the company. Amazing that their turbines can fit under the hood of a car, and also scale up to power a hospital or corporate campus. AND the price of their core fuel (natgas) is on the floor, and looks likely to stay there, because of the economics and productivity of new horizontal drilling techniques.

FD: no current position

Since early January we have had consecutive weekly losses (per the closing price on S&P 500 on Fridays). In order to keep this streak alive the S&P needs to close below 1066.

Same problem here for the last couple of weeks. I am a Mac user mostly, but notice that whenever I am on Windows XP it works fine and I am scrolled to the bottom on each "reload".

I think it is worth keeping an eye on ORA over the next few weeks. This is one of the only pure geothermal plays I am aware of. They have large scale geothermal operations all over the world (which have very long-term revenue streams).

The stock has taken a beating the last couple months, hitting $44 on December 7th and trading sub-$33 as of today. I think it is partially due to the general market pullback (and simultaneous pullback in electricity generators) as well as a recent project acquisition announcement which is probably weighing on the shares in the near-term. Long-term, I think the prospects are bright for ORA as a global technology leader. I believe the barriers to entry in this market are large and the moat is wide.

The only other pure geothermal plays I can find with existing production are HTM, RPG.TO, and NGP.V. CPN has geothermal but is part of a much larger portfolio so not much of a play on geothermal.

Why we just turn green

No volume and everyone leaning short. easy money for someone.

Trading in asia seemed like a bear trap. now seemingly confirmed today in Ny trading.

its confusing as hell. I am likely to go all cash into the close. If you put a gun to my head i would say we are going to fake out Tues morning. not sure which way. open down and go higher, or open up and go lower. not much conviction in me huh?

I am confused also. I cannot remember a time in my 20 years of watching the market that equities are so influenced by the dollar for such a long period of time. Trading in equities is like being a defacto Forex trader.
Bob

I know China is putting the brakes on their economy but isn't that what we did back in the 1930's? There is no real evidence of sustainable worldwide economic growth (see Germany's GDP and the rest of the Europes GDP)...wouldn't this be the wrong time to put the brakes on the economy?

Teamonfuego ,Marc Faber discusses China in Feb 11 interview (link below),you may find it interesting ,the interview is entitled "The chinese economy has the capacity to crash".He goes on to say it will be ok in the long run.

http://tinyurl.com/blcu37

of TZA... A broad market plunge will now ensue for anyone wishing to participate ;)

These moves are 100% technical. Look at this chart of S&P 500 today.

... on another pleasant note, I was profiled here: http://tinyurl.com/yg5nnto. I think this is my first encounter with the world of twitting... I am probably a bit too old for this stuff, lol

Bill, I'm watching the utility stocks basically going down every day, and I'm wondering why. I know things move in cycles, and I'm wondering what sort of cycle utilities are on. I'm guessing they move a little like bonds, but - they seem to have done a lot worse than TLT over the same period. Examples: FPL (down 21%), EXC (down 17%). TLT is only down 6%.

I was considering keeping some of my cash in utility stock, just to get some kind of return, and with their recent tumble I thought that perhaps they were cheap also, but I'm now wondering if - I'm shorting treasuries, so perhaps I should be avoiding utilities as well.

These stocks are yielding between 4% and 6%, which is a pretty good return given anywhere else you get 0.25%, but of course if your stock goes down by 20%, a 5% yield doesn't look quite so attractive.

Thanks Chris! The Cool Preview add-on works great.

dave

I would say across the utility space, you have got a number of factors pressuring the group as a whole - namely uncertainty surrounding cap and trade and an across the board decline in industrial demand. One factor that I think may weigh heavily on Exelon and FPL particularily is the precedent currently being set by state governments to disallow cost recovery for nuclear construction work in progress.

Decades ago, in the first round of nuclear construction in the U.S., companies were allowed to build construction costs into their electric rates (rather than waiting for them to be payed back after the plant was constructed). With states under extreme budgetary pressure, most are unwilling to commit to rate based recovery for work in progress. (Why bother when Uncle Sam is the lender of last resort, right?!?)

What that means is the burden of financing a nuclear project would be put entirely on shareholders. Exelon and FPL are two of the largest nuclear producers in the world. And the current costs for building a new nuclear units are $7-9B dollars - virtually impossible to borrow or privately finance!So, this is just one factor amongst many. I assume that somewhere down the road states will have to come around and meet half way. (Hopefully before the lights go out!)

Bill

Re: your comment on homebuilders

Here's news on Lennar from the WSJ today

"During the property party, home builders had a VIP table. Now they are collecting generous tips from a U.S. government trying to clean up the mess.

One example: The Federal Deposit Insurance Corp. has chosen Lennar as a co-investor in a $3.1 billion portfolio of bubble-era loans, from failed banks, linked to commercial and residential property. The two parties will pay a combined $1.2 billion for the portfolio, most of which likely will convert to the underlying property when the loans default.

Even if it takes time to sell the assets, the financing arrangement probably makes the deal a slam-dunk. The home builder will contribute $243 million for a 40% equity stake in the venture, while the FDIC will pay $365 million for the rest. The remaining $627 million is seven-year interest-free debt courtesy of the FDIC.

With so much leverage, Lennar could see huge profits. Assuming the property fetched just 60% of the debt's face value, Lennar could double its money if the land were sold over the next few years. On top of that, Citigroup's Josh Levin points out that Lennar will collect a management fee from the FDIC for overseeing the portfolio. Indeed, Lennar's shares have risen 8% since the deal was announced Wednesday."

How did Lennar get this deal from FDIC? Not public information

Lennar has received $1.1B in net tax rebates and stands to get another $320M this year.

Lennar gets rich and we, the taxpayer, get screwed once again.

For those seeking utility income, I would take a look at pipelines. Many are MLP's and pay 7-8%. They transport and store oil, gas and/or chemicals. Propane distributors are also attractive. Some to take a look at are
symbols EPD, EEP, MMP, PAA, NRGY, WPZ, WMZ and APU.

Vad- Hope you don't mind if I improvise a bit on your 'Stops' article.

I might add that the expectation of a gain, either in place of a loss, or in response to an earlier loss, can also get in the way.

You know, I took a 3-digit loss yesterday, and again today. Which is where it stops. However, I had to briefly struggle both times with the 'expectation' hang-up.

What gives me the idea that I should have had winning trades? Or that given a loss yesterday, I should have had a gain today? That's total bull. I happened to have two consecutive losing trades. Yet both were in fact 'successful' in that I recognized they were going against me, and immediately eliminated the positions.

I might as well wake up the morning after a bad day to the expectation that life now owes me a good day. Or expect that after a dozen blacks, the odds of the next spin being red have changed.

Here's another take-

Taking a minor loss is the same as a gain. It has the same effect on your bottom line. Which is to say, it minimizes the hits and maximizes the gains (in this case, by [i] minimizing the ground you need to make up, and [ii](psychologically) freeing you up to pursue them).

Thanks MoKat..
all of those make it onto my watch list.

http://tinyurl.com/yh3q45y

Hi Bill,

very cool. I would someday like to meet you.

vb

Here is a link to both parts for convenience.

Part 1: http://bit.ly/94HEBY

Part 2: http://bit.ly/bHGT7k

please spread the word. simply email these links to your friends and family. They at least need to be aware of this.

Bobbyo asked: "Why we just turn green?"

such a simple question yet so destructive to my account at the close. No need to rehash the subject posted by 2nd_Ave and Vad here, except that the closing didn't meet my expectations and an anticipated green finish turned to red. How many of us were expecting otherwise? Easy game for a small bear trap finish.

A close analysis of the month's trading tells me there is where I have to tighten up my game. I was directed to the appropriate section of MPP (p.57) for pointers on how to deal with this.

A visit by Prince William to my old stomping ground brought memories of the rote learning that automated my actions as a grunt.

http://www.telegraph.co.uk/news/picturegalleries/r...

Entering my second month of structured trading, such a psychological ploy must now be put in place in order to eliminate this tendency to give back profits to someone else's salary account.

Still, to nearly hold my own against the market with a simulated 25G account (couple of hundred lost) despite some horrendous sessions (1 day cost me $600+) tells me that the strategy works. Now, to take those stops more readily and protect profits more often...

ALOHA !!

Speaking of paper shuffling ... Here is a documentary on some major paper shuffling in the MBS market. Not exactly PBS reporting but the research is! This shows the quagmire of fraud and incest that is Wall Street!

LINK: http://tinyurl.com/yfrkrp6

davefairtex,

I've been wondering the same, but nearly all of my "usual suspects" are down — T-bonds (TLT), equities, gold, real estate (commercial just beginning).

Is everything deflating as some have predicted?

My best guess is that we have yet adjusted to the global interplay of all economies. The biggest factor, IMO, is the mouse-click movement of currencies. The Central Banks are playing musical chairs by rotating The Cash Winner of the Day.

There is an interesting video at Mish today which, while I see the guy as a nut case for advocating this, seems exactly like what Bernanke and his buddies are doing.

At a carnival it is done with walnut shells and a pea.

http://tiny.cc/KpQvy

Edit: Looking for a place to "park cash"? I've been using Vanguard Mutual funds with better yields. They have a 60 day period between in-and-out, but several choices available. I was in VFIIX (very stable), but now using VWESX and VWEHX which have higher yields, but are more volatile.

When we get our turn with the " start of a vast tsunami that threatens to overwhelm the global economic and financial system." resulting from Greece

http://www.comstockfunds.com/default.aspx?act=News...

at least the current administration is preparing capability to keep us in line, possibly with the "A Stability Police Force for the United States: Justification and Options for Creating US Capabilities..."

http://www.rand.org/pubs/monographs/2009/RAND_MG81...

"A visit by Prince William to my old stomping ground brought memories of the rote learning that automated my actions as a grunt.

Les- I like that image. That's pretty much what I did all summer:

Wax on (short), Wax off (buy to cover/stopped out, quickly)
Wax on (short), Wax off (buy to cover/stopped out, quickly)
Wax on (short), Wax off (buy to cover/stopped out, quickly)

Despite that, I had a stellar year in 2009, due to trading (leveraged) longs between early March and mid-May.

No, wait a minute! It was because of that. Without the automated stops, I would have given it all back.

I know most find fault with the gaming analogy, but I find it instructive. A recent visit to a (carded) craps table yielded the following black swan: a series of sevens that I will probably not see again. Do you bet against that? No. You'll get wiped out. The entire table got wiped out. Last summer's 'black swan' rally cleared tables as well. The point is, no one 'believes' what they're seeing until it's too late. That's why we need stops.

I'll be off to the City later in the day for lunch with a few Bay Area Caraistas. I plan to show them how to catch a fly with chopsticks.

Got a question-probably a tad long-winded....anyway: It seems to me Goldman is part of a system (big "duh!" there). The U.S. government is a debt addict, yes? Actually, it seems every government is a debt addict. Is not Goldman part of the system that feeds that addiction? Basically, they play the role of the heroin dealer, or so it would seem.

Which brings us to the patient...I'm sure there are those of you out there in your circle of acquaintances who are familiar with the process of "recovery" from substance abuse.

Here's the scary part: More often than not, the patient has to hit bottom, and it ain't pretty, before they can begin the road back.

So, it would seem that until the patient is ready, or can be separated from the environment, this will continue?

Guess there wasn't a question...:-)

nemo- What would Zhuangzi (Chuang Tzu/Chuang Tse/.. Man, how many transliterations are there of this guy's name) say?

'Legalize' the heroin and eliminate the outsized profits? 'Responsible' drug use, I suppose, requires 'responsible' dealers and 'responsible' users. Substance abuse won't go away with legalization. But the enormous profits (much of which is used to subsidize other illicit activities- not that investment bankers would do anything but donate to worthy causes), and the criminal world it supports, would vanish.

'Legalization' in this case might mean nothing more than 'legislation.' It means nothing more than this: Eliminate the large brokers/lenders and return lending to the neighborhood bank.

Canada did a great job with the opening ceremony last night - just beautiful. And, K.D. Lang was just mesmerizing singing Leonard Cohen's Hallelujah. We don't see enough of her lately. NT

Yes, it seems to be a small problem with the blog template.

There should be a tag <a name="new"> which takes the user directly to the new comments, but instead there is tag <a id="new">

Today's NYTimes reports the US "Justice Dept." effort to obtain access to cellphone location data without a warrant:

http://www.nytimes.com/reuters/2010/02/12/technolo...

(BTW, the US gov't already HAS a live feed of all internet content, per James Bamford's Shadow Factory.) Location data would be another huge threat to any future political activist or aspirant to political office. Here's a little background.

Several cell sites are always picking up a signal from your cellphone - although only the strongest signal is used for communications). Google maps' mobile version uses "triangulation" between cellsites to chart your location real-time as you drive.

Most likely each call record - used for billing - retains location data from the start and end of each call. If your phone has GPS, do carriers also store this - with accuracy of just a few meters? If "Justice" gets what it wants, "big brother" can know where any of his cellphone-using subjects was at any time a call was made. If NSA gets a real-time feed of such data, could they not monitor real-time the whereabouts of all cellphone-using activists? I have read (but don't know for sure) that NSA can remotely turn ON (and record from) any cellphone that's charged.

"I don't have anything to hide" and "after all they have to catch the terrorists" are common public responses. BUT if you ever hope to vote for a political candidate who didn't always play the two-party game or behave impeccably, you should care about such issues.

Imagine a future J. Edgar Hoover out to destroy a future young Ralph Nader or Martin Luther King!

Les hope my post did not influence you. I had no skin in the game at the time. In fact I could not find a single trade yesterday. I was about to pull the trigger two or three times but luckily I never got confirmation. I have been using more of a day trading (I think that would be Vads' Definition) style where I use smaller lots, but hold for longer periods of time. (up to a few hours) I have wider ranges between stops and triggers (.25-.40). I have been using set ups on a 2 min or 5 min chart. Yet, I use an 8 period EMA on a one minute chart for confirmation. Confirmation is a bar that closes above or below the 8 for jbe and dbi or a significant bend up towards the 8 on a reversal.

EDIT: The comment is getting posted twice here when I click on save. Is this issue happening with others too??

http://twitpic.com/130gmb

Blockbuster takes down mom and pop
netflix takes blockbuster and other brick/mort
Internet takes down...

"Strategists at Paris-based Société Générale said that any bailout of the stricken Greek economy would only provide 'sticking plasters' to cover the deep- seated flaws in the eurozone block."

The strategists go on to say that the collapse of the Euro is inevitable and goes on to say that the Eurozone faces the possibility of a double dip recession.
http://tinyurl.com/yguka39

ALOHA !!

Nemo posted - "Think about it...we vote all the bums out, bring in a whole new crew, how long before the embedded "institutions" bring them under there sway?"

Going back to your addiction model. You would agree that there are many who do hit bottom and recover, whereby they never touch the "drug" again for the rest of their lives or at least a very long time. If there is enough pain then that can happen ... the hitting bottom. There is always a percent of the population who will hit bottom and not recover and in fact get worse or just die. Because debt is not organic in terms of ingesting a drug substance our bodies can easily survive without debt in a physical sense. However our egos cannot and in this case the removal of debt from the system would mean some people who's image is tied to debt will perish by their own hands. Witness some of the bankers and wealthy people who lost their fortunes and committed suicide. None of us are born seeking debt. We learn to love debt. We are taught to love debt and the bankers in this country do all they can, like a drug dealer would, to encourage more and more debt use. I believe there is a "grassroots" movement in America to start the process of debt recovery. This movement is centered around getting rid of the "pushers" of debt. Better yet there is a debt methadone. Who cares where you get your debt from. A drug addict cares not who sells him his drugs. In that vane then we do not need the US FED. There is no reason why the US Treasury cannot issue consumer debt or any kind of debt without the US FED and all the member banks like GS, JPM, BAC acting as a middleman. In fact the US Constitution demands that the US Treasury be the only debt issuer in America. The US FED was created in 1913 yet we had debt prior to 1913. This country has been in debt since 1836, as 1835 was the last year America was debt free. The US FED has no "right" to exist based on the US Constitution. It only exists because the political will to oppose private banking in 1913 was not there and the Federal Reserve Act was passed late at night on Christmas Eve. How's that for a sneaky end run! Changing the tide in America is easy ... in fact the Declaration of Independence demands it. This document is our Founding Fathers speaking to us from their graves, as they knew there would be abuses to government, since they knew abuse all too well under British rule. The fraudulent and illegal part of our current system is the US FED, but like drug addiction, you have to want to stop using to get better. That can only be determined by how much pain you are willing to endure in your life until real CHANGE happens. This entire system could collapse in one day, just like the Russian people used a tank to blow a hole right through the Communist Party headquarters in Moscow. At that instant the Communist party lost power. Whether we suffer more with the current crony socialist regimes and illegal money depends only on WE THE PEOPLE and nothing else. Problem is those in power defy you to get off your sofa and turn off your TV to do it ...

That's right. Even DB Cooper (http://en.wikipedia.org/wiki/D._B._Cooper) would have had to invest the money immediately. Remember inflation rates in the seventies? It would have eaten up that 200k in no time. And if someone were to find the missing money today, it would last him 2-3 years, max.

Bob- I almost thought Vad was about to say 'life-threatening' issue;)

Hi bobbyo -

I reply as an old guy with a lifetime of practical and professional experience, a postgraduate degree, a stockbroker's training, various technical training, a decent portfolio and a reasonably happy life. I'd like to point out that a university education is only part of life's preparation. So are reading, communicating without preconception and bias, travel, sport and team activities, music and art, skills and crafts such as auto repair, carpentry, cooking and gardening. I reckon that Vad's course is preparatory as well. University or any other type of education shouldn't be seen simply as a foundation for acquiring more geldt and power, but more importantly as a basis for developing a better brain, judgement, ethics, morality, flexibility and social skills. As a parent and grandparent, I believe it is my responsibility to facilitate broad-based education, even for (perhaps especially for) those with narrow interests. I'd rather have happy, healthy and well-adjusted young people than rich ones, or have at the least a balance between the two. As a result, we may eventually experience fewer greedy pigs in financial circles, and truly narrow-minded or outright stupid politicians. Good luck with your youngsters.

Shamblin' Tremors

"What we in the western world are about to learn is that there is no such thing as a Keynesian free lunch. Deficits did not “save” us half so much as monetary policy – zero interest rates plus quantitative easing – did. First, the impact of government spending (the hallowed “multiplier”) has been much less than the proponents of stimulus hoped. Second, there is a good deal of “leakage” from open economies in a globalised world. Last, crucially, explosions of public debt incur bills that fall due much sooner than we expect"

http://www.ft.com/cms/s/0/f90bca10-1679-11df-bf44-...

FT blocks content for paid subscribers. but they must have a deal with Google, just like WSJ.

Google the headline, then click the 1st link for full story.
http://bit.ly/cx0qzh

Frankly,I am disappointed with the answers so far. Too politically correct. Really can't say anything negative about college. Why not? College develops a well rounded individual that has an appreciation for more in life than money blah blah blah. You can say the same thing about the army or prison for that matter. Full disclosure. I am in the education business. I give advice on life choices to graduating seniors on a daily basis and yes I espouse the party line when it comes to college. With my own kids I encourage them to think outside the box. There is an alternative to the standard way of doing things. In addition my kids have traveled to many country's and spend numerous hours in nature enjoying the joys of life sans money. They have not been at the mall waiting for a sale at Abercrombie and Fitch. If my kids need to be sent to university to learn to be well rounded individuals than I would consider myself a failure as a parent. With that being said let me rephrase the question into two.

What are the pre-requisites to becoming a professional trader? I have probably read 100 books on trading and traders and I have never read one that said. " I never took a huge loss in trading because my mentor told me to cut losses fast, SO I LISTENED!" You guys no what I mean it is always, " After I lost half my portfolio betting on DRYS. I decided to put every cent I had into DRYS because it couldn't go lower. Boy was I wrong. Now I use stops." Really does the market have to punch you right in the face a few times for you to become a decent trader.

Second question. Is there a program at any university or school that specializes in trading? If not maybe one should be started.

Thanks for all input,
Bob

OK, here you are. Politically incorrect: I don't know much about college life in the US. But: I studied in Germany, did my PhD, worked for my cost of living, and partied beyond believe. :-)

During this time I searched for my edge in trading, did seemingly endless back-testing, started real trading with wussy position sizes and continued to do so while working for some years for different start ups.

I started with a small account way under $25000. I taught MS-DOS at adult schools and thought "computers and MS-DOS and ftp with 4 kb/s are sooo cool" and I bought MSFT, INTC and all related stocks.

After that I did my trading with a proprietary screener for gap up candidates. I deliberately took the over night risk in my positions because with my account I was not allowed to day trade. Now I have my set of - as Bill would say - individual strategies and tactics for different markets and time frames.

If your sons really want to trade and love all what's associated with trading they will do it anyway.

They do not have to scalp the market. Everything is possible. They could trade in the time frame of weeks (10 min work per week, see http://cotstimer.blogspot.com/ ).

Introduce your sons to trading and the rest will follow.

Okay, I'll bite.

The four worst bargains in America are:
1) College education
2) Divorce
3) Weddings
4) Funerals

If the 'best' professor of (fill in the blank) is at the University of XYZ, then why can't he/she have a DVD series of lectures with interactive learning and testing, where she gets paid for her expertise, the breadth of knowledge is more widely dispersed, and the middle man (XYZ) gets cut out?

Or why wouldn't major corporations establish 'education' branches, where you pay for education from 'HAL' or 'GOOD' degree at some discount from IVY, with the promise of a job for successful completion. That would also potentially pressure the universities who would have to compete for the best and the brightest who could get a 'HAL' or 'GOOD' degree at a lower cost.

And why is the inflation rate for college education so far above the stated CPI?

The question of course becomes for whom the 'Traders Education' applies, from whom it flows, what it costs, and whether one can circumvent the '10,000 hours' of expertise that Malcolm Gladwell argues for in 'Outliers'.

I am, of course aware of Mark Twain's reminder, "all doctors are scoundrels, except of course, my own."

Happily away from the hospital/ICU for a weekend of alternatives including hoop coaching...

Bob-

Do your kids already know how to research a topic? Compose an essay? Frame an argument? Methodically tackle/solve complicated problems?

Have they competed with their peers doing any of the above?

There's much to be said for 'thinking outside the box,' but I don't know that I'd apply it to considering alternatives to a college education for my kids. It may not be a 'bargain,' but it's a standard credential for most jobs, and a standard frame of reference when interacting with others (at least in American society).

(Of all the possible professions in the world, is there any particular reason you've decided to focus on trading?)

Great replies all! I appreciate the input. My sentiments towards college are much like Ron's.Universities do a decent job teaching math, science and engineering. They just do it at an outrageous cost with little efficiency.

When i first wrote the post i was thinking more in the abstract of taking a 18 year old boy or girl with no business education or knowledge. A Tabula Rasa if you will and teach him from scratch the art of trading. He will not have to unlearn all the bad habits, prejudices and dysfunctions that we talk about daily on this board. If you could some how teach a trading technique without having fear and greed being part of that person's make up. You could have a great trader.

Side note: It is likely all my children will be going to college. I am really talking up Agricultural Economic studies with a minor in Portuguese, Spanish or Mandarin to them.I hope I can brain wash them. I have three son's and only one has an interest in trading. If he still has that ambition and has a passion for that when he graduates I would have no problem with him apprenticing under a trader to learn a craft. Just like I would have no problem with him doing the same thing if he wanted to be a plumber. So that is why I asked the original question.

2nd,
Funny you mentioned essay writing. I am helping number two son write an essay on absolutism. He is a freshman in high school. Anyway those skills you mentioned are important. The sad thing is that those skills will not actually be taught directly to any of my kids at a university. They will be given a task that requires those skills and they will be basically on their own to learn them to complete the task. Sink or swim method. There are better ways to learn.
Bob

Bobbyo, I think you may be surprised what your kids will be taught. My daughter was in Running Start which puts advanced placement kids into the local community/junior college while in high school where they take college course and earn a HS diploma and an AA concurrently. She was in 11th grade and taking college course with adults. One of her favorites was literature and writing where she had to write various types of papers on all kinds of topics that might make a lot of people here uncomfortable with their 15-16 year old. The nature of the topics and the critical thinking, research and ability to write from various points of view would be a challenge for any student (and most Caraistas too) and gave us the chance to discuss a lot of hot topics we might otherwise not have had. Also, some of those skills should already be in place by the time your kids leave middle school.
So I think you might be surprised what a modern college/university education might introduce and the skills your boys might learn. I do recommend taking some classes at the community/junior college level where the classes are smaller and there is more individual attention as opposed to the University where students may be one in several hundred.
The big benefit for my daughter (and her parents) was after graduating from two years of HS/junior college with an AA she was qualified to enter WSU as a junior (the AA having satisfied the general education requirements if done right) and graduated with a Zoology degree and a minor in professional writing in two years instead of four. That would be a substantial savings to direct toward a trading account....and less student loans.

Possible bsi87 style capitulation plays for Tuesday:


symbol RSI7d
-------------
FP.AFF 11,45
FR.AFF 10,12
FLIR.NAS 11,40
SNMX.NAS 11,22
GLUU.NAS 12,37
WTU.NYS 5,09
SXE.NYS 9,07
BSX.NYS 12,21
ASF.NYS 7,08
PKY.NYS 11,53
SKH.NYS 10,02


http://rsi.caracommunity.com/RSIApp/RSIApp.html#AS...

NYUGrad, Les,

"What we in the western world are about to learn is that there is no such thing as a Keynesian free lunch. Deficits did not “save” us half so much as monetary policy – zero interest rates plus quantitative easing – did. First, the impact of government spending (the hallowed “multiplier”) has been much less than the proponents of stimulus hoped. Second, there is a good deal of “leakage” from open economies in a globalised world. Last, crucially, explosions of public debt incur bills that fall due much sooner than we expect"

I understand that part of the Greek Crisis is due to toxic US derivative purchases there. If so, there is a bit of ironic justice for it coming back at us. "Cast your bread upon the waters..."

As for the free lunch, just last night a local news report indicates the "crisis" is already here for many. A local food pantry (one of several) fed an average of 183 families per month one year ago. This year the number so far is over 700 families per month. Some of the people the people interviewed have been donors (Once again "cast your bread"...) One very sad looking man, "We have given to the pantry for years, but never thought we would need to come here to take. Then my wife and I both lost our jobs last year."

This is what the Tea Parties are about.

While the Keynesians talk about spending our way out, people like this gentleman and his wife are seeing their hard earned money "spending out the banks", nothing for them except from others who know the real state of the US economy. These are people who are "too small for government to give a damn." No lobbyists for their problems, no campaign promises kept, no stock options, and now... NO JOB.

I'm totally in favor of contributions to Haiti, but the media (CNN non-stop) has covered this crisis daily while our own people face an increasingly dismal future largely unnoticed except by those closest to the brink.

The First Lady is concerned about child obesity while the pantry lines grow longer.

Are these stories of foreign suffering and individual eating habits an organized dodge? I think so.

Grym

It's 1 global community. The religion of debt has it's home here. Has spread o other nations. It will come back home to roost. As you said grym, it's already here. But Americans are the milost succeptible to tv brainwashing.

I am hearing a lot of chatter on Greece eu and Dubai, and it's only 11am here in nj.

Maybe presidents day is a trap, while we are closed, we might see intl market sell off, and a gap down tue in ny.

Apologize for any typos. Using iPhone. Off to the diner I go.

http://twitpic.com/130gmb

Here is the news:
http://nyti.ms/aqRIMe
"The closings affect one-third of the private equity-backed company’s 2,415 U.S. stores, and several thousand of the company’s roughly 19,100 employees probably will lose their jobs, Reuters said. Movie Gallery also operates 184 stores in Canada."

This mentions nothing of the soon to be empty 800+ strip mall stores. Let's watch for how fast Hollywood video stores locations find new retail tenants.

Which reminds me, I have "The Hurt Locker" on reserve with my local redbox for $1 per night :)

davefairtex,
"So if someone steals your money slowly, year after year, it's not thievery?"

So if you play into the thievery by subscibing to a culturally accepted and inculcated practice of multiple debt obligations-- is this not collusive and enabled addiction? What's the payoff? 'Owning' the things that define you as a card carrying member of the indebted? Sleeping badly? Drinking more to forget? Our culture is in deep denial. One can no longer refi out of last year's divorce, daughter's (lavish) wedding or parent's medical demise and funeral. I see this daily. Debt equates to denial: if you can't afford it now what makes you think you can tomorrow?

Yes, I'm a debt peddler (mortgages) of the highest order. The lesson we don't want to learn is this: there is such a thing as responsible debt. Debt you can manage and eliminate for a set period with a view toward freedom from debt. So the next time you are told by your bank "what you can afford" ask yourself this: what can you afford really? Not what fat commission based on the sale price that loan officer or realtor will make. History has proved them dead wrong.

Getting into anything responsibly requires an equally responsible exit strategy. I encourage everyone to have a plan: a simple set of goals and milestones.

For example: at what age and stage of life do you aspire to be debt (at least mortgage) free? Such obvious questions are not addressed in high school economics. (One wonders if the under-education of Americans is part of the plan.) All it takes is beating the system by understanding the key banking principle: mortgage interest is calculated on the average daily balance. Pay down your principal earlier and save a wad. I recommend a program developed by an ex banker colleague, Harj Gill. http://www.speedequity.com.

If you are interested contact me and I'll email my affiliate link ($49.95 for the book and online program). A pirated version is available for thousands more. You can buy his book on amazon http://tinyurl.com/yllncda

I would also stress the importance of trying to have your kids participate in as many opportunities to earn college credits prior to beginning a 4-year degree program. Most high schools are very poor at making kids/parents aware that these options even exist so some independent research is required.

And if your kids are fairly bright, they can take some advance placement tests without necessarily having to take a special preparation courses. For instance, you can take an advanced placement english composition test (fees less than $100 from memory, but that was quite a while ago). If they get the required score you can enter freshman year of college with a numebr of credits. This will maximize returns by allowing college graduation in less than 4 years AND/OR allowing for more specialized/advanced courses to be taken (since the more remedial courses will have already been covered).

Its also important to give kids avenues to discover potential academic interests prior to college. In the U.S. (I believe it is much different elsewhere) too many are herded like sheep into the university system. Thus they end up staying in college too long (elongating the process by switching majors) or even worse completing a course of study only to realize it was not their true interests. That can be very costly in both monetary and lack of fulfillment/satisfation down the road.

So, I disagree that college is the worst bargain (seriously, earning power is just terrible without a college education) but some steps need to be taken to reduce costs and mazimize value. The last thing you want is the kids to be saddled with debt (that they often will not understand ramifications of until later in life).

http://ronsen.blogspot.com/2010/02/conors-market-m...

We can't know the outcome...

There was no way to know how bad Greece is or was economically because the government and Goldman Sacks have been covering up the deficits for years. It seems deficits that don't matter until they become a crisis. Bubbles are covered up until they become a crisis and blow up. Side note, I know a property management guy that says that a lot of stores in our mall here, (Topanga mall) are not paying their rent, mall management are letting them stay anyway to help attract customers. Another one of our malls have filed for bankruptcy (Northridge Mall), these malls are in southern California, in Los Angeles and are huge.

I never knew 30% was underground, another way to say all cash.

Well i guess the new law that says any transaction over 1500 must be electronic & not cash, will cause upheaval then.

http://bit.ly/9NLgtJ
"From 1. Jan. 2011, every transaction above 1,500 euros between natural persons and businesses, or between businesses, will not be considered legal if it is done in cash. Transactions will have to be done through debit or credit cards"

I tend to feel concerned when the RSI7d, the RSI7W as well as the RSI7m are in the red (below 30). I wonder then if the company is really in a bad business cycle where bad keeps on getting worse. BSI - how do you read these ?

withdrawn

I have been reading this blog since the beginning and have learned many things that are simple and many that are complex. I have learned many things that should have been obvious to me after 25 years in business, but that weren’t.

One of the most important things that I have learned is that of capital market interrelationships…if that happens, then this should happen…that kind of capital market movement with precious metals, stock markets, ETF’s, interest rates…. and a lot more.

Now my first BS degree was in Mathematics and so I like algorithms and formulas.

The capital market interrelationship thing is something I keep thinking about…but it is complex.

HERE IS MY QUESTION...

Is there anyone in this group that could design a graphic, or a flowchart, or a spreadsheet, or a family tree type graphic that would take the major capital markets and forces… and combined it with an if, then type theme?

More than two thirds of Germans polled did not want Germany or any other EU country providing credit to Greece if it can't raise enough debt to fund its deficit. it goes on the say, if necessary expel Greece from the euro zone, the 16 EU countries that share the euro currency.

Greece may become the newest passenger aboard the "USS TARP"

Telstar3d,

Mr Gill's 2nd video on the site "how it works" describes the process of using your Home Equity Line of Credit (HELOC) like your checking account by applying the bulk of your monthly income toward your principle balance. I know this goes against all our conventional 'consumer training'. The HELOC must pass a checklist (in the book) to optimize this process and get the right product. I have several delighted clients using it now. (As an affiliate I am repaying Mr. Gill by referring clients his way.)

The beauty of this process is in this simple fact: your HELOC interest is calculated on the AVERAGE monthly vs. your 1st Mortgage which is calculated on your daily balance. A small Equity Line to cover your monthly needs is sufficient. I was stunned when I got a mortgage in NZ and my banker explained how to do this using a Line of Credit they had kindly provided. You see, the banks were at first very suspect of this system and tried to talk customers out of until so many people demanded a HELOC for this purpose that the banks decided to take the high ground and recommend this process. It takes a plan and you must exercise it which is how the software program came to be. I was offered a similar program by a company that pirated Mr Gill's program and their start up fee is thousands more. That company was awarded a JD Powers award for innovation (!).

You get the same guarantee when you married your wife...none.

I look for reasons NOT to make the trade.

SNMX, GLUU, WTU, and SKH have no options traded. I want max pain options expiration point (the price point where the most call and put options expire worthless) to be above the current price and preferably significantly above the current price. I use the max pain price as my target exit price. If one were investing under the RSI model where you buy when the RSI buy signal is given and hold till a sell signal is given, then the lack of a target price is not significant. But if one is swing trading (buy and selling in a matter of hours or days), I believe one has to have some way to evaluate the risk/reward of the trade. A day trader might scalp and not care. Me, I want at least a 3:1 potential return or why do it? I also want to see volume of 300K or better and prices of $5 or better so the big boys are playing along. I also like to see a strong reversal off an intraday low.

But to answer your questions, when the RSI 7 day gets under 10, it usually means about everyone who wanted to sell has done so and any bit of news that is the least bit positive triggers a short covering rally or the value players scoop up shares. Position size and good entry/exit points help avoid problems.

GL

http://seekingalpha.com/article/188380-the-u-s-lan...

and prob more than most Americans

http://bit.ly/bl3Iu2.

Nature never ceases to amaze me. there is another shocking video somewhere of killer whale hunting and killing a great white shark. amazing.

Never heard of him, he talks the talks - I dunno if we he walks the walk. But he's saying what we talk about here: "Washington is taking over people's lives and they are on the road to serfdom". Another fella in DC who apparently "get's it".

http://finance.yahoo.com/video/time;_ylt=A0wNc9MC4...

In case you cannot see it on the list of videos, seek it under the Fox Business provider link.

BSI, I assuming the long tail with the huge volume candle is the K tail.

http://content.screencast.com/users/Telestar3d/fol...

Thanks for pointing this out and sharing.

by Simon Johnson.

"We now learn – from Der Spiegel last week and today’s NYT – that Goldman Sachs has not only helped or encouraged some European governments to hide a large part of their debts, but it also endeavored to do so for Greece as recently as last November. These actions are fundamentally destabilizing to the global financial system, as they undermine: the eurozone area; all attempts to bring greater transparency to government accounting; and the most basic principles that underlie well-functioning markets. When the data are all lies, the outcomes are all bad – see the subprime mortgage crisis for further detail.

A single rogue trader can bring down a bank – remember the case of Barings. But a single rogue bank can bring down the world’s financial system.

Goldman will dismiss this as “business as usual” and, to be sure, a few phone calls around Washington will help ensure that Goldman’s primary supervisor – now the Fed – looks the other way.

But the affair is now out of Ben Bernanke’s hands, and quite far from people who are easily swayed by the White House. It goes immediately to the European Commission, which has jurisdiction over eurozone budget issues. Faced with enormous pressure from those eurozone countries now on the hook for saving Greece, the Commission will surely launch a special audit of Goldman and all its European clients.

This audit should focus on ten sets of questions..."

http://tinyurl.com/yz7hu6m

We can only hope so.

While our military is off in the Middle East hunting terrorists, the real terrorist threat continues unhindered as Goldman "Sacks" the nation and the world.

NYUGrad, The name 'Blackwater' is now available.....

Grym... How about ' Almighty Investment Corporation.... We never lose ' !

America was a great country because...

Bill,

In your WIR you stated, "America is a great country because it has developed and maintains the finest capital market in the world."

It seems to me the best of America came from innovation — from developing new products and services for a better life at affordable prices. I realize it takes capital to do this, but during my forty + years in business I saw a drastic change take place.

Companies I dealt with were mainly manufacturers — furniture, aero-space, fasteners (the real nuts & bolts stuff) packaging containers, valves, etc. Nearly all were local to the Middle West, USA, and several were still family owned, first or second generation companies. Their first goal was to make a quality product.

They had a genuine concern for their employees and our community and took pride in building upon their reputations of dependability and honesty. Management came from inside using people with the knowledge that comes from understanding the products first hand. Stockholders were loyal due to a gradual, yet steady growth in the value of their investments.

Somewhere around the late 1970s or early 1980s a major shift in thinking occurred. The idea that anyone could manage a company and what the product was or how it worked was incidental. The MBA Age was upon us. The main goal was to "increase shareholder value" any way they could.

Goldman Sachs is, IMO, the epitome of this thinking.

It is no longer as Buick used to say, "When better cars are built, Buick will build them", but a paraphrase of the GE slogan, "Money Is Our Most Important Product."

People have become expendable. Honesty is flexible and relative. Quality is a memory since obsolescence is a given.

For many America seldom a business consideration. The Corporation reigns supreme (well, second to personal considerations). Soon with the buying our US companies, foreign lobbyists will far out pace any thought of the US citizen.

The capital markets rule! (And not only in Britannia.)

incomplete - ignore this

I see some real conflicting and unstable indications of currency speculation, dependency and attempts at maintaining confidence. China's not interested in Greek debt. The ECB appears to be jawboning, maintaining the appearance of support for Greece's problems but not willing to commit anything concrete. The market appears to be calling this bluff as the bounce in the Euro drops away again. Russia's been keeping quiet, despite having significant assets in Euro's or so I've heard.

This is contrary to Soros, who's talking up the dollar and apparently the UK media, whom the Spanish government accuses of collusion to destroy confidence in Spain:

http://www.spiegel.de/international/europe/0,1518,...

Bill is there any substance to remarks made elsewhere that when England was forced to leave the monetary union it attempted to squeeze speculators? Similarly with the "Franc Fort" policy of France - was this an effort to hit out at speculators?

I'm curious as to this version of history read elsewhere in wondering if this almighty bearish bet against the Euro is going to burn speculators. If I understand the crash of 1987 a little now, it was in part due to the rapid flight of currency, or rapid exchange rate fluctuations.

We've got the wealth of nations tied up in bets against each other while the backscratching of buying each other's debt, particularly American debt, appears to be unwinding. Could the fed and its henchman be ganging up on the Euro to save the dollar and American fixed debt markets, at the expense of equities? I can't put it together into a coherent whole, but forex speculation appears to be a nefarious force that could turn out for the worse soon enough.

bobbyo -

Good point.

Loannetter -

Can the model you're pitching here include the assumption of runaway interest-rate inflation against a low-low fixed rate today based on a 30-year versus the 10-year (HELOC) schedules along with the ability to calculate the impact of a car purchase for determining the pay-off end date? Can it show the impact of 1,000-point interest rate and 20-year amort. spreads?

Home values will deflate with the unwind of the shadow inventory
BUT
Interest rates will inflate with QE/Moral Hazard/Hubrus/Blaa, blaa, blaa

Why not just lock in a low-low interest rate now on a 30-year note and pay it all off when hyperinflation kills the dollar? Just one big payment in about 1-5 years time when a wheelbarrow of USD will get you a loaf a bread. Simple ... without all the hassle of playing musical chairs with banksters' lawyered-up fee-infested products subject to random mods. Make yourself TOO BIG TO FAIL.

You can send me $300 cash or check to my P.O. Box ...

Cheers.

nevermind

Bobbyo,
The Speed Equity system assumes you keep your nice low fixed first and secure a modest second line of credit as a vehicle to do exactly what the banks do with your money to your advantage. You are not risking your entire mortgage balance to variable rates. The checklist in the book describes the ideal line of credit. Most folks take this list to their bank or credit union and ask for it. I am not at liberty to post the list as Mr Gill's book is copyrighted. I was skeptical until I used it. It works if applied consistently which is the benefit of having an online 24 hour tool to check your progress.

You're welcome. Elder's books discuss kangaroo tails. It's actually a doji dragonfly candlestick pattern. SPY on the daily chart shows a very strong one on Feb 5.

Loannetter, What rate could I get a Heloc for. Lets say $25,000. I have excellent credit and probably over 50% equity in my home that could easily cover the 2nd. No worries if you don't have a guesstimate at the top of your head. I can look it up, if it is any trouble.
Thanks,
Bob

Dr. S- I like that idea. You may recall we (wife and I) refinanced last spring when rates took a dive. We generally make additional principal payments on a monthly basis to effectively shorten the 30-year loan to the 15-20 year range. After reading your post, we may decide to make larger pre-payments during periods of weakness in the USD. We'll mail you the $300 upon realization of hyperinflation ;)

Dr Strangelove,
Warren Buffett is not my typical client. The clients I know using this system were average to good credit (FICO scores 650-720) with approx 20% equity in their homes. They either had an existing credit line via their employee CU or were able to take the list to their local bank for an appropriate vehicle. Check out the book at your local library.

Bobbyo, $25K HELOCS vary widely between 2.25% ARMs with caps or fixed rates around 7-8%. Too many factors to quote.

My gift to you and other Caristas is my affiliate intro offer: http://tinyurl.com/ykwpcnk no strings attached.

Disclaimer: SE is not a multi level marketing company. Sorry to be slow in responding as I am relying on my iPhone today and the local 3G network is superslow. Happy President's Day!

Gold looks set to breakout to an all-time high in Euros:

http://incakolanews.blogspot.com/

Also, there's Krugman’s column from today:

http://www.nytimes.com/2010/02/15/opinion/15krugma...

He argues that the Euro was an impossible scheme, foisted upon countries by the Eurocrat elite, against the advice of economists. (Before the Euro, Greece or Spain would simply have devalued and brought things into balance. But now they can’t -- and their sins affect the sober Germans and dirigiste French). Upshot is that the coming years will be full of bailouts of “club med” countries and fights at european level over fiscal policies in those countries.

SO, if:

- the Euro is destined for years to generate such bad headlines
(and truly bad underlying economics) and

- the Yen is the most debt-laden major world currency(with the aging Japanese population no longer to maintain the savings rate that long kept Japanese interest rates low) AND

- the US$ is subject to the world’s greatest debtor's need to "monetize his debt" and pay the world back in depreciated dollars,

- Then, what's left as a store of value for the newly wealthy of the Middle East, China and India?

Are they liely to await a new "Bretton Woods" agreement? I doubt it.

Isn't a major flight to gold – the only solid store of value throughout the millennia - virtually inevitable at some point during America’s second "lost decade”?

Gold is still only half-way back to its 1980 peak in real terms! And, isn't the world in more dire straits than in 1980? Isn't McEwan's $5000/oz a reasonable target for the metal?

Mightn't that mean ultimately an 8x rise for senior gold producers, and a 30x rise for high-quality juniors? with some rising faster than "dotcoms"?

If the shape of the coming chart is like 1980, there'll be a parabolic rise at the end, and just a very brief moment at the top.

"Isn't a major flight to gold – the only solid store of value throughout the millennia - virtually inevitable at some point during America’s second "lost decade”?

I agree with you Jock. How long it takes to reach that point... 2011, 2012 or 2015 ??

Although the UST/dollar offers the largest liquid parking lot for the world's billions, I'd guess it will be short term parking only.

Cash then will flow to gold, silver, platinum as monetary assets. It will also flow into oil and other essential commodities as a hedge against currency devaluation. A parabolic rise in the gold price might be sustained if an alternative to current fiat currencies does not develop or interest rates do not rise enough to attract investment in sovereign debt.

US Treasuries under Volker's control, paying in the 12-20% range, deflated the gold price as investors took advantage of the high returns offered by treasury bonds.

Confidence in most of the world's central banks and their respective currencies is ebbing rapidly due to the magnitude of the global debt bomb.. A contagion of fear can begin at anytime as debt destruction continues to grow. Billions are now trillions. We wait for the tipping point.

MoKat -

Good point on treasury yield bringing gold back down in 1980. Still, will investors - this time around - be tempted by such, if the move into gold was caused by loss of faith in all paper currencies?

Maybe it really will take a "Bretton Woods 2" agreement to bring people back into believing in currencies again. And surely such an agreement would take TIME to create, even during a global crisis. So, perhaps gold rises parabolically but stays at a high plateau until a new global currency regime (with, likely, a basket of currencies, IMF SDR's, controls on govts' spending and a gold and possibly an oil component.

At Bill's conference, Dr. Antal Fekete foresaw breakdown of the current global financial system, and advocated gold as the only asset unencumbered by debt and counterparties which will be recognized in the new system which emerges.

Who would convene a Bretton Woods 2? Who would chair it? Surely the US would accept the Managing Director of the IMF -- NOT! He's a French socialist. LOL

ALOHA !!

Jock thanks ...

Krugman's comments I half agree in terms of the Euro. I believe having a EU "trading zone" is one thing and most of the countries in that zone could benefit, however to make a new trading zone "currency" I think was a mistake. I believe they should have just traded in the currency of the most dominate country in terms of trade, which would have been the German Mark. That way the Mark would not have to have suffered the technical devaluation they unfairly did while the PIGS rode the Mark's coattails.

All that aside I also was looking at the 1980 gold spike today and this is what I came up with:

1-In 1976 the Fed Funds Rate started its climb to 20%. In that same year the POG also started its climb to $850. This speaks to my belief that if the US FED has to raise rates today it is not from a position of strength but one of weakness, meaning buyers of US Debt want more return for the risks they have to take. Today we have all been conned into the "lesser evil" BS and believe that this US financial meltdown is less risky than the Euro one. The US Treasury statements tell a different story, which is why I stay focused on the weakest link. Still Volcker had to raise Fed Funds Rates to compete with gold. Only one thing would cause a selloff in gold then and that would be higher rates. See even though America and the entire World was off the gold standard in 1976 through 1981, gold still had the power to force the US FED to raise rates. Remember the USA had just defaulted on the gold standard in 1971 so that was fresh on everyone's mind and at the same time there was this battle with inflation mainly due the our Vietnam War and the huge costs to conduct such a war. Also recall that the Vietnam War was touted as the last stand against rampant Communism(Domino Theory). In 1975 the US government capitulated on Vietnam, so the Communists won. What message does that send out to the World? Hummmmm .... Huge debt ... lost the war ... China and Russia backed Vietnam so Democracy lost to Communism. None of that was very favorable for the USA or the US Dollar and in fact many currencies back then were worth more than a US Dollar was. America's image sustained much damage in the global community from 1971 to 1975. The Fed Funds Rates took off on their upward trajectory in 1976 and so did the POG in unison. What happened to the USD when the US FED started raising rates in 1976? The USD broke down from 110 down to 80 over the next few years. Only after the POG came back down to the $300 range did the USD start to climb in 1981. The USD peaked around 165 in 1985 never to see those levels again to this day, 25 years ago. The closest the USD has gotten to 165 was in 2000 at 120. On a historical basis raising rates have tanked the USD. Recall in prior posts I have shown that 32% of US GDP is immune from interest rate increases, which is the consumption part of total GDP the US Treasury owns, which is close to half of all US consumption.

2-It took five years for the POG to "spike" to $850 starting in 1976 at $100USD and ending in 1981 at around $300USD, with the zenith at $850 in 1980. After 1981 the POG stayed in a limited trading range for many years until 2000.

3-The current POG rise began in 2000 and only recently reached its zenith around $1200. That's a ten year time period, double the five years of the previous POG high in 1980. That time span alone tells me things are different as the global debt spiral we are seeing now just never abates. This time gold has double the base it did in 1976. Once again are prices going up or is the value of the USD going down?

4-From $100USD in 1976 to $850 in 1980 is a 850% increase in the POG. We are now at a 480% increase since 2000 when the POG was at $250USD. To even match the 1980s POG event, in terms of percent, the POG now would have to go to $2125USD. Never mind inflation adjustments ...

5-Fundamentals? Are they better now than in 1980 or worse? Has the USA accumulated more debt or less since 1980? Have we spent more on Al-Qaeda than we did on the Vietnam War or less? Are there less liabilities on the US Treasury Balance Sheet or more now? Are there more assets on the US Treasury Balance Sheet or less now? Is the US economy growing or shrinking? Can you buy more now for a USD or less than you could in 1980? Is gas more or less? Are houses more or less? Is food more or less? Is healthcare more or less? Is college more or less? Are hotel rooms more or less? Are wages more or less? Is the DOW more or less? Surprising as it is, even after this great deflationary event, the Great Depression 2, things still cost more. Even with the great DOW crash to 6500 you still can't buy more of the DOW now than you could in 1980. I ought to know as I still can't buy XOM and CVX today below $5! Its all relative.

The moral of this story is that even though gold is known in central bank circles as a useless relic it still has the ability to force those same arrogant central bankers to raise rates. Gold made Volcker stare into the abyss of a USD default and raise rates to 20%. What will gold make Bernanke do?

http://bit.ly/9unNnu

Eurozone tells Greece to ready new cuts, taxes
(AP) – 1 hour ago
"Eurozone nations have pledged to help Greece if it can't repay its debts — but want Greece to make big spending cuts first."

they keep kicking the can down the road.

Bobbyo,
Out of curiosity I checked an online range of HELOCs for Fresno CA and if you have more than 20% equity for 660+ FICO a suggested rate for is PRIME plus 2.25% (5.49% start rate) with a floor of 4% and 1.00% disc w/auto debit; $75 yrly fee is typical. All depends on your specific profile. As you probaly know: lower LTV's = better rates and higher line value = lower points as does specific lender exposure factors. I'm sure some shopping would improve your odds locally as many banks use HELOCS as a loss leader to get your deposit. Many HELOCS allow you to fix the rate when things start to move upward...a little known fact. Bon chance!

or else...nothing.

http://bit.ly/amZAU1

"EU Leaders to Discuss Greek Budget Moves"
"BRUSSELS—Fellow euro-zone countries will give Greece one month to show it can right its unbalanced budget before demanding steep spending cuts and fresh taxes, finance ministers of the 16-nation currency union said after meeting here Monday.

The move is essentially a delaying tactic—European Union countries are eager to avoid a bailout of the struggling nation unless absolutely necessary. But it also reflects a newfound determination by the bloc to get its hands dirty fixing the fiscal problems of its profligate members."

Well the news was mildly bullish for the euro, but PM is quite happy - silver is +2.1% to 15.79 in the first 30 minutes of trading in asia, gold +7 to 1106.

Looks like Bill's prediction is right on target for this week so far.

Asia PM trading is so much more sedate than the silly business that happens when the NY market is open.

http://www.youtube.com/watch?v=1Cin0QzuEss&feature...

Bob/(et alia)- I was surfing through my posts from early 2009 (trying to find a more exact answer to your question), and came across a link to White Bird.

Man, February/March '09 was bleak indeed. But I can tell from reading my comments they were also some of the most exhilirating times on the Cara blog. Life is not about the money. It's about the journey (borrowing from Harrison). And I'm proud to have shared at least a part of its darkest hours with all of you.

So I still haven't found my comments about the loan (can you believe I have over 200 pages?), and I'm done searching for tonight.

Appreciate your input will have to put the thinking cap on. I Am surprised at the seemingly low Heloc interest.Makes sense though since the loan is secured. Also I can see how the speed payment plan could be a great choice for some people.

2nd Ave last March was wild. I remember you talked a few people off the ledge. I am sure they appreciate it. Sad thing is we may not of shared a once in a lifetime event.
Bob