Bill Cara’s Blog for Oct 29, 2010 [See post-close report]

to paraphrase........live w/the bios, die w/the bios...........here it is with over 2 hours till market opening and I am trying to figure out how VVUS, EXAS and ASTM will open.....guess it keeps one young at heart (or takes years off that same individuals life)......just wanted to thank everyone for their inputs to this blog......a true treasure

Good morning.

No POMO Injection Scheduled For Today.

8:30 - GDP (2% - 3Q)
9:45 - Chicago PMI
9:55 - Michigan Sentiment

Cara 100 Earnings:
CVX (1.87 vs 2.15)
MRK (.85 vs .82)

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DIS - Disney coverage assumed with a Buy at Davenport. Price target raised to $42 from $38

FSLR - First Solar downgraded to Hold from Buy at Deutsche Bank. Deutsche Bank downgraded First Solar and lowered its price target for shares to $125 from $155 following the company's Q3 results.

FSLR - First Solar downgraded to Neutral from Outperform at Macquarie citing relative valuation. Price target remains $175

MSFT - PT Lifted from $30 to $32 @ Oppenheimer. Outperform

MSFT - PT Lifted from $27 to $28 @ FBR. Market Perform

PG - PT Lifted from $66 to $70 @ Argus. Buy

POT - Potash upgraded to Outperform from Market Perform at BMO Capital citing stronger than expected potash and phosphate volumes, which should sustain the shares rather than BHP's bid. Price target raised to $175 from $165

RCL - Royal Caribbean upgraded to Buy from Hold at Argus based on the company's strong Q3 and positive outlook. Price target is $53

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“Under democracy, one party always devotes its chief energies to trying to prove that the other party is unfit to rule - and both commonly succeed, and are right” -- H.L. Mencken

Oh my gosh 3Q GDP is only 2.0, we'd better run the printing presses night and day until things get better!

Unless, perhaps the story they're telling us is leaving out some important bits?

The small improvement in 3Q GDP was due to an increase in consumer spending. I believe this is mostly the result of higher food and fuel prices. I doubt that Mom & Pop are splurging on Cadillacs and luxury yachts.

The government sector also added to growth. Wonderful....

(in reply to #73095)

TOF, I'm glad to hear your business is doing well, but often I see among your comments words like, "feeling" and can't help offering some experience-based thoughts that are triggered.

"I can't help but think that people are way too pessimistic. I know it's simplistic to think this way, but everything I read sounds just like this and it makes me want to be more bullish."

Sometimes a contrary approach works fine — sometimes it doesn't. I'd suggest we all need to avoid choosing from two alternatives, optimism or pessimism and go for realism as much as possible.

While not a day trader (well, hardly ever) I like to read all the views here because it helps me to understand better what I see happening short term.

I totally agree with Dave's evaluation, "There is a huge paradigm shift underway." I think we've only begun to see the result.

It began as early as the 1970s, but I didn't begin to realize it until a decade later — "globalization". Even then I didn't have any concept of how fast it would change life for everyone.

Our government, our financial concepts, our whole western lifestyle are out of date. While all else travels in real time our processes are stuck in 19th and 20th century mode. Textbook economics are out of date and probably the academics (Bernanke) will be the last to realize it (at our expense).

Looking to past examples of depression or recession may be a fatal mistake. Debating when we will "get back to normal" is pursuing the wrong question. Our interconnectedness is a whole new ball game.

My advice to you (and to myself as well) Get as much info as you can, but don't fall in love with any theories or historical models. My view is for deflation to be the first problem and I have been heavily into gov't bonds, but I must not become complacent. A favorite quote I try to remember in all things is, "It ain't what you know that gets you. It's what you know that just ain't true." Mark Twain

TOF & Dave M,
I am in agreement with your posts #73094 & 95 of yesterday. Pessimism can easily overwhelm a person in these times [and most any other time :)]. Particularly, given the financial events of the past three years and the facts we dig up daily. Looking forward and back, I am trying to give more weight to the small portion of recent good news than the gargantuan amount of past unsettling news and facts.

Regarding a huge paradigm shift underway. I agree with that. I am a "boomer" and still hear the echo of my parents experiences/stories/viewpoint of the great depression. As Bob Dylan said (I believe it was him.)

The times they are a changing.
J

The trend reversed the end of August, and still points up. Each challenge to the downside has been bought. Today is EOM. Things may change appreciably next week, and it may make sense to clear the table ahead of midterm elections/Fed annoucements. No point sailing in the midst of virtually guaranteed volatility, right- wait for the fog to burn off. But I think we close higher today.

Grym - I think I'm pretty flexible in my thinking. I'm more of a short/medium term trader/investor...not a day trader, but I tend to use my intuition to tell me when things have been oversold and are ready to bounce higher. Sometimes I'm right, sometimes I'm wrong like everyone else. I look at gold and think it's ridiculous that it could be this high but the trader in me looks at the charts and says that it still hasn't made that parabolic move higher that all bubbles experience. That move could result in a double in the price of gold very rapidly. When that happens I think we can all agree that it will end poorly.

Most of my money is invested overseas and in non-discretionary investments. I have large positions in REDF, an international index fund, and a few other investments. I agree that things overseas, particularly in India (see IBN for the latest example), will do better than in the US. That doesn't mean there won't be or aren't great opportunities here or in markets that have a lot of growth ahead of them...eBay and IMMR are just a couple of examples of companies that I think have a lot more to run.

(Reuters) - U.S. fund managers raised their exposure to equities in October and cut their high allocation to fixed-income assets on the likelihood of further easing by the Federal Reserve, a Reuters poll showed on Thursday.

Based on 14 U.S.-based fund management firms, surveyed October 14-27, firms raised equity holdings for a second consecutive month, to an average 62.4 percent of their assets, compared with 61.7 percent in September and 61.5 percent in August.

While U.S. stock markets have been supported by solid corporate earnings, the likelihood of more monetary stimulus from the U.S. central bank has provided an enormous boost.

"Stocks have been rising in response to the prospect of additional monetary stimulus, not because of any evidence of economic improvement," David Joy, chief market strategist at Columbia Management, told Reuters on Thursday. "Stocks have benefited because another round of quantitative easing will presumably assist the recovery."

The Fed is expected to announce another round of asset purchases when it holds its next policy meeting on November 2-3, after already spending $1.7 trillion on securities purchases to pull the economy out of the financial crisis.

The prospect of more market intervention by the Fed is again pushing U.S. bond yields lower, reducing the cost of borrowing dollars and encouraging investors to use those funds to buy assets such as stocks and commodities.

Indeed, September's rally drew money managers back into the market, as many had been reluctant to make huge bets in equities after an awful August. After climbing 7.7 percent in September, the Dow Jones industrial average .DJI has gained 3.1 percent so far this month. The Standard & Poor's 500 index .SPX is up 3.6 percent so far in October, following a gain of 8.8 percent in September.

Exposure to fixed-income securities, including government and investment-grade and high-yield "junk" bonds, dropped for a second consecutive month to 30.4 percent in October from 31.1 percent in September, the Reuters poll showed.

Money managers are not entirely letting their guards down, however. Cash allocations remained 3.3 percent in October, the same as the previous month.

I agree with James K's article here:
http://www.minyanville.com/businessmarkets/article...

Particularly that the EURO strength lately will be painful for European economies at a time when they least need more pain. I think the dollar has a more muted impact on growth here in the US because I think our economy is stronger. So it's probably important to keep an eye on the CDS spreads of the European countries.

http://www.reuters.com/article/idUSLDE69Q19A201010...

A thing to keep your eye on: Portugal's rising debt crisis.

And Greece may be back in the crosshairs too. Again, a strong Euro is more detrimental to these economies than a strong dollar is to the US:
http://www.marketwatch.com/story/greek-bond-yields...

It opened in NYC and Los Angeles few weeks ago. Opening wider soon.

I recommend

It should be televised prime time if you ask me.

Worse than expected.

Thus I bought some puts. Worked for me very well before.
I expect a small spike in dollar coming.

UNG very strong today. Hoping to repurchase calls on a dip.

Edit: note sure if the trade will work. SLW is strong despite $ going up.

I'm a big fan of those. If so, I expect a move up and then down and then a break out (whatever direction it chooses, probably down).

FD: I just purchased UUP calls.

When I mentioned the paradigm shift underway, i.e. Gen-Xers not sharing parents values on housing, transportation, etc., it is evident in many cities such as Portland Oregon today. The Pearl District in Portland is an area of former warehouses, light industrial and railroad classification yards now noted for its art galleries, upscale businesses and residences. The area has been undergoing significant urban renewal since the late 1990s, including the removal of a viaduct and construction of the Portland Streetcar. It now mostly consists of high-rise condominiums and warehouse-to-loft conversions.

Inner city revitalization is the future. Gen-Xers do not want the big McMansions and long commutes - they want downtown housing, transit, bike lanes, etc. In Vancouver BC, which has one of the most urbanized downtowns in North America, car co-ops are increasingly popular - i.e more people are using bikes and transit and have access to a car when they need one through a co-op membership. Many developers provide car co-op spaces and memberships in their condo developments.

In sum, much of the housing oversupply is the wrong product built at the wrong time - there is unlikely to ever be a demand for it and unfortunately you will see some of it get bulldozed someday. If you want to invest in real estate, look for those downtown areas with gentrification potential - that is the future. Similarly, demand for cars is likely to shrink significantly, so investment in most car companies will probably be a poor investment in the long term.

http://www.portlandcondos.com/portland-oregon-pear...

YES!

I hope many people see this and demand meaningful action.

Grym,

Probably the most interesting thing in there is that this is all predicated upon there being further QE. If Bernanke's fireworks turn out to be no more than damp squibs, someone is going to get a lot of egg on their face.

hope everyone has been well, i have missed posting on the site.
Bill and Jack have permitted me to post my most recent gold article, its a bit long but hopefully the community finds it interesting.
______________________

The Golden Castrati

by Jeff Borsato

In the late 18th century, Pope Benedict XIV attempted to ban castrati from singing in church choirs. The castrati’s popularity was too great and church attendance declined in response, forcing the Pope to reverse course. No matter how vile the practice of castration was, the sweet sound of the castrati was too appealing. Modern day central banks have revealed themselves to be nothing but an economic castrati- no matter how crude their methods, the proclamations of control using fiat prove too sweet to ignore.

The current economic ‘crisis’ is not historically unique, nor is it a singular crisis. A series of crises are unfolding across the globe and thanks to our economic interdependence, one man’s bubble is another man’s bust.

Enter gold. The yellow metal no longer occupies an obscure corner of the commodity market after the spectacular inflation boom and bust of the 1970’s. Gold does not sing any particular song, nor does it declare its intentions through officials with veiled interests. Having been called all manner of names from “inflation hedge” and deflationary store of value to barbarous relic, gold remains the only protection from the excesses of government ambition.

The 5 year run-up in the price of gold sits in stark contrast to the flat-lining major indices, barely able to keep their share prices afloat.

As gold continued to carve out new highs each year, laughter and skepticism soon gave way to anger and rage; inflation was supposedly under control, central banks assured us of that much. Some declared fiat dead (prematurely) while others challenged the long held notion that gold acted as an “inflation hedge”. Academic arguments reached fever pitch as 2010 gave way to Quantitative Easing- an act of monetary desperation.

Rarely are financial realities easily digested, especially when a market as small as gold has out-performed virtually every asset class the past 5 years. For those who arrived early to the gold party at the turn of the decade, vindication was quickly replaced by inter-party squabbles over which precious metal to invest in, if rare-earth metals were the next story and if gold stocks were better than the metal itself to leverage gains.

To those who accepted gold’s rise, a new debate between gold and gold stocks emerged, one which continues to this day and shows no sign of reversing course. Gold continues it’s bull market run yet gold stocks have barely hung on for the ride. The gold-bug community’s steadfast refusal to accept this fact is contrarian evidence that a turn in sentiment and share prices remain a long way off. Appeals to evidence and reason are of no use as the suggestion that gold stocks are not in bull mode is considered heretical.

As a sector, gold stocks have just recently breached their 2008 high while gold rose over 30% during the same period. A multi-year failure of any investment to rise beyond the annual rate of inflation does not qualify for bull market status. On a long enough timeframe…perhaps, though the question of why the stocks never kept pace with the metal be flashing signs that the lag will continue.

The most pressing question: why? Why do so many investors insist upon gold stocks as their preferred vehicle for profiting from gold’s rise? The inability to sit still perhaps. Very little can be made by news- letter writers for simply advising investors to buy the metal and hold it until further notice. Owning gold has been one of the most profitable positions the past 6 years, it has involved less risk to the downside while yielding greater gains to the upside and yet virtually no one would have believed it in 2004. Investing is more art than science, often the simple plan is difficult to execute in real time. The only bull market that gold stocks have profited from has been the bull market in fanatical claims that eventually, at some point, any moment now gold stocks will explode into an unstoppable bullish combination of falcon, unicorn and shark, shredding apart all asset classes in its way. The issue is not that mining companies as an investment vehicle are unprofitable (up 50% since 2006) its that better and less risky options like gold still exist (up over 100%).

Suggestions in 2006 that the TSX-Venture exchange would fall from 2800 to 1900 as gold doubled in price would have been widely mocked. Yet, an investor would have been right and much richer had they invested accordingly: long gold and short junior gold stocks. The reason why mining companies failed to keep pace remains a mystery. The same analysts who spoke of gains in the gold stock market were at a loss to explain their inability to keep pace with the metal. They soon turned to explanations which proved equally hollow in 2009: the high price of oil, base-metal hedging and labour. During a global recession when unemployment was high, oil prices had collapsed and their product was rising in price, mining outfits were having trouble finding workers, paying for cheaper gas and selling their commodity.

Perhaps risk was never factored in, and so-called ‘country-risk’ was never considered beyond ‘right’ vs. ‘left’ paradigms than no longer work to define a modern mixed political economy. Many mines remain in the proverbial cross hairs of nation states desperate for additional sources of revenue. Increasing taxes, introducing new service fees, reducing expenditures and limiting entitlements are the first choice of most governments nearing financial exhaustion. Mining activity during a commodity boom perceived to be enjoying windfall profits are the ideal target. Historically it has proven simple to rouse popular support by nationalizing mines or charging operators additional taxes.

The climate for business is risky in cash-strapped states with spotty records of private property rights and support for populist leaders. Insert Nassim Taleb quote here about the inevitability of risk realization. These risks, however one chooses to define them were never properly factored into share prices (the junior outfits in particular), the great flush of 2008 and the lackluster recovery into 2010 is a natural conclusion of this reality.

Fanaticism is a lust for dogma; it is the tendency to assert one’s viewpoint in spite of reason or reality. Those who insist on investing in gold stocks as a vehicle for profiting from the gold bull market can be considered fanatical. Those who naively believed that industry consolidation and buy outs would enrich the sector refuse to retool their thesis. Such purchases (few and far between), have been made by the same outfits that hedged gold against future declines prior to a multi-stage bull run in the yellow metal. Perhaps lessons were learned and future moves will prove right, or perhaps the shell game of “around the corner gains” will reveal itself to tired investors.

Chasing false prophets has facilitated the pursuit of a cocktail of investment themes well beyond their shelf life. Articles penned about billionaire megalomaniacs buying gold are no better than the appeals of a TV evangelist demanding money and prayer. The only money earned is about 50 cents a word by the writer; selling a story about an investment theme they have at best a Wikipedia-esque understanding of, and likely little or no money to invest with. Far too often in the financial media the question of “who is buying?” overshadows a more pressing question: “who is selling?”.

The high-pitched flutter of our monetary authorities is no doubt pleasing to the ear. Verse after verse speaks of inflation targeting, deficit reduction and monetary stimulus echo though willing accomplices in the financial media. Meanwhile gold continues to speak, not in harmonized concertos but through the unmistakable honesty of price. Gold will do what it does best, and the great powers of our economy will do what they do best, which is summed up best by the always enlightening Slavoj Zizek:

"The basic rule of Stalinist hermeneutics: since the official media do not openly report trouble, the most reliable way to detect it is to look out for compensatory excesses in state propaganda: the more ‘harmony’ is celebrated, the more chaos and antagonism there is in reality"

Be wary of your sources.

Mark H,

QE: Most individuals will only notice QE if it directly delivered to them as a check. That will likely be too small to be significant. If done as bailouts to states the effect will also be of little note to people short on mortgage payments. If states get it to help maintain pensions it will make little difference because those folks have not missed a check so far. It will not have any profound effect on jobs — which "polls" report as the single most important factor to so many these days.

I simply can't see any form of QE which is going to override the massive negatives of TARP and Obamacare which is sticking out like a sore thumb to millions of US citizens. The insult of being ignored is a burr in the backside of America.

We've lost trust in our stock market, our rating agencies, our representatives, our president and now our currency.

IMO, the equity game is now being played mostly by the pros, like a high stakes backroom game in Las Vegas, the little guys have no great interest right now.

Bonjour a tous

Getting home late from France meant missing a good morning's work under Vad's leadership, so it was up to me to go out and club my dinner for myself.

Two candidates were quickly located - X and AXTI - and the hunt was on for reversal signals. X double top was invalidated just before 12:30 so I switched attention to AXTI, which was stalling under .50. Failure to break this level would likely lead to sell off, so the short was placed at .39 at 12:43 with a stop above .50.

A bounce ensued but never exceeded .46. What was ambiguous was the direction of the market - consolidation at yesterday's closing price before bouncing higher, or dropping and aiding the short trade? The market was making me nervous with this direction-less meandering so I switched to the NASDAQ darling AAPL for some clue to direction. Wouldn't you know - a beautiful breakdown was in progress just after 1pm.

AXTI, being a NASDAQ stock, followed suit with a swan dive that made my heart soar - see attached.

I had a disastrous beginning to daytrading in the summer period, but sidelining myself to reflect on my losses, along with a further sidelining due to a restructuring of the trading group I work with (I've since moved on to another) gave me ample time to reflect on my apparent need to press the buy button too often, thinking that 'this time will be the golden payout'.

Watching Vad sit on his hands when conditions merited so, while I was pulled back from trading, was a necessary and enlightening lesson in patience, something which I admittedly lack. Following the kids return to school I also began Aikido, started a strenuous exercise regime, began taking supplements (amino acids are useful) and reducing the alcohol consumption - basically taking a more holistic attitude to the way I trade (amongst other things). Following the recent return to work I see its clearly paying off.

Those who've yet to find their feet - take heart.

Those same rebates we were told are unavailable for retail trader... :) And day trading dead. And chart patterns don't work anymore. And HFT killed all the life in Solar system and is eyeing Betelgeuse next.

Great to see your progress Les

No point sailing into rough waters next week, especially with a position that limits me to end-of-day trading.

Well the equity market is in a holding pattern. Six dojis over the past 7 days say the equity market is caught in the headlights of the oncoming QE2 train. Individual stocks have taken a beating on earnings misses, but for the past week the overall market has pretended earnings season doesn't exist. How it will respond when the news actually hits - well I certainly don't pretend to know.

Gold and Silver, on the other hand, seem to be pretty clearly recovering from its momentary dip; silver is especially hot, leading gold which says risk trade is back on again. Oil is not nearly so excited.

Perhaps the reason for PM's excitement is the renewed concern in europe for the PIG subsection of the PIGS -GLD:FXE is looking better now. Portugal is having political issues, Greek bonds are back at 10% over bunds, and the Irish are considering actually making bondholders take some kind of hit for all the bad banking that happened at AIB. (The nerve of the Irish, actually considering applying the rules of capitalism to a risk investor of a failed institution)

Can we read anything into the current performance vis a vis the QE2 train and its impact? I'm not so sure. PM may just be responding to european issues. Then again if we just focus on price and volume, it looks like a little cup is forming on both gold and silver, appearing like its readying for a breakout. Volume looks good, and silver particularly is 20 cents away. Anyone buying the breakout here? Or as Bill has said,

Got Gold?

FD: yes, and silver too

As the lone non-stealth FXY bear on this site and with all my bias' intact. I make the following case.
#1: FXY put in double top today i.e. printing 122.98 10/25 and 122.97 today 10/29.
#2: FXY last took a major dive December 2008 and December 2009.
#3: December 2008 and December 2009 $XEU also went south. We had a nice $XEU top October 14 & 25. Earlier we had the latest top in $XEU:$XJY of 1.1562 October 6. $XEU:$XJY having traveled lower all year.
#5 However, my trend lines indicate $XEU could go a bit higher and maybe December is the charm.

So, FXY could turn south Monday or according to the puppet master, it could wait until December 2010 and make it three in a row. Then again as Vad might say it could get overbought-erest some more.
That's the best I can do, after all it's only money.
J

Johnny -

I think I'll wait for downside confirmation before jumping in again short on FXY. Who needs to get the top tick? But I'm watching, that's for sure.

Johnny -

"In the yen, we are looking at 37 years from the 1974 low brings us to 2011. Therefore, we have a potential that 2011 may cause the high in the yen, and from there we will see an outflow of capital from Japan that will result in a capital shortage, debt crisis in Japan, and thus rising interest rates at last." - Armstrong, p. 17 report on the yen

http://tinyurl.com/25eylz8

The Zen Master of Timing has spoken from the gallows regarding the yen: It's too early to short here. Couple that with the high probability that Ben pledges up to $4 trillion to shore up the U.S. economy AGAIN and tank the buck the day after the elections and you have yourself a good old fashioned yen carry trade rally.

Here's Ben's motivation for QEII: "1.4% of the GDP growth of 2% was inventories. That is scary." - Jim Sinclair

My notes say 130 yen is the trigger to short sometime in 2011. I believe I picked that up from the Trading Wizard himself in a recent WIR but not positive.

So there appears to be some consensus here from the pros.

Stay thirsty, my friend.

The same Rosenberg that said the rally was over at S&P 700, S&P 800, S&P 900, S&P 1,000, S&P 1,100? I prefer to listen to people like Buffett.

I hear a lot of what you're saying and dont disagree that things are not balanced correctly but, and I don't mean any disrespect by this, it honestly just sounds like a rant. I need tangible things that I can trade on, like earnings or cash flow or good balance sheets or same store sales growth or price to sales. The rest is just opinion and is what I usually hear from people who are forming a negative picture that helps back up their point of view and reason for shorting the markets, but they don't really do much for me when it comes to investing.

There is a lot more to the earnings picture than what is going on in the US economy. The majority of companies in the US have significant overseas businesses. However, I do think things are improving enough in the US to warrant more upside in stocks and that's a big reason why I'm long.

Just curious...

I'm long RBY. I was buying today. I'm thinking whatever terrible news they have is priced into the shares already...

Home tonight and thought i would review a few "Catch of the Day" posts and charts....study them and try to understand the concepts....

But they are missing from the daily posts, except todays... am i looking in wrong place or have they been removed?

Thank you Dr. S,
I appreciate the Armstrong posts you provide via links and he sounds quite credible although a bit difficult for me to read at times. As you point out, Bill and other Pros on this board are to be taken seriously, and I do so. A 130 trigger for the J Yen sounds right to me! The market printed 124.27 on $XYJ at close (FXY 122.93). So we are quite close to 130 for the yen.

Stretching Stockcharts to the max at 20years+ for $XJY, I get a range between now and early 2011. We agree on the range I believe. However, I am still expecting the top to occur this year and no later than March 2011. $XYJ has already surpassed the 123.33 all-time high of 1995. That 1995 run-up had a long white candle up and a long red candle down. Except for 1998 there hasn't been another blow off top in the yen. Perhaps I should expect to see one first. ...and perhaps a longer chart would show the effect of inflation and other variables (e.g. QEII yen carry trade) that will take the yen much higher this time. In 1995 when $XJY fell, $USD went up, that is usually but not always the case.

However, all recent (2008 fwd) $XJY tops corresponded to $USD reversals. On my chart $USD arrives at a bottom this year, at the same time I expect $XJY and FXY to reverse. I agree with your assessment of the QEII effect and the yen carry trade. Anyway, I've already scaled into a portion of the put options I intended to purchase. I will hold off a bit longer before purchasing anymore.

I have the feeling that in 2011 we will witness dramatic currency fluctuations! ...as Bill reminds us, having gold in ones possession if not portfolio, is a wise decision.

Thank you for your information and advice.
J

Didn't see that one. Additional funding has been received and water issues resolved.
http://tinyurl.com/24d794u
Volume far below average is not convincing to me (# Vol / Avg. 4.78M/789.96M)
"As announced on October 8, ... Hanlong will close its purchase of the first $40 million equity tranche in General Moly, representing a 12.5% fully diluted stake and approximately 12 million shares, on December 20, 2010."

GMO has been bleeding money "...Net loss for the three month period ended September 30, 2010 was approximately $6.3 million ($0.09 per share), compared to a loss of $2.4 million ($0.03 per share) for the year ago period. Net loss for the nine month period ended September 30, 2010 was approximately $12.4 million ($0.17 per share), compared to a loss of $8.1 million ($0.11 per share) for the year ago", so the Chinese buy-in is welcome.

resolution of water problems.."Following the creation of the Agricultural Sustainability Trust and the Eureka Producer’s Cooperative’s withdrawal of all protests and appeals with respect to the Company’s water applications,"

GMO had a big run-up to 12+ in 2007/2008. Another commodity play.
J

ALOHA!!

Did you mean "REAL GDP"????

Real gross domestic product (GDP) is a macroeconomic measure of the value of output economy adjusted for price changes that is, inflation or deflation. Because Real GDP is adjusted for changes in prices and inflation throughout the year, it can be thought of in terms of 'purchasing power'.

The way I like to gauge official GDP numbers is to average growth since the collapse of the CREDIT BUBBLE. On that basis, since Q1/2008, REAL GDP is still in negative territory, running at -1.8 growth(by BLS calcs). Overall we have no growth as we are still mired in the collapse of debt. I know it is more popular to tout the short term view, its the American Way, but long term, if that means anything any more, we're still negative on REAL GDP. In that case purchasing power is still negative.

LINK: http://www.bea.gov/newsreleases/national/gdp/2010/...

Next go to the latest random survey by the Washington Post which shows this ...

A new Washington Post poll shows Americans' anxiety about paying their mortgage or rent have spiked higher, with 53 percent now "very concerned" or "somewhat concerned" about making their monthly payments.

In a Feb. 2009 Post-ABC poll, fewer, 46 percent, said they were very or somewhat concerned about this. It was lower still in Dec. 2008, when just 37 percent said as much.

Compared with December 2008, the rise in concern is pronounced among men, African Americans and those with lower levels of formal education. Now, 75 percent of African Americans are worried concerned about not having the money to make monthly housing payments, including 55 percent who are "very concerned."

LINK: http://voices.washingtonpost.com/behind-the-number...

If you charted this poll it would show higher highs not lower [edit.] highs. Its still debt attrition. How many of those 53% are still making credit card payments?

Next up is the US Treasury Statement for Thursday, October 28th. I know a number of people here will roll their eyes and say, "Uhhh, but you always report DEBT ... same old DEBT stuff ... its DEBT-T-T ... We know that ... BLAH ... BLAH ..." For those of you who require tangibles then there is no better place on Earth to go and look at tangibles than the US Treasury. Here's what was reported for Thursday:

TOTAL DEBT ISSUED - $108BIL USD
TOTAL NET OUTLAYS - $11.9BIL USD
TOTAL NET REVENUES - $1.96BIL

There's your tangibles for the United States Of America. We're running on PURE 100% DEBT employing 61.3X(Debt+Outlays/Earnings) leverage. Even Goldman Sachs balked at 40X derivatives leverage. Now tell me how many of the companies that trade on the NYSE or the NASDAQ are getting paid by the US Treasury? Probably most of them ... In that case then those companies paid by the US Treasury are being paid using "debt issues" and not tax revenue. That equates to PRICE FIXING via DEBT WELFARE. Money is debt ...

Valuations? How do you value the daily trades on the FX? All those currency spreads that determine year-to-year what your money will buy, both here in the USA and out traveling in Europe or South America or Australia. Where are those Balance Sheets, Earnings, and FCF in the daily FX free-for-all? Does the FX even remotely operate on supply and demand like the COMEX? You can print supply on the FX and you can dupe supply on the COMEX. Then why bother with fair value?

The Jim Grant link produced a great quote about US Treasuries that completely describes the risk/reward ... Return Free Risk

So how do you value tangibles in an intangible World built on free floating currencies mired in 60% debt leverage? You don't ... BY DESIGN!! I doubt that anyone really knows the total amount of debt that now exists in the World. I doubt that any sovereign state is being honest about their debt because I do not believe any of them plan to pay it off. So why be honest?

Johnny -

"Stretching Stockcharts to the max at 20years+ for $XJY, I get a range between now and early 2011. We agree on the range I believe. However, I am still expecting the top to occur this year and no later than March 2011."

Armstrong provides a yen chart dating to 1972 on page 16 of the provided link in the previous post with his channels. Well worth a look.

Maybe we'll see 130 by the end of next week. Best of luck with your trades.

Cheers.

No, they are not removed, we just don't post them every day. Click back through the posts to 10/12 (that's when we posted first). If you want more of those, they go months back at http://tradinglog.realitytrader.com/

"Volume far below average is not convincing to me (# Vol / Avg. 4.78M/789.96M)"

??????

Volume today on GMO was 4,775,079. Average daily volume is 546,478.
That's a 21.40 % gain in ONE DAY on over 8.73X normal volume.
If that doesn't convince you, nothing will!

"Don't confuse the issue with facts" - Dave Landry

It's GOOD for young Americans to get an early taste of their justice system. Only sad that they'll have to wait another 17 years to drown their sorrows!

http://www.nytimes.com/2010/10/29/nyregion/29young...

Ross - "I therefore conclude that gold is a ware."

So are dollars. Dollars are a ware as well. Just as anyone living in europe. And it also has a price, which depends a lot on the expected supply

I enjoy your comparison Ross - permit me to take it a step further and speak of these commodities as I see them.

The recent economic epoch - based on debt and cheap energy - ensured a modicum of economic strength to the consumer, who through the use of national distribution and sales machines like WalMart could pressure primary producers in order to keep the cost of foodstuffs reasonably cheap.

This epoch is in its death throws. While primary producers are sitting on some very valuable 'stuff' - and a tiny fraction of the population have access to this stuff through food cooperatives and direct relationships with producers, most people remain blind to the change occurring and will be caught with their pants down.

Those who are aware - mostly trading and investing professionals from what I see - are snapping up that commodity which is most trusted amongst the community, easily transferable and non-devaluable - gold - in anticipation that confidence will be lost at some point in money with no intrinsic value.

I for one embrace the future that you practice now. As the ashes of the present economic, trade and monetary system rise in rebirth and professionals see the green light to begin investing in productive wealth again, I will be waiting for the signal that gold's usefulness has passed before liquidating this investment thesis and transferring the proceeds to a new investment thesis. This investment thesis is predicated on the probability that such disasters that struck Russia and Pakistan's wheat crop are here to stay and likely to get worse.

I only wish I could travel back in time and join Kaimu in investing in this thesis many years ago.

Craig,
I have been using Google Finance for quick looks. Friday's reported volume & average volume for GMO is:
Google 4.78M/789.96M respectively.
Yahoo 4,775,079/589,523 (Yahoo avg vol is for the most recent 3 month period)
Using Stockcharts.com and a 60 day simple moving average volume overlay, the average volume is 618,372.3

So, you are correct. Fridays GMO volumne far exceeds average volume. Now I know not to trust Google average volume and to use stockcharts or yahoo from here on.
Thank you for setting me straight.
J

ALOHA!!

Oops I made a typo ...
If you charted this poll it would show higher highs not lower lows.
I meant to say, "higher highs not lower highs".

... a debt fueled rocket rise in GDP speaks to the issue.

I can never figure out why people must always look at debt as an asset. It never has been and never will be. Its just a monetary "syndrome". We all have been brainwashed that employing debt will improve our lives. For more than most that is not reality.

I agree your cows are assets because you can eat them and they serve a purpose in terms of providing a "food" for humans. Yes they do multiply, if cared for properly, and you can call that a dividend.

Yet you trade those cow assets for paper dollars that are only backed by debt. The only reason that paper has any value is because the next greater fool believes it has value as directed by the FX. Yet all these fools believe debt is our savior. If you agree that debt is a liability, like most normal, clear minded accountants do, then you also must extrapolate that the US Treasury is a a LIABILITY BUBBLE, because on a daily basis liabilities far outweigh assets. To the US Treasury debt issuance is an asset, it is revenue. If you buy that then the true determination of our money's value is the Balance Sheet of the US Treasury, both from an internal debt aspect and an external debt aspect, as this is how the S&P rates sovereign credit. The head of the GAO, the US Comptroller, David Walker, quit a few years ago because he thought the US Treasury along with the US Congress is a lost cause. As I have always said I equate David Walker quitting the GAO/US Comptroller as Jeffrey Skilling quitting Enron. Since David Walker quit the GAO the US Treasury and the US Congress have only increased spending and debt issues while at the same time tax revenues have fallen. The only reason the US Treasury and therefore the USD still has a AAA S&P rating is because it is the Worlds Reserve Currency and the US FED and IMF and the BIS are all US centric. They want the US military to be the biggest and strongest in the World and the US Congress and every US President since Eisenhower has gladly obliged. Yet that is no US Constitutional mandate, it is political and monetarily tactical. It is Empirical ...

Can we agree on one thing? That gold is not a liability ... If so then I prefer to collect assets not liabilities. And no your cows will not be alive in the next 30 or 50 or 1000 years. Of course neither will you and I ... but the gold will still be here as it has for many thousands of years. Not even a USD can say that. I understand that the idea of diversification is dead in the financial lexicon of the "new derivatives era", but putting all one's eggs in one debt ridden floating currency basket seems to me a formula for debt ridden monetary disaster. We now live in an EMPIRE OF DEBT and I get a good feeling being contrary to that incredibly crowded and extremely long term trade. How long has the USD been the long term crowded trade? Since Bretton Woods, July 1944 ... 66 years ... The Bretton Woods money monopoly was already telling the World that the USA would win WW2 about 14 months before the War was officially over. Jeez, someone should have told Japan that so we wouldn't have had to drop a couple A-Bombs on them. Imagine the scene at the Bretton Woods resort in New Hampshire as all the Western central bankers gathered amongst fine food, luxury and mirth, to sign up the USD as the winning currency while millions of soldiers and Asian civilians were getting slaughtered thinking they still had a chance at final glory. Pretty arrogant and immoral of those bankers. And they have been arrogant and immoral since Christ was on the Cross ... Hummmmm ???

How did I get off track into WW2 and the crucifixion? Its 4am in Hawaii, so I must be a bit sleep deprived.

Kaimu,

Hope you had a good sleep. Enjoyed your last post. One addition or correction in the history, perhaps, where you say "They want the US military to be the biggest and strongest in the World and the US Congress and every US President since Eisenhower has gladly obliged". I would say since Truman or even Roosevelt if you want to take it back to Bretton Woods.

ALOHA!!

I would say since Truman or even Roosevelt if you want to take it back to Bretton Woods.

Oh yes, I agree, both Roosevelts in fact!

I only used Eisenhower because he was the only one of the lot who stood on the pinnacle of US Military global power and at the same time warned every US citizen, upon his departure as President on national TV, to beware of the military-industrial complex. Of course we did not heed his warning and now that line item is one of the largest USD line items on the US Treasury Statement every day, up there along with Social Security and Medicare. In fact Obama has increased the dollars flowing to the military contrary to what he told voters during his campaign for President. Not only has Obama outspent Bush on military, but he even has at his employ General Patreus who was vilified by the DEMS when Bush was in office. My how CHANGE never does ...

LINK: http://www.youtube.com/watch?v=rd8wwMFmCeE&feature...

Loannetter,
I loved your take on homeownership. True so very true.

Having built 4 homes over the past 40 years plus 4 commercial income properties I can assure anyone that real estate is not dead. We may be living in an era where real estate is becoming the most attractive asset class available for the next 30 years.

Real estate is a long lived very slowly depreciating asset. At current prices, interest rates and leverage values, it will beat most commodities including gold by at least 3 to 1 by 2030........hands down.

Real estate is location, location, location... Where Grym lives is probably not a place to build a new McMansion or another shopping mall. But if you live near Southlake Texas, new commercial is being built as I type. Even Toll Bros. have a few new specs.

Architectural inquiries are still 60% below the 07 peak. Therefore it is a good time to engage an architect and I have. House number 5 is on my design board. It's a middling 2 bedroom 2 full and 3 half bath 4600 sq ft stone faced cottage with towering ceilings, Rumsford fireplaces, a soapstone kitchen and a negative edged pool overlooking a 4 acre oak treed pond where from the rear second story balcony I can watch my black beef critters munch and grow fat on my grass and hay. It is idyllic for me. For others it might be too much to handle or an inconvenience. It ain't a condo in Redondo fur sure.

If I build this, and I probably will, it will be the worst investment decision I have ever made. McMansion crud is on the market for 25% or more UNDER replacement cost. But when one is old and feeble minded and wishes to rid ones self of Yankee fiat dollars and borrow said trash cash at artificially depressed interest rates then..........OK, I will.

Hi loannetter,

your remarks on speed equity reminded me to comment on the Swiss situation.

The Swiss situation is that banks don't allow borrowers to take charge of their finances and are happy with the status quo of interest only loans with 20% down.

Now the scam here is to indirectly repay capital through tax-sheltered investment funds. But a crude understanding of how it works suggests to me that banks are laughing all the way to the bank (pun intended) with cheap money fronted by homeowners - and earning interest on the spread.

So we've already paid enough into this fund that's earning max. 2% (against variable interest charges presently 2.5%) that I decided to switch banks (notice given for April 2011) and use these funds to pay taxes due, the last big debt hanging over our head. Tax office ain't aggressive collectors in Switzerland, so I'm not a diligent payer:)

Our banker understood what I was doing and was clearly not happy to hear it. Stuff him. I'll start using our money for what we want. Spare income is being accumulated for daytrading education and a second, long-term gold trading account. I've the idea I want to leverage in PM's and just refi for a reasonable rate of interest next year. If I can't accumulate equity in the housing asset I'll seek it elsewhere.

I'm gambling that rates dip in 2011 before resuming an upward trend. I could be wrong as money is flooding Switzerland and finding its way into housing here. Apartment construction happening around our building is already selling for 40% more than what we paid in 2002. We'll see if it turns into bubble territory soon enough. I can certainly see the security in hunkering down with fixed interest for 5-10 years waiting to see how this economic circus unfolds.

bon dimanche.

Illini, Kaimu,

I have no problem with the observation, "They want the US military to be the biggest and strongest in the World and the US Congress and every US President since Eisenhower has gladly obliged".

But it, like all events or policies, should be viewed in historical context.

After the armistice of WW1 Gen. Pershing had offered the opinion that we should have crushed Germany or we would have to start over eventually.

Just prior to WW2 our standing army was under 200,000, our air force was pathetic, and our Navy was incapable of protecting both coasts adequately. This bought out the move for "unconditional surrender" of all three Axis Powers. (Prolonging the war and adding to the death toll.)

Like people who experienced the Great Depression, those who remembered our sorry state of defense and the resulting cost, (both in government and civilians) maintained this posture for decades.

The aggressive posture of the Soviets and the Cold War only reaffirmed such a need. Those of us who remember may believe it was the best choice for that time, but indeed wasteful. We may wish we were in better shape once again if the politicians push us into an adversarial position with China.

If an individual is corned by a number of assailants he will use all the means available out of fear. If we are lax in military defense I believe it may lead to reliance on nukes. Look at the overreaction (my opinion only) to Iraq and our semi-unilateral actions.

There are those who use the "crisis mentality" to their own advantage in finance (as we discuss here often) who see a linking of the two — military preparedness and profit as a pot of gold.

Fear is a great motivator and balance is an evasive goal.

I watched less than 4 minutes and that was all I could stand. They have taken a very serious subject an treated it almost comically, IMO. Let me know if there is anything good in the remaining 70 minutes.

Just finished watching it.

This isn't the blockbuster documentary that I expected, but after a weak beginning it becomes a decent commentary on modern American economic life. Worth a look.

BH

davefairtex,

We simply have different opinions based on our own experience. I've had all those rental experiences in several US, Australian and New Zealand cities. Moving is just not that much fun and I find it expensive, time consuming and disruptive.

For example in this quarter, in my region, we are seeing signs of stabilization in home values, largely because the Pacific NW is a destination for folks who appreciate a smaller green oriented community with less traffic, great natural ammenities and an international airport, only 1 hour to Vancouver BC and 1.5 hours to Seattle (end of pitch).

Last quarter our median home sale price fell only 1.9% (and that's AFTER the buyer tax credit expired) when most were screaming the sky would fall. Unlike the other areas, homes are selling at 90% or better of their listed price. Sure anyone selling has had to get real or get off the market.

Our regional unemployment fell to 7.7% while our state average fell .5 to 9%.

Sure we still have a lot of foreclosures and short sales inmpacting the market: the ones I see are laretly due to employment losses and personal tradegies. Quite a few naiive investors are walking away from rental homes who did not fully appreciate the facts of upkeep & tenant management but that's just bad business practice. I see this every day. I am also seeing the conservative home owner return to my door with solid equity and good credit looking for a prudent move to lower their payments. You don't hear much from these people because they have no injustices to scream about to the press.

So a home, if one considers it a store of value, is an investment IF that is how you see that particular investment. Hard to day trade yes, although lord knows, some do try and succeed in the real estate contract assignment world.

I never said a home is like a savings account. Any investment you make: whether it be gold, a particular stock, stamps, art, gems etc. is viewed by the buyer and seller as having a 'store' of value. That's what makes it tradeable. Homes are not consumed. They tend to last 50 plus years and certainly the land endures and that is the main store of value under any home. The location is certainly not consumed. Any physical purchase, like an antique Bentley, can certainly require upkeep (you have to securely store your gold, yes?) but most would agree homes are no more risky than tech stocks and at least you can live in your home.

I guess a big enough portfolio or store of gold could be fashioned into an umbrella? :)

Les,

Interesting! One has this impression of 'Swiss Bankers' running things like clockwork but I had no idea they had such an ironclad hold on your money!

Are you able to get a Home Equity Line to beat the daily balance/average balance spread?

Are you able to make principal payments on your interest only mortgage without some kind of penalty??? Prepay penalties on mortages (up to 3 years) keeping people lashed to high balances were essentially outlawed here in 2008.

bon chance!

Loannetter, we've been very lucky that capital payments have not been required, in that I've been able to put our finances in order (some 35k on wife's credit cards) in 3 odd years without killing our lifestyle.

The next refi will not be indirect payments into whatever scheme the bank have got going for us. Ten years of modest but reasonable direct payments to accompany the increase in gold-based assets. That's the equity I'm looking to build.

loannetter -

"We simply have different opinions based on our own experience"

Yes I believe so. I quote my experience as though it were the gospel truth, and so do you, much like the blind men describing the elephant. I have never been kicked out of a rental, some I've rented for 4 or 5 years, never had to make a deposit more than $1200, never lost my deposit, never had bad neighbors, never had a bad landlord refuse to make needed repairs - it's all been good. I'm sure you have many happy home purchase stories. "Ah, but when I finally bought my house, the sun came out from behind the clouds, it was all roses and ice cream, and I got to change the color of that living room!" Did you buy during the bubble years? I bet you didn't, but I'm willing to be surprised.

I'm glad your area is stabilizing. Only time will tell if the couple of trillion the government has spent to provide the stabilization has stopped the descent of home prices or not. Once rates move to 7%, the Fed sells those MBS, and all those foreclosed homes make it onto the marketplace, then we will know for sure. I certainly hope so, who needs more trouble?

Perhaps one way to see where prices are is to ask, can the median salary in your area can buy the median home? And, can the median rent pay for the PITI on the median home?

An note written by David Rosenberg made an interesting point about what happens when folks run out of unemployment insurance, and how that affects personal income numbers (we'll ignore for the moment what happens to the actual people):

"The looming expiry of the emergency unemployment benefits in the U.S. poses a very large risk to aggregate personal income over the next few quarters. Currently, combined with state programs, someone who loses their job is entitled to 99 weeks of unemployment benefits (a "99er"). However, the extended benefits are set to expire on November 30th, and our back-of-the-envelope calculations shows nearly a million 99ers will be cut off in December alone, with the remainder (about 3 to 4 million) falling off the rolls by April.

"Given that the average weekly unemployment cheque is about $300/week, this amounts to nearly $80 billion (annualized) loss of aggregate income over the next few quarters. This means that personal income could fall by 1.0% QoQ annualized for each of the next three quarters, starting in Q4. The 2% QoQ real GDP estimates pencilled in for Q4 2010 to Q2 2011, will look far too optimistic if such a loss of income does occur. Given that material downside risk to growth going forward, we intend to do more detective work on this file."

Where does one find 'alpha?' Most likely within. Seeking to replicate someone else's trading results (as someone recently pointed out) is virtually impossible.

A strategy that delivers gains beyond a risk-adjusted benchmark is pretty hard to come by. Even when we 'find' one, success can be fleeting.

My wife and I are now about -10% below our combined portfolio high of September 2008. Recovery from the March '09 lows was basically a one-step process- pedal to the metal trading using leveraged 3x ETFs until mid-May 2009 surprised us with 70-80%+ returns over less than three months. That was followed by an endless series of fender benders as we shorted against the prevailing trend. Frustrating, but invaluable practice (wax on/wax off, jacket on/jacket off training, if you will) using the single most effective defensive maneuver available in trading- stop-loss selling. Day trading results were mostly minimal, treading water for the most part. Intuitive decisions to move both portfolios all-in several times on the long side in late August/early September gave us the only real gains we had for 2010, in the +7-8% range.

Does alpha even exist, or is it all just plain luck? There's an entire industry built on the premise that it's possible to 'beat' the market. Obviously, most funds don't deliver. Sometimes it's enough to have played the game and to have simply 'not lost.' I feel fortunate right now to be within 10% of any 2008 figure, and I'm thinking seriously of moving away from day trading. I can't retire (comfortably) on what I have right now, but I can in 13-14 years if the portfolio returns 6-7% a year until then (realistically, I think most of us Boomers should be thinking age 70).

"....I'm thinking seriously of moving away from day trading. I can't retire (comfortably) on what I have right now, but I can in 13-14 years if the portfolio returns 6-7% a year until then ..."

2nd,

You might want to check out the Permanent Portfolio http://tinyurl.com/345898x or do it yourself http://tinyurl.com/3ag4kzu

It has a great track record going back decades and should be able to meet your goals.

I'm seriously thinking about putting my Roth in this and keeping my other taxable account for speculation.

Regards,
BH

Re: "Permanent Portfolio." Wow just checked it out and the monthly chart is fantastic (attached). And even invests in gold, silver, real estate, bonds, in addition to stocks etc. Thanks so much for suggesting the idea- can't believe I hadn't heard of it. I too need to spend less time fretting over the market and my stock picks and enjoying life...

KC

Perhaps they are not students of US history over there, but the phrase "Not worth a Continental", might ring a bell for you.

George Washington, was said to have lamented that a wagonload of supplies cost a wagonload of Continental Dollars.

This referred to the US Continental Dollar, which was a wildly inflated paper currency printed during the revolutionary war, and was I think the reason the Constitution required money to be "coined" rather than be "coined or printed", or "issued", and the Spanish "pieces of eight" (ie quarter = 2 bits), which I believe was also the same weight of silver as a "trade dollar" and was specked out in the coin act of 1793 which is on the same pages as the Constitution itself, and provided for the Death penalty for those in government who might debase the currency.

BTW, one of those Continental Dollars can now be had for about $75 last time I looked.

And yes, we needed a modern day Andrew Jackson, but to be honest we needed him back in the days of Wilson or Roosevelt or Kennedy or even Nixon, Carter or Reagan, because its way too late to stop the steamroller of spending and NEW debt, let alone ever recover from the existing debt.

I have to say, just based on writing alone (never mind the high content quality) it feels to me like this guy is a native speaker of English. I know a number of university students here in Bangkok and while they're smart, they certainly don't write this well.

Bill, I noticed the pain in your RBY remark. Back when it went sub $1.00 a year or two ago I loaded up a big position in it because I felt that it would have significant oz, had a good chunk of existing infrastructure to hold the build cost down, and was projected to have under $300 cast costs.

As usual, I sold way too early, on buyout rumors as I recall, which bother me, because when I see things being pumped, I know it takes me days to sell, and bubbles tend to burst too quickly for that.

Anyway, I've bought RBY again the past 2 friday's, and watched every trade all day both days, like I typically do. I had orders at the bid price for between 30 min and an hour this past friday, where even though I was only showing a 300 share qty at a time, I never even got the first 300 filled, and many, many thousands of shares traded during that time at that price.

What caught my attention was the number of shorts and bashers enjoying/celebrating their huge profits from RBY's decline, mostly elsewhere, but even here. Draw a line on your chart from the .70 low to the 3.18 low and see where it extends to. Anyway, I'm no mining expert, but I know a retail panic (caused by the pumpers and bashers, I think) when I see one, and let me tell you, both friday's buyers came out of the woodwork as soon as I got pissed and started steamrollering the scary asks to get the shares I wanted. Considering how many people I was seeing, like yourself, lamenting having bought it, I thought it very telling to see a buying panic for something so unwanted. Not that I know anything at all, but I think the downtrend maybe has exhausted itself.

Sad to say, its the only stock I own other than DGP, if you call that a stock, and I think with $1000+ gold its got to be worth in the $4's anyway, as they hit a 3rd hole with around 2000 gr/ton. None of the other miners I've owned ever get ANY numbers anywhere near there, let alone 3 holes with them, and 11 or 12 gr/ton overall isn't too shabby, either. Anyway, at or near current prices, I think its a good speculation, even if its been painful for you to date.

$4T? "Roads to nowhere" is a phrase I've learnt of the Japanese experience for good reason.

Of course, appropriate economic management (an oxymoron in light of present US administrations) doesn't mean that traders can't hop on board the relevant sectors should the investment in whatever sectors Congress deems important be made. Otherwise I'll be sticking with gold.

I still remember the great reflation call. I get the idea now.

Thanks for your thoughts once again.

S&P +8.60 / +0.73%
Level 1,188.30
Fair Value 1,180.38
Difference 7.92
Nasdaq +12.25 / +0.58%
Level 2,134.25
Fair Value 2,127.33
Difference 6.92
Dow +70.00 / +0.63%
Level 11,136.00

Asia bounces within ranges for a number of bourses. Markets remain in a holding pattern. Except Japan, which is sliding lower. I can't work out how QE2 tit for tat is affecting the slide.

Ditto US markets if these futures hold.

ALOHA!!

Les-That's $4.3TRIL

We look at these heavy TRILLION numbers and then forget that even when we "round off" TRILLIONS it is actually more money than any of us will ever make in our entire lifetime. That is how absurd money is now! By leaving off(rounding off) the "0.3" in "$4.3TRIL" you leave off $300BIL USD. Almost $100BIL more than all of Berkshire Hathaway's market cap! Just TOTAL NET WITHDRAWALS(net outlays) for FY 2010 amounts to almost 22 Berkshire Hathaways(BRK.B). Warren Buffet is proud of the "value" he has created by building Berkshire Hathaway into the super company it is today. In fact my sister-in-law works for one of Berkshire's holdings. Now if you go look at the history of Berkshire Hathaway you will see the company originally started in 1839 under a different name, but Warren Buffet bought it about 44 years ago. Here the US Treasury MOUSE CLICKED almost 22 Berkshire Hathaways last FY 2010 and it took Warren Buffet 44 years to get Berkshire Hathaway's market cap to $203BIL. Somebody has to explain to me, preferably a US Congressman or woman, what gives when money becomes so worthless and plentiful as to be able to create 22 BRK.Bs out of thin air in 12 months time? We can measure a USD in so many ways to show how worthless it is, but we prefer to use TUNNELVISION and just look at our own lives and what our USD buys at a grocery store or at the Toyota car lot. Everyday we here at Bill Cara measure a dollar by the spot price of gold and silver and by the price of our favorite day trade, but when you measure a USD in longer terms like using BRK.B market cap, where a 50 year chart is required then a USD looks like toilet paper once the US Congress gets hold of it! Yet we read in the headlines that Uncle Warren feels he isn't getting taxed enough so he takes it upon himself to announce to Obama and the IRS that they need to start taxing the rich people more! The epitome of HUBRIS in my mind!! Pure unadulterated GRADE A 100% HUBRIS!!! The idea that one of the BIGGEST gurus of "value" would suggest such an absolutely ludicrous and insane idea is beyond me. Wake up Warren the same people you are begging to TAX you more are the same people that can MOUSE CLICK your company on two Thursdays! Heck, the US Treasury MOUSE CLICKED over half a BRK.B last Thursday($118BIL in debt issues). Where do you think all that extra tax money you are so freely offering will go to Warren? Let me explain it in "astronomical terms" since the amounts of spending and debt are "astronomical" ... its called a BLACK HOLE! That is what I would term "astronomical malinvestment" ...

No Les, to answer your original question it is IMPOSSIBLE for the US Congress to ever "spend appropriately" and in my mind it is due to our political status as a OLIGARCH DEMOCRACY. If you give the right to vote to people who make absolutely no contribution to the US Treasury then you go down a very slippery slope. Add in a monetary monopoly and stick a fork in us! I speak in terms of real CHANGE that has to occur in the spending habits of the US Congress.

How do you say IT IS WHAT IT IS in Chinese?

http://www.incrediblecharts.com/tradingdiary/2010-...

BH,

What's the saying about great minds? My son brought PRPFX to my attention about two years ago and I have had some ever since. Earlier this year I put both my wife's and my Roths into it and I bought some in my SEP as well.

It is usually about equally split between equities, bonds and Gold — not a bad place to have been so far.

Davefairtex,

I have had similar thoughts. As you well know by now I am a confirmed skeptic (40 years in a one-man business hearing grandiose promises for the future if given a cheap price for the first project will do that.).

While I find these commentaries interesting, I would never base any decisions on advice, opinions or observations from someone I "know" very little about.

I have been stung believing guru's, TV "experts", authors and early in life — politicians and US government data. I have zero faith in foreign data.

The internet, cell phones, all of the fast pace 24/7 avalanche of instant info only makes me want to dig in my heals and wait for real trends to materialize — no more predictions.

I saw the job off-shoring outcome as inevitable more than 20 years ago. (Not because I am so smart, but because the effect was almost immediate to my own business and a good imagination allowed me to see the extreme result early.)I dumped my tech bubble investments too late. I made it back day trading for a short time and will simply conserve principal from here on.

Grym - interesting, I wasn't approaching it from a skeptical point of view, more like, I was impressed with the english skill. It didn't occur to me to be skeptical of the source. :)