[12:57pm ET]. Tough getting up today, but at least the sun is shining, the temperature about 80, and the ocean a combination of turquoise and emerald green. 2009 got off to a great start, so I can’t complain.
Last evening was an eight-hour party of excess next door at the Sandals resort.
See the attached flyer.
We did the pub and restaurant crawl – about six of them – where we had at least one glass of champagne each. Except for the shiraz for dinner, along with champagne of course, that was the drink of the night.
The resort was full and I cannot imagine anybody didn’t have a great time last evening. No hint about a market crash this year. The only fireworks here were marvelous.
http://www.sandals.com/main/bahamian/ba-home.cfm
It was really cool to be able to take your shoes off and walk maybe 100 steps through the sand, escorted by a security guard, home.
| Attachment | Size |
|---|---|
| New Years Ever Flyer.pdf | 1.89 MB |
Comments
Madoff victim list
http://s.wsj.net/public/resources/documents/st_mad...
Does anyone follow RGLD? All
Does anyone follow RGLD? All in all the past several weeks have been spectacular and it is up decently for all of 2008. As a royalty company it must have something going for it.
Trade of a Generation - 2008 was the year!
Four years of following the discussion of this blog and the sharing of information has been a great asset in learning how to trade this market. Since reading this blog returns have been positive over the years of around 20% up to 2007. This year has been one heck of a ride.
Currently 100% in cash. Throughout about 75% of 2008 the portfolio was 100% in cash. The other 25% of the year it was in positions in the Horizon funds in Canada, SLW and G for significant profits. The six figure portfolio was up 76% this year. Thanks Bill for all you do here (reports on G, SLW, trading examples, WIR and daily commentary) for all of us. Sometimes you get it right and other times you are off the mark. This is a learning blog. From this blog and others, there is a combining of thought which results in my decisions of what to buy and when to sell.
Some thoughts over the last few years for those who are trying to learn. Nothing new here as this was learned from this blog in 2006 and 2007 and were the focal point of my trading plan for 2008. Here are some points that make my trades work. These may be helpful to you. Especially if you like holding a loaded gun. You might not like what I say, but that is your tough luck. Frankly, I don't care what you think.
I hope others will post what helped them to positive gains this year as I find this the greatest feature of this blog.
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There is nothing new under the sun, so they say. I thought for those who are fairly new to managing their accounts I would post some of the things that I have learned from Bill's blog and others. So these are really not my thoughts. They are the transference of knowledge of those more skilled than myself and sharing with you some guidance I have been given.
Blog commentary: I am not interested in the opinions of others. I just go by the charts. Would you trust the posted trades of someone who has made less than 5,000 trades in their life? Go shoot off your right little toe.
Gold: Most opinions on mining, resources in the ground are BS. It pays to look at other sectors (WIR). Go shoot off your left little toe.
Averaging down: Just BS from those who have made less than 5,000 trades in their life. Success comes from averaging up. Go shoot at random one of your middle toes on your left foot.
Averaging up: Gains of 76% fully depended on this, along with the stop profit (or gain). Once the position had a gain, add to it. Be mindful that you want to protect the gain at all cost. The worst that can happen is that you get out with a small gain. This is the only time you want to have a stop. If you are making money, add to your position as it goes up. But make sure to get out with a plan. Know it before you buy and watch the moving averages. [I broke a rule to limit the amount that I place in an individual stock. With this strange market I did extend and held position sizes that were extremely large. I did this only as long as the position had a profit and I knew my exit. Only volatility in these markets gave me confidence to execute this strategy. I will put this down to luck which was another rule I broke. We know that SLW and G are great stocks. And I would never execute this on a penny stock ever.]
Stop Loss orders: Just BS form those who have made less than 5,000 trades in their life. Don't use them. Not in these markets of 2008 or 2009. When the market closes for the day, that evening go over your stocks. If you don't know now what stocks to sell the next day, than make 4,999 trades until you do. Go shoot off two middle toes on your right foot.
Luck: Yes this does concern some stocks gains and winners. If you depend on luck, then buy short-term certificates of deposit. If you believe in luck, go shoot your right big toe.
Day trading: If you have made less than 5,000 longer-term trades, don't start with day trading. Go shoot your left big toe. All trades executed in the account were for 30 to 90 days.
Buy and Hold: Give me a break. Worst advice anyone would follow. Note, a lot of people who have losses in their positions have a weird belief that these stocks are buy and hold to zero. Go figure.
Losses: No one likes a stock that doesn't obey our will. Cut your losses quick. Look at your stocks each month and fire one that is not working to make you money. If 30 or more days have past and it is down, get rid of it (Get rid of it within a day or week). This should be your rule number one. "Your fired!", that should be your commanding call with stocks. Don't let a stock boss or intimidate you. Admit your mistakes. There is always another trade.
Cash: Nothing wrong with holding cash. If you can't spend a day, a week or month with holding only cash or not trading, then you should not be in the stock market. You have not emptied emotion from your trading. CASH IS KING or QUEEN, depending on your viewpoint. Remember that. A lot of money managers 'don't get this rule'.
Emotion: You can't have emotions if you are in the stock market. This should also be rule number one. One reason I don't care what you think of this commentary. The stock exchange that traded emotions went bankrupt a long time ago, hopefully it was before your time.
Margin: Give me a break. Don't even think about it in a Bear market.
Moving averages: You have to use them. Try the 50 and 200 day averages for a start.
RSI: Just shoot off another toe. Just a BS indicator if you don't use it with another one. You need to confirm it with another indicator of your choosing, otherwise it won't work the way it should.
Keep a log: Buy a notebook, they are cheap. Every day write like Bill does without giving second thought. Just write about yourself, the market, the economy, other blogers, your stocks, etc. Fill at least two pages everyday for five or six days each week. If you can't do this, then forget about the stock market. You are too lazy to make it in the ruthless game of buying and selling stocks, options, forex etc.
Ranting: People waste time ranting about people, the market, stocks, government etc. I don't give a flock about what you have to say. You are just lazy. If you are really serious, you would either take advantage of the market if you are so smart about your rants. Get off your butt and do something to make changes to what you don't like. Your rants only fuel anger with others and make others lose focus on getting ahead.
Method: This is what I want to know more about. Your method or the method of someone you trust and value. One has to be open to the methods that others use to trade. Beware of methods that are complex to the point of being a black box method. Trading should be simple, it truly is. Why pay thousands of dollars a year for 'the experts' opinions and trades' when you can get it for free here.
Stocks: Don't give a flock about what others are buying and selling. There has to be over 10,000 plus stocks around the world. Why should someone be just interested in the one stock you are promoting. So you bought the stock at $6.00 and sold it at $6.20. Trade price and volume of the stocks you follow. You don't need to dance the same way as someone else. Just learn one dance and practice it until you can do it second nature.
5,000 trades: Seek out those who been in the game and have the experience to show it. Forget the talking heads, academics, economists, money managers and "know it all's". Just more BS experts. What is more interesting is how these individuals became BS experts. Bill's blog is a good place to look for HB&B BS and other BS facing investors/traders in these markets.
Learning: Never stop learning and question everything. No one can predict the future. There is only one market wizard and it is you. Stop looking for one. Become your own wizard. You can do it, but it might take you 5,000 trades. Don't give up.
Time: Beware of becoming obsessed with the market. If you are spending more than 30 to 60 minutes a day on news, stocks and blogs, you have a problem. Exceptions to this would be day traders.
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Best wishes to all and may 2009 be a year we learn and become truly independent. There is a great opportunity for us to make more than 26% next year. These are interesting times. All I will say is that it is possible that the market won't turn around until 2010. I am not a wizard, have no crystal ball, but discipline to the above have been a major factor in producing a 76% gain this year. This is a bear market and we haven't seen nothing yet. Be careful.
where did all the money go?
Kathleen Pender of the Chronicle
http://tinyurl.com/865zrg
"Charles Biderman, chief executive of TrimTabs Investment Research in Sausalito, has a different explanation.
He says that from the market's bottom in 2003 until its peak in 2007, the market value of all publicly traded stocks worldwide grew from about $20 trillion to $45 trillion.
During this period, only about $1.5 trillion in cash went into the market. Debt accounted for some of the remaining increase in market capitalization, but most of it existed only on paper.
Not related
"Market cap and money aren't necessarily related," he says.
Suppose a company has 1 million shares of stock priced at $100 each, giving it a market value of $100 million. Over the next few days, someone buys $5 million worth of stock. Speculation drives the share price to $140, and suddenly, the company has a market value of $140 million.
In this case, a $5 million investment has created a $40 million increase in market value.
Is the company really worth $140 million? Not if everyone tried to sell their stock at once. The first person might get $140, but everyone else would get less, probably much less.
"It's not any different than a Ponzi scheme, a legal one," Biderman says.
The same thing happens in real estate. Suppose the house next door sells for $700,000. Suddenly, every family on the block thinks their house is worth $700,000. But if everyone on the block put their house on the market, everyone could not get $700,000.
Multiply that by just about every asset class in the world, and you'll get a sense of what happened last year.
"The perceived value evaporated," says Ken Winans, president of Winans International, a research and money management firm in Novato. "Are there trillions of dollars that have simply evaporated? The answer is yes."
Re: Trade of a Generation - 2008 was the year!
barry- congrats...(perhaps more aptly titled as trading lesson(s) of a generation...hopefully you continue the performance well beyond 2008)...
Re: Trade of a Generation - 2008 was the year!
Congratulations and thanks for your observations. I hope 2009 treats this community very well and that we can all continue to learn.
Re: Trade of a Generation - 2008 was the year!
FredC - Lots of good commentary there. Don't know about the 5000 trades, though. Some people could do 5000 trades using the same losing method and never learn a thing.
I sometimes wonder about the ones who don't want to spend a few bucks on good data, good charting software, a good book, etc., and who won't even spend just a few hours learning the mechanics of trading, but yet think that they will take 10k to 150k each year. It might be possible for a very few lucky ones, but not for most.
Congratulations on your success.
Re: Trade of a Generation - 2008 was the year!
FredC,
as much as I love most of your points (especial kudos to one about ranting!), I must take exception to this one:
"Stop Loss orders: Just BS form those who have made less than 5,000 trades in their life. Don't use them. Not in these markets of 2008 or 2009. When the market closes for the day, that evening go over your stocks."
Unless you can watch your stocks on intraday basis, not having reasonable stop in place may end in disaster. Stops are dictated by price action, and with volatility we have seen one may find his stock way too far from his stop point after the market close. Just remember what BSC did on a day when it broke $40 and imagine seeing closing price after the market close. A lot of other stocks, mostly financials come to mind, made too big moves on intraday basis to justify the notion of having your stops in place. And it's not the case limited to last year - I have seen this kind of things many times in the past, it's just that this year it was way more widespread. Your other point about losses mentions cutting them quickly, and correctly placed stop loss does just that.
Can you get shaken out by doing this? Absolutely, but so can you by applying any other method. Some stocks WILL reverse after taking out your stop, even placed in the best way possible. So what, it's not like anyone can or should count on winning every trade. Such is nature of the market - beast that works in probabilities and not in certainties. Shrug, say "Next!" and move on.
Again, let me join you strongly in "ranting" point.
"Stop Loss orders: Just BS
i am hoping that those who can, would give some opinions re using stop loses vs using puts on specific stocks (that you own) vs using puts on a general index (related to stocks that you own). i guess to each his own, but maybe one of these is more effective in limiting losses?
IBKR and Citi
Hi Bill, and others who might kindly comment.
First and foremost, Happy New Year,
and keep the ideas coming. Many to thank you for, SLW was an absolute gem of a trade for me.
Interactive brokers (IBKR) uses citi as their bank, or was using Citi the last time I checked. Do you think client funds are safe if, hypothetically, things get really rough at Citi?
best regards
piazzi
XIME
CP, my reply to your post in the other thread was in two parts. Did you see my thoughts on XIME in the first part? http://caracommunity.com/content/caras-commentary-... How are you thinking of playing it?
By the way, with the way Jeff has urls display in posts, is there any real need to be using tinyurl anymore?
Globally assessing your performance
I've been doing a lot of (mostly unproductive?) thinking about the following: Presumably the goal of wealth management is to 1) preserve your real global purchasing power and then 2) increase your real wealth on a relative global basis.
For a simple illustration, achieving a 10% gain in a US ABC stock is no great achievement if the US$ tanks 20% relative to a basket of global currencies in the same period. You'd have been far better off holding some currency ETF paying a short term rate (excluding inflationary considerations).
My brewing solutions are murky and filled with hurdles. First, what to use as a "global benchmark currency"; maybe the US$ Index? It's interesting to look at these two charts in comparison, e.g.
$CDW (US/CDN exchange rate) http://stockcharts.com/h-sc/ui?s=$CDW&p=D&b=1&g=0&id=p76921853958
vs
$CDW/$USD http://stockcharts.com/h-sc/ui?s=$CDW:$USD&p=D&b=1&g=0&id=p76921853958
As a C$ investor, the former looks scary to me - C$ losing ground to US$. But the second seems to say that, globally, the C$ is simply back to the parity of the march '06-march '07 range.
Again, as a C$ investor, I suspect the benchmark should be some
(alpha)*$CDW+(beta)*$USD
where alpha and beta are perhaps money supply weights in those two currencies.
Ugh, this is a game for computers, not humans!
Elaine Garzarelli, president
Elaine Garzarelli, president of Garzarelli Capital, in Business Week's Investment Outlook 2008 - “Garzarelli is advising investors to buy some of the most beaten-down stocks, including those of giant financial institutions such as Lehman Brothers, Bear Stearns, and Merrill Lynch.We all know what happen
There are many like her at wall street. If you know prediction like this, please post it so we can buy put or short them and make some money?
gold
I wish that everybody and his/her cat/dog was not recommending gold and gold miners. Makes me nervous.
Happy New Year to this blog, to its participants, and to the Trade Wizard, Bill Cara, and his family, with many thanks for the time he gives us.
Oh, and cash
Oh, and I am also nervous holding cash. How long do we have to wait for the (hyper)inflation tsunami?
stops
I am still experimenting with stops. I bought gold at 831, and put in a stop at 800. Gold went up to 881, and so I raised my stop to 860. On the 31st, gold dipped briefly down to 855, and is now back at 873. My stop was taken out. It was a somewhat disagreeable outcome, because I would rather have the contract at 873 than have sold it for 860. I was "shaken out" as Vad has described it.
Now perhaps that's an example of a "poorly placed" stop. And perhaps that's why you need 5000 trades to figure out all these things. WIth hindsight, perhaps placing the stop at 850 would have been better. Originally I set my stop at 800 to be $30 under my purchase price, since that's what I observed the daily trading volatility to be in gold. Why did I lower that margin to $20 - probably a desire to hold on to my $30 gain. Perhaps after 5000 trades I will learn to stick with my discipline? :)
Inverse ETFs all under their 50 dma
What a difference a few weeks make. If you recall, i track 37 short etf's to show me sentiment, and just a few weeks ago the majority were all bullishly trading above their moving averages. They are now well below their averages.
Also scanning 350+ stocks of those that once were in ibd 100, many are forming bases and showing upside potential.
The 3rd worksheet are stocks with charts that are peaking my interest and i will be watching actively.
I have attached an excel with 3 worksheets.
2008 PORTFOLIO
ALOHA!!
I consider everything I buy an "investment" against future dollar depreciation, whether I am trading shares on the ASX or holding XOM since 1983 or buying an art collection. I have limited my cash holdings all my life. Instead of going to a movie in 1985 I would instead prefer to buy a share of XOM.
I own no US stock market shares. I once traded heavily in the NASDAQ during the heady days of dot coms. Since then I have totally exited tech in favor of gold and silver(monetary trades).
TRADES
ASX trades-up 62%
TSX trades-down 43%
FX trades up 14%
BUY AND HOLDS
Gold-(since inception 2001)up 30% annual
Silver-(since inception 2001)up 18% annual
XOM/CVX -(since inception 1983)up 60% annual dividends not included
ART
Picasso collection-(since inception 1985)up 75% annual
Emanuel Radinsky collection -(since inception 1975) up 1,660% annual
Pule collection - (since inception 1997)up 100% annual
Byrne/Blackman collection - (since inception 1997)up 360% annual
18th Century HeiTiki collection - (since inception 1990)up 190% annual
HAWAII REAL ESTATE
Farm(5 acres) - (since inception 1998) up 35% annual
Beachfront parcel - (since inception 2006) up 90% annual
Just a reminder there is more to accumulating wealth than trading stocks!
ART been very, very good to me ... I had the best teacher in the World, my uncle ... He taught through example. Kind of like a Cara100 list of the best art in the World. It just took me heaps of time going through Sothebys auctions and estate sales and worldwide travel.
I think what my investments point out is the loss in purchasing power of the US Dollar over the past 30 years. As you can see things that are of "real wealth" and that cannot be printed into infinity have done well, contrary to the belief that long term buy and hold is foolish! Had I been sitting in cash all along the way for the past 30 years collecting a measly net 2% or 3% interest I would have lost my ass compared to diversifying out of a US Dollar.
I also have done quite well in real estate, as I have never followed the crowd anywhere. While most sit in a cookie cutter cracker box suburb home languishing in the AMERICAN DREAM of DEBT, I have moved into debt-free farmland and beachfront and the results speak to the false claim that real estate has performed badly in 2008, just the majority of FNM and FRE homes have performed badly! There is no subprime in farmland and beachfront here in HAWAII!
I was speaking to a friend of mine in Key West, Florida today and I mentioned Greenspan's oft quoted warning about stock markets ...
"Markets can remain illogical longer than you can remain solvent ..." I believe that was something that came out of the days of "irrational exhuberance" during the tech bubble!
Well, we were reading the latest report from the US Treasury Dept signed by none other than Mr. Hanky Panky, Hank Paulson, where he warns of the impending doom of the US government. Somehow this report has escaped the media's attention and the markets attention! Anyway I said to my friend ...
"The US FED can stay illogical longer than you and I can stay frickin' sane"! Greenspan's quotes work both ways!
This is what you and I have voted into existence, a cadre of criminals who have no morals and are willingly selling you and your kids future down the drain just because they CAN!! THEY CAN!!! They CAN because they have a printing press and you DON'T! Their crimes are legal but yours are not! What is your crime you may ask? Your CRIME is not handing over your entire family's wealth with a smile on your face for the good of the Nation ... that's your CRIME! For being the "home of the free and the brave" this government sure has a strangle hold on all American's necks! What blows me away is we keep VOTING FOR IT!
Best work some monetary theory into your trades before it is too late ...
HANK'S DIRE WARNINGS !!!
ALOHA !!
Okay, as I mentioned in my post on PORTFOLIO 2008 Hank Paulson has come out with a dire warning of impending default of the US government on its unlimited guarantees and promises.
I wish I could say this is all TIN HAT CONSPIRACY stuff but it is right off the pages of the DEPT OF THE US TREASURY and it is even signed by Paulson himself!
This all plays into my strategy of watching US payroll tax revenues looking for a negative break in the daily US Balance Sheet. I have already posted that link before. If you watch this then you can see the last big negative break brought the USDX down from 120 to 72 back in 2002. Now I am seeing another major negative break on the Q/Q Chart, just showing as it did in 2001 prior to the severe USDX crash beginning in 2002. If 2009 keeps the break negative then the USDX should crash again.
The 2008 FINANCIAL REPORT OF THE US GOVERNMENT ...
The report is 194 pages and it starts with a message from Hank Paulson ...
Link: http://fms.treas.gov/fr/08frusg/08frusg.pdf
Here is an excerpt from his message ...
"The government's net operating cost for the fiscal year that ended in September 30th 2008 was just over $1trillion, more than triple the net operating costs for the prior fiscal year."
There are some GREAT charts in this report that show the USA unfunded liabilities crashing in 2017! Make sure you look at those because it is much closer than what David Walker predicted. Maybe next year Hank will upgrade that to 2012!
In this report Hank Paulson sounds remarkably like the former US COMPTROLLER GENERAL who just quit, David Walker!
What is the latest update on unfunded liabilities for the USA? Well SMT came out on Friday to state that it is a bit higher than the last update from US FED governor, Richard Fischer, it is now at $101.2tril USD!! Up from $99.2tril!! Hey, whats a couple trillion at this point?
So what can possibly CHANGE from an OBAMA presidency as we continue to bailout anything that even remotely smells like a failure? What will CHANGE for the "supposed" FREE MARKETS? What will CHANGE for the US military? What will CHANGE for the US Dollar? What will CHANGE for Americans?
PLEASE-E-E ... welcome to REALITY!
payroll tax revenues
kaimu - I like your strategy of following the money, namely, watching the payroll tax revenues as a number the government cannot hedonistically adust away on us.
What was that link you mentioned that you follow?
Re: payroll tax revenues
ALOHA !!
I am not really watching payroll tax revenues but what I am really watching is the daily US Balance Sheet, in other words the DAILY US government's checking register!
The composite of US TAX REVENUES breaks down as follows:
42% - Payroll taxes
38% - Individual income taxes
11% - Corporate taxes
7% - Excise taxes
2% - Other(like estate)
Now what differentiates payroll taxes against all others is the FACT that payroll taxes are the largest portion of tax revenues collected DAILY by the US government while all others are collected either quarterly or yearly. I have been on both sides of the TAX REVENUES game. I worked for the IRS in the early 1980s and I was a payroll tax depositor in the 1990s and 2000s and I still am. The MOST stringent offense(IRS penalties)is against failure of businesses to deposit correct withholding in a timely manner. These mistakes can literally cost a business its future! I know ... I dealt with the heat from such situations and I have seen it happen to contractors I used to work with! NOW YOU KNOW WHY!!!
Believe me the US government is SPENDING every frickin' second of the day so those payroll taxes are the most important from a DAILY standpoint. If DAILY tax revenues do not cover DAILY expenditures then the US government must make up the difference by printing(borrowing). In 2002 the daily payroll revenues collapsed and the USDX crashed.
COME ON!!! The US government is no different than you and I ... What happens if you do not have enough money in your checking account to pay your bills? The difference ends there since you and I have no way to counterfeit $20 and $100s!!!
Has anyone here ever heard of the FINANCIAL MANAGEMENT SERVICE-FMS? It is part of the Dept Of The Treasury. They report the US government's DAILY Balance Sheet and they show the US government's check register and it is posted daily.
Here is the link to the US government's check register ...
Link: http://fms.treas.gov/dts/index.html
Click on the link and then you will see a pdf file labeled Dec 29, 2008. look at it and you will find a check register.
Whats missing here? All the OFF BALANCE SHEET entries like the frickin' Supplemental Budget for the WAR ON TERROR! What do you expect from a corrupt government with a corrupt monetary system TOTAL HONESTY? This is as close as they get ...
Of course nobody bothers to look at this stuff and I have never seen any correlations to the US Balance Sheet ... This is it!
PAYROLL TAX REVENUES LINK
Here is the link again to the blog that covers all US PAYROLL WITHHOLDING TAXES DAILY.
Link: http://www.trivisonno.com/withholding-taxes-chart
On the 2008 Q/Q Chart it shows a negative break for Q4 2008. The Y/Y does not yet reflect a negative break. I believe Q1 2009 will ...
Now if I were the Chinese or Japanese government spending hard-earned money on US Treasuries I would want to know if my "counterparty" US TAX REVENUES is solvent on a daily basis. If I was a huge trader in the FX I would want to know daily whether the US government was solvent or not. If the US government suffers a collapse in tax revenues, like I suspect will happen in 2009, then the USDX will collapse and so will the US Sovereign Credit Rating whether the S&P and MOODY'S reports it or not.
Take note that there are listings in this report showing US Ten Year Treasuries with ratings of Baa. Did you guys know they are being rated that low already? WHO HERE KNEW THAT? What will they be rated at next year after OBAMA(FDR JR)doubles down on the US National Debt?
IT ALL WORKS ...
Re: payroll tax revenues
Awesome explanation. So many interesting facts I did not know. I've added that site to my list of sites I need to watch. So many people here have revealed correlations between things that I did not know before - and it has been very enlightening to me. This is so much more powerful than saying "buy this now", it shows me how things are interconnected, so I can figure out for myself what I should be doing, and when.
One thing though: you might want to invest in a new caps lock key, I think yours gets stuck pretty often... :)
kaimu and Payroll Tax Revenues
Kaimu...
Using the same report Tabe III-C shows that total Public Debt of the US government at December 31, 2008 of 10.489 trillion. Last year at this time it stood at 9.145 trillion.
Total US debt grew by 1.344 trillion dollars in one year!
For me it appears that the US government spent 1.344 trillion dollars more than it took in during the past 12 months. That dwarfs the official budget deficit.
Thanks for the website monitoring this report. I did not know of it.
excellent post
Thank you Kaimu. The numbers are no surprise to me but the site certainly is.