Cara's Commentary & Community Chat, Thurs., Jan. 8, 2009

We've all been hearing whispers. Now, it's getting more mainstream.

http://www.iht.com/articles/2009/01/07/business/yu...

TCK - Downgraded to Neutral @ UBS

http://www.marketwire.com/mw/release.do?id=935692&...

Eric, two things: There is always a place for the best of something. Often to be the best at something you have to have a passion for it (eg: Bill). You'll spend an inordinate amount of time becoming the best at something, so if you don't have passion for it, that time can become pure drudgery. Frankly, time is the only thing you can't get more of...spend it wisely

If only there were more honest, shoot from the hip advisors like you Bill the world would indeed be in better shape than it is today. Hope for MCI (measurable constant improvement) is something we should all strive for both personally and professionally.

I learned yesterday that Stop loss's don't really help if the stock goes to near zero while the market is closed. I had done what I thought was the right thing with SAY being up 78% with a sell limit just below 10 and a stop loss around 8. I was through even thinking about the position and had it on autopilot, with plenty of volume, etc. OPPS my bad.

I have now clear distinction between setting a stop (which costs nothing) and buying insurance via buying puts. I have cancelled the stop loss order and am trying to decide what to do next. My inclination is to hang on, but would appreciate any comments from the community.

I hope this helps others to realize the danger with a stop loss. Best Regards to all.

"when I say the financial services model is broke, you can believe that it is broke and not merely “upset”."

I assume that "broke" means they are not making enough money to cover their expenses and will soon, or have, run out of same.

if you're able to watch the market closely, i think there's serious money to be made...down 20 yesterday, and poised to open up 20 this morning...that's the equivalent of a multi-day-to-week trade in a stock with an average beta...

As the dollar tanks shouldn't TBT rise in value?

I touched on this topic several days ago:

http://caracommunity.com/content/caras-commentary-...

The way stop losses work doesn't seem quite fair, does it? Don't worry though, the SEC changes the rules in whatever way they please (HB&B).

Dollar for dollar, it will beat spending a career invoking that classic phrase......

"WELCOME TO WAL-MART!"

This is simply natural limitation of a tool. Stop loss is supposed to be triggered when a stock trades below a certain price. In the situation of overnight gap however, there are no smooth trades, stock just opens well below. There is no tool that can take you out at, let's say 9, if a stock never trades from 10 to 9 and below and instead simply gaps down to 1.

at 225% of allocation

"There is no tool that can take you out at, let's say 9, if a stock never trades from 10 to 9 and below and instead simply gaps down to 1."

Not true; a long 10 put will protect you in this instance.

Ross,

I wasn't able to respond yesterday to your post. I read that article in Mineweb and looked into Commerce Resources Corp CCE.V. It looks promising technically in Stockcharts and I looked through their website and looked at their financials. They appear to be well positioned financially but I did notice that they had about $6,000,000 or so in ABCP. How much of that will have to be written off is unclear. Even so, their cash position looks ok. They mine tantalum and niobium. I'd certainly be interested in hearing what others have to say about this stock, if anyone has bought it or looked into it. It looks like an opportunity to get in early on a promising subsector of the mining industry. The 50EMA has just crossed the 200DMA on the upside. Do your own due diligence. Also, the stock did not seem to drop like most other small mining stocks yesterday. Current price at .28$CN--recent high .29. Article in Mineweb on High Technology Metals--a good read.

http://tinyurl.com/98rbj6

By the way, read the article on SLW--a real pleasure to read, as Bill said. Not sure what to do about my position in SLW in the immediate future. Bot at 5.30 US.

dr.cosa - Following your observations, it seems you've got a good handle on POG moves. Are you trading???? I need to start doing this....

Scottraders....keep an eye on bid/asks, they are all screwed up today.

Watch actual price and low/highs as the real bids/asks aren't displaying which could cost you plenty.

shark- personally, i would have bought into the calamity yesterday, spent all night sleeping, and set aside the 3 coins for a bottle of frankincense to be used for embalming...

Bill I just wanted to say that I am finding your daily trading commentary extremely educational and beneficial. I don't want to know about specific positions etc, but I'd love you to keep helping us see what needs to be seen. Just in the last month or so that you have seperated the trading comments I can notice a minor improvement in my results and quite a reasonable improvement in my understanding of the 'dance' as you call it.

So thankyou
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This is true for success in most anything that a person sets out to do. I am a structural engineer. Extra hours of study and diligent work was the basis of my success. From the beginning of my career, I enjoyed it, and still do at age 70. I can't imagine anyone succeeding in the financial industry, or most anything else, without truly enjoying it. This is what I have told my employees: If you don't like what you are doing, find something else.

I suspect that a lot of people who were "previously" employed in the banking and mortgage industries were not people who enjoyed what they were doing. Here I am thinking of the ones all along the lines that contributed to the meltdown.

Zooming today +18%

not much of a handle considering how down i am for the past year,
im just looking at peaks and valleys for the POG noting these price spikes used to fool me into and out of positions alot more than now.

i still suspect that people are too quick to jump on the gold bandwagon
w/ the wrong kind of rationale. predicated on a fall in the US dollar and/or rising deficit spending is incorrect imho

the idea that the US is in trouble is unqualified when examined on a relative basis: europe has its own problems, and they are made all the more unstable when much of its energy supplies come from russia; a nation dedicated to beligerence in the region. why nations like ukraine, slovakia and finland would rely %100 on russian energy is lunacy considering these are all former russian dominions who only a few decades ago for some were still at war w/ russia. and then they cry about russia playing dirty when they shut down gas supplies? all this after a recent incursion into Georgia... its like relying on a crack dealer for your newspaper delivery. half the time you wont get the paper, and if you complain he wont hesitate to pull a knife on you.

whats happening in india confirms my long held belief that india is just far too corrupt to excel at anything more than a snails pace. outside of a few pockets of development and wealth you are looking at a nation of 1.5 billion that is still on balance a 3rd world nation, nuclear, and virtually at war with its worse off but still nuclear neighbour.

the corruption in india is so rampant that i laughed at the recent scandal of the outsourcing company fudging profits of %95 of their total cash flow for years. people acted surprised... im surprised its just one company. more will come, and many more will abandon the notion of india as the jewel of overseas investment.

china is the juggernaut and seems to be the one to best attack USD supremacy, but again they are having their own issues and i highly doubt the move to a new global currency can occur at a time when china's domestic problems are so great. w/ a slumping economy how a developing nation be it china, india or brazil can maintain stability without some sort of insurrection or mass unrest is unrealistic.

things are bad in the US but when things get bad in developing nations people are much quicker to fight and destabilize. remember the riots that occured outside the pakistani stock exchange after weeks of losses? an appetizer before the main course of civic unrest that brims just below the surface in these nations.

all of this only bodes well for the USD in comparison to other currencies.
so i dont beleive the hyper-inflationary scenarios, or gold at $2000 by the end of the year. great if it happens but based on false logic in my mind.

I found these interesting as he hit it out of the park on his '08 forecast.

1. Sell Homebuilder stocks and bonds.
2. If you plan to sell your house, second home or investment houses anytime soon, do so “yesterday.”
3. Sell some housing relates stocks.
4. Sell some consumer discretionary spending related stocks.
5. Sell some commercial real estate;
6. Sell some commodities;
7. Sell emerging market equities.
8. Sell emerging market debt
9. Buy the US dollar.
10. Sell stocks in general.
11. Sell consumer lenders equities
12. Buy, carefully, high grade bonds

POG moves are huge, and look like a rhino horn on the chart. It has hit $880's numerous times, only to fall back to $860 level shortly afterward. This happens time and time again, I probably could have paid for all your trips to Bill's clam bake by now...

"The contamination is extremely minute, at levels federal regulators say are safe for babies."

Back in yamana

exactly and someone just pointed out that the U.S. should be doing that and increasing their strategic reserves

From DRYS website:

"DryShips Inc. is a global shipping transportation company specialising in the transportation of drybulk cargoes." -- NOT OIL.

http://www.dryships.com/

While TNK which is oil, is currently down.

TCK Cancelled, in PHB @ $16.11

Anyone have an idea for turn round the last 20mins?

I'm liking this

Gold's reaction to this inflationary speech is CRITICAL

I posted an ascending triangle in dow the other day,it was drawn wrong using close basis trendlines. Using the intraday highs and lows for trendlines is a perfect triangle and the dow touched the bottom rail this morning.

Gold looks ready to jump the creek this morning.

This is why selling is such an art...Just when you find yourself mentally skipping down the daisypath, that's when you need to sell. It's very hard to do.

Somebody just got a great spot price in silver. Check out Kitco chart.

More thuggery on the high seas..........
From Reuters
Thu Jan 8, 2009 11:07am EST
WASHINGTON (Reuters) - The U.S. Securities and Exchange Commission and the U.S. Commodity Futures Trading Commission said on Thursday it has charged a Philadelphia investment fund manager and firm for an alleged $50 million Ponzi scheme.
Highlights:
* Accuse Joseph Forte obtained an estimated $50 million through sales of securities in the form of limited partnership interests in his firm.
* Say federal judge issued order freezing Forte's assets and ordering an accounting.

Sorry, I'm all over the map the past 2 days. I am going to buy back some more today and over the next few days. I believe SRS will be a nice winner in the next few months. Look at the retail sales today...many of these retailers will be going bust over the next 6 months. Rents are coming down. Occupancy is going down. The IYR has more room to go down in my opinion.

I'm only going long things directly affected by the stimulus package and that have lots of cash and little or no debt.

At a 54% premium. Any other brokers out there anyone thinks could be the next target?

http://finance.yahoo.com/news/TD-Ameritrade-to-pur...

Based on Bill's statements this morning and the community's general belief that the system is broken (and I do agree), where does this put the 401k????

I think this is a good topic for discussion and it is NOT to ask for specific investment advice (funds, ETFs, etc.)

We all have our brokerage accounts and trade. I am assuming many people who read and blog here have a 401k. How do we protect and manage our 401k, or is it even worth it? It is still our wealth.

Given today's system:

Here are my questions and it assumes that money not donated to a 401k would be saved to a brokerage account or Roth

Assume you are locked to 12 core funds, with their fees, and have short term redemption fees:

Is it worth donating?

Is it worth donating beyond the company match (free money)?

Assume you can us your 401k like a brokerage:

I am assume the concensus would be to use ETFs and trade occasionally as sectors/currencies/countries move.

Or, hold out for the best and hope better regulation is enforced in our markets?

I know there are a lot of "ifs/ands/or/buts" but I thought it would make a good topic for the forum.

I personally am leaning towards reducing my 401k to only the match and putting the rest in a brokerage account for myself or a future adviser to manage.

I hate to keep pointing to it, but it's continuing to go down. I'm telling you that the MER deal could turn out to be the one that finally brings them down...

Everyone has a different definition of value - if the company matches dollar for dollar - an guaranteed 100% return is hard to beat. Certainly contribute upto the company match if you feel there is value despite the limited choices in the plan.

If there is no match, then why limit yourself to average funds that are long only and pay fees to boot. In that case, you are probably better off in an IRA where the choices increase to almost the entire investment universe: long and short ETFs, long and short mutual funds, bonds, individual stocks, and limited covered option activity...

edit: the max contribution in an IRA is much less than your 401k... that may also affect your decision on where to place your retirement contribution...

Otis -
Have you considered rolling your 401k into a Rollover IRA? I did so, initially with Fidelity but moved it to IB. IB has a "margin"-like IRA which functions very much like a regular margin account, except you can't borrow to fund purchases or sell short (but you can trade options, futures, etc.) No waiting for trades to settle before initiating new positions. Works for me!
Good trading!
~OG

TD Ameritrade, I have been using them for over 5 years. They have made a lot of improvements and I am pretty happy with them. Very reliable except during the few days last November during the extreme market moves, when I was getting bounced, but was able to login again.

Why goof with donating anything to a 401K including the match if it's losing value? Better to pay off debt and donate remaining amount if any to a self directed free Roth IRA paying the lower taxes now and having access to the principal if needed. If they end Roth IRAs then you've already paid your taxes. If we continue down you can use short/ultrashort ETF's to hedge/gain.
Once we see a real longerterm rebound, then resume donations up to the match and the remainder into the Roth. If you need to use the tax deferment then there is always a standard IRA or SEP if you are self employed.

They really force you into looking at insurance/annuities/dividends/bonds for a real retirement due to their silly limits. If they were really serious all retirement/savings donations and proceeds would be tax free.

"Old Goat, by IB are you referring to Interactive Brokers (IBKR)?" Yes.

2009 Dogs of the Dow; BAC on the list!!!

"A year ago, it would have been hard to imagine GE sporting a single digit P/E or Bank of America trading in the low teens. While this list has many attractive stocks, Bank of America (BAC) and Pfizer (PFE) appear to be the most appealing on the list to me. With the acquisition of Countrywide and Merrill Lynch, Bank of America has become the largest bank in the country in terms of deposits and is likely to benefit from the refinancing wave that the lowest mortgage rate in decades has triggered. Bank of America is however a risky play as the integration of Countrywide has proven harder than expected and the company is already experiencing cultural issues even as it completes the acquisition of Merrill Lynch."

http://seekingalpha.com/article/113755-2009-dogs-o...

I believe BAC has stated MER advisors are currently paid too much and would have to be reduced - in addition to other cultural issues.

Further evidence of the strain being put on REITs (and why I'm long SRS)...spreads are actually beginning to go back up, despite the so called improved credit markets.

http://www.markit.com/information/products/categor...

"More buyers than sellers."

Best I can tell, the inverse happened yesterday as well!!! ;)

The three key components of any financial plan are rate of return, inflation estimates,and taxes. The irony is, typically the rate of return is overstated, inflation understated, and no one can really forcast tax rates... with the MAIN COG being the rate of return.

Very good point about taxes and the expectation they will increase in the future to pay for the current spending...

Thank you Bill, nemo, and everyone else who responded to my question about the future of the industry. I value each of your opinions very much. I will continue to be positive, as I'm growing quite weary and tired of the fear mongering by those who wish to convince everyone that the world is over. Better to push forward, as most of us do here.

As I said here on January 5th, comment 5217, when I stated: "Looking at the 8 hr chart, I think oil will see some resistance at $48 level. I'm thinking oil will go down and test $42 again before any more upshot.
Whether it breaks below $42 level I'm not sure. Everyone seems a bit too bullish on this rebound IMO.
I will open a 1/3 position in USO at $42 oil"

I opened a 1/3 position this morning at $32.50. I had planned on selling UBOBI feb 35 calls at the same time but my blasted broker has changed and now requires an options account on top of the margin account I already have, unbeknownst to me at the time. I wish they would have mentioned this to me yesterday when I was asking about margin requirements, etc....
this covered call would have reduced my cost to $29.87.
It's ok though, I'm bullish midterm and long term on oil. If we drop another 10% I will open up another 1/3. I'll have to spend some time on the charts now before theorizing where I think its going.

Cheers

Bill - "And I assume you are joking."

Actually I was attempting a kind of joke, but in retrospect there are differences between broke and broken... If someone reading these words were clueless, he might assume broke means they need bailing out to avoid collapse. That's in opposition to your point, if I understand correctly...

FRO is a better play for the storage trend taking advantage of contango. Nice yield too nd not as volatile as DRYS.

that is great Bill! was reading through ctab site. that slogan just slaps me awake.

is on sale today, isn't it?

My employer offers a "Roth" 401K option - the essential difference being that you can pay tax on it up front and then let it grow tax free. This works well for me because I am pretty young and would prefer to pay the tax now (instead of rolling it into a Roth later, since I will likely be in a high tax bracket 10 years from now).

A couple rules of thumb that I live by with the 401K:

1) I always elect that all of the deposits are put into the most conservative fund, i.e. money market/stable interest. (I think all 401ks have something along this line as an option). This way I can choose to allocate to the equity market when I choose (not when the automated deposit is made).

2) My 401K has about 10 choices, about half of which are "managed" funds targeting a certain index and the other half is just an index funds. I always elect to invest in the index funds because fees are lower.

My reaction to the anticipation of the onset of recession was to take in any article or material useful for such a scenario, and place my faith in market historians and technical analysts who were prepared to confront the possibility after the NASDAQ crash.

In every way, the NASDAQ crash is very similar to the crash of the DOW in 1929. I have kept that in mind over the intervening years. The best perspective on long term market cycles is probably those of Bob Bronson, who accurately portrays the overall market moves. Our present situation is very much like the Dow of 1891 - 1896 or of 1968 - 1974 and has been tracking that curve for years.

But the thing that was different during the onset of recession in 2001, was the expansion of the use of securitizations. The recession was very short lived and a housing bubble along with commodities ensued. What was then a market of "only" a few trillion in securitizations, is now exanded to over a quadrillion and involves the exclusive patronage of government bonds by commercial banks, to which vast amounts of credit derivatives and default swaps are applied. Guess who are holding the swaps and guess who's holding the bag.

Such a situation could not have arisen without a massive stimulus in the form of military keynesianism with the war on terror. This can only have one outcome. When the musical chairs finally stop, somebody in the G7(8? 20?) is going to have to apply to the IMF, if it still exists. I believe by that time that quantitative easing will seem passé.

So what are the chances, I think- since we are seeing similar conditions, so I based my strategy on placing my investments in gold exploration because all indications from historical precedent and day to day developments say that this strategy is correct, only that these companies were obliterated in the crash. I was correct in my choices, but I could not anticipate the huge psychological resistance to gold as money. That a company can produce world class cores and still manage to be ignored by the overall market is extremely unusual.

Everybody is engaged in very short term thinking, looking for the maximum return in the shortest possible time. In fact, I believe the correct place to be in the first stage of the gold price run-up was primarily on the sell side as the shorting opportunities were second to none. Moreover, people are still jabbering on about "gold equivalent ounces" and lead/zinc and copper mines as if they were gold mines.

There were other sectors which did well during the depression, such as the automakers. All it takes is a little reading which sector is likely to be key to a recovery in the very depths of our inherited financial disaster. The next move is more investment demand for the gold sector, as the price remains a beacon of value in a collapsing house of cards.

TennVol, I may be wrong - isn't your 401k self directed without any guidance or advice? It's highly recommended the plan sponsor refrain from giving specific advice not already available in the marketing materials or the website due to possible legal consequences... By default, you are currently investing on your own...

Most here will lean to having total control without limitations set by the plan sponsor via the govt... btw the sponsor is most likely a local financial advisor anyway.

<>

I was responding to the idea of hoping manage your account... my point was your are doing it now... While learning to manage money/invest, don't underestimate the emotional aspect of trading/investing.

I think all the remarks on this topic have been great. Sucks that I am in charge of my company's plan administration (Yea!! I'm the 401k chair) but I am starting to lean away.

This has been very helpful for many. I'm a saver, and the challanging part is finding the best mix financially and mentally (Roth, 401, brokerage, physical metal, paying down the house, etc).

Thanks again all

I've read in many places that when stocks go down it means that money is coming out of the market and going someplace else (Treasuries have been the supposed recipient in the past few months). But I don't see how this creates a net outflow. There was a buyer for any stock that was sold and so wouldn't that net zero?

Today equities are down and metals are up. Did money go out of equities and into metals? Seems to me that most of what "left" equities today did so by evaporation.

I ask because I've noticed that TBT has held up thru 2 days of equity selling.

Cara's Commentary of this morning is really well said and much appreciated. I've learned a lot from this blog. NT

I guess they can go about saying its not a depression unless unemployment reaches 25% and all of the banks fail. As long as the banks are propped up, and the employment numbers are kept within a certain limit, then everybody saves face.

But we are certainly beyond any notion that we have avoided the onset of a recession.

This chart has seen the most extreme change:

http://www.investmenttools.com/futures/bdi_baltic_...

A decline in the Baltic Dry Index indicates a recession. A crash like this indicates a ????? <= thingm

Base metals have crashed(and very badly so):

http://www.kitcometals.com/charts/gfms_historical_...

Mines closing, ports idled, banks failing, a housing bust, a commercial real estate bust, vast bailouts and stimulus packages, car makers at the end of their rope, truck makers laying off, major equities crash(the third worst since 1929), sovereign debt failures such as Iceland(and a whole string of others in Eastern Europe) and more to come.

This is somehow NOT a depression?

A transcript from yesterday's PBS commentary on the subject of 401K's and matching...

http://www.pbs.org/nbr/site/onair/transcripts/0901...

Wow - now that, I wouldn't have expected!!!

Took some off at $17.29 that I bought earlier today at $16.28. hopefully we'll see a spike down tomorrow morning that will give me a better entry on KBR. I like this a lot up to $20ish short term.

I think the fact that the herd hasn't run back to Treasuries during the panicy feeling of the last 2 days bodes well for TBT and, of course the TOG

Something I've wondered about for many weeks, but haven't seen addressed much: There has been plenty of talk about the forced liquidation of hedge funds, and how redemptions lead to forced selling and general market pressure. But if you presume that many of these hedge funds have held big short positions, shouldn't there be more talk about forced covering? I wonder if the velocity of the moves in stocks like DRYS and HIG can be attributed to this. I read that DRYS had been on the REG SHO list for quite a while - it would make sense that this would be taking place but I haven't seen much talk about it. Thoughts?

FranSix,

One thing is bothering me in trying to see how things could turn out:

The Japanese had a ZIRP--quantitative easing--and presumably used the same monetary (Friedman) and fiscal (Keynes) tools that are now being used to nurse the current dying patient. Yet, as far as I know, in spite of rampant money creation, they did not experience hyperinflation after deflation. They had deflation of stocks and real-estate as well as currency. Therefore, why is it necessarily a certainty--as so many argue--that the US will eventually experience hyperinflation?

just money management...still left with 200% of allocation, and still bullish...

well I did sell puts on WMT...but is was a very conservative trade...I sold a bunch of the Mar 40's for .71 each...maintenance requirements are so low that far out of the money that return on margin (ROM) is 16% for 71 days.

Aloha,
I am a novice investor forced to participate actively in the markets late last spring and early summer by the dips in the market. I wanted to find a place in our Vanguard 401k(no match just pre tax $ direct deposit) to rest my money while the market decided to take off or head down to Louise Yamada's(welling @ weeden July o8 interview) lows. At the time I thought OK I'll just put my money in the cash equivalent save money for retirement portion of my husbands 401k and wait. HA HA
There is NO such thing! You can not save in our(and most I think) 401k you have to invest in indexes or a MMF used as sort of a sweep fund in our instance.Then I discovered no the mmf is not insured at $1 value and if I remember correctly not by SIPC . If the mmf is in a bank and under $ limit FDIC I think covers MMF's.

So I found out we could open a Brokerage side to my husband's 401k for a yearly fee $250 I think, and for $25 a trade(50.00 in out)commission. That process was easy the opening part but adding me to my husbands 401k as a trading participant took filling out a 6-8 page form and about a 3 month delay. In that time i discovered that it's almost impossible to find out what the indexes in the plan really hold and that many funds are set up to mimic treasuries or Gov backed sec but do not actualy hold them.

I didn't find Bill (the real deal) until later in the year.I then opened a small account at Scottrade so that I had a window to live market info, you CAN NOT trade from a Vanguard brokerage side without an outside window it's like trading blind, no information is available or platform to use but the commissions are over 3X as high.

Today I am a different American the flag is still out front but I am awake. My opinion now is that 401 k's were set up to feed the financial system not create wealth or a comfortable retirement for the US citizen. I have found my ability in regards to investments is seeing the rhythm of the market as a whole. I am a sponge and my brain is constantly taking in new knowledge and throwing out useless information. I do not know enough to trade individual stocks and tend to have to much emotion when I try to. I will continue to thank God for Bill Cara and look for ways to protect my famalies financial future.
I wanted to say Mahalo to Bill for being here for providing this platform and for a place to find market neutral information. I have learned so much from all of you this past few months I look at charts, study comments of the blog and hope one day to be able to move in and out of the dance without tripping and falling on my face.
Goodluck and best wishes to all during this historical New Year
just learning

That's a good question. I don't believe hyperinflation is in the cards. With quantitative easing, you have a very significant currency risk which leads to higher prices in the end, but not hyperinflation because the money just isn't being dropped into the street. The surprise move could be that the dollar winds up appreciating on the foreign exchange markets due to an overall collapse of treasury prices. I was assuming that quantitative easing would be a long term strategy, but its looking more and more like a very short term fix before the inevitable occurs.

They are able so far to divert the vast sums created to manage the debt crisis by channelling it into the long bond. That can only go for so long as they have to keep creating ever increasing sums of treasuries to fill the gap, which will ultimately depress bond prices. Those economic stimulus packages require trillions worth in treasuries. Who will buy them? What's more, the bulk of the bailouts are meant to prop up the notional value of the off balance sheet securitizations market, where there is no political support for such a move.

I think this will create a dilemma where you either chose quantitative easing with long term near zero interest rates, a stagnant economy dependent on subsidy and a weak currency, or you lose control over your sovereign debt where the bond price collapse much like the oil price and you see very high interest rates to defend the currency. It may very well be that another collapse of sovereign debt sets off another round of credit contraction, but on a massive scale making the whole point moot and setting off very high interest rates such as we saw in Russia or Brazil.

They will force quantitative easing as much as possible, but sustaining bond prices while creating endless treasuries seems unsustainable, especially at a time when foreign countries with excessively low wage rates and weak currencies with the onset of depression can no longer consider the same trade imbalances as before.

A major shift downwards in bond prices will result in aggravated currency risks around the world, especially in countries such as the UK, Germany and Italy, where their banks are heavily leveraged much like Iceland.

Nowandfutures.com calls it the "creeping corallito"

http://www.NowAndFutures.com/glossary.html#corralito

Haven't counted but I'm hoping for another one, but then aren't we all?

Since 1990, The Japanese maintained high employment, had a positive trade balance until just recently, and maintained
a high rate of savings. The Japanese Yen strengthened from 144 Yen/Dollar in 1990 to an average of 114 yen for the last 3 years. Currently 91 yen to the dollar.

Check out this good article: 10 Threats to the Dollar

http://www.marketskeptics.com/2009/01/ten-major-th...

it will give you some info on why hyper-inflaton may come to visit us soon.

Got the report on SLW. Thank you Mr. Cara and all of your staff. I like the possibilities concerning the ZPower battery.

I have positioned myself for a leap ahead in Tech. Intel has the Core i7 which requires a new motherboard and DDR3 memory. Microsoft is going to release Windows 7 (and I believe Ballmer will put the nail in the coffin for the XP operating system). Cisco is king with their network gear period. I've read articles about what capabilities their newer switches will possess. They will be the provider for the backbone.

I'm hoping next years Christ mas will be very much merrier.

Is it not possible that hyperinflaton is created by excess quantitative easing, which leads to a bond market collapse?

Hyperinflaton destroys currencies. Higher rates are the only antidote for currency destruction. But higher rates

in a debt laden society is a prescription for ill health as well. As the Mogambo Guru says "we are freakin' doomed"

Telestar, this absolutely fly's with the IRS... And right now there are ton's of real estate investor's who need to use that money since new conforming loan rule limit one to 4 conforming loan mortgages.

Tim

I booked Westjet to the bahamas for the conference on a one day sale at 129 one way.
Just checked Air Canada they have prices from 116 right now. At these prices you can't
afford not to go. from TO

2nd
We should mention poster (beside BILL) whose post help us most to make money trading market in 2008
This way when we see a post by him/her we will pay little more attention to it
All post are important, informative, education and useful to understand daily move of this fast moving market
What do you think?

Do they announce the job report pre market ?

shark,

a few issues can be at play here.

1. I know nothing about scottrade so I can't evaluate their routing algorytm. If it's not sophisticated enough, it may not be swiping all market participants available thus missing your fill.

Assuming their routing is good:

2. Their software speed may simply be not high enough. Not all brokers are created equal, some are more suited for fast trading and some less. Again, not having direct experience with them I can't judge... indirectly, can say I haven't heard their name mentioned among best for day trading.

3. Even with a very fast broker, sometimes offers just get swallowed in one swoop so you find yourself a little late in the queue. To maximize my chances for entry when I feel this coming (and most often it's a breakout of a solid resistance level after nice consolidation), my technique is:

a) NO market order - this can get you in much higher than you wanted and often at the high just before the pullback - maybe not too deep but unnerving anyway
b) I click the price on Level II A FEW CENTS ABOVE my limit (below for sell order naturally). I.e. if I want to buy $20 breakout and my ideal entry is 20.01, I click 20.05. I click buy button as soon as I see 20 being broken. This gives me some room for affordable chasing to minimize the chance of missing the fill altogether, while keeping my amount of chasing within predetermined limit.

Best case scenario, my order swipes all best available offers - I may get 20.01, or I may get partials at 20.01, 20.02, 20.03, up to my limit. Worst case scenario, I get whole fill at 20.05. Acceptable scenario: stock runs away from me anyway and I do not get my fill which is fine since I don't want to overpay for it. If it pulls back into my buy zone, stalls and strengthens again, great - I will get it without overpaying. Last comment on this - if such raising of a limit takes your predetermined loss above your risk tolerance, just decrease your position size - let's say from 1000 shares to 800.

Yep - "The Labor Department releases the December employment report Friday morning before the start of trade."

http://tinyurl.com/79lyph

Passmm, RH has it correct for Canadian symbols.

If I remember correctly Korvus uses Yahoo as the data feed, so just look up the stock on Yahoo and use that symbol coding. I found it works even for the more complicated royalty trust coding and preferred share codings.

Up over 12% AH!

edit: (not to mention today's gain!)

just add .to if you are trying for the tsx or .v for venture exchange

here is what i'm seeing as far as scenarios for tomorrow:

job losses: 450k to 550k > market should open up higher and finish up significantly higher
job losses: 550k to 650k > if market opens up lower, buy and i would expect a decent up day; if market opens up higher, sell and i would expect a flat to moderately higher day
job losses: 650k to 750k > if market opens up lower, wait for a rally to even then short

what are others thinking?

yvrapx -

Whether the market crash leads to a depression, no one can know! Not Bernanke, nor Krugman, nor Feldstein nor Stiglitz, nor Wolff. We're only 1 year into whatever we're into!

Fear in the average Joe? He's been conditioned to it by Bush, Cheney, and Paulson. And now there's something immediate and REAL to fear.

The best antidote, IMO, is to to open your eyes, prepare emotionally for either outcome, to detach and trade prices.

I was thinking of using my profits in TBT (currently unrealized) and moving into put LEAPS on TLT. My thought is that TBT is not suited for a longer term hold. So I was hoping to get some advice on which LEAP to buy as I have very little experience with options (and even less successful experience).

Currently the Jan 2010 110 is at 16 and the 115 as it 19. TLT is at 112.56

Any advice would be greatly appreciated.

I think that all sounds entirely too logical. In the very short term, I think it's more important to know when market-roiling news will be announced than what the news actually is. Just look for your setups and follow your plan.

It seems a no-brainer that the range will be greater tomorrow but I see no edge as to the direction of the close. Whatever scenario develops, the post-day news headline will find a reason for whatever happened.

Vanilla - "There is alot planned at Palm and this is all because of Rubinstein. If the announcement was today at 4 PM, is it too late to buy more? comments? thanks!"

It might be worth a shot, but I think the new phone was leaked earlier in the day, at least. That said, if the new products are even competitive (I'll bet they are) it's got to lift the company?

http://blog.palm.com/

Thursday, January 8, 2009
Marc Faber on Gold and Industrial Commodities
Gold is now very expensive compared to industrial commodities. Actually, it’s at the highest level in 30 years or more. And so right now, as of today, I would rather buy a basket of oversold industrial commodities."

Sheesh!!!

http://www.bloomberg.com/apps/news?pid=20601070&si...

I don't think that's a bad fee. Most brokers either charge a fee per contract or an amount plus a fee per contract. So, which broker is cheapest will often depend on how many contracts you purchase. Depending upon changes in volatility and time remaining before expiration, you can be 'right' on the direction that price moves and still lose money purchasing options.

You might want to paper trade, or learn more before jumping in. I would highly recommend reading about options in chapter 1 in Part 4 of Bill's book.

"Forget what you might have heard. There is no bubble in the US government bond market, according to Goldman Sachs."

A satirical review of GS' forecast:

http://ftalphaville.ft.com/blog/2009/01/08/50926/b...

Thanks blue bluff and Tremendous,

If I were going to really get into trading I would definitely practice first. I'm going to get Bill's book as well. My goal in this case is really to ride the interest rate wave for the foreseeable future (and not to trade short term). I still remember when long bonds were yielding in the teens - I didn't have any money at the time, but I recognized it as a great place to put away cash.

I'm not saying that interest rates are going all the way back up to those levels but they ain't staying where they are for too long (IMO). So I don't need the 2x volatility of TBT and ideally I thought shorting TLT would provide the perfect inverse tracking that I'm looking for. The LEAP PUT idea occurred to me as a way to reduce capital requirements... but that time premium does seem huge. I like the idea of rolling forward shorter term puts as well, but won't I just end up in the same place after a year (smaller premium x4)?

Blue Bluff, I like your idea of selling the calls but wouldn't that cap my upside. Even if I were to write new calls every month it seems like I would have been better off with one of the other strategies.

Thanks again you guys.

When you sell options you collect your premiums up front and that does cap your profits. The returns can be excellent, however.

A nagging concern about the TOG and the Treasuries bubble bursting is the Fed's threat to purchase Treasuries if they have to.

I agree

If you buy doré gold unrefined out of a gold mine, then you can pass Canada customs without declaring monetary instruments and have it refined either in the mint or some other refiner.

ALOHA !!

This worth watching only to point out the lunacy of central bankers. I suppose this show is the equivalent of The Daily Show in Australia.

Link: http://tinyurl.com/8tgk7w

Who was it that said ... "In the end we're all dead!" Sir Keynes is that you?

kaimu,
I'm not familiar with the "Daily Show" but what you've attached here is a comedy TV show in Australia where both participants are comedians, not to be taken seriously. In fact it had poor ratings and was hardly looked at over here.

Given your marvellous edification on the FED I'm much more comfortable about our central bank than yours. If you do try to flog it at some stage don't bring it down here, please!

Suns up, surfs up, prawns on the barbie and just knocked the top off a beer.