[7:33am ET]. FoxNews has a couple videos on the Madoff affair that I think are well worth the time to watch. One is about the Madoff public accountant, and the other an interview with one of my favorite Wall Streeter’s Howard Lutnik, the Cantor Fitzgerald CEO.
The auditor situation reminds me of the time I caught a fraud on a Vancouver listed company where the CPA signed off on Generally Accepted Accounting Principals (not principles). I notified the exchange and they shut down the number two trading stock on the exchange that year to investigate. It was found to be a fraud.
Since the Madoff scandal broke, I remarked that the man must have had accomplices, and Lutnik, who is one of the savviest people on Wall Street, and who knew Madoff, told FoxNews as much. He said, “Everybody working with him has to know and decided not to know.
The expression is, “When it comes to money, people are funny.” That’s why we need regulators. And, when regulators receive warnings from one registrant regarding another, of the kind the SEC received in 2005 about Madoff, they have a duty to follow up, and the public has a right to see their final report.
In effect, Lutnik is saying that when warned by one of the Madoff & Co competitors that Bernie was running a Ponzi scheme, the investigators did not undertake the simplest action, which was to interview the Madoff staff and auditor. It’s not likely that all of Madoff’s associates would have given the SEC false testimony with the probability of serious prosecution when discovered. Those lower down the food chain would not have been paid enough to lie even if their morality was an issue.
I have always said two things exist with securities regulation: (i) there is too much of it on the books because of the underlying conflicts of interest, so we need less, not more, but we need more appropriate regulation, and (ii) more enforcement of the existing regulations, before the problems occur rather than as a reaction, is needed.
The bottom line to the problem is one that financial services and capital markets are different systems, each requiring their own regulators. Henry Paulson, as Treasury Secretary, has played every card in the deck to push through legislation that would see the SEC, which was established to regulate capital markets, lose its power to the Fed, which regulates financial services. The heart of the problem – and I truly wish that academics and financial media would finally understand this, and start to write about it – is that the job of the financial services industry is to sell risk to people who are seeking opportunity for reward, and who are basically risk averse. That fact is the single reason that the financial services industry should never be permitted to control capital markets. The owners of capital need to control the capital market. Full stop. Anything less and these fiascos like the Credit Default Swap and Madoff Ponzi frauds are going to continue.
Believe me; this is not rocket science.
Comments
Jim Rogers shorting U.S. Treasuries
Bill, I know you don't hold Rogers in very high regard, but I thought it worth mentioning that Bloomberg reports that he is looking to short LT Bonds and go long the Yen.
FWIW.
And crude is now trading below $37. I hope no one got hurt too badly with DXO.
It feels like both of these things -- oil and Treasuries -- are like rubber bands stretched to their limits. The question for a trader is when they are going to snap back. And the trick is to avoid getting stretched and/or snapped in the face.
Cara 100 Ratings Changes
CCJ - Downgraded to Market Perform @ Friedman Billings
--------------------------------------------------------------------------------
Happy Holidays to my second family here in Caraistaville.
Photo of local Amish musicians:
http://tinyurl.com/8p3cmq
Don't Follow Lead
"Japan Should Scrap U.S. Debt; Dollar May Plummet, Mikuni Says"
http://tinyurl.com/a5mxrw
Jim Rogers will get burned on that trade like many experts after their home run usually do... Listened to a conf call with him, not impressed as he is very assumptive that global growth will be right around the corner.
Understand that he is pretty much divested out of USD, small position left that he wants to exit. So any rhetoric that is spoken has an agenda. Just like the pundits on bubble vision.
Use your own facts and help each other to make sound decisions. above all (as i never learned) use stops.
merry christmas.
Waiting..
for signs of life in the regenerative medical stocks. STEM comes to mind, but a few others look attractive. Not much said lately, but the new leadership will plow money into research grants for this sector.. Going strictly by T.A.
Howard Lutnik
... a profile in courage, I just wish he would slow down his story telling!
Thanks, Bill, for posting that link.
Bill's Comments this morning
You are right, Bill.
Changes need to be made, and sooner the better. Taking your discourse further, I believe that in addition to too many regulations, we have too many lawyers. The role of most if not all lawyers includes avoidance of arrest even if such action is immoral, unethical, and pure obfuscation of any intent of the regulation (law). Thus, we must “first kill all the lawyers” (Shakespear).
Secondly, and on a more serious note, we must start teaching our children some morals and ethics. Somehow, some people in high places (lawyers?) decided that all such teaching must be declared “religious” teaching, and thus it must be so-called unConstitutional. What a bunch of crap. Teaching all people some moral and ethical obligations, aside from religion, is a necessity for harmony in society.
What might be called the “Golden Rule - Do unto others as you would have them do unto you.” says nothing about who to worship, or not, but it does say a basic rule for societies everywhere. It is easily taught and means what it says. That message has been around a long time and might even predate Confucius, who also taught it. What current US public school includes ethics and moral standards?
Even if I am wrong, and the message of the Golden Rule is being taught to students, this is probably the wording that is currently being used (can you believe it?):
The Golden Rule (revised edition):
http://en.wikipedia.org/wiki/Ethic_of_reciprocity
I guess the true Golden Rule for today is: “Rush out and be sure to buy, buy, buy!”
Where’s that bottle for the eggnog?
Durable Goods
Down 1% when the consensus per Econoday was for a drop of 3%.
U.S. Durable Goods Orders Fell Less Than Forecast
Maybe its because of the light trading today, but the markets haven't responded much to the news.
Ponzi schemes
Further to Bill's commentary, Paulson et al have essentially created a meta-framework around wall street similar in concept to a ponzi scheme....the early in folks (e.g. GS, JPM, C) get paid with the late money (TARP).
All the more important we keep a weather eye on our own "knitting" and agitate for better enforcement.
Happy Holidays and very best wishes to everyone and your families!
a lot of bad economic news
If there isn't a lot of selling the bad news today than I'm beginning to feel a bottom. In the unlikely event the market rallies that is a bullish sign in my opinion. If the market shrugs off the news than terrible expectations may already be priced in. The bull market will be months before the good news comes out and the herd jumps in and as we know that is the most profitable leg of the bull. Good luck, it's a jungle out there.
Re: a lot of bad economic news
That's very accurate IF-THEN scenario, IMO
Re: a lot of bad economic news
as no2son points out that durable goods news isn't as bad as forecasted although it is down...IMO the unemployment numbers trump all other bad news to the herd
Times are a changing, Bill
I'm assuming your regulatory filing was more then 5 years ago. Today anything goes when it comes time to steal from the working people that are setting money aside for their golden years. Working people know it's impossible to live on SSI unless you give up all the fringes while your younger, and leave your hard earned money to the so-called money managers that slither across the earth, in hopes of having that little extra when you do need it. Today, your same regulatory filling would of been scoffed at, and most likely you would of been run out of town. Whistle blowing just don't happen any more....NEPOTISM.
Nepotism has intermingled so deeply in the management of the working peoples money, that it is almost a given the working people are going to be used and taken advantage of.
Most money managers are either married to each other, or a first cousin to one another. When it comes to regulating the money managers it's like having a Christmas dinner among butt-buddies (relatives). My personal opinion is, PAULSON is the Godfather of all those well connected, unregulated, crooks that are self appointed money managers of the working peoples retirement dollars. Why do you think hedge funds aren't even regulated? Nepotism 101. All those unregulated hedge funds are nothing but a Ponzi scheme with built in gates to prevent the working people from withdrawing their money and exposing their simple minded Ponzi scheme.
Prisons are full of people that write $100.00 checks and don't have money in their checking accounts. HB&B's and hedge funds are full of snakes that use double trick accounting to keep debt of their books, salivate over billions of dollars in Paulson TARP welfare, and hand out billions of dollars to management under the disguise of bonus/compensation!
It's not rocket science!
Hope everyone in the Cara community has a very happy Christmas.
Kettled cooked....honey cured turkey with all the fixings in our family!
Ethics
Ethics, like charity, begin at home.
I can assure you, schools fight the morality battle everyday.
Ever hear of cheating? Stealing? Respecting others? Citizenship? Work habits?
Last I checked these are all taught and enforced in schools and in most cases are noted or graded on report cards.
Schools can't undo the foundation and habits of parents. They can enforce and punish all they want but it's parents that need to act.
I GUARANTEE my daughter's morals and work habits had nothing to do with school and everything to do with parenting. That is why she excelled in school, not the reverse.
And lawyers? They had nothing to do with nothing.
I think the events of the last year or so is more than enough proof that teaching religion is no safeguard of morality. Some of our most righteous were the ones trying to pick up dates in airport men's room stalls or preaching while on crack. Let's not even go to our Treasury Secty. Someone here is fond of Rush Limbaugh. Really? How much respect do we get to have for a drug addict that was so strung out he ruined his own hearing from Oxycontin and then dodged the law? He didn't even score his own! Ah yes, ethics.....how can schools help the radio god's fine example? (purposely small caps when mentioning Rush the demi-god).
My suggestion? Stop watching others and live the example.
Half Day Trading Today
Half day trading today and tomorrow is a holiday. Here is a link to the 2008 and 2009 NYSE holiday schedule.
http://www.nyse.com/about/newsevents/1176373643795...
re:ARTC
out for 16% gain
merry x-mas
merry x-mas to the whole gang,
its been an interesting year, and who knows what else might happen in the last few trading days until Jan 1st.
all the best.
J
adding to SLW
moving to 100% of allocation at 5.40...
Re: Jim Rogers shorting U.S. Treasuries
Re: "Bill, I know you don't hold Rogers in very high regard, but..."
Actually I do hold Jim Rogers in high regard. He gained great success as a trader on Wall Street and is very outspoken about many of the problems I have spoken about. I respect that.
Where I disagree is that Jim always is bullish on commodities, and there are times traders have to sell those commodities.
I often use The Book of Ecclesiastes Chapter 3 as a way of explaining why. You don't have to be a religious person, or one who follows any particular religion, in fact, to see the wisdom of this writing.
1 To every thing there is a season, and a time to every purpose under the heaven:
2 A time to be born, and a time to die; a time to plant, and a time to pluck up that which is planted;
3 A time to kill, and a time to heal; a time to break down, and a time to build up;
4 A time to weep, and a time to laugh; a time to mourn, and a time to dance;
5 A time to cast away stones, and a time to gather stones together; a time to embrace, and a time to refrain from embracing;
6 A time to get, and a time to lose; a time to keep, and a time to cast away;
7 A time to rend, and a time to sew; a time to keep silence, and a time to speak;
8 A time to love, and a time to hate; a time of war, and a time of peace.
9 What profit hath he that worketh in that wherein he laboureth?
10 I have seen the travail, which God hath given to the sons of men to be exercised in it.
11 He hath made every thing beautiful in his time: also he hath set the world in their heart, so that no man can find out the work that God maketh from the beginning to the end.
12 I know that there is no good in them, but for a man to rejoice, and to do good in his life.
13 And also that every man should eat and drink, and enjoy the good of all his labour, it is the gift of God.
14 I know that, whatsoever God doeth, it shall be for ever: nothing can be put to it, nor any thing taken from it: and God doeth it, that men should fear before him.
15 That which hath been is now; and that which is to be hath already been; and God requireth that which is past.
16 And moreover I saw under the sun the place of judgment, that wickedness was there; and the place of righteousness, that iniquity was there.
17 I said in mine heart, God shall judge the righteous and the wicked: for there is a time there for every purpose and for every work.
18 I said in mine heart concerning the estate of the sons of men, that God might manifest them, and that they might see that they themselves are beasts.
19 For that which befalleth the sons of men befalleth beasts; even one thing befalleth them: as the one dieth, so dieth the other; yea, they have all one breath; so that a man hath no preeminence above a beast: for all is vanity.
20 All go unto one place; all are of the dust, and all turn to dust again.
DXO
As per a quick calculation I executed last night in the wee hours, I came up with a $0 price on DXO of approx $1.70. I think it would be prudent to sell at around $1.75 to avoid the possibility of DXO reaching the clause limits and defaulting to zero.
ERY
out for 10% profit.
Crude Oil
With the absolute crushing downward pressure on black gold, I'm anticipating a substantial dead cat bounce just around the corner.
Re: Times are a changing, Bill
bigwad1, re: "I'm assuming your regulatory filing was more then 5 years ago."
If you referred to me, I think most people here know my regulatory filings were made and accepted between June and November this year, in Bahamas and the US, so I don't understand this statement.
As far as being outspoken on the issues you covered, nobody can't say I haven't taken the concerns I have expressed here to the forefront, including the Wall Street Journal, the Canadian Securities Regulators and the Senate of Canada Banking Committee.
http://www.billcara.com/archives/2006/06/trading_s...
Times are changing, and for the better. The people who will complain from this point on will be the hedge fund managers and the so-called financial advisers at Humungous Bank & Broker. Many of those people are actually very good at providing a valuable service. The problem they have is that the system they work under has broken due to its flawed structure and the greed of the movers and shakers at the top of the food chain.
Ecclesiastes
"18 I said in mine heart concerning the estate of the sons of men, that God might manifest them, and that they might see that they themselves are beasts.
19 For that which befalleth the sons of men befalleth beasts; even one thing befalleth them: as the one dieth, so dieth the other; yea, they have all one breath; so that a man hath no preeminence above a beast: for all is vanity.
20 All go unto one place; all are of the dust, and all turn to dust again."
You are absolutely right Bill. This transcends religion and wraps it in a nice bow.
We are beasts, and it is up to US each individually to make the effort to rise above. Afterall, who amongst us bears no sin? The answer is within, not in other's hearts, but our own.
If we act accordingly and demand the same of others by avoiding those who do not, then the world will right itself. You know, the same stuff our parents taught us....you are known by the crowd you choose...choose wisely.
Re: a lot of bad economic news
In your IF-THEN scenario, you need to build in the "if the markets go down big, then...". Need to keep in mind all possible scenarios...
Re: Waiting..
Tried STEM but got stopped out @ 2.20 this week. Others in that field bear watching. Any biomed/biotech with no LT debt is on my watch list.
DXO/DTO
"If you'd bought an equal number of DXO/DTO shares June 24th and held them, today your overall gain would be slightly more than 2x. It looks as though a steady gain has been accruing over the entire period. How about them apples?
UCO/SCO
Submitted by Chickenpookie on Wed, 12/24/2008 - 01:46. #4287
It looks like over the last 30 days, the UCO/SCO pair have yielded a 7% gain.
Re: DXO/DTO new
Submitted by SiO2 on Wed, 12/24/2008 - 06:28. #4290 (Posted in reply to this comment (#4286))
CP, that happens in a trending market. However, the issue is what the return should have been in that case, likely significantly higher than 2X. Since those started trading oil has only declined. In this case, returns are exponential."
SiO2 - Yes, this goes against intuition however, the DXO/DTO pair have produced a positive total yield of 2X since June end. That's an incredible gain due to reverse decay. Now, wouldn't we anticipate similar gains if the crude oil market reversed to the upside?
Additionally, I think I see a similar pattern evolving with the UCO/SCO pair...
uso
buy stop/limit order 29.36
New ETF : WIP
WIP: World nflaton protected ETF.
Has anyone researched ths fund ?
How about using this as a hedge aganst falling dollar as well as against inflation?
Sold OXY 40 May puts @ 4.10.
Sold OXY 40 May puts @ 4.10. Usually don't go out so far when selling, but risk/reward looked good at this price.
Among refiners, TSO (Disc: long, also holding Jan 10 calls) showing strength while VLO and HOC weak . . . not sure why TSO doing better last few days . . . all could change with oil inventory report coming out. DOYDD.
BSI87 - ARTC
What made you sell ARTC?
Hourly MACD still up, price didn't break a floor.
Do you have a target price in mind and sell when it is reached????
Glad you sold ARTC...too much uncertainty is nasty and they are restating 8 years of financials.
Hey...16% is nice.
Re: Jim Rogers shorting U.S. Treasuries
Thanks for that excellent response and clarification, Bill.
Re: BSI87 - ARTC
I don't like any stock that trades below its open AND previous close.
16% in a day is enough for me.
KBR (Infrastructure Play)
picked some more up at 14.75
BAC
shorted at 12.98 for a st trade
Securities Regulation
Bill - "I have always said two things exist with securities regulation: (i) there is too much of it on the books because of the underlying conflicts of interest, so we need less, not more, but we need more appropriate regulation, and (ii) more enforcement of the existing regulations, before the problems occur rather than as a reaction, is needed."
I think the media understands this subject, as well as congress and the new administration. If they continue to ignore and remain on the sidelines or worse, turn their backs, they will have failed their responsibilities. Currently we are awaiting change, and the Madoff scandal is just the tip of the iceberg that was formed back in the S&L days and reappeared glaringly with Enron. Recently we've seen even more evidence as the unsinkable ships hull is scraping alongside the iceberg.
Disclosure: Holding gold, what I believe is insurance protection.
To all my Friends, To all the
To all my Friends,
To all the great people I've come to know, through thick and thin thanks to the inspiration and blogging genius of Bill Cara, I wish each and every one of you a
MERRY CHRISTMAS
and a bright shiny (and most of all) GREEN new year.
Hey...What's that sound up on my roof? Oh man! Couldn it be?...
Are they finally installing Dish Network?:)
Phi mate update
Chickenpookie
"We are inside a window of time where our phi mate and Fibonacci cluster analysis suggests a multi-week trend change is likely. We have a phi mate turn date today, December 23rd, and another one December 29th. This could mean we got a short-term bottom now, and an interim top on the 29th, or we could get one turn sometime over the next week to ten days, both dates pointing to the same turn. We'd prefer more clarity at this time than exists. Wave b's are notorious for lots of whipsawing moves in complex corrective patterns. This could change, but if I had to venture a guess, this phi mate turn could be the bottom of wave (B), and launch wave (C ) up, per attached.
We expect a buy signal tomorrow, December 24th, in our reliable PPT indicator. The odds of that happening are above 90 percent. This is usually an early warning of trend turns, so it argues that this phi mate turn is going to be a bottom, with a multi-week rally coming. We got a bullish divergence in the 10 day average advance/decline line indicator Tuesday."
TNA looking interesting
I missed the trade on TZA last Friday by a matter of seconds as it had a classic setup on the 1 min chart. Basically the story of my year in a nutshell.
Now I see TZA bouncing off resistance on an uptrend line on the 15 and the upper boundary of a downtrend channel on the hourly. Interesting.
I think it's time to go the other way and I have an order in for TNA on a pullback. Again, the short-term chart offers a good place to set a stop in case I'm wrong.
Update: Sigh ... history repeats. Just missed the buy on the pullback. I won't chase and I won't buy at resistance. If it breaks through this level and holds then I'll reevaluate.
Naughty or Nice?
So what's the Jolly ol' man bringing to bestow upon the market? There's been a lot of naughty executives out there...
Re: Don't Follow Lead
Maybe it took Biden wallowing up to the big trough once more to get SOMEONE to realize there is absolutely no way the US can ever repay this endless mountain of debt.
Did you see where they forecast the dollar to drop by 40% and suggest that Japan just forgive the debt?
I guess what really amazes me is that they are the first rating agency to see that the emperor has no clothes. Rating agencies are like sheep, one bleats, then the rest bleat.
Madoff distraction?
While sizeable, I wonder if the Madoff thing is a distraction from the real massive fraud going on as we type....the Hank and Pony show.
Gold/Silver next year - the first domino just dropped
I think the japanese rating agency statement could start the move to the exits on dollar debt, and that's good for gold.
Thanks Bill for your comments snd time, and having the blog here, and hoping it helps lead me to invest/trade better in the coming year.
Merry Christmas to all
Re: Crude Oil
I agree, CP. However, there have been 5 dead-cat bounces since the bubble burst in July. See, for e.g., USO: http://tinyurl.com/7hsg8k . Each have been well signalled by the RSI system. Unfortunately each have been 3-5 days in duration and when they ended they did so with violent and quick return to the down trend. I suppose sitting glued to the day-action, waiting for that signal, hoping it plays-out like recent history, and quickly taking your profits off the table when you think the bounce has ended, might get you a 5%-15% return on...what? How much are you willing to risk on this play?
The reason I say this is that I've come to the decision that Oil has come down so far and so fast and is so obviously being determined by market makers with an agenda, and dire economic news, that there will be plenty of time to make a proper investment in the commodity and/or oil-stock plays when this nonsense ends. Let's not make the mistakes we did in Sept/Oct catching falling knives :).
Re: a lot of bad economic news
fuego - you are correct, sir
Ethics
Craig I wish I had said that.
Integrity---it flows from the top.
Talking about ethics, it really comes down to integrity.
It’s been my experience that integrity flows from the top.
If the head honcho lacks it, cuts corners, omits facts, etc., the workers know it. Rot can flourish even though others in an organization may be individuals of integrity and ethical behavior.
On the other hand, if the company/organizational leader has integrity, displaying ethical behavior in everyday decisions and policies, it sends a message to the troops. Sure, there may be a rotten apple here and there, but when disclosed, the leader (President, CEO,) brooms him/her out the door.
Re: BAC
fuego - you called it on BAC...I sold my holdings last week
Christmas Shopping
Have we all finished our Christmas shopping? I think there's plenty of time left!!!
WNS
WNS is an Indian stock and does back office work for corporations. It has RSI(7)= 6.....very beat up...waiting to see a change in trend before buying a bit...Market cap of $250 million is half of the annual revenue of $500 million.
PLD,
Since entry on 12/3/08 the thing is up +300% time to leave? Rationale for acquiring included local company with good mgmt., apparent decent liquidity and dividend yields. Also doing well with Bill's recommendation of AET - up +20% and TTEK - a play on infrastructure focusing on H2O. This one picked up to play on the new administration's expected improvement to public works. Happy Holidays All
Re: Christmas Shopping
"Have we all finished our Christmas shopping?" One more to go - waiting for a break in the rain :(
Re: Crude Oil
Mack - "The reason I say this is that I've come to the decision that Oil has come down so far and so fast and is so obviously being determined by market makers with an agenda, and dire economic news, that there will be plenty of time to make a proper investment in the commodity and/or oil-stock plays when this nonsense ends."
Agreed, however I'm psyching myself into holding my underwater position until Crude returns to $145/bbl. How could I have not ridden the short from there to $40 is beyond my imagination, so I'm keeping my eye on the ball now as opposed to the "racket"; come what may. The last whistle blows.
Re: Madoff distraction?
"While sizeable, I wonder if the Madoff thing is a distraction from the real massive fraud going on as we type....the Hank and Pony show."
No doubt in my mind!!! Madoff is just a quick peek through the keyhole.
USO - DXO - HOU.TO - Crude Oil
I think it's still too early for a bounce in crude. USO has traded in an almost perfect channel since August. I expect the price to bounce off the lower trend-line around $27. The upward target would be mid-30s.
Just my opinion.
Re: Crude Oil
CP - "How could I have not ridden the short from there to $40 is beyond my imagination..."
Ditto for me. It might be interesting to try and dissect the reasons why all of us haven't made a gazzilion $ on this play of the year. Off the top of my head:
1) falling in love with a holding - spoiled by 5+ years of relentless upward momentum in oil (see e.g. XLE +256%)
2) endless babbling about peak-oil
3) endless babbling about Emerging markets explosive demand for oil
and most puzzling for me,
4) fundamentals - how could the world's most valuable commodity actually do what it has done since July.
Back in the TBT trade
This thing is coiling like a spring. I think it's going to break in a big way after the holiday.
And TNA is still butting its head at that resistance level. If nothing else, it's interesting to watch patterns like this play out as it helps you to learn what to look for the next time opportunity knocks.
When does the market close today ?
Friends,
When will the market close today ?
I know ( heard it on CNBC. ) it closes early.But not sure when.
Santa's Reindeer
Perhaps Khris Kringle's reindeer are all actually female. Male reindeer have already lost their antler by this time of year, and females are known to like wearing bling, much more so than males...
Any opinons on how the market will open after the holidays ?
Any opinons on how the market will open after the holidays ?
The 12 days of Christmas
Just for fun.
http://www.youtube.com/watch?v=owK5tHjL0aE
Re: When does the market close today ?
13:00 EST
http://www.nyse.com/events/1198755725395.html
Re: When does the market close today ?
Market closes at 1 p.m. est. After market until 5 p.m.
BAC Short
Hmm, I would be careful with that short because those bankers are some unimaginably slick SOB's. Just when you think their down and out for the count they bounce back from hell, just like the unstoppable maniac demon in Jeepers Creepers.
Disclosure: Long BAC quietly, a few days ago.
Biden
cheapy mentioned vice-president-elect Joe Biden ("Maybe it took Biden wallowing up to the big trough once more..."). I'd like to throw out something for discussion.
Yesterday Biden directed a team of Larry Summers and others from the next Administration into a talk of how they intend to address the problems that face the nation. I was impressed with his presentation, but I also saw something I hadn't noticed before. It seems to me that Joe Biden smiles and tells jokes and all to try to put people at ease, but when he does we tend to laugh at him in contrast to how we naturally (most of us anyway) receive Pres-elect Obama. But, when Joe Biden plays it serious and straight-on, he's a different person altogether. I listened to him, and I came away being very impressed. As he led that team in discussion, I could even see him looking presidential.
Clearly, we are all waiting for action, representing change, which is so necessary today. Like I was yesterday with Joe's presentation, we might actually be surprised with the result. We need to keep an open mind.
Re: BAC Short
I agree it's risky to be short. But the big picture to me is that they will need to raise significant levels of capital in order to maintain their reserve requirements now that the bad assets from MER are on their books.
Re: BAC Short
By the way, it's awfully convenient that the MER deal closes on 1/1/09. Those assets won't be incorporated in their earnings until the 3/30/08 quarterly filing, which will be out some time around May. That's 5 months until we see the write downs from the MER deal. And they will be gargantuan.
Indices and ex-Divs
When Stock Market indices are calculated and streamed, do they adjust upwards for ex-div drops? Was just thinking about this because the whole iShares complex on TSX went ex-div today, some with pretty big drops. On the other hand, I wonder if iShares stuff is even used in calculating the TSX index, or any of its sub-indices?
Wishing all of you.........
Good health and happiness. As 2008 fades to black, 2009 will begin with great promise and my hope is all of you will be beneficiaries of the positive changes that are coming.
Merry Christmas and a Happy New Year.
Re: Biden
Sorry, my comment wasn't intended to say that Biden was presenting the case badly. Actually, what I saw of it, he did quite well at presenting it, better than I'd have expected, and certainly better than the current administration.
What bothers me is the current level of debt and the relative ease and indifference with which the politicians seem to have at adding to it. As I see it, unless some huge trade restricting change is implemented, the stimulus will leak out via the trade deficit as quickly as they pump it in, and we'll just be talking more stimulus from a higher level of debt at that point.
Something I can see that most of Washington seems to have missed is that debt is a lot easier to get into than it is to get out of. They REALLY flunked that class, IMO.
Re: Any opinons on how the market will open after the holidays ?
My opinion is worth less than what you pay for it, but my bias is that the markets go up. I base this mostly on what I see as a pending reversal in the charts.
But then again, it's notoriously perilous to make judgments about market direction on days when so many are away from the market. So I'll remain cautious and ready to change my mind as events unfold.
P.S. - Bill and Korvus, I tried to upload a png and jpg and got back an error. Thought it worth mentioning in case others were having the same problem.
Re: Biden
"We need to keep an open mind."
I've been attempting this feat for more years than I care to imagine or account for, a few more cannot do much additional harm. That said, I think it's time to demand not just change, but abrupt change; a genuine focus on resolving the underlying and primary issues, comprehensive examination, formulation, implementation, and explanation of proactive action plans as opposed to the continuous blizzard of a snow job we are so thoroughly saturated by on a consistent basis. No more passivity!!!
I want these guys to feel that same devastating feeling I experienced when I was four years old and dropped my milk glass, shattering it all over the kitchen floor, then act like the responsible adults, men and women that they are by cleaning up the mess and righting the ship. We can accept no substitute, the BS has and must be stopped immediately or face the consequences.
We can turn the tables but it has not yet happened. No offense intended, but it won't happen until we force the issues and make abrupt change happen. Only then can we begin to keep an open mind.
Holiday Cheer
Anyone still trying to trade today REALLY needs a holiday.
Last one into the eggnog is a rotten egg! Cheers, to all! And hoping everyone gets their happy wish come true.
Gone.
MFN
Back to even on this one. Should be ramping up production to full steam in 1st Qtr., with mine now completed, good mgnt & explorationists. More potential in permit area and not yet fully explored + other decent projects and funds to acquire others. Current mineable resources of ~3mm oz/Au & 150 mm oz/AG. Just raised another C$40mm so this may represent a good entry if Au stays buoyant. Happy Trading
Happy Holidays
Thank you Bill for all that you have done and continue to do, and thanks to the
community for all your contributions.
All the best for the coming new year,
Natural Gas
Stepping up to the plate on natural gas stocks. I like the Canadian trusts, AAV, PWE, and drilling trust PDS for US-listed companies.
Pop in UNG yesterday, and action today, low prices, high yields, tax-loss selling near over, all make them attractive,imo.
And the cold weather...
JNK
Big pop on JNK at the close. Possible rotation out of HYG to JNK?
Re: Biden
Joe Biden is a leader. He will be a tremendous help to Obama.
KSK - Ford 7.4% notes
Albeit on miniscule volume, someone knocked the Ford 7.4 notes today to $4.26. This gives it a yield of 43.5%. Next payment is not until the end of April '09 though.
Might be interesting to watch how some of these exchange traded debt products trade during the especially low volume holiday week.
Oil Prices
Looks like they are using the last 10 minutes of todays oil trading to crush the Feb contract. USO and DXO ralphing after hours.
Re: Biden
cheapy, we are in 100% agreement. With respect to debt, there are no checks and balances. I thought the law required each State to have a balanced budget. Don't most of them run massive deficits? Same with municipalities? Politicians are to blame. The cannot just say the people wanted the services, so they spent the money giving them what they wanted. Isn't that the same as what the Treasury is now saying about banks? There seems to be no end to the debt cycle, and now the Fed wants to issue its own debt, which means to me, should it happen, that bankers have finally driven a stake through the word "value".
In Canada, the Scotiabank runs these stupid marketing ads and commercials, "You're richer than you think". If central banks are allowed to issue their own debt, we'll all be on that treadmill to riches. As prices increase, merely because our currencies just have extra zeros added (the new trillion is the old billion), we'll all be paying more in duties, sales taxes, property taxes, income taxes, and every other tax that a politician can dream up.
As I say, there seems to be no checks and balances to govt spending, which is another way of saying the political system has failed us.
Re: Biden
Hey now.
Biden is a 35 year door mat towards washington lobbiests. He follows and does not lead.
He teaches law and univ of deleware. He has been constantly mis-quoted about history. Like when FDR went on "TV" in 1929. Strike one and two.
He also tried to school VP Cheney (who i can't stand) about constitutional law. Stating that the presidential and vp powers are articulated in Article one of the Constitution. The problem with Biden's statement is that Article ONE defines the Legislative Branch now the Executive (presidency). That is Article II.
Look up the perks his son got with the 6 month contract for a NY lobbying firm. got paid around 400k for no work.
Change and leadership? sure... I really bet his students are all buying into that pudding.
We can't hope things to get better we must do something to make them better. Start writing those knuckleheads that are elected and form groups in your local area to round table like debate and discuss change.
I got one better. How about run for government? Local/state/national - Probably going to happen real, real soon.
Expect to see a third party arise from the ashes over the next decade. Believe in that. That is hope.
Or we could enforce a flat tax, term limits and tort law reform.
That's change.
Re: Biden
EDC,
I believe in a flat tax -- like zero, like we have in The Bahamas where everybody pays duties and stamp taxes. It's called 'pay as you go'.
The efficiencies in the financial and fiscal systems here are incredible. Despite the fact that govt seems to be lax in collecting a lot of these monies, the local B-Dollar is at par with the USD and the current account has a surplus of close to $1 billion, which, as extreme as you might think, is, based on per capita, about 4 times that of China. The $30,000 per capita GDP here is also two-thirds that of the US, and closing, (versus $5400 in China), and there is no Wall Street or industrial manufacturing wealth creators here either.
I can be located here, with a wonderful lifestyle, and be registered internationally to do business in most any country of the world, with clients whose funds never leave those countries, or outside their control in their own brokerage accounts. I happen to believe I represent the best financial model, and the govt system here represents the best fiscal model.
I should add that the US does not allow Americans the same advantages should they decide to join me. It is the Commonwealth of Nations countries (England, Scotland, Canada, South Africa, India, Australia, etc) plus some others (like Russia, Germany, Switzerland, etc), that impose taxation only on domicile rather than citizenship.
Re: Oil Prices
At least they waited until the stock markets closed. It looks like the other contracts got hit as well. We will see what happens when volume returns.
Re: Biden
i have similiar sentiments regarding biden and the new administration....hoping for the best for the world.......
merry christmas Bill, Geoff and the bunch. You have been a great breath of fresh air for me in 2008......DB
Re: Biden
Bill, I absolutely agree on the tax issue. Just tax the imports and luxuries higher if you need to feel better soaking the rich, LOL. An extra $5.00 a bottle on my Rum or Goldvasser, $2.00 a gallon on fuel, or 50 cents a can on those King Oscar sardines wouldn't bother me if it paid for an honest government to provide needed services for a reasonable cost, instead of this exercise in bubble blowing and fiscal lunacy where we give them a huge amount of money and they spend that and a huge amount more.
Whatever is taxed is discouraged. Tax work, production, income and jobs and surprise, surprise you get less of them. We need to get to where we produce as much as we consume before our credit runs out. To accomplish that we need to ENCOURAGE work, production, income and jobs, and DISCOURAGE some of the consumption. Its just that simple.
As for our states, each has its own constitution and laws with regards to budgets, but by US Constitutional limitation none can print money except as gold and silver coin. What it doesn't say is that they can't BORROW money or lease out or sell state assets, and that's what they've been doing. In 2009 I expect we see most states get into fiscal trouble and need to be bailed out with loans from the Federal government, because investors both local and offshore will avoid state debt as bad of shape as they are all in. Revenues are dropping as jobs disappear, so I see no way to avoid it.
For example, without a Federal guarantee on the debt, would you be willing to buy California bonds for your account? At 5%? At 10%? At 15%? You see the problem. At the low rate there is no reason to take the risk, and the higher the rate goes, the less likely they can repay it. So, as I see it, the Fed or Treasury end up backing the debt or lending the money, until we get to where foreigners balk at buying US government debt, too. I'd bet you have a better handle than I just where that line gets drawn, but I have this feeling its not far off.
Madoff new excuse for dead beats
Now I see Madoff becoming the excuse for dead beats not being able to pay their bills. Twice in the last week I have had company owners who owe me larger sums of money use Madoff as an excuse.
After promising payments that never arrived in my mail box, ignoring my calls and avoiding me, both guys came up with the excuse that they had money invested with Madoff and can’t get funds to pay me….
Re: Any opinons on how the market will open after the holidays ?
I wasn't sure whether to reply to this comment or the phi-mate update one. Both are in regards to the short term outlook. Phi-mate seems to be just a fancy term for fibonacci time ratio confluence. But, it seems to match my independently determined outlook. The gold miners have obviously been stronger this month than the overall market. I find rough similarities in the pattern between the GDX in early Dec and the SPY right now. I think the miners have broken out ahead of the market. I wouldn't be certain of a breakout with several up days in a row just yet...perhaps a daily stochastic double bottom will develop sometime around next Wednesday? But my outlook for the next 2 or 3 weeks is bullish.
Have a merry....
I love the Johnny Nash version, but this is a best, by a woman from the Great White North...
http://www.youtube.com/watch?v=f68uFGwLd84
Have a good day all...
Christmas baking
Bill & the rest of the participants -- thanks for the crazy ride this past year. Merry Christmas & may the trades in the days ahead work out better than the road just travelled.
A mince meat tart courtesy of Bim, now known as Roy Forbes. Enjoy.
http://www.royforbes.ca/wma/tart2.wma
MINCE MEAT TART - lyrics
Well, you can take your Christmas pudding
And put it outside to freeze
You know the nutmeg in that eggnog, now
It just about makes me sneeze
I've got something finer in my mind
And it stands miles apart
Understand, I'll be a sad young man
If I don't get a mince meat tart
I want me a mince meat tart (he wants it, he wants it)
I want a mince meat tart (he wants it, he wants it)
I want a mince meat tart
And I want it with all my heart
Now, I don't mind those chestnuts
But I hate it when they up and explode
I can put up with that cranberry sauce
But, last year I had an overdose
If you wanna make me happy
Prepare for the joy to start
When you take me to the fireplace
Sit me right down
And supply me with a mince meat tart
I want me a mince meat tart ... (repeat chorus)
Now, if you happen to see old Santa
You know, the guy with the big red nose
Well, tell 'im he ain't gonna get no milk and cookies
If he doesn't keep on his toes
Because, I don't wanna be like Elvis
Have myself a blue, blue Christmas
And I don't wanna fall apart
But as sure as you're born
I'll be shattered and torn
If I don't get a mince meat tart
I want me a mince meat tart ... (repeat chorus)
ROY FORBES
HUMAN CONDITION MUSIC
SOCAN
MINCE MEAT RECIPE
- by James Barber (from the liner notes of the 'New Songs' album)
1 lb. (500 g) raisins
1/4 lb. (125 g) sultanas
1/2 lb. (250 g) suet
1 lemon
4 oz. brandy (about a wine glass full)
1/2 lb. (250 g) currents
1/2 1b. (250 g) dark brown sugar
1 lb. (250 g) shiny green apples
1/2 tsp. ground nutmeg
2 pinches of ground cinnamon
piece of fresh ginger as big as your little toe
the peel and juice of a medium, juicy orange
Put everything dry through the mincer. Put it all in a bowl, add the juice of the lemon, the brandy and the orange jiuce. Stir well (make wishes), put into jars and keep in a dark cupboard for two weeks. Next year moisten it with a little more brandy ...
Mince tarts take exactly nine minutes to cook at 400 degrees F.
John Cleese on Growth and Learning
http://www.youtube.com/watch?v=eBqe5xvYnNc&eurl=ht...
http://www.youtube.com/watch?v=O2QJvc_SxFQ&NR=1
Canadian tax-free saving accounts
As we approach 2009, if you are in Canada and haven't paid attention - don't forget to have a look at this new option becoming available in a week. No tax on gains (contribution itself is not deductible though), not even at withdrawal, and free to withdraw at any time.
Details are at http://www.budget.gc.ca/2008/plan/chap3b-eng.asp, scroll down a little through the government self-back-patting to
Tax-Free Savings Account—A Savings Plan for All Canadians
Gold Hit In Last 5 Minutes of Trading
Anyone notice that gold got hit for about $10 with about 5 minutes left in trading today? All of the days gains were lost in virtually seconds. Nothing like a little manipulation on Christmas Eve when almost no one is watching. As they say, scum never sleeps!
Cheers - Fireworks
Merry Christmas and Happy Holidays
Peace on earth, Good will towards men! Thank you especially Bill for your kindness, knowledge and sharing. Thank you all for the information, thoughts and points of view. Merry Christmas to all and to all a Good Night!
Re: Canadian tax-free saving accounts
don't forget to check out the associated bank fees
GMAC gets bank's fleece
Or are we the ones being fleeced?
dxo
considering dxo was at a high of 29.65 on 7/11 when oil was at $145, and is now at $1.99 when oil is $35. The midpoint of both is oil at $90, dxo at about $32, which means that if oil goes back to $90 you will get a 1600% gain on dxo using simple arithmetic. Its not clear to me from what I have read how the dxo share price is calculated, it is tied to the "deutche bank liquid mineral" index somehow, but they don't say how. The question is of course what happens if oil goes to $25, do they close the fund (negative value) and you lose your money (if you invest tomorrow). And if oil goes up will the correlation be the same on the way up as on the way down legimatizing my calculations above.
If this is indeed the bottom on oil and the above is correct this could be a 16 grand profit on a 1 grand trade (if oil goes back to $90 which it should at some point). Would appreciate any comments on this analysis.
the reason i'm so fanatical
the reason i'm so fanatical about this is i missed a six bagger on dto by selling too early, i have learned that you can learn from your mistakes from selling or buying too early in certain circumstances by doing the reverse especially if you missed a huge move, i'm looking to make up my theoretical losses in dto buy buying dxo now, seems like it makes sense comparing risk to reward.
Re: dxo
My understanding is that the notes for DXO will become worthless if the price of oil drops more than or equal to 50% in one month. Currently DXO is tracking the July '09 futures price, which was at $61 on Dec. 1st and is currently above the price of ~$30.5. I'm planning to bail on DXO as/if the July '09 futures price begins to approach the $32 dollar range, which would be quite a spectacle considering oil 6 months ago was so ridiculously high.
http://finance.yahoo.com/q/fc?s=CLG09.NYM
Check David's post from yesterday for the exact wording from Deusch, as he actually spoke with a representative on this subject.
thanks for the leads, im
thanks for the leads, im going to try to check this out as this could be a great trade. interesting info about the notes worthless if oil goes down 50% in a month, i didnt know about that. but maybe some bozos at lehman brothers did cds's on oil so theyre protected. i will probably end up throwing a grand at it as a gamble and see what happens, i guess this is one where you can average up as risk of default decreases, whule watching it carefully of course
Re: dxo
DXO will go to 0 before the New Years if the July 09 futures contract hits $30.5. If it doesn't hit it, and the lowest point will be at $33 on December 31, then the condition for DXO going to 0 in January will be that of July 09 contract dropping to 1/2 of $33 at some point in January, which is pretty unbelievable. So I would say that if DXO does not "default" in December, then it will be pretty safe to enter it in January. In the future, one should just be careful when buying DXO during a month when the price on the 1st of that month was some spike top (as it would increase the probability of a 50% drop during that month).
Merry Christmas to everyone!
july 09 futures were $43.97
july 09 futures were $43.97 today, there is no way they are going to 30.5 in a week. maybe this is the TOG just in time for Christmas
maybe its not
maybe its not
NYMEX oil contract
Worthwhile reading on NYMEX contract:
http://blogs.reuters.com/great-debate/2008/12/23/n...
Dave
Re: NYMEX oil contract
ICE began trading US futures back in Jan 2006. I'm pretty sure this could be traced back if the CFTC weren't the best money could buy to look the other way. Limp-wristed politicians put the US taxpayer on the line by running up the federal deficit to bail out HB&B, who just happen to be in the thick of things.... This is all the biggest circle-jerk tournament the world has ever witnessed, GS has already won both 1st and 3rd place.
"Perhaps 60% of oil prices today pure speculation
Goldman Sachs and Morgan Stanley today are the two leading energy trading firms in the United States. Citigroup and JP Morgan Chase are major players and fund numerous hedge funds as well who speculate. "
http://www.globalresearch.ca/index.php?context=va&...
Crude Oil Forecast 2009- Time
Crude Oil Forecast 2009- Time to Buy?
by Nadeem Walayat
http://www.globalresearch.ca/index.php?context=va&...
Great technical analysis, he seems to think it's still too early...
2009 Thinking
Trying to come up with ideas for next year, I ran across this stock, EBS - Emergent BioSolutions, which has run up from $5 to $25 in the last 12 months and still climbing.
Not a cheerful thought for this special day, but EBS makes an approved Antrax vaccine. Wonder who's buying this stock and what they know?
Here's a "gallery view" - be sure to move down to the weekly chart.
http://stockcharts.com/charts/gallery.html?ebs
Holiday wish for racial harmony ...
“Los blancos huesos de un muerto pueden ser de qualquier raza. Si la muerte no discrimina, que tampoco lo haga la vida!”
“The bones of the dead are white, whatever their race. Since death doesn’t discriminate, nor should life …"
Peace on Earth !
What Housing Bubble?
By Nell Henderson
Washington Post Staff Writer
Thursday, October 27, 2005; P
Bernanke: There's No Housing Bubble to Go Bust
Fed Nominee Has Said 'Cooling' Won't Hurt
By: Reuters | 12 Feb 2008 | 03:59 PM ET
Bernanke Expects Housing Recovery by Year End
I'm looking at a 5 to 7 year span for a bottom. Who's team are you playing for - strike 3, you're out Mr. Grey beard!!!
Re: Bill's Comments this morning
Spot, with time to reflect today, surrounded as I am by a quiet blanket of fresh snow, it occurs to me that Einstein, Newton and the Buddha had great thoughts on the concept of reciprocity. From: "For every action is an equal and opposite reaction" to "What goes up must come down" to my favorite "Actions have consequences". I believe we are living proof that a nonjudgmental universal response exists for our every action and our ultimate human challenge is to accept responsibility for our creations and strive to evolve.
A prosperous and peaceful New Year to us all!
Holiday wish for racial harmony ...
Oops, credit for the phrase cited goes to Ruben Blades, IMO one of the great songwriters of our time. It's from one of those salsa tunes he writs which surprise listeners with their disrmingly profound messages.
Thnx, Zorro
thnx for those fine Xmas videos from the gospel according to monty python
Pozi Scheme
Bill mentioned the Madoff Ponzi scheme. If you think about it, the whole US Government is the largest Ponzi scheme of all. It's even more sinister as contributions are forced (ie: social security and taxation)
Happy Holidays All !!!!!
here's an excerpt by Lew Rockwell/Daily Reckoning:
Madoff’s scheme played into the belief that wealth was not something to work for, but something to scheme for. It could be generated by playing your cards right, hooking into the right networks, and finding the right “investments.” The people with whom he dealt had, it turns out, some internal sense that there was something a little bit shady about the whole operation. But they dispensed with this sense when the fat checks arrived, and concluded that whatever was making this perpetual motion machine operate, it did work.
But listen: the government right now is using the same tactic to convince you that it is saving you from the recession. The whole scheme partakes of the same sense of denying reality that characterized Madoff’s scheme. And I’m not just talking about Social Security, which is almost an exact replica of the Ponzi version, except that at least Charles Ponzi didn’t force people to give him money. I’m speaking of something broader. The entire financial system that is propped up by the Treasury and the Fed is based on the same idea: that something out of nothing is possible.
So they will jail Madoff. Wall Street would flog him if it could. He is disgraced for all of history. But meanwhile, the likes of Bush, Bernanke, Paulson, Obama, and all the rest are still riding high, even though their scheme is far larger and more egregious.
Most of us like to believe that we wouldn’t have been tricked by Madoff. But are you being tricked by the elites who claim that they can conjure up a trillion dollars to stabilize our economy by clicking a few buttons on a computer screen? Most people are. Certainly the press seems to have bought it. Many people were outwitted by Madoff. Many more people are today being outwitted by the government and its central bank. And it will all end in disgrace and disaster, only on a far, far grander scale.
Re: Pozi Scheme
The primary difference between Modoff's ponzi scheme and the government ponzi scheme is that the US asset owner is supposed to have representation. The capital collected through social security is supposed to grow in value because it is "invested" wisely however, the collection half of this bargain appears to function much more efficiently than the "investment" side due in large part, to poor judgment, corruption, misrepresentation and various other parasitic effects.
Don Coxe's ideas
I have just listened to Don Coxe's webcast (which came out on Wednesday), and Don said that he believes the "page 1" economic news will be bad for another 4-5 months and will then begin to recover. However, he said that the "page 16" fundamentals are already getting better (the banking index is in an uptrend since July, TED spread has recently come down strongly, etc.), and now is the time to scale into banks and commodities, which will lead the stock market recovery. He said that this is NOT his wishful thinking but a cold-blooded analysis of the situation, where the current state of the economy is not nearly as bad as it was in 1974 or 1982, where the world leadership (central banks and governments) is obviously better than it was back then and smarter when it comes to solving the economic problems, and although they DID overlook/ignore the credit bubble, they are now using unprecedented measures to revive the economy, which are MUCH stronger than anything done in the past.
What I found unique about his reasoning is that unlike the vast majority of analysts, who are extrapolating the current data (the "state" of the dynamical system called global economy), Don is also looking at the "inputs" being currently injected into this dynamical system (which constitute BOTH monetary and fiscal stimulus world wide). He acknowledges that this system obviously has a lot of inertia, and there is a delay before ANY inputs will actually change the system's state. I think that a lag between inputs and effects in the economy is an undeniable fact, and so the analysis that only extrapolates the recent changes in the system's state is obviously wrong and lacks the predictive power, ESPECIALLY when massive and unusual inputs are ALREADY being injected into the system. So from a purely mathematical standpoint, Don Coxe’s expectations have more validity, in my opinion, than those who predict deflation for years to come simply because the CPI has been dropping for 5 months. A *real* counterargument to Don would be the one that would acknowledge all the current AND POTENTIAL inputs that the governments and Central Banks can inject into the global economy (since they all seem to be committed to doing whatever it takes to revive it) and then demonstrates, either mathematically (using known models of cause and effect) or statistically (using comparisons with the past), that they will not be sufficient to turn the US economy around in 2009. Has anyone seen such an analysis anywhere? I have not, and therefore, given my current state of information, I have to believe that Don Coxe’s predictions will come true.
Hopefully, this is a cheerful Christmas thought for all. :)
Re: Pozi Scheme
But like all Ponzi schemes, its the late players (future generations) who pay off the earlier "investors" (us) in the government's plan.
Time off
I am enjoying Christmas Day as I will Boxing Day on Friday. I will return with the Saturday Daily Report and a Year In Review report on Sunday. Next week, I will cut back my hours as well. Merry Christmas.
Re: Don Coxe's ideas
David,
not pretending to be capable of even guessing when the turnaround comes, I very much agree with the premises. In fact, Bill made this point a while ago when said that all this injected liquidity will become a moving force one day.
A lot of analysts and analysis fail to look at the system's dynamics and limit their views to snapshots and their static projections. While their extrapolations seem to be valid at the moment, future developments almost invariably prove them wrong as system's dynamics change (or, come into action). Interestingly enough, this idea seems to be obvious enough in retrospect, yet rarely applied real time. Examples of this are numerous, I cited a few of them in http://www.realitytrader.com/blog/2008/10/turning-.... Even astute players sometimes find themselves blindfolded by static image of the reality (I cited Pickens in the article above as one of examples). Thinking of this year alone, you can easily identify a lot of such cases and predictions.
Never thought I'd post on Christmas day but your post hit the right spot :)
Re: Don Coxe's ideas
Agreed, I think the question isn't really if, the real question is when. It looks as if we've seen a bottom, but there are more bad news in the pipeline that could keep us in a trading range for the better part of '09, possibly longer?
Re: Don Coxe's ideas
David, thanks for the summary - fits somewhat with Bill's perspective, I think. I'm not convinced that the various governments are any smarter now than in 1974 or 1982. And I think the situation is far worse, in that now we face the possibility that the collapse of private debt markets will reduce the money supply (whatever that actually is) faster than governments can create it. I think that's why the long bond has been so strong - nobody really knows, but if there is serious deflation ahead, the classic investment would be long US treasuries. That said, TLT is looking toppy.
Re: 2009 Thinking
Add AFAM to that list as well.
2009 Thinking
Yes, I agree with adding AFAM to the list with EBS. Success might build upon success, but maybe not.
I wonder if Hedge Funds will drive the Markets in 2009. There are still many of them left. Most hedges are not value players but rather are momentum players, I think, which would make a list of those stocks that are making consistent highs a good potential list.
On the other hand, if I were master of a hedge fund, and I had to sell some of my best holdings in 2008 in order to meet cash outs, wouldn't I want to buy back those holdings in 2009 starting with the best (meaning lowest) priced stocks?
Or, would I depend upon some formula based computer decision that says to buy a particular stock because every other hedge fund is jumping on board?
Just wondering.
Re: Don Coxe's ideas
ChrisM - You made some great points. Considering the old adage not to fight the FED, perhaps we should be taking into account their goals. It seems they want to drive down borrowing costs to reinvigorate the housing market, which to me means keeping the long bond rate low. If we assume they're successful at this task, we wouldn't be expecting long bonds to come off, right?
Going one step further and knowing the money will search for the best returns, where does the money go?
Re: 2009 Thinking
AFAM - That seems like a defensive play. I expect money should be leaving AFAM during a bull phase and returning on the bear. No?
Re: Don Coxe's ideas
Chickenpookie, it is hard to know what expectations are already priced into TLT. I will be surprised if the market does not overshoot and drive TLT above the levels that the Fed wanted to support for some part of 2009. Having said that, I will sell my TBT (which I purchased at 36.5) if I see TBT below $36, and will place a buy limit order on TBT at $32 for the same number of shares.
The Next Battleground
http://tinyurl.com/a5gcyk
Best to all.
Ron
Re: Jim Rogers shorting U.S. Treasuries
Kudo to you on this missive, Bill & Merry Christmas.
Re: Deflation
We are in deflation. A depression is presumed to follow. What the Fed is attempting is quantitative easing to paper over the deflation. We may wind up with both, deflation and quantitative easing. There is a wider economy 'out there' which Wall st. forgot about, which is why some aspects of the economy look to improve without resorting to credit derivatives.
This could all change overnight if the government bond market collapses. For instance, like Iceland, the U.S. can no longer pay its bills and must default on its obligations.
Cara 100 Ratings Changes
Good morning.
There are NO Cara 100 changes to report at this time. ANALysts all on vacation?
Capstone...
For the CPST crazies...did you see the recent shelf-registration...grab the dramamine.
took a nice bite out of the
took a nice bite out of the general (GM)
Re: Capstone...
CPST pukes once again. How sad, glad I listened and didn't buy based on sex appeal. Thanks nemo.
Anyone betting that we will
Anyone betting that we will close higher?
I do, but not a lot of conviction.
I don't like the TLT action this AM.
Off topic: I had a chance to catch up on reading some yesterday. Started reading "Fooled by randomness" by Talib. OMG, why I didn't read it earlier (I bought it months ago, but no time).
Re: took a nice bite out of the
shark - If you draw blood, spit it out immediately and rinse well.
Re: Anyone betting that we will
close positive today based upon holiday cheer and GMAC news. Crude was lashed with a cat-o-nine tails and walked out on the gang-plank after hours Christmas eve. There's bound to be a reprieve as the public is so thrilled about lower energy prices, don't realize why prices are down, but are still pissed over high prices during summer. Thanks GS and MS!
People have shorter memories these days - the American public have been dummied down by corporate owned media and their attention spans reduced to 1/2 hour in the process. Meanwhile governmental regulators are hired to look the other way while market makers create unlimited and untold numbers of equities shares out of thin air.
Happy New Year!!!!
Re: Anyone betting that we will
Fooled by Randomness is a great book...it'll wipe the confident smile right off a trader's face...and that's a good thing
the bubble vision
why is it that every person who goes on air of bubble vision has to make their case for retail sales or higher oil prices?
what worked in 2000, worked in 2001? hmm... tech. Bubble popped and it is time for a new trick.
Stay away from oil, if there is no "fantasy land" credit available then oil will not go back the fantasy land prices we had over the past 4 years.
Also with an Obama admin, I am slightly skeptical that we will see super high oil prices too...
retail sales might be slight above estimates but those are gross numbers. anyone notice that everything is around 30% off at department stores? I saw 70% off signs before xmas... sales might be higher than thought but margins are going to be awful.
It is better to self liquidate then to liquidate in bk.
Happy Holidays all.
Hopefully the season has been spent with loved ones.
Divide the working people of a nation to protect the greed of
this nations bankers and managers of the working peoples retirement monies. (IE)protect the greedy at all costs works fine until it stops working!
Tuesday, December 23, 2008 1:14 PM
By: Jim Meyers
A new report from the U.S. Army War College discusses the use of American troops to quell civil unrest brought about by a worsening economic crisis.
The report from the War College’s Strategic Studies Institute warns that the U.S. military must prepare for a “violent, strategic dislocation inside the United States” that could be provoked by “unforeseen economic collapse” or “loss of functioning political and legal order.”
Entitled “Known Unknowns: Unconventional ‘Strategic Shocks’ in Defense Strategy Development,” the report was produced by Nathan Freier, a recently retired Army lieutenant colonel who is a professor at the college — the Army’s main training institute for prospective senior officers.
He writes: “To the extent events like this involve organized violence against local, state, and national authorities and exceed the capacity of the former two to restore public order and protect vulnerable populations, DoD [Department of Defense] would be required to fill the gap.”
Freier continues: “Widespread civil violence inside the United States would force the defense establishment to reorient priorities in extremis to defend basic domestic order … An American government and defense establishment lulled into complacency by a long-secure domestic order would be forced to rapidly divest some or most external security commitments in order to address rapidly expanding human insecurity at home.”
International Monetary Fund Managing Director Dominique Strauss-Kahn warned last week of riots and unrest in global markets if the ongoing financial crisis is not addressed and lower-income households are beset with credit constraints and rising unemployment, the Phoenix Business Journal reported.
Sen. James Inhofe of Oklahoma and Rep. Brad Sherman of California disclosed that Treasury Secretary Henry Paulson discussed a worst-case scenario as he pushed the Wall Street bailout in September, and said that scenario might even require a declaration of martial law.
The Army College report states: “DoD might be forced by circumstances to put its broad resources at the disposal of civil authorities to contain and reverse violent threats to domestic tranquility. Under the most extreme circumstances, this might include use of military force against hostile groups inside the United States.
“Further, DoD would be, by necessity, an essential enabling hub for the continuity of political authority in a multi-state or nationwide civil conflict or disturbance.”
He concludes this section of the report by observing: “DoD is already challenged by stabilization abroad. Imagine the challenges associated with doing so on a massive scale at home."
As Newsmax reported earlier, the Defense Department has made plans to deploy 20,000 troops nationwide by 2011 to help state and local officials respond to emergencies.
The 130-year-old Posse Comitatus Act restricts the military’s role in domestic law enforcement. But a 1994 Defense Department Directive allows military commanders to take emergency actions in domestic situations to save lives, prevent suffering or mitigate great property damage, according to the Business Journal.
And Gen. Tommy Franks, who led the U.S. military operations to liberate Iraq, said in a 2003 interview that if the U.S. is attacked with a weapon of mass destruction, the Constitution will likely be discarded in favor of a military form of government.
ALOHA - FARMING PROFITS
ALOHA !!
The following is taken partially from a book written in the 1920's entitled "Satan's Bushel", by G Garret ... To me it explains the dilemma between paper shufflers who trade prices(false wealth) and those who produce products that all of us need to survive(real wealth). In this instance it is the WHEAT FUTURES.
"Farmers are not forests. Farmers depend on markets, and markets don't allow them to set their own prices with the agreement of all others. The market even auctions off the wheat before the farmer grows it. Really it auctions off the farmer's labor, and with seemingly non-rational results. If the market wants ten bushels and he grows only nine, it pays him well for the nine; if it wants nine and he grows ten it pays him poorly for all ten. The bushel that breaks the market is "Satan's bushel."
" ... it auctions off the farmer's labor ..." but really it goes even further and auctions off the farmer's future and so in the long run this effects supply, which we all depend on. You can print up or mouse click a futures contract out of thin air in exchange for paper IOUs that are also printed out of thin air, but a bushel of wheat cannot be produced out of thin air! The last thing we need in this World are farmers who cannot afford to farm. The US government already pays some farmers not to produce and has been doing this for umpteen decades now! Talk about "welfare"! So in the coming years this commodity crash will have its global consequences(global populations have not fallen like commodities), which will be mainly felt by the masses not the elite who own our Nation's money and government.
Here is my dilemma as a farmer. While orchids are not traded on the futures I still face similar circumstances where the price I charge for my product cannot be raised, yet the cost to produce my product has not diminished by the same 60% or 70% that the commodities markets have dropped, mainly labor and fertilizers and boxes. Most of my cost to produce is tied up in labor. So unless all components to produce my product are part of the same futures markets then the playing field can never be level. Who here in the ag biz working in the fields will take a 70% pay cut, because wheat is down 70%? Will the UMWA or UFW or IWW take a 70% pay cut so as to fall in line with futures market declines? Will the CEO of XOM take a 70% pay cut because WTIC dropped 70%? So unless the structural pricing of production, including labor drops the same as futures prices then essentially the futures markets are leveraging bankruptcies and entire countries(OPEC) finances are collapsing, just due to futures markets. What is to stop producers from just quitting the global futures markets and start setting their own prices?
It brings me to the thought of market interventions, which are regularly carried out by bankers on the behalf of either the US government or corporate interests or even the banks own self interest and profit. So those of us who produce a product in demand by the masses, whether it is an ounce of gold or a bushel of wheat or a ton of copper are forced into the various futures casinos, or what I call "run the gauntlet"! We who produce real wealth are always faced with running a gauntlet which is owned and controlled by the US government, IRS and banks ... politicians and bankers own the US markets, so who's agenda will be most important?
There is always the few who somehow feel it is their God given right to own and control the many! We have seen this play out on TV over the past six months in the highest offices of American government and nothing really ever changes, because it is those who control this Nation's money that own us and our vote.
A LONG TRAIN OF ABUSES ... is what the Declaration Of Independence speaks of.
wfmi
buy limit 8.72.
RSI accumulation zone. Jan max pain 22.50
do ur own homework
The Great Wave
Just in the process of finishing reading the book "The Great Wave: Price Revolutions and the Rhythm of History", it was written in 1996 and looks at 4 periods of inflation since the 12th century. Currently reading the conclusion chapter and thought I'd share some snippets that seem rather prescient, and gives a another perspect of what may lie in our future. Paraphrased here:
"Each wave as starting with gradual price increases, eventually becoming an accepted long term trend. Inflation becomes institutionalized, prices go higher becoming highly unstable, surging and declining with increasing volatility. Price shocks in commodity movements. Money supply alternately expanded and contracted. Financial markets become unstable. Govt spending grows faster than revenue, public debt soars. Strongest nation states suffer the most. Wages lag prices. Returns to labor decline while returns to land and capital increase. Wealth inequality increases.
"These events have cultural consequences, disenchantment, alienation, cultural anomie. Finally the inflationary wave crests and breaks leading to cultural crisis, demographic contraction, economic collapse, political revolution, war and social violence. These events relieve pricing pressure: prices, rents and interest fall. This sharp deflation is then followed by period of equilibreum that last many decades with stable to declining prices. Real wages rise, returns to capital and land fall."
I would definitely say that we are living in a period of highly unstable commodity prices with potential price shocks coming due to stopped production, etc. Money supply definitely fluctuating widely, public debt has and continues to soar, financial markets unstable. Wealth inequality? Can we say bankers bonuses and hedge fund managers? Social unrest seems to be cropping up in every corner of the world, and with it strong possibilities of political revolution.
Perhaps we are now experiencing the crest as people have 'voted for change', but the true disenchantment I think hasn't fully set in yet. Every trend seems to go longer than you'd expect, and I don't see economic contraction stopping for another 6 months at best, so more unemployment, more disenchantment, etc. My personal opinion is that we may bounce here but head lower sometime in 2009, and probably end the year down.
The silver lining is that if we get through the next 5 years without some crazy wars, we probably have several decades of stability and prosperity to look forward to...
Gold Spike
Gold just rocketed up from $850 to $870 in a flash
long yamana for a big
long yamana for a big breakout out of it's sideways cons....
Long PCX
Long PCX for a trade @ 6. 5-day chart is turning. I like the action in gold and potential for ashort term turn in crude which should lift broader commodities complex.
Re: Divide the working people of a nation to protect the ...
//
And Gen. Tommy Franks, who led the U.S. military operations to liberate Iraq, said in a 2003 interview that if the U.S. is attacked with a weapon of mass destruction, the Constitution will likely be discarded in favor of a military form of government.//
Looks like relocating to Bahamas & being a global citizen is a wise option....
Telus :)
Hope some of you caught the ride.
Oil
edit: Anyone else curious why DIG is positive today considering USO and DXO are down?
Hyperinflation Investing Principles
Just read concise "The Hyperinflation: Survival Guide Stategies for American Business" written in 1989 and available free in PDF over at Bank Implode-O-Meter. Reviews lessons from Brazil, Argentina, and Bolivia as they relate to corporate survival during quadruple-digit hyperinflation. The author wrote this with the view that the U.S. dollar is to hit perhaps a triple-digit inflation owing to its runaway debt creation. Said these South American corporations relied heavily on U.S. dollar as a currency hedge but notes that U.S. corporations will not have such a luxury. Timely read, IMO.
The author's major themes for investment in a severe inflationary market:
- Pick high profit margin companies to guard against price controls;
- Pick companies with nominal debt and ample cash available to lend at high interest as credit markets tighten;
- Avoid companies with foreign suppliers (BA?) due to weakening dollar/heightened probablility of import duties;
- Nimble authority/flexible management critical to survival;
- Deft money management is critical to survival;
- Look for hard goods product with constant demand;
- Wage freezes and price controls for large cap companies are used by gov't for economic guidance
So which sector will outperform when/if inflation hits. I'm liking basic materials especially coal (BTU) and infrastructure through Obama's reflation programs (FLR). Foreign currency is a must (UDN maybe) which of course means an overweight in gold (GG).
Author warns that inflation hits hard and fast. I figure the dollar will devalue either when China triggers a rotation out of U.S. Treasuries or shortly after President Obama's reflation programs dump liquidity into the market.
We could even live underground and have 27:1 ratio of women to men...
Mike Morgan's Quick Notes - Behind Enemy Lines
Retail - The preliminary retail sales numbers are in, and they are dismally horrifying if your are a bull or you are long the retailers. The media is doing the best to put a positive spin on things, but give it a few weeks, and the real story will come out.
As we noted over the last few weeks, our mystery shopping tells me that not only are sales off, but so are prices. In fact, some merchants were selling inventory at break even to small losses, simply to reduce inventory and build cash. That, my dear friends, is very scary. It not only means the savvy retailers understand just how bad it is going to get, but it confirms our China concerns.
Housing - We have spoke about this quite a bit, and I have written about it till I am sick of writing about it. But let me digress for a moment to the current story behind housing. Cramer is yapping away about how great things look down the road and how lower mortgages are going to boost the industry. Huh? Is he that absolutely clueless? Yes. The man is a monkey that has other monkeys doing his research . . . and then he goes on to perform. Here's why he is simply off the wall when it comes to housing.
Lower interest rates are helping millions of existing homeowners that want to refinance. In fact, our Behind Enemy Lines information tells us that more than 80% of current mortgage applications are for refis. That, my dear friends, does not help housing or the home builders. And here is a catch. The people that need mortgage help the most . . . cannot get it.
Very simply put . . . for the benefit of the monkey . . . the people that bought homes during the bubble with fairy dust financing, cannot qualify for refinancing because - (1) the value of their home has fallen so much, that they would need to come up with a small fortune to qualify for a refi, and (2) so many of these people have lost jobs, that they would not qualify based on income and (3) so many of these people have fallen behind on credit payments, that they would not qualify based on a credit score.
All of this will unravel over the next few weeks. We are not going to see a housing bottom in June of 2009 as the monkey is calling for. We will see a huge tsunami of foreclosures over the next six months. And that will push prices lower. And that will increase foreclosures, etc. etc.
CPST
These guys needed the funds to grow the thing - too bad they didn't bite the bullet last summer with a directed placement the market could have digested in short order. Should be a good day trader in due course. Happy Trading
sold my TBT
Happy Holidays to all!
I see that TBT is down again in a slightly positive market. I hoped that after rising for the past two days, a wave of Treasury selling would have started. The rise of long bonds was pretty drastic, and if it is indeed a bubble, the fall should also be drastic. If it didn't happen now, then the chances are that long bonds are not ready to collapse yet. So I sold all my TBT now at $36.30 (a small position of 100 shares), which I bought at $36.50 a few days ago.
CHARTING SOFTWARE FOR MAC?
Can anyone provide me with a website for software available for Mac and not Windows? Thanks and much appreciated. I had no idea finding some would be such a problem for me but it is proving to be a headache.
Re: Oil
Scott, yes these ETF's often do some strange things, but this one is actually in line right now. DIG follows the "DJ US Oil and Gas Index", $DJUSEN on Stochcharts, which is up today. The holdings are major oil and gas companies along with service side companies. The fund has no direct ties to the current futures price of oil or gas.
Holding my partial position of TBT
I try and sometimes succeed in applying the good trading techniques discussed here. I bought 20 shares TBT @ 36.95 (second time in)to ease in to the TOG. Keeping a mental stop rather than an actual one at this point. I have been way too quick on entry many times. By small position size and the hope to scale in if it moves back to my basis, I may participate in a reversal of the long bond. Brings to mind that better entry calculation is key.
Eased in the same with RY, although the financials may be the last to the table.
Question to bsi
your comment re WFMI; is wfmi better chance of gain due to its beaten status or is your focus on it due to Cara 100?
It did not hit your buy stop of 8.72. Will you raise your stop?
peace
double oil ETF: UCO
I just spoke with a representative of ProShares about UCO, and he said that there are no special "trigger" events that would make UCO go to 0. They are rebalancing their fund daily so as to provide a double daily return of the DJ-AIG Crude Oil index. The index is now tracking the February crude oil contract, which explains why UCO is down more than DXO during its history (DXO tracks the July contract, and the nearby contracts fell more than the more remote ones). However, for the same reason, UCO will be up more than DXO once the spot crude oil price turns around. In February, the DJ-AIG Crude Oil index will most likely start tracking the April contract (so by design it is tracking closer contracts than DXO). There is a "natural" reason for UCO to go to 0, which would happen if the DJ-AIG Crude Oil index closes one day 50% lower than the previous day, as in this case, as promised, UCO has to close 100% lower. Even if this were to happen, the ProShares representative told me, the board of directors can still choose not to close the UCO fund.
UCO vs TBT. Expecting long bonds to fall off the cliff in the near future and expecting to catch the top of the long bond is a bit optimistic. Those who are buying TBT now will most likely be rewarded in 2009, as the economy will start turning around and the Fed will not be under such a pressure to artificially keep the long bond so low. However, when the economy starts turning around, the upside in UCO should be much bigger than that in TBT. This is another reason why I sold my TBT today -- I figured now is the time to move money to the most volatile assets that should rise the most once the economy starts recovering.
I'll start scaling into UCO (rather than DXO) either if spot crude oil falls below $35 or on December 30, whichever comes earlier. There might be a short-covering rally on December 31, so I want to start buying the day before.
Re: CHARTING SOFTWARE FOR MAC?
I don't know of any that runs on a Mac, but you could always use one of the online services like stockcharts.com or bigcharts.com, where the chart drawing is done in the browser.
BCE
Scooped up some BCE now for longer term and dividends. There's been some encouraging signs in Canadian Telco accumulation recently, I think.
Gold Rises Most in a Week on Middle East, South Asia Tensions
“Not since 1967 is it so obvious there is going to be a war in the Middle East that will send gold and oil well past this year’s highs,” said Ralph Preston, a commodity analyst at Heritage West Financial Inc. in San Diego.
http://tinyurl.com/979kqp
Gold jumpped when CNBC pumped
I was watching the futures screen at the time. Missed it.
Re: Gold Rises Most in a Week on Middle East, South Asia ...
“The only possible explanation for gold’s gains are the geopolitical tension in Gaza and in India and Pakistan,” said Leonard Kaplan, the president of Prospector Asset Management in Evanston, Illinois.
What about monetary supply explosion and uncertainty in equity and financial markets?
Mac Software
ProTA
www.beesoft.com
is for end of day and the best. If you want real time I have one I use to use but have to find the site and name.
dzz/sil
stopped out of DZZ for a loss, still long SIL
Mac Software, real time
I used trendsoft eod and real time for about ten years ending in around 92-94. I migrated to Tradestation for charting. I still use Prota for eod mutual funds that I like to monitor and it will adjust for distributions (when set-up) and keep the charts correct. Also has the best features imho.
http://www.trendsoft.com/
Re: Holding my partial position of TBT
re:WFMI
don't know what will improve its chances of a gain. changing limit order to 3 PM price
uso
buy limit 28.98
Re: Holding my partial position of TBT
long wfmi at 8.85
Retailers
I'm looking at buying some of all of the following:
CMRG
ANN
LIZ
CACH
My thoughts are these are all extremely speculative. One or several may go bust. But if one of them goes up 5 fold from here then you are going to make money. Gas prices are down, competition is down, and the stock prices are down up to 90% in some cases. All of these companies have solid cash positions with the exception of LIZ, which is extremely speculative at this price.
Cash:
Casual Male (CMRG) - $0.15/share cash; stock price: $0.4701; LT debt of $0.22
Ann Taylor (ANN) - $1.40/share cash; stock price: $5.60; $0 LT Debt
Liz Claiborne (LIZ) - $0.50/share cash; stock price: $2.58; LT Debt of $10.00
Cache (CACH) - $1.92/share cash; stock price: $1.92; LT Debt of $0.27
Mac Software
http://www.pure-mac.com/stocks.html
Correction: Mac Software
www.beesoft.net
WFMI
I've been watching WFMI closely for 6 mos., (Why, I couldn't possibly explain because I haven't the faintest idea) I'm wondering why it's fallen off a cliff so much the past few days... $22.50 seems optimistic for something that's been in the basement for so long? Some kind of bounce to ~$12 is believable IMO but might take a while...
Re: WFMI
it was on the Cara 100 list so I look at it pretty regularly. I'd suggest setting up a series of RSI screens to screen many issues quickly.
re: 22.50. That's the max pain calc. Doesn't mean it'll get there but again, it's a way of screening for issues with the most potential AND have a tendency to move in that direction ST.
the 50 dema is 11.31, 200 Dema is 20.
if disposable income improves, I'd speculate diets will improve prior to increases in other discretionary items.
China Begins Filling Oil Reserve
Talk about good timing of filling at price bottoms...
China has started filling tanks at its largest oil reserve, taking advantage of tumbling world crude prices, state media reported Thursday.
The facility's 10 tanks, which have a total capacity of 6.3 million barrels, are operated by China National Petroleum Corp., the nation's top oil producer, and are located in the northwest Xinjiang region, the Xinhua news agency said.
This is just the first phase of the reserve, which will eventually have an overall capacity of more than 50 million barrels of crude, mainly produced in Xinjiang or imported from neighbouring Kazakhstan, it said.
Total investment in the project is 6.5 billion yuan (950 million dollars), with 856 million yuan invested in the first phase, it added.
Analysts said the ongoing slump in the global oil market, with crude prices falling 78 percent since hitting record highs above 147 dollars per barrel in July, made a good opening for China to expand its crude imports and reserves.
http://tinyurl.com/783p9c
Re: Anyone betting that we will
We were correct on the close. I hope the trend will continue longer, as my positions are only slowly turning green (sold only KGC and WGW today with minor profit).
On the other hand, the markets feel toppy by some measures. The raising TLT bothers me.
My new year resolution is learning option trading to better control risk.
Happy New Year to everyone!
max pain calc.
I played some with the site and the results could be surprising (likely not reliable).
For USO: Jan 2009 $55 but Feb 2009 $30.
Who's Zooming Whom?
http://tinyurl.com/7b3l5h
Quick history lesson for the Professor.
Re: China Begins Filling Oil Reserve
I believe this could be significant, as it can offset the Chinese import decrease.
Incidentally, US strategic reserve should take the suspended delivery starting in 2009, right? This combined with OPEC's effort on cutting oil production should move oil in early 2009.
In retrospect, oil went down shortly after the US strategic reserve was suspended in July 08.
Re: WFMI
All of the above, including the balance sheet!
USO
bought leaps 2011 on USO today.....100 dollar strike.....any one else thinking this way?....if oil does not move up for a long while it still seems pretty safe to me....
Re: USO
dberyclan: what is your exit strategy from this trade? Will you be able to keep holding your leaps once they double in value, or will you just sell them at that point? How high would USO need to be a year from now in order for your leaps to double? What will happen to UCO at that point -- maybe it will more than double? So maybe investing the same amount of money into UCO would fit better your psychological profile (you are not paying a volatility premium for UCO now and it has no risk of going to 0 if USO just misses your $100 strike price)? I don't know the answer to these questions, but it would be very useful for you to ask yourself the same questions.
Re: USO
Also, since UCO cannot go to 0, then you might be able to invest more money into UCO than into USO leaps, and hence get a bigger total return if USO does rise. When comparing an options strategy with a pure stock strategy, I always consider how much money I would be willing to invest into each strategy and then compare the expected total return from each strategy (given several possible paths for the future evolution of the market weighted by my subjective probabilities of each path actually taking place).
Re: max pain calc.
I agree the results can be misleading, especially when looking at the leap contract months like Jan. I just looked at the open interest for the Jan contract and there is still open interest all the way up to $200 strikes, (ie at the $200 strike there are still 1423 call contracts open).
Now the shorter term Feb contract has open interest only up to $67 and really nothing to speak of above $50 so the results are definitely very different.
TBT
Watching TBT for a bullish divergence (ie., a new price low with a higher RSI than the most-recent low). If that happens, then that's when I'll commit some $$$.
Pakistan Moves Forces as Tensions With India Rise
http://tinyurl.com/9jjqxn
watch gold and oil price in coming days
Monty Python- Annoying Peasant
Social Commentary
http://tinyurl.com/8tdf5q
Happy New Year!
Re: WFMI
What do you mean when you refer to "max pain calc"? I'm sure you have been asked this question before so please forgive asking if that is the case.
Cheers and all the best for a propserous New year.
"max pain calc"?
see
http://www.optionetics.com/market/articles/13857
http://www.iqauto.com/cgi-bin/pain.pl
http://www.optionpain.com/MaxPain/Max-Pain.php
Saturday Morning Coffee
http://tinyurl.com/9kscde
Pink Floyd, Force Feeding, and occasionally a trading idea.
Re: Who's Zooming Whom?
Excellent Ron.
btw, three years ago I told Seeking Alpha's creator/CEO that you were my favorite blogger. You consistently hit the mark with the points you make.
Thank you for sharing it here.
Re: Who's Zooming Whom?
Everything about the markets provides an opportunity for humility and the stock trader's breakfast...egg on the face. Still trying to decide about the Cara Community conference...
Re: Who's Zooming Whom?
Re the Cara Community conference, Jim Watt and I have reviewed many surveys, and we have a much better idea of what people want. The result will be a slightly different program, which will be obvious in the file that will be uploaded this coming week.
Israel Attacks Gaza
Much more support for gold next week...
Israeli F-16 bombers have pounded key targets across the Gaza Strip, killing at least 195 people, medics say.
Gaza officials and the Hamas militant group said more than 300 others were hurt as missiles hit security compounds and militant bases.
The strikes, the most intense Israeli attacks on Gaza for decades, come days after a truce with Hamas expired.
Israel said it was responding to an escalation in rocket attacks from Gaza and would bomb "as long as necessary".
Israeli Defence Minister Ehud Barak said "it won't be easy and it won't be short".
"There is a time for calm and a time for fighting, and now the time has come to fight," he said, quoted by Reuters.
http://tinyurl.com/8oompp
Zooming Ron Sen
I agree Bill, Many Thanks to Ron who's site I check daily, usually right after reading the daily report here, depending on the timing.....sometimes I read Ron first as he's posted first....:>)
Thank you Ron. I enjoy the Saturday Coffee as well.
"When I look at the volume
"When I look at the volume table, my eye draws a line across the +25% line and I look above that to see (i) how many stocks also have higher closing prices than lower closing prices that day, and (ii) which ones, in that GE is a more important “General” than GM. What I am studying (it only takes 5 seconds) is money flow."
I'm always learning from you Bill! Just can't thank you and all the other posters on your site enough, for sharing their knowledge and insight.
Thank you all! I wish everyone here my very best as the new year kicks off!!!
Re: Monty Python- Annoying Peasant
Zorro - the other day I told a friend that I fear that Bernanke's strategy will turn out to be the large wooden badger. The look on his face reminded me that you have to know your audience when referencing Python. :)
http://www.youtube.com/watch?v=T2PdyxMtiYM
Re: Who's Zooming Whom?
Forgive my lack of blogging experience, please...
What does "zooming" mean?
PS: Congrats on being right on SLW. At the time I was scared, too scared. Being a bottom fisher, I should have realized that was THE panic at the bottom, the last rumor that says its going under....
A lot of it is the "not being able to believe anything companies say" routine, which had or has become a nasty recurring problem all over the place it seems since Bear Stearns and Merril and AIG, etc, would say something that they were "strong" one day, and within a week later it would all turn out to be false and turn to crap. We saw that enough times and began to assume it was true everywhere.
Re: Israel Attacks Gaza TIMING
Israel pounded the Gaza Strip in the bloodiest one-day death toll in 60 years of conflict. India and Pakistan are setting their forces in place for lord knows what. Heaven help us if two new wars break out funded by Cheney's cronies to rescue their sagging money bags...just where did a record $7.3 trillion of stock market value that was obliterated this year go---into the sands and hands of these greedy beasts?
re: Bill's Opening comments
"FoxNews has a couple videos on the Madoff affair that I think are well worth the time to watch. One is about ... the other an interview with one of my favorite Wall Streeter’s Howard Lutnik, the Cantor Fitzgerald CEO."
I feel like I need a shower after watching that video. Among other discomforts, that amply-sweatered hostess who botched - literally - every sentence she had to utter. Bill, you've touted Mr. L. a few times and I've dutifully persued the interviews and empathize with the tragedies the C.F. firm has had to endure, but I nevertheless am always left feeling uneasy after watching/hearing him. Since you recommend it, I suspect my feelings are wrong - my snobbish, Waspish upbringing, no doubt. Heaven knows there have been villains raised on both sides of the tracks during this cycle's fiasco. What an awful time - trust and confidence so damaged.
Back to Belgian chocolates and Edward's "Technical Analysis of Stock Trends"...
Canadian Gold Fund Premiums Skyrocket
Incredible premiums on these funds:
GTU trading @ 23% Premium $40.35 share
CEF 17% Premium (12-24-08) $10.40 share
KRY news
http://tinyurl.com/74tcwc
Platinum ETFs
Platinum prices looks promising for spring back compared to gold / silver. Is there any 1X/2X long ETFs or SLW / GG equivalent platinum play.
Re: Crude Oil/"easy money"
[CP - "How could I have not ridden the short from there to $40 is beyond my imagination..."]
[Mackinaw - "Ditto for me. It might be interesting to try and dissect the reasons why all of us haven't made a gazzilion $ on this play of the year."]
Sometimes on long drives I'll ponder questions like that.
(a) Let's not forget that the vast majority of actively managed funds fail to beat their benchmarks, that the majority of both long/hedge funds got hit in October and November as badly or worse than most of us did (in fact, was it not forced margin sales that may have accounted for the pummeling of many mining and commodity stocks), and that the majority of day traders quit within a year.
(b) Manipulation. There has to be a 'smart' way to play manipulation (and it's not necessarily deciding not to play). We know insiders win this game. We know outsiders lose. Since we're making the outside play most of the time, I would say playing against our inclinations will often work out simply because we're betting against the outside crowd.
(c) The short oil trade. There is someone who shorted oil at 140 and hasn't yet moved his chips. But I don't think it would be someone who's watching the market closely. It would almost have to be someone with little to no ego/financial security invested in the trade.
(d) Emotions. Are key to any trade, since trading is a competition that depends a great deal on how well one understands the emotions of others, as well as how well one controls his own.
(e) The long gold trade. It would be difficult to convince me that a washout low for this sector did not occur in October. If I had the urge for high stakes baccarat, this is the table I would choose. Holding LT positions in GDX/FSAGX/GG/WGW, and both LT and ST (day trading) positions in SLW.
FARMLAND VALUES
ALOHA !!
A visit to the University Of Iowa and USDA farm data shows farmland values have been rising this year at a 6.6% rate after three quarters reported. Compared to residential property losing on average 34% for the same time period, mostly due to the real estate hot zones like So Cal, SF, Vegas and Miami ... I really do not see even 0% Fed Funds Rates moving this market any time soon. A lot of people are either unemployed or about to be and once severance packages run out and unemployment benefits end then what is left? So there is a race for OBAMA to restore employment or else! I am sure he will extend benefits and raise the debt ceiling, just like all the prior administrations have done! Welfare is the way of the two party aristocracy and their power base.
Interesting to note that according to the USDA stats US farm business assets are allocated by the following:
- 79% real estate
- 8% machinery
- 2% crops
- 6% poultry/livestock
- 5% financial
So real estate accounts for the vast majority of farm assets.
What caused the problems in the 1980s when farms were going bust was the amount of debt farmers had. If you recall Willie Nelson had the FARM AID concerts going on back then! Where was the FARM TARP?
Maybe instead of $700bil TARP BAILOUTS for the US BANKS they should have tried BANK AID concerts first! If US domestic policy is to allow US farms to fail then I see no need to save US banks. What food do banks produce? Lately its been mostly CROW!
Remember there are not any record supplies of grains laying around and with the collapse in pricing I would not expect to see any over supply for a long time. You just cannot mouse click wheat like you can money!
As I type this I see the USA is sending some $220mil worth of food to foreign countries in 2009. Can that be prudent right now?
While China fills up their oil tanks(which would probably be a good indicator that the WTIC is at the bottom), not many Chinese will be able to eat oil!
IT ALL WORKS ...
Re: FARMLAND VALUES
As I recall the most recent farm bill was around 30 billion USD - small potatoes compared to the banks, but still pork to a lot of people who don't need it, yet claim to believe in a free market - most farm states are solidly red. Like most government programs, it transfers wealth from the masses to the rich.
Re: Platinum ETFs
http://keyinvest.ibb.ubs.com/e-tracs/CMCI_platinum...
Re: Platinum ETFs
PTM is an ETN that's supposed to be a 1x tracker of the price of platinum. Not a lot of volume, so be sure to use limit orders.
FD: no position in platinum, long PAL.
Madoff scandal connects to Pirate Islands
This will be fascinating to watch unfold.
So where did the money wind up?
http://tinyurl.com/9d2s48
Re: FARMLAND VALUES
ALOHA !!
It would be nice if everybody just called "pork" what it really is ... WELFARE! Its somebody's WELFARE in the end ...
offtopic - EditGrid. An online spreadsheet with stock prices
Not meaning to hype but just stumbled onto a possibly useful application called EditGrid. The online spreadsheet will retrieve remote data such as Yahoo Finance stock quotes, news, and related info. which allows for some interesting number crunching and data sharing possibilities, etc.
fwiw.
https://wiki.editgrid.com/display/helpcentre/Home
Re: Crude Oil/"easy money"
(a) agree - but forced selling affected executives as well as funds, for example, the Tesoro CEO who was forced to sell a hefty amount of shares due to margin calls last October.
(b) I'm not so sure about this; if there's heavy betting (and enough heavy betting) moving a particular market AND you are on the right side of it, I don't see how you can be manipulated out of it; ie. bets against you would likely lose, if I follow you correctly?
(c) "It would almost have to be someone with little or no ego/emotion in the trade".
--Well, its not me, LOL. I bought USO Jan 2010 puts at strike 100 when oil was pretty high last July - the trade kept me awake - holding a $16+ option premium (at that time) is pretty hairy, but had I held til now I'd be taking all of next year off. As it is, sold out with a little profit. A pity to be right and still miss the boat, but that's life.
(d) yes!
(e) the long gold trade - I'd tend to agree with you. Looking back, I expected gold to carry it's strength, following thru on last March's highs. Why did I believe so - inflation. These days, I'm just confused. Its difficult to track M3 since they stopped reporting it; and I also did not like the CPI reports claiming small increases "exclusive of energy" which is just BS. Massive cash printing, which I can't find real evidence of that either (no doubt it is happening, though, given all these bailouts); so an increase in cash supply results in future inflation, which is good for gold, and now the markets just have to catch on to that idea (well, that's my thinking anyway). Reflation - its a concept I am still getting used to. I am long AUY calls with an April $5 strike.
Nice talking to you.
Re: "max pain calc"?
Cheers
Sunday Morning Coffee: Fish Finder?
http://tinyurl.com/8ja2st
Pat Benatar comments on the markets?
FOOD STAMPS
ALOHA !!
In FY 2005 the USDA food stamp program(SNAP)cost the US TAXPAYERS $28.5bilUSD and in FY2008 it is now $35.6bil. The total US National Debt during 1930 was $16.2bil and by 1939 FDR and the New Deal had it up to $40.4bilUSD. In 1937 the US National Debt was about the same as what the US government is spending on just food stamps in 2008!
In WHO do we TRUST?
MORE FARM DATA
ALOHA !!
Okay, back in the 1930s this is what the American farmers looked like:
1930
US population = 122mil
Farmer population = 30.5mil(21% of US labor)
Total farms = 6.3 mil
Average acres per farm = 157
Acres under irrigation = 14.7mil
1 farmer feeds 4 people
And now:
2008
US population = 304mil
Farmer population = 2.95mil(2.6% of US labor)
Total farms = 2.1mil
Average acres per farm = 461
Acres under irrigation = 49.4mil
1 farmer feeds 103 people
Obviously technology and machinery have taken over crop yields in the USA and a lot of that is US corporate owned. How else could less farmers produce more?
Back in 1930 there were no unemployment and food stamps and no social security or medicare or virtually any US government aid. For one simple reason ... almost every US family had some family member who was a farmer, so if you lost your job in the city you could return to the family farm and work and provide for your basic needs like shelter and food. That is gone today and instead the family farm is now the US government. We now vote to have our government expand money supply so we can watch more sports on TV and drink beer instead of going off to work on the family farm! The US government has traded your vote for your complete dependence(cradle to grave). Except now our US government is dependent on foreigners not just to buy our DEBT but to also supply a growing portion of America's food. We import food we used to export less than 30 years ago! Who has not been to the produce section of your local grocery store and seen imported food from Mexico or Israel or India or Costa Rica or Columbia or New Zealand? This to me is a bad plan and an accident waiting to happen! In the 1930s when the US government defaulted on its currency Americans could still eat, now if that happens food imports will collapse. I can tell you it takes years to grow a fruit tree and some trees like Lychee take ten years to produce one harvest and it only bares fruit once a year! As any alcoholic or cokehead will tell you, "Being dependent sucks!" America is more dependent on foreigners for all aspects of life more than ever before in our entire history! WalMart is virtually built on that principle!
Our Founding Fathers are rolling in their graves as JP Morgan is smiling in his grave! Robber barons all ... but to what end? None of this favors the US TAXPAYER, an increasingly rare species ... and getting more rare!
IT ALL WORKS UNTIL IT DOESN'T!!
KEEP AN EYE
ALOHA !!
Speaking of the US TAXPAYER ...
Keep an eye on these two charts and data below the charts and as quarterly growth goes negative and gives way to annual negative growth then the USDX will crash again like it did in 2001! Look at that drop from Q4 2007 to Q4 2008! If US tax revenues from payroll remain negative in 2009 then I believe the USDX will start another long term down trend like it did in 2002. The USDX went from 120 to 72 before and of course lately there has been a rally, but this current rally is not based on anything fundamentally sound unless you consider US DEBT as a safety. What kind of paper currency rally is sustained on "desperation" and seeking safety?
Link: http://tinyurl.com/455lx2
As you can see on the Q/Q chart the negative tax revenues started up in 2001 and then really went negative in 2002 on an annual basis. That was the peak of the USDX and it has gone downhill ever since until this latest rally but the tax revenues are now going negative again which is the only thing that prevents the USA from looking like Mexico. Our ability to raise taxes is the underpinning of a AAA/Aaa US Sovereign Credit Rating. Without that we are Mexico! Now I have been to Mexico so many times I can almost say I was a resident, so there is much I like about Mexico and its people, but there is not a huge tax base there worthy of a AAA rating. For governments tax revenues are income! That's it! Any BALANCE SHEET boils down to income versus expenses(assets versus liabilities). On the "liability" side of the US BALANCE SHEET there has never been a problem with growth! We can grow "liabilities" like nobody's business! In fact the US CONgress should just change its name to "LIE-ABILITIES-R-US"! That's LIABILITIES with a Capital "LIE"!
US payroll tax revenues play a key role in sustaining the ability of the USA to create debt? If that is impaired then US DEBT looks a lot less attractive to the foreigners who are now buying our debt.
ALL OUR BEST THINKING ...
Re: Sunday Morning Coffee: Fish Finder?
ALOHA !!
RON ...
Pat Benetar ... Wasn't there a time when girls used to dress and look like her? Didn't she do a song where she sings the lyrics "Hit me with your best shot!"?? As a US TAXPAYER and small business owner I am always saying that to my government! HA!!
Holy crap ... so is GM really begging for more now? Hey, a billion here, a trillion there, a quadrillion over at the BIS ... ahhh ... its only MONEY!
Thanks for the mention. I always enjoy your commentary and trading angles. Gotta keep it all in perspective!!!
WE OWN THE GOVERNMENT, but they like to convince us otherwise! HA!!
ALL THE BEST!
Re: Crude Oil/"easy money"
Goldbug - "Massive cash printing, which I can't find real evidence of that either (no doubt it is happening, though, given all these bailouts)"
The second graph in this link is I think, the place to go for evidence of "cash printing". But of course this seems to be just "mouse money" so far. Most mouse money has been soaked up by the banking industry and awaiting circulation? Gold will be my indicator of main street inflation.
http://www.marketoracle.co.uk/Article7880.html
And direct from horses mouth, but I think more recent:
http://research.stlouisfed.org/fred2/series/BASENS
kaimu comments on a series of indicators pointing us in the same direction, eventually these dramatic spending programs will begin impacting street money. Magnitude of impact will depend on how effectively the FED can soak up the excess (as if). Perhaps recently weak gold prices were influenced by USD strength and manufactured energy prices? Energy prices in terms of world currencies will become relevant in the near future, once fear begins to subside and normalcy returns. World government spending is an effort to reverse downward price pressure "fiat strength" and I think will succeed in overshoot. Nothing about the concept of money is real, except for hard assets and value-added labor. The planet is more populated than ever in terms of human numbers, each of them competing for limited resources.
Disclosure: We are all in neck deep.
Debt Safety
Debt matures in the form of slavery, the escapes are default and avoidance.
Re: Crude Oil/"easy money"/who's playing who/peak oil
goldbug58- re manipulation, my point was to assume that our 'inclinations' will generally prove wrong, as we are the ones being manipulated...
taking the thought further, however, how many shorts got taken out on TASR? that would just be an example of more sophisticated traders taking advantage of less sophisticated traders; there is no end to the short squeeze game...
then there is the question of who, ultimately, is pulling the strings (if there is in fact 'real' manipulation)-> who qualifies as being an insider? if we are to believe the media, even T Boone ended up on the wrong side in a big way on the slide in crude...being cynical, however, i have to wonder if he was playing both sides, and any publicly proclaimed losses were taken for the sake of hiding enormous gains on the short side?
peak oil- at one point last summer i casually posted a link to an article about the 'myth' of peak oil (i don't personally have an opinion about it), and was surprised at the number of responses to the contrary...now that oil is $100 lower, there aren't any links available countering peak oil...sometimes i sit back and wonder if it's possible to game broad moves in the market (commodities, equities, whatever) simply using a system that tracks media headlines...
the october 28 SLW trade
reposting Bill's link to the October 28 report:
http://www.billcara.com/archives/2008/10/caras_com...
it's worth scanning through the day's posts; glad to see many bought SLW below 3 that day-> if you can recall your emotions that day, you can use those recollections to inform future trades...
Re: Crude Oil/"easy money"
CP - thanks for the links - very interesting. The last time I tried to calculate the amount of $USD per ounce of (US-owned) gold allegedly sitting in vaults (Ft Knox, the NY Fed, etc) I came up with a ridiculous figure of around $10,000 per ounce. Conclusion: the input data (not the simple division) had to be wrong?
I've been aware of the dangers of fiat currency since about 1980 when I was reading (and actually believing) Howard Ruff's "Coming Bad Times" but that was during the double-digit hyper-inflation years (and I guessed that we'd "fixed" things by the time of Reagan's 2nd administration - I was quite naive in my 20s - and probably still am).
Gold should certainly be higher than the current $870 quote - that is merely $318 (roughly) in terms of 1980 dollars. I've been wrong before, but I buy a Canadian Maple or a US Eagle, plus 25 oz silver, every paycheck nowadays.
For my kids, I figure they're better than savings bonds.
Re: Crude Oil/"easy money"/who's playing who/peak oil
Actually I thought all of your points were good. In reference to the manipulation theme, I was thinking more along the lines of trading desks playing against the customer's positions, which I don't know if its feasible; for example, say if I'd bought a measly 300 shares of CHK back in early Sept when I thought a good price for it was $30, down from $40+. If my broker said something like "let's take this guy down", what could they do against me? Immediately short 2000 shares of it? 3000 shares? Given a voulme of say 5-10 million or so, it would be meaningless, and quite a risk on their part, if they were wrong.
I do think that big cartels, such as OPEC; or maybe just the Saudis or the Japanese alone, could force big moves in any market. But its a dangerous game, even for them, and with collusion, its a matter of trust - ie. any player(s) can suddenly take chips off the table, leaving the "partners" high and dry. I believe that a German consortium, Metalgesellschaft (sp) tried this with copper some 20 years ago and got smoked for half a billion; and the Hunt brothers with silver a little further back. Central banks play similar games, but not often with good judgement. I don't know how to play it either, as you said its an inside game, they leak all sorts of erroneous information, and who really knows what the truth is?
Like everyone else, I stick to my own little trading strategies and hope for the best.
scaling into oil (UCO)
Placing a small buy stop limit order on UCO for tomorrow (200 shares, stop at $10.75, limit $11). I am thinking the Middle East tensions can scare some oil shorts into covering, which can potentially turn around the positive feedback loop of decline in oil (oil is falling because everyone knows it will keep falling). As I have posted previously, UCO is much safer than DXO and has a greater potential upside (as it tracks less remote futures contracts than DXO, which have fallen more).
Chavez siezes back gold mines
http://www.iht.com/articles/ap/2008/12/27/business...
Apologies if this has already been posted or discussed, I have been offline for days and I am just catching up on news. I do not have much commentary to add since I don't follow these miners closely, but I thought I would share with the community,
-Rix
Venezuela to seize gold concessions as oil falls
The Associated Press
Sunday, December 28, 2008
CARACAS, Venezuela: Venezuela will seize several gold-mining concessions that previous governments granted private operators, in a bid to supplement falling oil prices with proceeds from state-controlled gold, President Hugo Chavez said Saturday.
Chavez named no specific contracts or companies to be affected, but his mining minister has vowed to next year take over the nation's largest mine, Las Cristinas, which is operated by Canadian mining company Crystallex International Corp.
"We are taking back some concessions that former governments have given, and whose permits are still held by some rich people," in order to reduce public reliance on oil, Chavez said.
Venezuela relies on oil for 94 percent of exports and roughly half its federal budget, making it unlikely that its largely undeveloped gold reserves could ever compete in importance.
Chavez acknowledges that oil prices down 70 percent since topping $147 a barrel in July will affect Venezuela, but he insists the wealthy will suffer more than the country's poor, who benefit from record social spending programs that he vows to continue.
"Social investment will not be halted," Chavez said Friday. "This, for us, is sacred."
Calls to Crystallex's Toronto headquarters went unanswered Saturday, but a Dec. 11 statement said the company had "received no official communication concerning changes" at Las Cristinas.
Crystallex won a contract to develop the mine in 2002, but was forced to halt construction after Venezuela's environment ministry denied its final permit in May.
Chavez's government nationalized four major oil projects in 2006, and has clashed over permits and labor disputes with several international gold mining companies this year.
Mining operations have not yet begun at Las Cristinas located in Venezuela's biologically rich Imataca Forest Reserve, which covers 8.6 million acres (3.5 million hectares). Environmentalists warn that mining there could upset the delicate ecology.
Venezuela produced roughly 4.2 tons (4.3 metric tons) of gold in 2007. The country is also rich in diamonds, bauxite and other minerals.
While oil has tumbled more
While oil has tumbled more than $100 off its $147 a barrel high in the summertime, the price of US light, sweet crude could yet move as low as $25, and even $20 if current conditions persist, Gulf CEO Joe Petrowski said on CNBC.
"Oil's got some more downside," Petrowski said. "Whether it hits $20--could--but I think $25 is in the cards."
Naked Puts
First Post
Have been a long time reader and truly appreciate Bill's generosity, comments and insights. I have been selling about 6 to 12 OTM Naked Puts per month for about a year on about 75% on Cara 100 Stocks. Have been assigned stocks about 25% of the time and when assigned write covered calls. Presently have covered call on BK Feb 5, HNZ Feb 40, MSFT Jan 20, and ABT 55 FEB.
Currently have naked put on Jan 25 USO(UBOMY.X), GG Jan 25, Jan 14 puts(INTC), and plan to sell OTM January puts on some of the following: BP, COP, ORCL, CSCO, BMY, KO, ADBE, RIMM,CELG. Would love to hear suggestions for naked puts on quality stocks, that I could own and if assigned write calls?
I believe this a great time to writ puts on quality stocks in the energy sector? Any ideas. I appreciate all the comments in this blog and look forward to participation.
Re: Chavez siezes back gold mines
This is a sad ending to what should be a real lesson....
The Crystallex story was compelling...It had all the ingredients of a classic "promotion" in Bill's parlance. The company had the "rights" to an elephantine pile of the yellow stuff. The story was easy to understand and the share price affordable to all. There were experts lending their good names to the promotion, although through it all management had very little skin in the game. It was a "no-brainer" investment, one "guaranteed" to triple or God knows...There were of course indications going back years that this property would be confiscated, but those indications were ignored by the legions too blinded by the shining glimmer of a golden mirage.
Little people invested all they had in the mine, buying into hype while smarter players (me by this point, a couple of years ago) were eager sellers into any rally and were loath to take a loss or even hold overnight, after a point. For a long time the stock was fun to trade because almost the entire float was controlled by "stupid money", giving idiots like me a better-than-even break! By about a year and a half ago, Kryztallex became far more trouble than it was worth, and most players just moved on.
The moral? Nothing easy, nothing "sure" ever comes to fruition in the stock market. There is by definition no easy money because if it were there the pro's would just walk over and take it and it would be gone. Krystallex never really set up right on a risk-reward basis. The risk of holding was always too high. However, we do have great memories of selling into the full-blown euphoria the day GRZ got their permit, soon to be revoked.
For those stuck with shares, may I suggest requesting the certificates and consider re decorating your kitchen or perhaps a guest bathroom in Krystallex wallpaper, so that you may never forget the lesson of the great gold mine promotion.
chavez' move on KRY, GRZ
With Chavez' oil revenues WAY down (along with his popularity) there's a logic to moving now on KRY: to mollify his constituency. Some statements refer to foreign miners taking the artisan miners' gold, but the only foreign miner actually taking out gold is "socialist partner" Rusoro - which seems destined to benefit from the commotion. I'd think the forthcoming move would also "persuade" GRZ to sell to Rusoro. Question now is whether Rusoro will continue to act "western" for a while or suddenly go "putin-esque". If the former, I'll hope their stock price will come alive, and have a good run. Given their low trading volume, it shouldn't take much new interest.
FD: long-(suffering)holder of Rusoro
Re: scaling into oil (UCO)
If you had bought equal amounts of SCO and UCO on Dec 1st, by now you would have gained 12%.
KRY: Kry is not a
KRY:
Kry is not a concession and it recieved its MOA and paid out the bond and taxes to the current government. If the verbage of Chavez is correct, he was not addressing KRY. GRZ will not sell out to Rusoro because Rusoro's mining business model is secondary to its primary goal of "trying" to collect cash and then applying it to the pockets of the board of directors. That is the "only" reason that Rusoro wants GRZ. To get their hands on the 100 million plus war chest the GRZ has in the bank. Rusoro burned through 40 million of its 60 million cash position on one quarter. Now it is in a position of no longer being able to go to the capital markets to continue its "financing" arm. Without the GRZ cash position securely in "Rusoro's pockets" they are on their way to bankruptcy in quick order. The Russians nor any other counter party is in a position to bail them out. There is not one mining company that is in a good position in Venezuela. Only GRZ has the bucks to move on and reinvent themselves elsewhere. KRY and RML are dead meat in a Hugo Chavez socialist government where one hand does not know what the other is doing. Decision making at a standstill. At least with the oil problem there is a limit on Chavez's power or his chance to rewrite the election rules in his favor.
Re: scaling into oil (UCO)
Chikenpookie: Had I bought only SCO on Dec 1st, I would be up 54% now. And if I buy only UCO now, I am sure I will be up much more in a year than if I were to invest the same amount of money split evenly between UCO and SCO.
In a range-bound oscillating market, the strategy of investing an equal amount of money into an ultra-long and an ultra-short pair will keep losing money over time. In an uptrending market, it is obviously better to invest money only into an ultra-long. An ultra-long & ultra-short pair will gain money only in a downtrending market (but will gain less than an ultra-short by itself).
will gold test 900/rebirth of the commodities trade
900 before the NY Open looking like a distinct possibility...here's to the start of another leg up...
YIR
What a great YIR, Bill - that Schiff video is hilarious. Thank you (and all your great contributors) for your insights this year which have saved me considerable financial loss and, more importantly, armed me with a potent set of tools and skills to navigate these treacherous waters in the future.
gold silver ratio
The gold silver ratio is the highest it has been since 1996 where my data starts. It toped out over 95 two months ago. Now at 83. The weekly RSI went over 80 twice in the last 14 weeks and is now down to 64. Weekly MACD started crossing over last week. Good chance that either gold goes down or silve goes up to reduce the ratio. I'll bet that silver rises faster than gold. Any thoughts?
Re: scaling into oil (UCO)
David - SCO/UCO - I agree, but isn't the phenomenon interesting? There was a about a 200% gain in the DXO/DTO pair from the period back in July. That said, I don't quite understand why an ultrashort/long pair would loose in an uptrend and gain in a downtrend.
Anyway, in the case of UCO, if oil were to reach $60(a 60% gain), then UCO could be double that(120% gain) at a maximum, reaching ~$21. For DXO, a 120% gain from here would produce a price of ~$4. Understanding and successfully trading the volatility in oil seems much more elusive than trading the broad market.
I'm just trying to figure this all out... while still holding DXO.
Nice pop in gold tonight, but since I don't really understand when to trade, I'll just hold for now. Long term, I know it'll be a winner.
Re: gold silver ratio
Bruce - Silver is a consumable and has industrial uses so might not rise quite as fast as gold, but with platinum also rocketing, it looks like the ratio will trend back to the norm. Good choice if you're holding any of these.
Re: Platinum ETFs
That PTM chart is looking VERY bullish with considerable upside potential. As Bill says, "Something is happening here". Stochastics are also pointing to an opportune entry point at this time.
PTM Chart: http://tinyurl.com/9cc2m7
Re: Platinum ETFs
The PLAT price was just thoroughly pummeled in the selloff, so a pop with gold/silver wouldn't be out of the question by any means, but it's outperforming both... I guess someone thinks we'll be making catalytic converters again soon?
Hey, maybe metals will be the next bubble???? What next....?
Re: gold silver ratio
Bruce interesting stat on gold/silver ratio.
I found this random blog entry regarding the status of the gold/oil ratio from a week back.
http://tinyurl.com/8wvj24
Particularly interesting is the chart of the long term gold/oil ratio:
http://tinyurl.com/9tz7lc
Looking at my current market data, I am seeing gold@$890 and oil@39.50 for a ratio of apxx 22.5. Last weeks extremes when gold was moving up through the 800s and the closure of the January Nymex crude conract was pushed down to $33.xx looks like it may have been a peak in the ratio.
Looking at the ratio chart(1990-present), the gold/oil ratio has only been above 22 three time, once in '94 and the other in '99 and the other in December 2008.
If anyone is good with charts and/or knows how a good way to create these ratio charts - I would love to figure out how.
With all this said, it really looks like we are moving into uncharted territory here as gold ascends above all paper currencies. While I like it as a gold investor I struggle with what it really reflects about the status of our financial system.
Re: scaling into oil (UCO)
"I don't quite understand why an ultrashort/long pair would loose in an uptrend and gain in a downtrend."
Chickenpookie, this goes back to the post I made a few days ago, which explained how an ultra-long gains less than 2X in an uptrend, loses less than 2X in a downtrend, and grows slowly (in proportion to the volatility) in a range-bound market. An ultra-short, on the other hand, gains more than 2X in an uptrend (with no oscillations), loses less than 2X in a downtrend (with no oscillations), and declines slowly (in proportion to the volatility) in a range-bound market.
Since all stocks have a superposition of a trend and an oscillation, the ultra-short generally performs worse than expected long-term when the oscillations are large (as is the case with FXP). If the oscillations are small, then the ultra-short can still gain more than 2X in a "real" uptrend, as I think will be the case with TBT once the long bond collapses.
Re: Platinum ETFs
CP - Do you know of any good PLAT miners? Off the top of my head, Thompson Creek (mostly Moly, I think - chart looks o.k. now) and Eastern Platinum (although I didn't like them at all when I last looked - Sept 2007)?
Home prices
• Stop trying to support home prices. The solution to the housing mess is in fact found in the exact opposite policy - correction to affordable levels nationally. That's no more than 2.5-3x incomes, on average. Yes, it will suck. We get that - it already sucks. At the same time we need to stop building new houses until the existing inventory clears. There's no need to mandate this - just refuse to provide any sort of artificial support or help for the builders; some of them need to go bust, and they will if we quit screwing around. Capacity must come down."
Hey, it's true we need home prices to become more affordable, or for wages to rise. Not supporting home prices is the opposite of not supporting builders though, isn't it? If builders build fewer homes, this would support home prices. Falling home prices are a cause of mortgage default and result in pressure on banking industry, no? High interest rates make ARM loans adjust upward, putting pressure on default rate. Get the ARM's into fixed loans prior to raising rates. The housing firestorm was set off by Bernanke's raised rates, the backlash through the ARM's broke the camel's back.
Another way to make homes affordable would be to increase wages by bringing back value-added jobs shipped overseas by NAFTA. The public voted for NAFTA, but the scheme was sold, not bought.
Re: Platinum ETFs
PLAT - Here's an article by someone I trust to tell it like it is, I hope it helps:
http://seekingalpha.com/article/19227-a-look-at-pl...
Re: Platinum ETFs
I think SLW has some platinum production
Guinea going the way of Venzuala?
The leader of Guinea's coup has said contracts for the country's vital mining industry will be reviewed and pledged to stamp out corruption. Only gold miner I could find there is Anglo Gold Ashanti.
http://tinyurl.com/7jk4jr
Re: Platinum ETFs
CP said: "PLAT - Here's an article by someone I trust to tell it like it is, I hope it helps: http://seekingalpha.com/article/19227-a-look-at-pl..."
Yah, I hear that guy's pretty good :P Thanks.
Re: scaling into oil (UCO)
David - Somehow I missed your post from a few days ago :( But I'm reading your repeat!!! Thanks!
Uranium
I'll bet uranium makes a big move too (if it hasn't already). Nuclear is going to replace coal.
Re: Uranium
There I've done some research. Things I watch:
Producers: CCO.to, UUU.to, and DML.to (although not much in the works)
Middlemen: U.to (decent proxy for uranium spot)
Juniors: PDN.to, LAM.to
Nuclear ETF: NLR
(.to = TSX)
I like Merv's Uranium Index: http://techuranium.blogspot.com/
Re: Uranium
Mack - You never cease to amaze. How about the thorium angle? Uranium today, but maybe thorium tomorrow....?
Re: Guinea going the way of Venzuala?
Claim jumping is the second oldest profession.
Re: Uranium
Thorium - abundance and favourable waste properties. What's not to like? We have a ways to go on cost yet, though. Maybe when the Uranium runs out? lol
BTW, who's got the largest reserves? Brazil? Turkey?
Re: Uranium
Largest thorium reserves - Dunno, how about Iraq? Wouldn't that be incredible...
Potential thorium reserves
Potential thorium reserves Country Thorium reserves (in tonnes)
Australia 300,000
India 290,000
Norway 170,000
United States 160,000
Canada 100,000
South Africa 35,000
(Source: 1999 U.S. Geological Survey)
bad news for Dow chemical tomorrow
Dow Chemical Receives Notification of Kuwait Decision to Cancel K-Dow Partnership
VENEZUELA TO OZ
ALOHA !!
When Bill first brought KRY to this blog my first comment was that I did not care about management as the country risk was too great! That statement came from my own personal experiences of living in Venezuela in the 1960s when it was a communist regime as it still is ... one elected dictator after another! I never bought KRY because it was in Venezuela. Sometimes that is all you need to know about a company! Shortly after that Exxon and Chevron pulled out of Venezuela and that confirmed my suspicions. If huge and powerful, cash rich oil companies are pulling out then what chance does a small and weak little junior explorer company have?
I would not be surprised in the least if Chavez and his buddies did not make a small fortune off playing the ups and downs of KRY over the past couple years. They were the ones pulling the strings so the insider info was all theirs. Who in Venezuela would prosecute Chavez and his buddies for insider trading?
Venezuela is a no go for me! Still is ...
The most mining friendly and safest country risk on Earth is the State Of Western Australia in my opinion! That opinion comes from living there for six years and visiting on and off for the past 25 years, since 1970.
Here is a link to more info on Western Australia ...
Link: http://en.wikipedia.org/wiki/Western_Australia
Re: Naked Puts
daydreamer - our investment methods are very similar. Please feel free to check out my trades at http://optionpremiumcollector.blogspot.com/. I have posted some very complimentary things about Bill and this site on my blog and I mean every word of it. Good luck with your trades.
Re: Naked Puts
if you like a wild ride for your energy trades check out ERX :)...option volume is rising on this 3X energy bull
Uranium
Speaking of uranium, does anyone have thoughts on USU.
Seems uranium prices have reversed (about 25% gain)5 weeks ago, but uranium stocks have not recovered much.
I am a huge believer in all things uranium for 2009.
My concern is for the loan from the DOE to be shelved because of the difficult economic times we are experiencing.
Madoff Victims
The WSJ published this list, more to come I'm sure.
http://tinyurl.com/6xxycc
Re: gold silver ratio
And to add a question: how to track the percentage of NYMEX contracts physically delivered versus those negotiated to paper?
And does anyone use this as a type of indicator?
-the old historical ratio was 35:1 (1934-1971)
-gold is off ~20% Mar 08 peak; whilst silver is off ~50%
-gold mostly up today (political tensions cited)
Gold is more attractive than silver as a store of value (for large investors the cost of storage is a factor; and of course gold is scarcer).
My guess is that they should both rise, but no opinion as to which rises faster or that the ratio narrows.
Cara 100 Ratings Changes
Good morning. Hope that everyone has recovered from the holidays.
DOW - Downgraded to Equal Weight @ Barclays
Faber on Board
http://tinyurl.com/9ozewv
Nothing like a good time.
Re: gold silver ratio
One might argue that the government is less likely to confiscate silver than gold in the future...
4 Compelling Dividend Plays
I don't usually read the Motley Fools but it's hard to argue with this bundle of stocks, three of which are of Cara 100 fame:
http://tinyurl.com/7jbfzq
question on hou.to, uso, dxo
Just wondering if anyone could explain whether or not there is significant risk of hou.to, uso, dxo, etc..(etfs that track commodities) defaulting, and losing your entire trade?
I am also looking to open about a 1/3 position early /09 but would like to get some input from the group on the risk of default, barring oil doesn't go to $0.00
thanks