Saturday, January 14, 2012
1/14/12 Even the crowd can't help me now
For those of us who day trade, the hip move is to bet against the crowd. On the other hand, the wisdom of crowds can prove right in the long run. From a non-trading point of view, I think it's clear (a) Europe is headed for a recession, (b) recent growth rates in China are unsustainable, and (c) a global scale-back in living standards is in the cards.
Common sense tells me 1998-2008 just isn't the way life was meant to be. Everyone and their housekeeper driving a new foreign SUV sipping a grande mocha in the morning on their way to a job that allowed them to return home to a newly-remodeled kitchen/bath/den after picking up the kids from private schools. Lunch at the bistro and dinner on the Avenue. All funded by rising salaries and/or stock markets and/or home prices.
No, I think we're headed back to the Seventies. A decade of social unrest, high unemployment/energy prices/inflation, and lowered expectations- which will ultimately lead to improved fiscal management and more fulfilling lives.
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Kinda agree with most of that bro.
ReplyDeleteRB- I agree re-WLL. MOG likes it also and the amount of liquids are right.
ReplyDeleteSometimes we miss the obvious. Simply b/c we're too focused on the day-to-day gyrations. Sure, the media is often misleading, and they have a penchant for bad timing when it comes to headlines. But right now I'm seeing a string of stories that seem to point the way to an economic global slowdown. It's a no-brainer, really- but we've trained/conditioned ourselves to dismiss the obvious.
ReplyDeleteThe crowd is always wrong, until they're right.
ReplyDeleteIt's all timing, right? We were all wrong about the mortgage crisis in 2007, as the indexes kept climbing, stopping out our shorts/ultrashorts. At some point, the indexes 'recognized' the crisis, and sold off hard.
ReplyDeleteConsider INTC/MSFT for a trade- http://www.marketwatch.com/story/tech-industry-takeaways-from-ces-2012-01-13?link=MW_story_investinginsight
ReplyDeleteHow many of us commented in 2010 that we could have made a killing in the market by simply sitting on the sidelines between 2007 and 2009, then buying back in at the lows? That's one way the patient trader is rewarded.
ReplyDelete2nd - I agree man. The hardest part about being investing is being patient. Even if it means waiting for selloffs during a bear market to buy. During the 2007-9 you could have made a killing on the long side if you traded it. I remember buying BAC at $17 or $18 in July 2008 and selling it a couple days later for a 30% gain. I also remember buying ACAS at $3 in December 08 and selling it a day later for a 15% gain or so, only to watch it double a week later (and then crash to under $1 a couple months later). Do that a couple of times and you're sitting really pretty as you patiently wait for confirmation of a bottom.
ReplyDeleteIn my opinion we're just not quite ready to sell off given how bearish people are in general. I think if we get a rally to new highs enough bears will finally throw in the towel and then we can sell off.
I found out yesterday that they will officially inform me that they're laying me off on 1/18 so I will most likely be minimizing the trading until I know for sure what the deal is with everything.
here are a couple of other companies I came across that I like or want to look further into:
ReplyDeleteALVR > $66 Million mkt cap; $65 Million cash
ANW > 0.5 P/B; profitable; down from $35 in 2010, looks like an inverted H&S on the weekly chart, MACD shows things are bottoming
AMED
ARCI
BONE
CXDC
I also like these the best:
IRE
RDN
OMX
ANR
CEDC
SKUL
Team,
ReplyDeleteThey are laying you off in the height of tax season? Anyway no worries every time i was let go from a job it was the best thing that ever happened to me. Now If they would only fire me from my current job my lawyer and myself would be quite happy.
Bob
Severance?
Rb - I asked to be laid off...not sure about severance will find out soon.
ReplyDeletehttp://www.thestreet.com/story/11373532/1/8-stocks-to-consider-ahead-of-earnings.html
I didn't realize this many companies warned...not good.
RCKY..What's up with this one?
ReplyDeletevery interesting one mark but what's the deal with the huge debt levels?
ReplyDelete"Rb - I asked to be laid off" Oh, I call that quitting.:)
ReplyDeleteRB - tomato tuhmato
ReplyDeleteTOF- I don't know ANYTHING about it. Was linked to SKUL.
ReplyDeletehttp://www.marketwatch.com/video/asset/january-should-be-great-for-small-cap-stocks-2012-01-03/5759DDDE-10A8-40DA-B489-FD9C9120F5FA#!5759DDDE-10A8-40DA-B489-FD9C9120F5FA
ReplyDeleteA pretty interesting post on Saturday by Bruce Krasting:
ReplyDeletehttp://brucekrasting.blogspot.com/2012/01/tyler-durden-and-paul-krugman-agree-eu.html
Here are some quotes from it:
"There is absolutely no way to achieve economic growth while pursuing fiscal austerity. It just doesn’t work like that. The only other possibility is for Italy and Spain to re-establish their legacy currencies. That is S&P's unwritten, but clear message."
"The thought process of a resumption of legacy currencies won't start on Monday. Before this can be accepted as a viable option, things have to first get worse. Much worse. Liquidity has to dry up further. Bond spreads for Italy and Spain have to widen. Funding conditions for the banks have to get worse. Equities (especially bank stocks) have to be broadly declining. The economies of the region need to be in recession coupled with very high rates of unemployment. Declines would be most severe in Spain and Italy. Social disturbance would be on the rise."
"There are some very substantial currency implications built into this line of reasoning. If you believe, as I do, that things have to get (much) worse before we see Pesetas and Liras again, then you might logically conclude that the Euro is first headed south against the crosses. EURUSD at 1.100 would not be out of the cards in this scenario. But consider the end game for this. What's the value of a Euro if Spain, Italy, Ireland and Portugal were no longer part of the monetary union? That price starts at EURUSD 1.6000."
However, one of the readers commented on this article saying: "And if the Germans decide to leave the Euro, you get taken to the woodshed......"
This thing is just SO complicated...
Incidentally, John Mauldin on Friday also mentioned something that supports Krasting's speculations:
ReplyDelete"Germany exports products to the peripheral European countries, which run trade deficits. As I have shown in several letters, a country cannot reduce private-sector leverage, reduce public-sector leverage and deficits (balance its budget), and run a trade deficit all at the same time. Greece runs a trade deficit of about 10% of GDP. Until they can stop that bleeding, they cannot get their government and private budgets under control. It is not simply a matter of cutting budgets or raising taxes. Indeed, their economy will continue to shrink, making it more difficult buy foreign goods without increasing their own production of goods and services. It is a vicious spiral. And that same spiral will spin up to take in all of Europe.
"Already, according to more leaks, IMF Managing Director Christine Lagarde had warned German Chancellor Angela Merkel and French President Nicolas Sarkozy that the fiscal and economic situation in Greece had deteriorated. Hence, the 'voluntary' haircut on Greek bonds held by private sector investors should be increased to more than 50% to maintain the goal of bringing Greece's debt load down to 120% of GDP. And the second €130 billion bailout package, agreed upon on October 26, should be enlarged by 'tens of billions of euros.'"
The 49ers hosting the Championship game. Un-Fing real.
ReplyDeleteIt's 1981 all over again.
DeleteGo Niners!!!!
Capital flight out of China-
ReplyDeletehttp://www.marketwatch.com/story/chinas-foreign-reserves-fall-2012-01-15?link=home_carousel
Mark- The Asian markets are open! And you're watching a bunch of people moving a ball up and down a field?
ReplyDeleteYep!! And loving it!
ReplyDeleteHopeless, man.
ReplyDeleteHappily so...
ReplyDeleteat least my beloved texans showed up for the game. it has been a good season.
ReplyDeleteso europe matters again?
so my one coworker that used to talk to producers has never heard of gasfrac but then he wouldn't be talking to them about those things either.
2nd - the one thing that confuses me when i think about the possibility that we are in the 70's is that we have already had 2 market crashes and one housing crash. the majority of investors are weary of another crash and most have pulled money out of the markets. so who else is left to sell? and every time we do sell off we just bounce right back up.
ReplyDeletemaybe the markets are on to something bigger: maybe they see the euro dissolving and the euro countries going back to their original currencies. shit since the US is now a "growth" country based in large part on our devaluing our currency, then why wouldn't they do the same? i'd have to imagine they're contemplating this.
David - "If you believe, as I do, that things have to get (much) worse before we see Pesetas and Liras again, then you might logically conclude that the Euro is first headed south against the crosses."
ReplyDeleteYes, it appears the dollar is and will remain the "safe haven" until trade imbalance issues in Europe are resolved, and I agree that lack of currency control is their stick in the spokes.
A fiat currency is a flexible currency, there's good reason for that if you're going to go down the road of growing deficits then eventually someone's got to pay the bill. Either cut spending to the bone, or devalue, or both. Cutting spending (and thus possibly, debt) to the bone isn't an economy booster.
It really is all about carrying unsustainable levels of debt. Europe needs to increase printing (strictly for the sake of reducing debt, not increasing it), and so does the US.
Look at our "printing program", we're just increasing debt, not paying it down. This program is nothing more than bankster welfare and b/c of the increasing debt, is only delaying the inevitable. Every pretty penny printed should go directly towards paying down public debt, else it's not really printing, it's more of the same kicking the can down the road.
Last I checked, human population was still increasing by leaps and bounds, there are now more humans clamoring for the western lifestyle than ever before in history just as debt levels are spiking. These aren't commodities negative phenomenon, in a time horizon greater than a blink of an eye.
Nice write up CP!!
ReplyDeleteYOKU looks interesting if it can get above $20.5 on a close.
ReplyDelete"U.S. equities are in the third of four bull-market stages, in which investors accept the rally that gathered momentum in the first two, according to Birinyi’s analysis. He said this phase, which started around July, should end in 2012 with a gain of at least 8 percent. The bull market’s final phase of “exuberance” has lifted the S&P 500 an average of 39 percent in the five advances since 1962, he said."
ReplyDeleteThat would equate to S&P 1,900 by the end of the bull market. That would be quite a doozy.
A new mechanism for making graphene quantum dots:
ReplyDeletehttp://www.innovations-report.com/html/reports/physics_astronomy/graphene_quantum_dots_big_small_thing_188576.html
Just saw the first Schwab add promoting mobile deposit. Hope the run the hell out of it like Chase does...Baby needs a new pair of shoes!! (cleats)
ReplyDeleteMark - Given how long it took to get back above the 200 DMA, I'm going to wait until it retests the 200 DMA before hopping in with a smaller position this time so as to not get too worked up about it. Hopefully it gets to $12 first so you can cash in big time.
ReplyDeleteTOF- Makes sense. Man, what a weekend for the 49ers. I swear I was 16 again watching that game.
ReplyDeleteThree days ago I purchased a low end tablet on sale at Big Lots. $130 for a Nextbook 7" Android 2.3. Also is an e-book reader. It's been a bit of fun with a lot of learning and hassle. Actually these things are amazing but I do not yet know whether it will download my Scottrade Elite Trading Platform. Not to worry, I am pretty much a fixed base operator. May be one of the few who do not own a cell phone (tried it years ago but had few calls).
ReplyDelete