Rolling the Dice at the Real Estate Casino

Nov.24.08 | About: ProShares Ultra (URE)

Well our "investment" decision to get into Ultra Real Estate (NYSEARCA:URE) [Nov 21: The Best Casino Ever - Restarting Ultra Real Estate] is paying off as the ETF is up 40% and we've owned it for just over 2.5 hours. I am going to take a third off the table here, reducing from a 5.6% stake to 3.7%. I'm selling in the $4.70s

We've gotten our Citigroup (NYSE:C) bailout, and much like AIG, we will be putting increasing amounts of money into this over the next year(s). Next we will be bailing out Bank of America (NYSE:BAC) sometime in the next 1-3 months, and most likely "they" will attack JPMorgan (NYSE:JPM) in 2009. By summer 2009 we will have backstopped every major financial institution in America and be part owners. The "free market" will cheer every step of it, as it is doing today - as it did the day we took Fannie/Freddie private, as it did the day we bailed out AIG ... as it did... well you get the idea - every step to offload risk onto the backs of American taxpayers and away from Wall Street is a victory. It is what it is; gold is acting well again today - but at this moment the US government/Federal Reserve will be happy to be fighting inflation in latter 09 and 10 rather than deflation.

The Obama team will have a nice honeymoon, so at some point the Kool Aid will be flowing - I believe he speaks at 1 PM which as you know is more important than anything fundamental to any stock. So a part of me wants to 'sell the news' at 12:59 PM and I'll probably do so if we continue this rally - we are now up 10% in the past 2.5 hours... the casino is marvelous. Remember, you don't need to know anything about stocks - just guess the sentiment reaction to speeches, bailouts, and CNBC announcements.

Thanksgiving is generally a better than average week in the markets - and we quickly approach S&P 840 which was once support/now resistance. If we blast off through that, the Obama halo effect will be on and all our problems go away as Obama's new economic team will fix all the problems. Doesn't have to be true - just has to be thought to be true.

My prediction of a half trillion New Deal 2.0 in early 09 is looking more accurate as well... maybe we can get it to 1 trillion, or I say 2 trillion at this point. Why not? Debt is no issue in the country and we have limitless pockets. Maybe 5 trillion - that should push our GDP somewhere in the 15% range and have us pass China.

Disclosure: Long Ultra Real Estate in fund and personal account