The Age of Turbulence: Preparing for the Crash 47 comments
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"Prediction is very difficult, especially about the future." Niels Bohr Danish physicist (1885 - 1962) |
Executive Summary:
It is necessary that Minutes Before the Crash we have a bout of extreme irrational exhuberance.
I am short 100% of my allocated position of long-term yields. When the yield on the 30 Years US TBonds gets to 4.610% then short till it gets to 3.5605%. I will square the position and if TYX transgresses, 46.30 [No short selling].
I am long stocks with a first objective of 1017.64 on the SP500 with a possible new all time high later. I will update my final objective when TYX transgresses 41.42 and I will square the position if TYX transgresses 46.30 [No short selling]. I am long 100% of my total allocated position for stocks.
Reminder: the market Crash comes with low long-term yields and a deeply inverted yield curve and very low risk spreads, hence the high level of Irrational Exuberance and Global Euphoria. Because of the fantastic amount of liquidity in the system I expect the Mother of all Bubbles.
I am long minerals (100% of my allowance) with a first objective of $89 on Oil with a possible all time high later. I will update my final objective when TYX transgresses 41.42. I will square my position and go if TYX transgresses 46.30. For the same liquidity reason I expect explosive mineral prices.
I am short the spread of the yields Corporate Bonds / Treasury Bonds with 100% of my allocated portfolio.
I time the crash with the yield on USTBonds getting at 3.5605%.
The crash will be later then I previously anticipated. However, I expect that timing it will be easier.
Abstract:
My strategy is continuously evolving as the Market gives me more information.
My strategy relies on my analysis of the Market: "Plea for a New Economic Order." However, I explain there that there is no way of predicting mathematically the Crash. Hence, the hypothesis I make here about the future behaviour of the Market is based solely on my 24 years experience of the behaviour of financial Markets, hunch and intuition. I believe it is reliable.
My strategy concerns only the Markets I have superior knowledge of: fixed rates, yield curve, stock indices and minerals.
It is highly advisable to play a portfolio in these different segments (because we have no superior knowledge of an individual specific risk, it must be diversified. Of course, if I had a superior knowledge in one segment of these Markets I would use it). It is also advisable to play a portfolio of those different Markets giving some weights to fixed incomes, stock indices and minerals.
Th ideal portfolio, for those who know what it is, is built by running an analysis of Principal Components on the historical values of the financial products and using the first component.
For those who don't know what an analysis of Principal Components is a sub optimal portfolio is made by using a weighting inversely proportionate to the implied volatility of the financial products.
The ideal weighting is modified with the results of technical analysis.
As I said, it is Mathematically impossible to predict the Crash. In fact, chairman Alan Greenspan said it was "Mission Impossible":
That is mission impossible. Indeed, the international financial community has made numerous efforts in recent years to establish such oversight, but none prevented or ameliorated the crisis that began last summer.
Much as we might wish otherwise, policy makers cannot reliably anticipate financial or economic shocks or the consequences of economic imbalances. Financial crises are characterised by discontinuous breaks in market pricing the timing of which by definition must be unanticipated - if people see them coming, then the markets arbitrage them away.
The Age of Turbulence: Adventures in a New World [Economic Order?]
First, although Alan Greespan is the economist that best understands systemic risk, he oversees one thing; the real problem with systemic risk is not that you can't foresee it, it is that you can't avoid it and insure against it. It means the system can't avoid it. You will anyway be adversely affected by the depression, it doesn't mean that you can't analyse it and foresee it. It means also that when the Market foresees it we are already in the Crash. So although the Market can't foresee it, individuals can.
The problem lies with my model, which says that the Crash is the result of an unstable equilibrium due to an inverted yield curve which is resolved by a discontinuity of the yield curve as it gets to its stable equilibrium and normalizes.
A Liquidity Trap [Confer: Keynes' Liquidity Trap: A Theoretical Curiosity.] supposes a small shock. History remembers that what triggered Black Thursday was the failure of a small Austrian bank - nothing close to a Lehman Brother or a Bear Stearn.
For a description of a Crash Confer: Chapter III.Greenspan Conundrum and Bernanke Global Saving Glut.Paragraph 3: Bubbles & Bursts.
As with any mission impossible, for those who watched that television series like Alan Greenspan did, it is possible for the Impossible Missions Force (IMF, no kidding) to accomplish the task. We are going to use a special toolbox and use it in a smart way. As usual, “Should you, or any member of your I.M. force, be caught, or killed, Alan Greenspan will disavow all knowledge of your actions. This tape will self-destruct in five seconds.”.
I do think the most relevant likely reason why we are dealing with what we are dealing with are new forces ... in the international market. Their nature and their behaviour is not something we are going to fully understand, if ever; certainly except in retrospect.
Chairman Alan Greenspan
Central Bank Panel Discussion.
To the International Monetary Conference.
Beijing, People's Republic of China
(via satellite)
June 6th, 2005
Maestro, The Forces Be With You
But how do we know when irrational exuberance has unduly escalated asset values, which then become subject to unexpected and prolonged contractions as they have in Japan over the past decade?
And how do we factor that assessment into monetary policy?
We as central bankers need not be concerned if a collapsing financial asset bubble does not threaten to impair the real economy, its production, jobs, and price stability. Indeed, the sharp stock market break of 1987 had few negative consequences for the economy.
But we should not underestimate or become complacent about the complexity of the interactions of asset markets and the economy. Thus, evaluating shifts in balance sheets generally, and in asset prices particularly, must be an integral part of
the development of monetary policy.
Chairman Alan Greenspan
The Challenge of Central Banking in a Democratic Society.
At the Annual Dinner and Francis Boyer Lecture of
The American Enterprise Institute for Public Policy Research,
Washington, D.C.
December 5th, 1996
My special tool is a curiosity of the Markets that makes it a special mathematical function of time: it encounters technical supports and resistances which give them small discontinuities in the derivative of the value of financial instruments. These shocks, I pretend, will be sufficient to cause the return of the yield curve to its normal configuration, if, of course, the resistance or the support is sufficiently strong. On the other hand, when the financial instruments are not on these supports or resistance, the kinetic energy of the Market would render the yield curve immune to random shocks.
Another condition is that the yield curve be sufficiently inverted: the force needed to take it away from its unstable equilibrium is inversely related to the distance between the yield curve and its normal configuration.
Strategy:
Hypothesis:
I am going to use only the three Markets I have superior knowledge of: Treasuries, Stock Indices and Minerals.
The long-term yields will continue their downward secular trend. Hence, the yield curve will get more inverted.
The volatility of interest rates will go down until the Liquidity Trap as will the volatility of any Market we are concerned with. Experience tells us that when the Market goes up the implied volatility goes down, when the Market goes down its implied volatility goes up.
The lower long-term interest rates will be favoured by their lower volatility [Confer: Chapter I: Model of the Yield Curve.].
Because in a configuration of inverted yield curve bankers chase yields, I anticipate that the inversion of the curve will increase and every risk spread will shrink (which favours stocks and corporate bonds.)
The Market will get some stability from the talks about a second round of stimulus package, whether it finally emerges or not.
However, the inversion of the yield curve will be soon unsustainable. Our hypothesis, given my empirical knowledge of the yield curve is that, in order to be sufficiently inverted, the yield on the 30 years US TBonds needs to be below 3.90%.
We will see that a key level for the yield of the 30 US TBonds is 3.62% after reaching 4.60%. Until I change my mind, this is the support we are going to use now.
We will see also that the key level on the SP500 is 1017.63. However, my final objective can be much higher and I don't exclude a new all time high.
We will see that a key level for Oil is $89.00. However my final objective can be much higher and I don't exclude a new all time high.
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This article has 47 comments:
Niels Bohr Danish physicist (1885 - 1962)
Wasn't it Yogi Berra?
Your yield inversion is more difficult to like. We know that Ben B says he is finished with buy downs to save the mortgage interest rate from a leap that will kill the housing recovery (its done), but that is different than the long end where the command performance of the Treasure is - sell til you are in hell to pay the national debt. The will push yields up at the long end, but what brings TNX and TYX down your model?
You say: "The long-term yields will continue their downward secular trend. Hence, the yield curve will get more inverted."
I say: mean reverting yield curves of secular trends are for orderly markets and rational traders. That condition precedent leaves this market out. The more likely events are that interest rates continue to rise to the point that it collapses the equities following the model on competitive yields. I know it is simplistic, but in this world it is likely the rule that wins the most followers.
I just don't see how your model is wired. Thanks
the 2 words I compltely agree with is irrational excuberance.
Oil ( hyped by risk aversion factor on a hyped up market ) may go to 78 due to GS and other manipulators ( who will go short again and sink the market to possible new lows at some point...probably when the commercial crash comes more into focus) so I will ride the tide...but ready to go short with a DTO abd celan up when reality sets in again
1) Macro forecast
2) choose your Asset class allocations
3) Choose your specific securities
4) include robust risk management
I must have missed your point, but it seems that you are doing a lot of predicting, and little robust risk management. you think you have superior knowledge of treasuries? Good luck to you sir.
"Hypothesis:
I am going to use only the three Markets I have superior knowledge of: Treasuries, Stock Indices and Minerals.
The long-term yields will continue their downward secular trend. Hence, the yield curve will get more inverted.
The volatility of interest rates will go down until the Liquidity Trap as will the volatility of any Market we are concerned with. Experience tells us that when the Market goes up the implied volatility goes down, when the Market goes down its implied volatility goes up.
The lower long-term interest rates will be favoured by their lower volatility [Confer: Chapter I: Model of the Yield Curve.].
Because in a configuration of inverted yield curve bankers chase yields, I anticipate that the inversion of the curve will increase and every risk spread will shrink (which favours stocks and corporate bonds.)
The Market will get some stability from the talks about a second round of stimulus package, whether it finally emerges or not.
However, the inversion of the yield curve will be soon unsustainable. Our hypothesis, given my empirical knowledge of the yield curve is that, in order to be sufficiently inverted, the yield on the 30 years US TBonds needs to be below 3.90%.
We will see that a key level for the yield of the 30 US TBonds is 3.62% after reaching 4.60%. Until I change my mind, this is the support we are going to use now.
We will see also that the key level on the SP500 is 1017.63. However, my final objective can be much higher and I don't exclude a new all time high.
We will see that a key level for Oil is $89.00. However my final objective can be much higher and I don't exclude a new all time high."
But for anyone who will listen.....
On Jul 27 12:47 AM Larry House wrote:
> I would think the inherent difficulty in making predictions about
> the future would give you pause about making predictions, but I guess
> not.
Of course oil could reach 75 or 85 dollars a barrel, but those prices would not make sense for the OPEC people - they would just prolong the meltdown. It is better for everybody if they allow it to decline to less that 60 dollars a barrel.
optimistic. Your oil price of high 80's is way off,
since there will be less demand because of people losing their jobs and less use of car travel. The trust of the Market by many after lsoing their 401ks, or majority of savings, leaves only the fund managers, and wealthy to participate in the market. And with all the uncertainty, this is not a game to play with so many unknown factors at this time. Rather,
a test of new lows for the Dow, and S & P would be more appropriate, before a new foundation of optimism is formed across the Nation.
WITH A BURN RATE OF DEBT THIS COUNTRY IS ACCUMULATING, AND PROPOSED NEW STIMULUS PACKAGES, AND NATIONAL HEALTH CARE IN THE WINGS, YOUR PREPARATION FOR A CRASH WILL BECOME FRUITION FOR SURE. THE INEVITABLE FIRST SIGNS WILL BE MASSAIVE DEMONSTARTIONS ACROSS THE COUNTRY,
FOLLOWED BY THE BEGINNINGS OF VIOLENCE, AND LOOTING, AND LAST BUT NOT LEAST, THE ORGANIZED MARCHES TO THE WHITE HOUSE WILL BE THE BIGGEST RED FLAG OF ALL. OBAMA'S PLATFORM WAS CHANGE. BUT IT APPEARS TO BE TURBULENT CHANGE TO A DEGREE NOT SEEN IN HISTORY AS OF YET. BUT IT IS COMING!
On Jul 27 09:35 AM jimmy Turano wrote:
> Your analogy in general makes sense to a degree, but I believe your
> 1017.64 SP500 is a little to
> optimistic. Your oil price of high 80's is way off,
> since there will be less demand because of people losing their jobs
> and less use of car travel. The trust of the Market by many after
> lsoing their 401ks, or majority of savings, leaves only the fund
> managers, and wealthy to participate in the market. And with all
> the uncertainty, this is not a game to play with so many unknown
> factors at this time. Rather,
> a test of new lows for the Dow, and S & P would be more appropriate,
> before a new foundation of optimism is formed across the Nation.
>
> WITH A BURN RATE OF DEBT THIS COUNTRY IS ACCUMULATING, AND PROPOSED
> NEW STIMULUS PACKAGES, AND NATIONAL HEALTH CARE IN THE WINGS, YOUR
> PREPARATION FOR A CRASH WILL BECOME FRUITION FOR SURE. THE INEVITABLE
> FIRST SIGNS WILL BE MASSAIVE DEMONSTARTIONS ACROSS THE COUNTRY,<br/>FOL...
> BY THE BEGINNINGS OF VIOLENCE, AND LOOTING, AND LAST BUT NOT LEAST,
> THE ORGANIZED MARCHES TO THE WHITE HOUSE WILL BE THE BIGGEST RED
> FLAG OF ALL. OBAMA'S PLATFORM WAS CHANGE. BUT IT APPEARS TO BE TURBULENT
> CHANGE TO A DEGREE NOT SEEN IN HISTORY AS OF YET. BUT IT IS COMING!
But there are countervailing forces. The oil socialisms are not investing enough to maintain production. And the US Congress is hostile to the development of American oil.
I don't think you can count on American Cap and Trade or the American Health care bill to pass.
And you will see people in the streets in China before that happens in America. That country is in a precarious economic/political situation. If civil war erupts there expect a lot of production to move elsewhere. Some of it back to the USA.
Trends? It is impossible to predict trends with chaos looming. It will depend on the net balance of forces. Economic and political.
For traders (I'm not one - I'm not even an investor) have a plan to pull in your horns and hunker down. Make your bets for shorter and shorter time frames.
And yes. I study history and am making predictions.
Nice that you have accepted $60 oil and bowed down to OPEC.
Oil should be $20 a barrel. PERIOD.
On Jul 27 09:30 AM Ferdinand E. Banks wrote:
> Predicting the future is rather difficult for most of the academics
> I have worked with, because they are so incredably ignorant of the
> past. Therefore, I make it my business not to talk to them about
> either, because I don't like becoming depressed.
>
> Of course oil could reach 75 or 85 dollars a barrel, but those prices
> would not make sense for the OPEC people - they would just prolong
> the meltdown. It is better for everybody if they allow it to decline
> to less that 60 dollars a barrel.
Peak Oil means declining production because the easy stuff is already gone or going. The decline will be much faster than the ascent because usage is already high, and you are basing assumption on previous usage rates----increases in demand only add to the rate of decline. To get shortfall rates, figure in declining production in current fields + increase in demand. To meet current needs, figure the amounts of investment needed to maintain production in declining fields, + the amount needed top explore for and exploit any new discoveries.
In the entire 150 year history of drilling for petroleum and its use --- there has never been one single drop of oil produced. In the case of petroleum, "production" means using up what is there faster.
Oil is getting harder to get to, get at, get out, and get back with; what is extracted is becoming harder to refine because it is lower quality.
Party on.
Another aspect of the equation is Agency Bonds and the lack of Foreign appetite for the future of the US real estate market, which has been a factor contributing to the decline of US LT DEBT NET PURCHASES on a quarterly basis. I translate this as an "unofficial" announcement by Foreigners that the US Sovereign Credit Rating is on a "negative watch" downgrade. As we have learned from the Sub Prime debacle, the US credit rating agencies only react after the fact and I see no signs credit rating agencies have changed that practice, especially when it comes to the "Sovereigns".
The latest reported TIC quarterly NET PURCHASES of US Long Term(LT) Securities has been dismal if you “net out” the totals for each debt product, which includes AGENCY DEBT, the debt nobody talks about. It seems the fascination for US Treasuries overrides the failures of FNM and FRE (Agency Bonds).
LINK: www.treas.gov/tic/snet...
If I just look at US Bonds America’s debt profile looks rosy, but if I net out Agency Debt and US Corporate Bonds it looks like this:
TOTAL NET LT US SECURITIES
Q3/2008 = $6.548BIL USD
Q4/2008 = ($74.341BIL USD)
Q1/2009 = $68.703BIL USD
TOTAL = $0.91BIL USD ($910MIL)
In terms of purchasing LT US Securities the Foreigners have voted with their feet. Now only short term US DEBT remains viable and as the US TREASURY DAILY STATEMENT reveals most of that is in Bills, the shortest of the short term.
Even the Financial Stability Oversight Board's Mission Statement infers symptoms of a "monetary crisis" ...
"It is a crisis of confidence, of capital, of credit and of consumer and business demand. Rather than providing the credit that allows new ideas to flourish into new jobs, or families to afford homes and autos, we have seen banks and other sources of credit freeze up – contributing to and potentially accelerating what already threatens to be a serious recession. ... " END
Now if US Banks are refusing to lend then they are no longer banks? Isn't that their primary "business model" ... lending? Based on recent quarterly financials of large banks such as Goldman Sachs and JP Morgan it seems most of their revenue streams come from their trading desks now days and not from loans. So essentially the $700BIL USD BAILOUT from 2008 was used to "trade against order flows", known lately in the media as flash trading.
The whole "rescue of American families" as Henry Paulson, US Tres Sec 2008, stated was the purpose of the $700BIL USD Bank Bailout stinks of PRICE FIXING 101 ... When was the last time government "price fixing" worked?
Prior to this FINSOB Mission Statement is this "Updated: April 20, 2009". Most Mission Statements I have seen don't have regular "updates", so that in itself makes me uneasy and wondering if this group has any idea what it is doing.
A Mission Statement in a constant state of flux ... like predicting the future, nothing is certain.
you seem to have the right pulse of our economic and social situation. First people were pushed into using their credit cards, then pulling equity from their homes. These 2 buckets are now exhausted. The "last bucket" left is 401Ks and IRAs.The stock market crash will be triggered by people liquidating their 401Ks and consequently the underlying Mutual Funds forcing fund managers to sell stocks to meet redemptions.
On Jul 27 09:35 AM jimmy Turano wrote:
> Your analogy in general makes sense to a degree, but I believe your
> 1017.64 SP500 is a little to
> optimistic. Your oil price of high 80's is way off,
> since there will be less demand because of people losing their jobs
> and less use of car travel. The trust of the Market by many after
> lsoing their 401ks, or majority of savings, leaves only the fund
> managers, and wealthy to participate in the market. And with all
> the uncertainty, this is not a game to play with so many unknown
> factors at this time. Rather,
> a test of new lows for the Dow, and S & P would be more appropriate,
> before a new foundation of optimism is formed across the Nation.
>
> WITH A BURN RATE OF DEBT THIS COUNTRY IS ACCUMULATING, AND PROPOSED
> NEW STIMULUS PACKAGES, AND NATIONAL HEALTH CARE IN THE WINGS, YOUR
> PREPARATION FOR A CRASH WILL BECOME FRUITION FOR SURE. THE INEVITABLE
> FIRST SIGNS WILL BE MASSAIVE DEMONSTARTIONS ACROSS THE COUNTRY,<br/>FOL...
> BY THE BEGINNINGS OF VIOLENCE, AND LOOTING, AND LAST BUT NOT LEAST,
> THE ORGANIZED MARCHES TO THE WHITE HOUSE WILL BE THE BIGGEST RED
> FLAG OF ALL. OBAMA'S PLATFORM WAS CHANGE. BUT IT APPEARS TO BE TURBULENT
> CHANGE TO A DEGREE NOT SEEN IN HISTORY AS OF YET. BUT IT IS COMING!
Analyzying your judgment of Greenspan I have to suggest that a man so vastly knowledgeable about systemic risk would merit serious hard time for orchestrating the economic crisis and wealth loss of the century.
Someone with such an artful and insightful full knowledge of risk would be held accountable for his actions in an insiightful and knowledgeable society, which ours is not.
In his defense, Greenspan could call in the Mises Institute to testify that crashes of this magnitude happen about every 80 years anyway.
I think I have devised a mathematical system that is easier to track than yours. Just follow PCL - or any bellwhether stock of your choice - and when the dividend gets too low and the price too rich, a crash is imminent.
But now that the crash is out of the bag, one has to establish floors and ceilings for the fluctuations of PCL for the long ride down to the bottom, and then the eventual long ride back up to the top.
In essence, I think this is a short read for your long essay.
On Jul 26 02:48 PM whidbey wrote:
> I like your rationale and your determination to trade the plan subject
> to change in your parameters.
>
> Your yield inversion is more difficult to like. We know that Ben
> B says he is finished with buy downs to save the mortgage interest
> rate from a leap that will kill the housing recovery (its done),
> but that is different than the long end where the command performance
> of the Treasure is - sell til you are in hell to pay the national
> debt. The will push yields up at the long end, but what brings TNX
> and TYX down your model?
>
> You say: "The long-term yields will continue their downward secular
> trend. Hence, the yield curve will get more inverted."
>
> I say: mean reverting yield curves of secular trends are for orderly
> markets and rational traders. That condition precedent leaves this
> market out. The more likely events are that interest rates continue
> to rise to the point that it collapses the equities following the
> model on competitive yields. I know it is simplistic, but in this
> world it is likely the rule that wins the most followers.
>
> I just don't see how your model is wired. Thanks
This was followed by their admiration of our power dam projects. They studied our designs on a first hand basis and proceeded to institute very large flood control and power projects. China is on a path to replicate the US in power generation and consumption.
Eisenhower's 1950's Interstate highway system was next. They are currently building a massive highway system that will give birth to an automobile revolution. China will put enough cars in use to double the worlds count within the next ten years.
Coal and auto pollution aside, demand for fuel will drive oil prices through the proverbial roof. Think about it. While US auto production peaked at what 15 -17 million annually, China will produce 100 million/year for the foreseeable future.
Now ,the price of minerals is going down. Australia,the world leader in commodities exports exported 50 loads of iron ore last year. This years orders totalled 30. The Chinese have agreed to a 30% cut in price . Rio's shares rose yesterday .China's Home reserves of iron are shrinking to the point of unviability.
A little more real world investigation is needed before taking the figures on a screen so seriously.
On Jul 26 04:45 PM buyforeclosures wrote:
> How in Gods name do you come up with $89 oil? The supply is at a
> 26 year high and the demand is minimal... Oil was at $11 in 1998
> and should be around $30 max right now... even with a weak dollar...
>
>
> the 2 words I compltely agree with is irrational excuberance.
> Oil ( hyped by risk aversion factor on a hyped up market ) may go
> to 78 due to GS and other manipulators ( who will go short again
> and sink the market to possible new lows at some point...probably
> when the commercial crash comes more into focus) so I will ride the
> tide...but ready to go short with a DTO abd celan up when reality
> sets in again
On Jul 27 06:19 PM I am not a number.. wrote:
> exactly my thoughts. Although Oil companies are retailng fuel at
> $140 bbl levels ,the actual price of crude is falling. Eventually
> the populace are going to say"Enough!".
> Now ,the price of minerals is going down. Australia,the world leader
> in commodities exports exported 50 loads of iron ore last year. This
> years orders totalled 30. The Chinese have agreed to a 30% cut in
> price . Rio's shares rose yesterday .China's Home reserves of iron
> are shrinking to the point of unviability.
> A little more real world investigation is needed before taking the
> figures on a screen so seriously.
"Hence, the hypothesis I make here about the future behaviour of the Market is based solely on my 24 years experience of the behaviour of financial Markets, hunch and intuition. I believe it is reliable".
Now believing a "H-U-N-C-H" to be reliable is a comforting theory for me to invest in!
Very good tip!
On Jul 27 02:01 PM claudio.lane@att.net wrote:
> Looks like this post stimulated some dialog. First let me say that
> if you go to Gerald Celente website and look at his forecasts over
> the last 20 yrs you will find the list impressive. Then put together,
> marc faber, Raoul Rabini, Taleb,Jim Rogers, Schiff and a few others
> to get a different view of what is occurring in the economy. What
> you will find is the arrogant poster who feels his little model can
> cover the bases has fallen in love with his own painting. To me it
> is all about china. China buys the debt, china is keeping the dollar
> were its trading, china is keeping the inflation down by producing
> cheap goods, china is also figuring out how to unload their billions
> of dollars in reserve with out doing harm to themselves. They are
> hiring the smartest minds in the financial world. The only question
> is when..not if they will figure it out. The US is on a path of destruction.
> While China is buying assets and mining companies. Securing cheap
> oil in the middle east, cheap materials in Brazil we are pissing
> trillions of dollars away and encumbering our nation to the point
> of collapse. If you have not read about china and africa, your eyes
> will be wide open after reading the story. In short china is taking
> over the commodity rich africa with hard money loans to corrupt leaders.
> Migration of chinese citizens. Population is now 750,000 and growing.
> I know I was shocked when I read that as well. There buying African
> companies for cash. The US on the other hand is going more toward
> socialism the china. We have a president who has while a senator
> accomplished nothing. We elected a man who reads a tele prompter
> like an expert but has never run a state, a company. How is it then
> possible that in a world of brilliant minds we can only find this
> man to lead our country. The man who should have become president
> but told the real truth is Ron Paul. How can a senator who is putting
> a bill forward to require the FEDS to open their books ever get elected?
> That in itself tells you the inside money and power brokers will
> not let it happen. Watch the actions don't listen to the words.
Short:
out-of-the-money put options on SPY--when VIX spikes, the premium portion of the option will rise disproportionately with the actual value.
Long:
TBT - with tight stops
DBC - w/tight stops
AWF - for protection against gradual US dollar fall + good dividends
I'm up over 50% this year, so I think I must be doing something right.
Health Care is going to be defeated anyways; within a few short months it will have slipped away quietly into the night.
On Jul 27 09:35 AM jimmy Turano wrote:
> Your analogy in general makes sense to a degree, but I believe your
> 1017.64 SP500 is a little to
> optimistic. Your oil price of high 80's is way off,
> since there will be less demand because of people losing their jobs
> and less use of car travel. The trust of the Market by many after
> lsoing their 401ks, or majority of savings, leaves only the fund
> managers, and wealthy to participate in the market. And with all
> the uncertainty, this is not a game to play with so many unknown
> factors at this time. Rather,
> a test of new lows for the Dow, and S & P would be more appropriate,
> before a new foundation of optimism is formed across the Nation.
>
> WITH A BURN RATE OF DEBT THIS COUNTRY IS ACCUMULATING, AND PROPOSED
> NEW STIMULUS PACKAGES, AND NATIONAL HEALTH CARE IN THE WINGS, YOUR
> PREPARATION FOR A CRASH WILL BECOME FRUITION FOR SURE. THE INEVITABLE
> FIRST SIGNS WILL BE MASSAIVE DEMONSTARTIONS ACROSS THE COUNTRY,<br/>FOL...
> BY THE BEGINNINGS OF VIOLENCE, AND LOOTING, AND LAST BUT NOT LEAST,
> THE ORGANIZED MARCHES TO THE WHITE HOUSE WILL BE THE BIGGEST RED
> FLAG OF ALL. OBAMA'S PLATFORM WAS CHANGE. BUT IT APPEARS TO BE TURBULENT
> CHANGE TO A DEGREE NOT SEEN IN HISTORY AS OF YET. BUT IT IS COMING!
This point can be demonstrated and proven with a very simple logic.
Consider the following: ( I will use the race track analogy).
I am an "expert" at picking horses. How is it determined what "expert" means? The definition, (it is arbitrary), is that I am able to win more than I lose and never put my betting funds in sufficient danger for all of those funds to be lost and my ability to gamble ending.
I being this "expert", should be able to take $100.00 and eventually turn it into $1,000,000.00, etc..
My ability to turn a profit would be affected by my choosing horses that would also provide higher payoffs. Simply put, the more favorites that I choose, the longer it would take to increase my money. Yet, even an even money favorite would double my money.
However, a 10-1 shot would increase the speed of my earnings.
The very last thing that I would want to do is to spread my valuable information to others who would affect the odds.
Point being, I would be super secretive in how I chose my bets because sharing my winning information would only hurt my odds and my ability to earn money. Yet, what do we find.
"Experts" who pick stocks instead of horses. But, the same rule would apply. Why provide any valuable information to others? Why sell it? It would destroy or gravely affect the ability to make money by giving everyone else the special "expert" "power" that only you owned!
Interestingly, you find "expert" after "expert", only too willing to earn a living, providing YOU this information that will make YOU rich and they do this.....for what possible reason? To make money off of your buying their information?!!!! Why would they do that? Why would anyone in their right mind provide the info of how to achieve the "golden goose" when they were the only one who had a "golden goose"!? Logic dictates that they provide you with this "expert" information to get rich off of YOUR money that YOU pay for this"expert" information which leads me to the very simple, and obvious conclusion that the "expert" information, does NOT exist!!!!
Opinions are like A holes....everyone has one.
But, when someone tries to "sell" you the idea that they have a knowledge which will make you rich, why would they wish to share it? They wouldn't!! Unless they had other reasons for selling it.
What they do offer is the illusion that they can provide you with the direction to the golden goose. Sometimes their information will be correct and other times it will not be. If they are lucky, you will win, if they are unlucky, you will lose. But, they are guessing.
If they were sure enough about their own predictions, they would NOT SELL you or anyone the "answers to the test" that if they alone would use would make them as rich as they wanted to be.
They will use little bits of the truth...sometimes more of it...sometimes less of it to gain your attention. They will plead to your fears or your greed. They will use psychology to hypnotize you to give them your money. This is how they get rich.
The author of the above article is worse than a fraud. He is touching your weakest points to control you.
Anyone who truly has good information and wants to be a good guy will not charge you for it and will let you know up front that he is not offering you a magical solution to become rich. He is only offering his opinions which may or may not have some merit. But, once again, like typed previously, OPINIONS ARE LIKE A-HOLES, EVERYONE HAS ONE.
Good luck in your efforts to invest/protect and preserve your money.
All bow to the superior one!
I really like the way you guesstimate and then say you may change your mind, i can see why you are superior.
On Jul 28 08:58 AM stocknerd wrote:
> This is an example of an average person with too much analysis. He
> is lost in the process. His theories are too complicated and many
> contradiction in investing will only bring him lower returns. Plus
> I hate the END OF THE WORLD scenarios. They are ALWAYS WRONG. ALWAYS.
They only have to be right once.
Besides, it is not the end of the world---it is only the end of western industrial civilization. If you can kill buffalo with arrows you make yourself out of sticks and rocks, you will be fine.
Oooops. I forgot, we killed all the buffalo already.
The next round looks like a repeat of 2008 in terms of energy inflation, but with consumers that have no more credit cushion and companies continuing to cut to the bone to restore balance sheets meaning more job losses. I saw it coming and did my own macro calculations in 2007 and followed that other commenters advice on preserving cash and paying down debts. Gee, I didn't even need a supercomputer, PHD from Harvard, Frac Reserve training. I do respect the author for explaining his positions and why even though I only partially agree with some of them.
Good luck and good trading
Dave
On Jul 27 10:06 AM mlambert890 wrote:
> Its kind of funny just how irrationally paniced the right wing is
> over Obama. The ALL CAPS PIECE really tells the tale.
On another note, all these pundits saying oil will go to $20, $10 etc etc are clearly loons. There are hardly any producers who can afford to supply at these levels and the demand is global. A good indication of the global reality can be found in the basis between WTI, Brent and Urals. From a quality perspective, WTI should be the most expensive and Urals the cheapest, but the supply demand picture is reversing the order.
What I am trying to understand is if the US economy tanks from here, the traditional "flight to safety" may hold true for a while, but if this is a localized problem there will be a reversal as investors look for a truly safe haven. My money is on, and in, Norwegian sovereign debt and gold, but we shall see.
On Jul 27 05:00 PM Shalom Hamou wrote:
> The Fed has put much more liquidity on the market than there are
> available Treasuries... So the excess supply theory does not hold.
>
On Jul 26 12:05 PM Gary A wrote:
> Deja Vu all over again. But this revelation of churn and phony valuations
> may make some retail mutual fund managers nervous, eh? Could that
> bring the crash sooner?