Coming Full Circle with the Market

[The following is excerpted from Bill Cara's Daily Report]

In all cases of recent bank failures, and throughout history in the US, it was the shareholders (and in some cases the employees) who lost, but the account owners remained whole.

The WaMu (WM) failure of Thursday evening was widely predicted, just as had been Fannie Mae (FNM), Freddie Mac (FRE), Lehman Brothers (LEH), Merrill Lynch, IndyMac [IDMC.PK], and Bear Stearns. I called them “toast” before others had the guts to do the same.

Bill Cara: Bill Cara's Community Chat, Thurs., June 12, 2008, 8 ...
How many months ago did I first write the words, “Banks are toast” and “Done like dinner!”? It was mid-March, at least…

But, it was a long time ago, in November 2005, when I started discussing the bad judgment in investing in syndicated mortgages and similar financial products.

Bill Cara: Week #46 (2005-11-19) in Review (Introduction)
Government, Humongous Bank & Broker, Corporate America and Big Media are misleading you .... with US treasuries, which would mean all instruments are toast! ... www.billcara.com/archives/2005/11/week_46_2005111

This blog has been quite a ride for me. I now receive hundreds of letters daily from all over the world. These are serious letters. Thursday, for example, they came from the senior editor of Barron’s and from the head of investor communications of the SEC, and from too many publishers to mention.

When I started to blog in April 2004, I was concerned about the big picture from the beginning, and was tagged with a perma-bear label. At the time, I said I was just speaking from experience and objectivity. Regardless of what anybody thinks, I am a very private person. I don’t like to be labeled.

In the summer of 2006, I first warned that the normal stock cycle was rolling over, but had been propped back up by Paulson’s Folly. Most people believed in Paulson, which concerned me, so I turned up the heat.

Then in the summer of 2007, I warned that the credit bubble had burst which I could see when the US Retailers hit the wall, and major investment bank hedge funds were shutting down. Few people believed me; the DJIA index went on to set a record high. I started to write my book “Lessons” because I knew people needed to learn for themselves, and stop being misled by more financially sophisticated people.

Friday morning, regarding my call last week that I turned bullish on equity markets, I received a letter asking me “What are you smoking?” I expected it. I have now come full circle. Still, it’s disappointing.

Successful traders are in the minority; they trade against the order flow and general perceptions of the majority. For that reason, they are both admired and despised. In past years, for me, that would be water off the duck’s back; however, since I started to blog, I took on a mission to show a community how to trade against those who are quick to exploit them, and the weight of this task has been a lot to bear. More than I had imagined when I started down this road.

Yes, the word gravitas has been on my mind a lot lately.

Comments

[Per:]

Keep up the good work! It's more important for most people to fit and be popular than see the trust and be honest.

2008 Sep 28 10:47 PM

[Per:]

Correction:

Keep up the good work! It's more important for most people to fit in and be popular than see the truth and be honest.

2008 Sep 28 10:48 PM

[Umm, yeah:]

Regarding the flaming - you'd think that most of your detractors would at least check your track record. It's pretty easy to see that you've been correct especially compared to some of the perma-bulls out there.

2008 Sep 29 09:36 AM