Dan Schmeidler

Systemic Financial Crisis and Its Implications for Gold

Market update 4/8/08: Financials are mixed. Gold down. Gold miners down. Not as ugly as yesterday, though, when Financials were up and Gold was down. This market is just setting itself up for trouble.

Yamana: Stock Down on Concerns about Costs and Forecasts

Yamana will trade well upwards of $20 by the time they are reporting Q3 08 earnings. Why even bash the stock now that it is trading at around $14. ($13.50 last week). Do you really expect it to crash and burn like a WM or MER or LEH or CYN. Since so many people are going crazy talking of Gold falling to the $700's (and below), why not just put the Gold juniors (and seniors) in the same sector as the financials. Just let me know how and which way you decide to compre inflated balance sheets backed by even more inflated securitization to the supply/demand patterns that drive some of the growth/earnings for the (gold) miners. Or even better, let me know how on earth it would be possible for the financials to be trading higher than the miners in about 6 months. I heard some articles talking about inflation not being a concern anymore. I say, make those people go long the financials and short gold. Maybe in a few years those bank shares will come in handy when it's time to record capital losses on your taxes. But of course, according to them, Gold will also be trading at $300 by then.

Is the Worst Over for Financials?

This is from the "Seeking Alpha" charter: "We strongly favor contributions from finance professionals and industry experts writing about their own sector, but we are open to any article that is carefully argued, informative and well-written". I interpret the "but" as meaning regardless of the favoritism to people in your "standing", the emphasis of this site (the "but") is to be open to any article that is "carefully" argued and "well written". Panzner, please don't mess around here anymore, unless you return to this web site with a replacement article of your "Is the worst over for the financials", which, this time around, must be carefully argued and well written.

Is the Worst Over for Financials?

What do you think, Panzner, do you want to fill us in on the rest of your article about how investors apply the fairytale character to debt (namely (de)levaraging)? I would like to know a lot more about those new hot topics in these exclusive financial circles you are mentioning. Or wait, do I need to buy your books first? Crap, or even subscribe to the Financial Times (see your link to ""The Financial Fairytale of Goldilocks and the Credit Bears"). You know what Panzner. I am just going to wait or check back into this site and see if maybe one of site's readers can unlock your great mystery about this "new direction". Until then, do me a favor and do not post "teaser" articles on this web site, or I will make a serious complaint to the host of this site.

Chance This Is The Bottom? Zero.

These are challenging times for investors, however, I don''t believe that waiting 1 -2 years to trades equities is the right approach. There are companies in certain sectors that trade on good fundamentals which makes them good investments. The notion that our markets trade in an environment of "cascading counterparty defaults and capital base destruction" actually allows these companies to move higher and reach new all-time highs. As these fundamentally sound equities start getting chopped down by short interest or market rotations, they eventually pick up steam again as investors wake up from yet another horrid nightmare and storm right back to what is really working in our broken system - bidding these stocks higher and higher. As long as you are aware and prepare for the environment that we are trading in (by reading the above informative article), there is no reason to wait that long to start investing. We have been through these volatile markets for over a year now. Just through those suckers ($US dollars) in there and start balancing them.

Why I Bought the Ultrashort Financial Sector ETF

Use the financials as a short hedge for your long position. This will work well if you are long anything outside of the financials (such as commodities, industrials, retials, etc.) Build a nice short position on some of the financials while they are still near the top of the recent near 20% run-up. There is little fundamentals that can drive these stocks higher. During the next correction some of these financials should come down again, giving your long position a nice cushion. Then close your short position on the next "dooms-day" or "it's the collapse of all capital markets" kinda days, use the extra cash to add to your diversified long positions, (like buying some of the gold miners at an insane 60 earnings ratio, why not!) and then enjoy another bounce up. The banking industry in general is going through a drastic change this time around. A change towards socialization due to their inability to be profitable without goverment intervention. This means less prospects for profitability and real growth. In fact, it appears that our government acutally enjoys watching these monsters bleed to death slowly. In the future we are going to see less branches and far longer waiting times and longer lines. Kinda like banking in Moscow in the 1960's, or East Berlin in the 1970's. Wait, do the communists even have such a thing as banking? Wealth management and private banking will also change to some degree. This bail-out will come at a cost, and the government is not going to let this industry off the hook until they get on their knees and answer to "who is your daddy". Good luck with your trading.

Jim Cramer's 10 Predictions for 2008

Stop bashing on this Cramer guy. It's pointless and not contributing to any direction on how to treat his stock predictions. If my opnion about him helps, I see him as someone who is simply motivated by his fearlessness of the markets. He survived hell when he was working professionally as a hedge fund manager, and now, he lingers around as a quasi semi-retiree because he feels that this is the kind of enjoyment (for him, at least) that he should have had in the first place when he worked on wall street. He also seems to have some kind of obsession with trading, which he readily would admit to. If you read his book "Confessions of a Street Addict", he will formulate to you $ by $ on how he made his millions. He gives you all the trades (generally by sector, or the maket as a whole), the time, and even the payout $$. This guy had a lot of guts (or the stupidity of a dare devil). He would borrow VERY heavily and cash in on big one or two day payoffs. His timing of the market was everything. Plus the fact that he is probably crazy helps him.

Next Stop: $2,000 Gold

Just to add. One might want to add or substitute for the gold miners to your gold investments. Following the equity side of this play will add more clarity as far as growth potential is concerned (with respect to earnings, for example). But, I guess, it would just depend on what kind of investor you are.

Next Stop: $2,000 Gold

Gold is scarcity. If gold was not gold, we would be building buildings out of it. It happens to be a solid and effective metal that is also scarce. But the many "myths" surrounding it probably make it at times uninvestable. Just be careful with it.

Where Will the 'Commodity Currencies' Head Next?

After looking at the trend in the BDI over the last few years, I still don't see a compelling reason to think that the trend line is on a long term decline. Don't forget that the commodities supply side can be easily controlled if demand is indeed seen to be on the decline. Why on earth are we going to see a continuous increase in supply of commodities when there is noticeably a steep decline in demand worldwide. In other words, the supply side will eventually correct itself in order to once again gain the upper hand. And with the economic environment that we are in (low interest rates on the US dollar amidst economic growth globally, etc.) I just can't be convinced that 2 or 3 months from now that Index will trade significantly lower.

Dispelling the Financial Myths Behind the Credit Crunch

Interesting list. Never seen those events listed in that order. Glad I came back to check on the article. Makes our current "Great Housing Recession of 2007-200?" crisis sound like a walk in the park considering the other adversities that this country has experienced. If you are a believer, I think the time to invest is now and in the next year or two. The returns might not be great yet, but if you look at the big picture, a little bit down the road, the next boom will be just unbelievable. And as far the housing prices are concerned, by the time home prices have bottomed, the economy will have already taken off like a rocket. So, personally, I would not wait until home prices are bottoming to invest, unless of course, you are investing in real estate which right now is out of the question.

Dispelling the Financial Myths Behind the Credit Crunch

Great, great column. Anybody that has been in the market this past month will attest to having at least one or two existential revelations about trading this market. I can agree with associating current market behaviors with something intangible such as "the masses being misinformed". Usually those revelations come at your worst trading moments when the red just keeps going redder. If you haven't experienced those moments, yet, you must know more about this market than I do. Anyhow, I have the myth of the day (3/19/08) for you: "... sell gold, in fact, don't ever get near it again, the Fed has finally managed to stabilize the economy, inflation expectations, and prospects for its own currency ...". Good luck everybody.