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Logical Thought
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My name is Mark B. Spiegel and I'm the Managing Member of Stanphyl Capital Management LLC. I can be reached at: mark (at) stanphylcap (dot) com. My Twitter feed is @markbspiegel
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I don't have a blog, but here's a link to a WSJ article regarding my thoughts on the "flash crash"
  • Is the "Dollar Down - Stocks Up" Relationship Finally Decoupling? 20 comments
    Nov 25, 2009 4:13 PM
    If I were to tell you a week ago (in light of the recent near picture-perfect inverse relationship between the dollar and stock prices) that with the dollar down more than a full percentage point in a single day against the Euro, the Dow would only be up 30 points that day and the S&P would only be up 5 points, would you have believed me? And yet here we are with exactly those figures at today's close. Are we finally getting to the point where-- as things always were traditionally-- a sliding dollar is perceived as BAD for stocks? Maybe. And if that's the case, then watch out, because "traditionally" (unlike now) when the dollar went up there was no dollar carry trade to explode and thus cause a panicked dumping of risk assets (such as stocks).

    Meanwhile, how's this for weirdness: Despite the horrendous day for the dollar, long-term Treasury yields were DOWN. So, who's buying long-dated treasuries and why? It's not foreigners (unless they're being bold enough to predict an imminent dollar bounce), and it's not anyone with any sort of an inflation fear (despite the slide in the dollar). So if the bond market TRULY is "the smart money", what is it telling us? What it's (seemingly) NOT telling us is that we're headed for a stronger economy down the road.

    Man, on a daily chart it sure looks as if the S&P wants to break out of that little three-day ascending triangle and set new post-crash highs. Well, if it does, I'm still planning to stop out half my SDS at 1115. Meanwhile, I'm still 60% in SDS, 20% in DUSA (which looks to me as if it now needs to consolidate for a week or three between $1.40 and $1.60 before quickly moving to the $1.80 to $2 range) and 20% in cash.
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  • Swashbuckler
    , contributor
    Comments (715) | Send Message
     
    Seems like everywhere I looked in the past few months, I've seen articles and comments regarding the irrefutable logic of the inverse relationship of the dollar and stocks. "OF COURSE a weak dollar means higher stocks." Nowadays it is accepted dogma for all the 'generals fighting the last war'. Or anyone looking in the rear view mirror. People stumble on a new methodology like this, make some money, and think they have some kind of divine touch. The eternal key to the stock market vault. Never mind the fact that the relationship has existed now probably just long enough for it to collapse of its' own weight. Six years. Wouldn't surprise me in the least if things transition back to the historic norm over the next few months. Not to worry. Some new "ironclad" indicator will arise and work. Until it collapses.
    25 Nov 2009, 05:00 PM Reply Like
  • Swashbuckler
    , contributor
    Comments (715) | Send Message
     
    Logicalthought----Because the float is so thin, you aren't worried about getting screwed by the specialists making the market in DUSA when you get in and out of the position?
    25 Nov 2009, 05:20 PM Reply Like
  • Logical Thought
    , contributor
    Comments (4580) | Send Message
     
    Author’s reply » LOL... How true!

     

    On Nov 25 05:00 PM Swashbuckler wrote:

     

    > Seems like everywhere I looked in the past few months, I've seen
    > articles and comments regarding the irrefutable logic of the inverse
    > relationship of the dollar and stocks. "OF COURSE a weak dollar means
    > higher stocks." Nowadays it is accepted dogma for all the 'generals
    > fighting the last war'. Or anyone looking in the rear view mirror.
    > People stumble on a new methodology like this, make some money, and
    > think they have some kind of divine touch. The eternal key to the
    > stock market vault. Never mind the fact that the relationship has
    > existed now probably just long enough for it to collapse of its'
    > own weight. Six years. Wouldn't surprise me in the least if things
    > transition back to the historic norm over the next few months. Not
    > to worry. Some new "ironclad" indicator will arise and work. Until
    > it collapses.
    25 Nov 2009, 05:47 PM Reply Like
  • Northern Dancer
    , contributor
    Comments (737) | Send Message
     
    Since June, the dollar has lost a stunning 8% of its value. Today alone, another full percentage point. But while nobody was looking today, with a full 1% devaluation of the dollar, the equities markets essentially went sideways. Not too long ago, when the dollar fell, the markets surged. In fact, when priced in any currency except USD, the American markets have been flat since June. In other words, it's been a rally since June based on absolutely nothing other than currency depreciation. And yet today, the currency absolutely fell off the cliff, and the markets didn't react. This is absolutely ominous.

     

    It sure looks to me like the day has come when we're going to be seeing the dollar and the equity markets falling at the same time. Today Russia said it's given up on any hope Bernanke gives a shyt about the American dollar. As a result, Russia now wants Canadian and Australian currencies where the economies are well run and sanity still prevails. He'll begin the process of slowly unloading Russia's holdings of American dollars. Can't blame him one bit. Surely that's embarrassing enough for Bernanke to do something? Probably not, since he doesn't give a shyt about the American people, as long as his buddies are making another fortune in the cheap American dollar carry trade. God, what bastards.

     

    One final possibility. It could be an orchestrated event which would give Bernanke reason to shock the world and do something to support the buck. It's a long shot, but possible. After all, the sentiment on the dollar is 98% bearish and it wouldn't take much to spark off a rally for the ages.

     

    .
    25 Nov 2009, 05:53 PM Reply Like
  • Logical Thought
    , contributor
    Comments (4580) | Send Message
     
    Author’s reply » This is definitely not (yet) something one can trade. I've owned a lot of these kinds of stocks, and they're "buy and holds" (as long as the fundamentals stay strong) until over time both the price and volume pick up, and then they become tradeable. The unique thing about this one is the surprisingly large institutional ownership for such a tiny company-- normally, institutions won't touch something this small because it's too tough to buy in any kind of quantity. However, this situation is a bit unique in that Morgans Waterfell and Fidelity bought this when it was a much larger, more liquid stock and stuck with it, and I think that Deerfield (which is a very smart pure-play healthcare fund) must've bought its stake as a large block (or blocks) from one of the other big institutions that bailed out at some point when the stock cratered.

     

    I really think this is worth around $4/share "as-is", based on 2x run-rate revenue + net cash + the NOL carry-forwards. And if a larger company with a built-in derm salesforce bought it, the acquirer could probably pay more like $7-$8 (although that kind of premium wouldn't happen unless the price first got up into the $3-$4 range "on its own").

     

    I was a buyer in there today (@$1.52) for a few thousand more shares, in order to maintain my 20% position.

     

    On Nov 25 05:20 PM Swashbuckler wrote:

     

    > Logicalthought----Because the float is so thin, you aren't worried
    > about getting screwed by the specialists making the market in DUSA
    > when you get in and out of the position?
    25 Nov 2009, 06:05 PM Reply Like
  • Logical Thought
    , contributor
    Comments (4580) | Send Message
     
    Author’s reply » Check out this "Turkey Factor" post on Zero Hedge:

     

    www.zerohedge.com/arti...

     

    On Nov 25 05:53 PM Northern Dancer wrote:

     

    > Since June, the dollar has lost a stunning 8% of its value. Today
    > alone, another full percentage point. But while nobody was looking
    > today, with a full 1% devaluation of the dollar, the equities markets
    > essentially went sideways. Not too long ago, when the dollar fell,
    > the markets surged. In fact, when priced in any currency except USD,
    > the American markets have been flat since June. In other words, it's
    > been a rally since June based on absolutely nothing other than currency
    > depreciation. And yet today, the currency absolutely fell off the
    > cliff, and the markets didn't react. This is absolutely ominous.
    >
    >
    > It sure looks to me like the day has come when we're going to be
    > seeing the dollar and the equity markets falling at the same time.
    > Today Russia said it's given up on any hope Bernanke gives a shyt
    > about the American dollar. As a result, Russia now wants Canadian
    > and Australian currencies where the economies are well run and sanity
    > still prevails. He'll begin the process of slowly unloading Russia's
    > holdings of American dollars. Can't blame him one bit. Surely that's
    > embarrassing enough for Bernanke to do something? Probably not, since
    > he doesn't give a shyt about the American people, as long as his
    > buddies are making another fortune in the cheap American dollar carry
    > trade. God, what bastards.
    >
    > One final possibility. It could be an orchestrated event which would
    > give Bernanke reason to shock the world and do something to support
    > the buck. It's a long shot, but possible. After all, the sentiment
    > on the dollar is 98% bearish and it wouldn't take much to spark off
    > a rally for the ages.
    >
    > .
    25 Nov 2009, 06:43 PM Reply Like
  • Swashbuckler
    , contributor
    Comments (715) | Send Message
     
    Northern Dancer---I think China is headed down the same road as Russia, with regard to the USD. And not a damn thing we'll be able to do about it. When China pulls the plug, I believe it may precipitate a collapse in our economy which will in turn devastate our society. It won't bother Beranke and the people who sold us down the river; they'll still have their penthouses and Porsches and hookers even though mainstream America will be shot to shit for many decades.

     

    On Nov 25 05:53 PM Northern Dancer wrote:

     

    > Since June, the dollar has lost a stunning 8% of its value. Today
    > alone, another full percentage point. But while nobody was looking
    > today, with a full 1% devaluation of the dollar, the equities markets
    > essentially went sideways. Not too long ago, when the dollar fell,
    > the markets surged. In fact, when priced in any currency except USD,
    > the American markets have been flat since June. In other words, it's
    > been a rally since June based on absolutely nothing other than currency
    > depreciation. And yet today, the currency absolutely fell off the
    > cliff, and the markets didn't react. This is absolutely ominous.
    >
    >
    > It sure looks to me like the day has come when we're going to be
    > seeing the dollar and the equity markets falling at the same time.
    > Today Russia said it's given up on any hope Bernanke gives a shyt
    > about the American dollar. As a result, Russia now wants Canadian
    > and Australian currencies where the economies are well run and sanity
    > still prevails. He'll begin the process of slowly unloading Russia's
    > holdings of American dollars. Can't blame him one bit. Surely that's
    > embarrassing enough for Bernanke to do something? Probably not, since
    > he doesn't give a shyt about the American people, as long as his
    > buddies are making another fortune in the cheap American dollar carry
    > trade. God, what bastards.
    >
    > One final possibility. It could be an orchestrated event which would
    > give Bernanke reason to shock the world and do something to support
    > the buck. It's a long shot, but possible. After all, the sentiment
    > on the dollar is 98% bearish and it wouldn't take much to spark off
    > a rally for the ages.
    >
    > .
    25 Nov 2009, 06:48 PM Reply Like
  • Northern Dancer
    , contributor
    Comments (737) | Send Message
     
    On Nov 25 06:43 PM logicalthought wrote:

     

    > Check out this "Turkey Factor" post on Zero Hedge:<

     

    Wow! Great find buddy. How co-incidental is that? You make me feel like I was onto something here. lol

     

    .
    25 Nov 2009, 06:49 PM Reply Like
  • Swashbuckler
    , contributor
    Comments (715) | Send Message
     
    Thanks for the explanation. You ever tagged one of these microcaps big? Like a three bagger or five bagger etc.? If so, did you learn anything new in the process?

     

    On Nov 25 06:05 PM logicalthought wrote:

     

    > This is definitely not (yet) something one can trade. I've owned
    > a lot of these kinds of stocks, and they're "buy and holds" (as long
    > as the fundamentals stay strong) until over time both the price and
    > volume pick up, and then they become tradeable. The unique thing
    > about this one is the surprisingly large institutional ownership
    > for such a tiny company-- normally, institutions won't touch something
    > this small because it's too tough to buy in any kind of quantity.
    > However, this situation is a bit unique in that Morgans Waterfell
    > and Fidelity bought this when it was a much larger, more liquid stock
    > and stuck with it, and I think that Deerfield (which is a very smart
    > pure-play healthcare fund) must've bought its stake as a large block
    > (or blocks) from one of the other big institutions that bailed out
    > at some point when the stock cratered.
    >
    > I really think this is worth around $4/share "as-is", based on 2x
    > run-rate revenue + net cash + the NOL carry-forwards. And if a larger
    > company with a built-in derm salesforce bought it, the acquirer could
    > probably pay more like $7-$8 (although that kind of premium wouldn't
    > happen unless the price first got up into the $3-$4 range "on its
    > own").
    >
    > I was a buyer in there today (@$1.52) for a few thousand more shares,
    > in order to maintain my 20% position.
    >
    > On Nov 25 05:20 PM Swashbuckler wrote:
    25 Nov 2009, 06:53 PM Reply Like
  • Logical Thought
    , contributor
    Comments (4580) | Send Message
     
    Author’s reply » This year, I had DCTH as a 2.5-bagger (bought last year in the low-to-mid-$1s and sold in the low $3s... Now it's in the $5s! When I bought it, it would trade 30,000-40,000 shares a day, and no one had ever heard of it. (It's still a great story, and now that the financing risk is gone I'd probably buy it back in the low $3s.) My other big win this year (I sure as hell haven't made any money this year on the short side!) was MNKD, bought in the $2s last year and sold in the $8s this year. This one wasn't as tiny as DCTH ($200mm market cap when I bought it), so it was actually tradeable all the way through (and I did trade around my core position).

     

    On Nov 25 06:53 PM Swashbuckler wrote:

     

    > Thanks for the explanation. You ever tagged one of these microcaps
    > big? Like a three bagger or five bagger etc.? If so, did you learn
    > anything new in the process?
    25 Nov 2009, 07:08 PM Reply Like
  • Northern Dancer
    , contributor
    Comments (737) | Send Message
     
    On Nov 25 06:48 PM Swashbuckler wrote:

     

    > Northern Dancer---I think China is headed down the same road as Russia,
    > with regard to the USD. And not a damn thing we'll be able to do
    > about it. When China pulls the plug, I believe it may precipitate
    > a collapse in our economy which will in turn devastate our society.
    > It won't bother Beranke and the people who sold us down the river;
    > they'll still have their penthouses and Porsches and hookers even
    > though mainstream America will be shot to shit for many decades.<

     

    Swashbuckler, I just checked out the link logicalthought gave and I think it confirms my suspicion that this Putin thing may have been a choreographed event. It might give Bernanke the excuse he needs to begin to pump up the dollar when he doesn't really want to be blamed for the effect that would have on the economy. He's stuck between a rock and a hard place (of his own making) and this just might be a "you scratch my back and I'll scratch yours" kind of deal.

     

    I also hear speculation that China might do the same thing as you astutely suggested. But after reading the story by the currency trader, I now doubt that's gonna happen unless this Putin thing doesn't do what I believe it's intended to do. Stay tuned. And watch for the dollar to react the other way soon (up). Or at least watch for Bernanke to react to it. This might be the beginning of a surge in the dollar. God knows, one is due.

     

    .
    25 Nov 2009, 07:13 PM Reply Like
  • Logical Thought
    , contributor
    Comments (4580) | Send Message
     
    Author’s reply » swash,

     

    I don't necessarily agree re. China massively dumping the dollar. They're WAY too export-dependent to do anything to deliberately drive the dollar down further-- if they did, the worldwide pressure for them to abandon the yuan-dollar peg would be unbearable.

     

    On Nov 25 06:48 PM Swashbuckler wrote:

     

    > Northern Dancer---I think China is headed down the same road as Russia,
    > with regard to the USD. And not a damn thing we'll be able to do
    > about it. When China pulls the plug, I believe it may precipitate
    > a collapse in our economy which will in turn devastate our society.
    > It won't bother Beranke and the people who sold us down the river;
    > they'll still have their penthouses and Porsches and hookers even
    > though mainstream America will be shot to shit for many decades.
    >
    25 Nov 2009, 07:18 PM Reply Like
  • Northern Dancer
    , contributor
    Comments (737) | Send Message
     
    On Nov 25 07:18 PM logicalthought wrote:

     

    > swash,
    >
    > I don't necessarily agree re. China massively dumping the dollar.
    > They're WAY too export-dependent to do anything to deliberately drive
    > the dollar down further-- if they did, the worldwide pressure for
    > them to abandon the yuan-dollar peg would be unbearable.<

     

    Agreed! That's another logicalthought.

     

    .
    25 Nov 2009, 07:21 PM Reply Like
  • Swashbuckler
    , contributor
    Comments (715) | Send Message
     
    Nice, logicalthought. A couple of movers like that probably go a long ways toward your having a good year.

     

    On Nov 25 07:08 PM logicalthought wrote:

     

    > This year, I had DCTH as a 2.5-bagger (bought last year in the low-to-mid-$1s
    > and sold in the low $3s... Now it's in the $5s! When I bought it,
    > it would trade 30,000-40,000 shares a day, and no one had ever heard
    > of it. (It's still a great story, and now that the financing risk
    > is gone I'd probably buy it back in the low $3s.) My other big win
    > this year (I sure as hell haven't made any money this year on the
    > short side!) was MNKD, bought in the $2s last year and sold in the
    > $8s this year. This one wasn't as tiny as DCTH ($200mm market cap
    > when I bought it), so it was actually tradeable all the way through
    > (and I did trade around my core position).
    25 Nov 2009, 07:25 PM Reply Like
  • Swashbuckler
    , contributor
    Comments (715) | Send Message
     
    logicalthought and Northern Dancer----I believe that China has already decided to abandon the yuan-dollar peg in favor of a new reserve currency. All that remains is the timing. I formerly believed and stated for the past couple of years that they would be committing economic suicide to bail out of dollars. I have recently concluded just the opposite. What do we owe them, $800 trillion? I believe they buy commodities the world over and then pull the plug. I am not well versed in monetary policy or international economical relations. I reached my conclusions on my own. But I have done much reading on the subject over the past several months. The person whose opinions I am most closely aligned with on this matter, although her IQ probably has me covered by 50+ points, is a poster here, named Freya. Her comments on SA regarding China, posted on 4-28, 5-03, and 11-08 are my own thoughts, in a manner beyond my ability to express them. Again, any conclusions I have on the matter were arrived at on my own. But her posts reinforce my own opinions. Keep in mind, she is stating primarily what China CAN do. My thoughts are that China WILL do what they CAN do. My thoughts are that China will sacrifice themselves to whatever extent they deem necessary in order to arrive as the sole economic superpower. Which is not to say I am correct, as I have been wrong many times. Time will decide. Nothing wrong with reasonable people disagreeing about a matter such as this. Respectfully, Swash.

     

    On Nov 25 07:18 PM logicalthought wrote:

     

    > swash,
    >
    > I don't necessarily agree re. China massively dumping the dollar.
    > They're WAY too export-dependent to do anything to deliberately drive
    > the dollar down further-- if they did, the worldwide pressure for
    > them to abandon the yuan-dollar peg would be unbearable.
    25 Nov 2009, 08:12 PM Reply Like
  • Logical Thought
    , contributor
    Comments (4580) | Send Message
     
    Author’s reply » Well, I think the problem is that if they kill their export business, they will have a new revolution on their hands (from the hundreds of millions of then-unemployed) long before they have the chance to become the "sole economic superpower". But I'll tell you what-- if you want to talk about "reasonable people disagreeing", here's a REAL outlier of a position on China:
    ftalphaville.ft.com/bl.../

     

    On Nov 25 08:12 PM Swashbuckler wrote:

     

    > logicalthought and Northern Dancer----I believe that China has already
    > decided to abandon the yuan-dollar peg in favor of a new reserve
    > currency. All that remains is the timing. I formerly believed and
    > stated for the past couple of years that they would be committing
    > economic suicide to bail out of dollars. I have recently concluded
    > just the opposite. What do we owe them, $800 trillion? I believe
    > they buy commodities the world over and then pull the plug. I am
    > not well versed in monetary policy or international economical relations.
    > I reached my conclusions on my own. But I have done much reading
    > on the subject over the past several months. The person whose opinions
    > I am most closely aligned with on this matter, although her IQ probably
    > has me covered by 50+ points, is a poster here, named Freya. Her
    > comments on SA regarding China, posted on 4-28, 5-03, and 11-08 are
    > my own thoughts, in a manner beyond my ability to express them. Again,
    > any conclusions I have on the matter were arrived at on my own. But
    > her posts reinforce my own opinions. Keep in mind, she is stating
    > primarily what China CAN do. My thoughts are that China WILL do what
    > they CAN do. My thoughts are that China will sacrifice themselves
    > to whatever extent they deem necessary in order to arrive as the
    > sole economic superpower. Which is not to say I am correct, as I
    > have been wrong many times. Time will decide. Nothing wrong with
    > reasonable people disagreeing about a matter such as this. Respectfully,
    > Swash.
    25 Nov 2009, 08:27 PM Reply Like
  • Swashbuckler
    , contributor
    Comments (715) | Send Message
     
    Logicalthought---I probably should have referenced the comments I referred to earlier. I got reamed by a reader the other day for not referencing. So, on (1) 04/28 the article by J.S. Kim "World Gold Markets: How Lack of Transparency Translates Into Poor Analysis" at 5:57 pm --- (2) on 05/03 the article by Sean Maher "Will China Save The World" at 11:04am--- (3) on 10/26 the article by Howard Richman "Geithner:China's Not Manipulating Currency" at 2:24am and--- (4) 11/08 on the article by AIKI 14 "Are The US and China Currently In The Middle Of A Trade War?" Some of these comments were sobering.
    25 Nov 2009, 09:10 PM Reply Like
  • Swashbuckler
    , contributor
    Comments (715) | Send Message
     
    Terrific link logicalhought. The new year we are entering, for better or worse, should hold a lot of excitement.

     

    On Nov 25 08:27 PM logicalthought wrote:

     

    > Well, I think the problem is that if they kill their export business,
    > they will have a new revolution on their hands (from the hundreds
    > of millions of then-unemployed) long before they have the chance
    > to become the "sole economic superpower". But I'll tell you what--
    > if you want to talk about "reasonable people disagreeing", here's
    > a REAL outlier of a position on China:
    > ftalphaville.ft.com/bl.../
    >
    25 Nov 2009, 09:18 PM Reply Like
  • Swashbuckler
    , contributor
    Comments (715) | Send Message
     
    Northern Dancer----I recently posted that a surge in the USD would not surprise me, because I don't remember in my entire life so many people openly motherfu#king the dollar. I would almost think that everyone who is going to dump has gotten out by now. Although I meet people every day who know more about the USD than I do. My guess is that your remark is likely on the money, that Bernanke may be looking for an excuse to pump it up. But I don't know. Like you, I don't feel sorry for Ben, he made his bed, as it were.

     

    On Nov 25 07:13 PM Northern Dancer wrote:

     

    > On Nov 25 06:48 PM Swashbuckler wrote:
    25 Nov 2009, 09:31 PM Reply Like
  • Swashbuckler
    , contributor
    Comments (715) | Send Message
     
    800 trillion? Sorry for the mindfart. 800 billion.

     

    On Nov 25 08:12 PM Swashbuckler wrote:

     

    > logicalthought and Northern Dancer----I believe that China has already
    > decided to abandon the yuan-dollar peg in favor of a new reserve
    > currency. All that remains is the timing. I formerly believed and
    > stated for the past couple of years that they would be committing
    > economic suicide to bail out of dollars. I have recently concluded
    > just the opposite. What do we owe them, $800 trillion? I believe
    > they buy commodities the world over and then pull the plug. I am
    > not well versed in monetary policy or international economical relations.
    > I reached my conclusions on my own. But I have done much reading
    > on the subject over the past several months. The person whose opinions
    > I am most closely aligned with on this matter, although her IQ probably
    > has me covered by 50+ points, is a poster here, named Freya. Her
    > comments on SA regarding China, posted on 4-28, 5-03, and 11-08 are
    > my own thoughts, in a manner beyond my ability to express them. Again,
    > any conclusions I have on the matter were arrived at on my own. But
    > her posts reinforce my own opinions. Keep in mind, she is stating
    > primarily what China CAN do. My thoughts are that China WILL do what
    > they CAN do. My thoughts are that China will sacrifice themselves
    > to whatever extent they deem necessary in order to arrive as the
    > sole economic superpower. Which is not to say I am correct, as I
    > have been wrong many times. Time will decide. Nothing wrong with
    > reasonable people disagreeing about a matter such as this. Respectfully,
    > Swash.
    25 Nov 2009, 09:54 PM Reply Like
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