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Tim Ayles
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We strive to build highly disciplined, sensible client portfolios. Portfolios that are focused on investing in businesses with solid free cash flows and solid dividend payouts. We buy businesses, not stocks. Tim is a Registered Investment Advisor.
My company:
Napa Wealth Management, Incorporated
  • Preparing for Stagflation 8 comments
    Oct 16, 2009 11:30 PM | about stocks: UUP, GLD, SH, SPY, SLV, GIS
    Just going to write some very random thoughts going through my mind about the market just for documenting......

    I have been in the deflation camp for months now after writing in March that the bottom for 2009 was in and that we would see 9000+ on the Dow. When we wrote that, our own clients mocked us. Now that we are in our target range of 9100-10650, we are telling clients the next big move in the market is towards 5000 on the dow over the next year.

    The caveat to this is the governments bent on destroying the value of our currency. We bought UUP and sold for a .5% profit when it started to go against us, and will be looking to add UUP again in the future. In the meantime, our portfolios are very bond centered and filled alternative investments. We did add GIS and SLV to the portfolios along with selected corporate fixed income. Because of inflated asset prices, we have moved from slightly net short to back to nuetral after the NFP report did not hammer stocks lower. We will become net short again soon by adding to long positions in SH and PSQ.

    Stagflation is becoming a larger concern to us. In stagflation, there is nowhere to hide. Prices to live go up, and asset prices plummet - both stocks and bonds. Commodities might hold their purchasing power, but for retired folks who own gold per se, they have to sell their purchasing power to live, thus giving them a lower and lower capital base. Wall Street is not prepared for stagflation.

    We still believe another panic is on the near horizon though, one in which cash will outperform all other assets for a strong but short period of time. Once this next panic is nearing the end, we plan to get long inflation as we feel the government will throw the kitchen sink at the problem. If printing money fixed all problems, why would we ever need to worry? Bottom line, printing money does nothing, and this recent rally is but a facade. Foreclosures are hitting record highs, and banks are contracting lending still. debt destruction is still stronger than the printing the government is doing. This next panic will make the fed put nitrous oxide tanks on the printing press, thus hurling America into a deeper depression than the 1930's. If you want a glimpse of what that could look like, just do some research on Argentina and Iceland. Rising prices for living, while asset prices collapse. It's not fun to be a doom and gloomer, but this administration and Fed leaders should be arrested for what they are doing to enrich the crooks who got us into this mess, while leaving main street to fend for itself. Get ready for a second American revolution.

    Long GIS, SH, SLV, PSQ in selected client accounts
    Stocks: UUP, GLD, SH, SPY, SLV, GIS
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Comments (8)
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  • philzuco
    , contributor
    Comments (11) | Send Message
     
    Tim,

     

    Still long the American peso (UUP)?

     

    Like I said a few months ago, the weakness in the dollar isn't a phenomenon of oversupply (ie, money printing) but one of waning demand for the dollar globally as central banks, wealthy individuals and funds diversify their holdings away from US dollars.

     

    Also, I hope you didn't short the GLD like you said you would a few months back. These long-term commodity breakouts usually yield massive moves to the upside.
    26 Nov 2009, 10:40 AM Reply Like
  • Tim Ayles
    , contributor
    Comments (1208) | Send Message
     
    Author’s reply » You do realize now that this post in which you tried to take a dig marked the exact low before this large rally?

     

    :)

     

    We are selling off some of our UUP now.

     

    Wonder why I haven't heard from you again?
    17 Feb 2010, 06:40 PM Reply Like
  • Tim Ayles
    , contributor
    Comments (1208) | Send Message
     
    Author’s reply » Well - take a look at my post.

     

    Your answer is there......

     

    We will be adding UUP again this week for a trade. I have often said I do not like the USD long term, but its still the best of the worst for fiat currencies. What would you rather own? Euros?

     

    We'll more than likely be taking profits on our SLV trade this week as well.

     

    Not short GLD...... yet.

     

    On Nov 26 10:40 AM philzuco wrote:

     

    > Tim,
    >
    > Still long the American peso (UUP)?
    >
    > Like I said a few months ago, the weakness in the dollar isn't a
    > phenomenon of oversupply (ie, money printing) but one of waning demand
    > for the dollar globally as central banks, wealthy individuals and
    > funds diversify their holdings away from US dollars.
    >
    > Also, I hope you didn't short the GLD like you said you would a few
    > months back. These long-term commodity breakouts usually yield massive
    > moves to the upside.
    26 Nov 2009, 09:42 PM Reply Like
  • philzuco
    , contributor
    Comments (11) | Send Message
     
    Just read your post. If you bailed out of the dollar on the first sign of weakness, it looks to me like you don't practice what you preach. Just a few months ago, you were mouthing off about how I would feel the pain and be blow away by an out-of-the-blue 20% rally in the dollar.

     

    Apparently, even you didn't believe your own delusions.
    1 Dec 2009, 10:23 AM Reply Like
  • Tim Ayles
    , contributor
    Comments (1208) | Send Message
     
    Author’s reply » I find it comical that you spend so much time being obsessed with my trades. There is something in trading called discipline that trumps conviction.

     

    UUP will still see a rally, because it is priced against other fiat currencies in countries that are doing just as much printing and doing worse econmically.

     

    You will feel the pain of the unwind. And I won't be lame to point it out to you.

     

    On Dec 01 10:23 AM philzuco wrote:

     

    > Just read your post. If you bailed out of the dollar on the first
    > sign of weakness, it looks to me like you don't practice what you
    > preach. Just a few months ago, you were mouthing off about how I
    > would feel the pain and be blow away by an out-of-the-blue 20% rally
    > in the dollar.
    >
    > Apparently, even you didn't believe your own delusions.
    1 Dec 2009, 12:44 PM Reply Like
  • philzuco
    , contributor
    Comments (11) | Send Message
     
    There's no obsession. Don't flatter yourself. You've chosen to put yourself out in the public domain, and you've made predictions that obviously were wrong. I came across your predictions, and I'm responding to them -- simple as that.

     

    I just find it funny that you try to have it both ways. The dollar goes against you 10 cents and you claim to be out of that "loser of an asset class". But if it rallies 20%, then you can claim you published in your blog, "months ago", that the dollar would surely rally 20%. What a joke.

     

    So, let's assess your strategy: you give your convictions no room at all to play out, but claim credit in the event they do work -- some day.

     

    Btw: if you're not prepared to stand by your big-picture view, then, why spend so much time writing articles about your grand views on the markets, when, at the end of the day, you just buy some SLV and go with the trend?

     

    Sounds to my like you'd be a lot more honest with yourself if you just said: "I HAVE NO IDEA WHEN THE MARKET WILL TURN.. NOBODY DOES... and, in the meantime, I will stick with the trend until it's no longer in place and stops working. Then, I'll go into cash or buy some bonds until I reassess my strategy."

     

    Instead, you gloat about specific targets for when the DOW will "top-out" then crash and burn. And, all along the way, you yourself don't trade those ideas. It's pretty pathetic...
    1 Dec 2009, 01:08 PM Reply Like
  • Tim Ayles
    , contributor
    Comments (1208) | Send Message
     
    Author’s reply » You don't have a clue how we invest or whether we are wrong based on your "timing" and definition of wrong. When we were buying stocks in November through February this year saying we would get a rally, and the market kept going down, four months after we started buying, I assume you would gloat that we were wrong and expect us to come out and say so? When we sold some of those longs on technical breakdowns only to buy them again at lower prices, did we bail on our thesis and "not give our thesis room to play out"? When we bought inverse funds to protect our downside in the short term while getting long during the crash, were we weak hands? I don't think so. We were being prudent with client capital.

     

    Don't assume everyone just buys and holds with the idea they are the world's most knowledgeable trader/investor as you seem to think you are by your comments to me and others I have read about you.

     

    Our long term thesis is the same. We have always told clients we are certain we will be right, we just may be wrong on the timing. If we weren't certain, we shouldn't be investing. But we don't risk money for too long trying to "prove" we are right. We would rather make money than be right. You seem to be willing to ride massive drawdowns in your ideas because you know you are right. We are not. Therefore, we do trade around our thesis. We protect capital when we are wrong on the timing and look for better opportunities to enter at better prices. If the technicals say to take profits and buy again lower, that is in the best interest of our clients. We did that time and time again on the way down, and were handsomely rewarded for it. We have done that even before your sleuth work has tried to apparently point out that we are admitting we are "wrong" by just going with the trend.

     

    We are not dogmatic idiots who just dig in our heels and say our thesis is right and the timing is now, client accounts be damned! The majority of our clients have outperformed the stock indexes this year, and taken about 60% less risk in the process. We have nothing to be ashamed of. You certainly should be though that you have time to waste in attempts to mock what we do without having a clue as to what it is. You have wasted your breath with personal attacks just because we don't agree with your thesis in the short run. People are fun to talk with who don't agree, it thought provoking and intellectual. Others are hot heads who lacks conversational ability, and only look to make personal attacks and create animosity.

     

    Regardless, I too am an idiot for spending so much time responding to your unfounded accusations, and thus will no longer waste it in response to your posts. Please feel free to write as you see fit. I will continue to post articles in which you can bash. You may want to read my most recent blog. Might be something that meshes with your thesis of everything going to hell in a hand basket. Enjoy the ride down and the loading up of your emerging markets.

     

    BTW - It's obvious you are obsessed. The fact that you would come back weeks later and post yet again a probing question asking if we were still long the US Peso speaks volumes about your intentions and your obsession. Something tells me I'll hear from you yet again if the thesis doesn't go in my direction starting tomorrow.

     

    Regards
    1 Dec 2009, 05:09 PM Reply Like
  • Tim Ayles
    , contributor
    Comments (1208) | Send Message
     
    Author’s reply » Also - in the meantime - if you are ever in the Napa Valley, give me a call, I'll take you to lunch, on me, and you can come to know I'm not some crook or jerk you make me out to be.
    1 Dec 2009, 05:38 PM Reply Like
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