Vladimir Senkov

John Hussman: The Market Is Not in Uncharted Territory

Jase,

Congrats on your 8 good trades and your high YTD return.
Why do you think that any of this has something to do with TA?
I don't know what your exact method is, but most TA methods I'm familiar with are an attempt at pattern recognition. Human brain is very good at confirmation bias. If you already believed that gold was "expensive" your TA would always confirm it.
Do you believe that you can establish cause and effect based on 8 trades? Have you closed all of them yet? My guess is no, since you are still in the market.
You seem to believe that making these kinds of returns is easy.
I guess if it's so easy you have probably already quit your day job.
I guess it must be easy for you but impossible for the rest. What makes you so special? I know we are all special, but seriously?

Good luck climbing the easy money mountain!

On Nov 17 07:26 PM Jase wrote:

> chrisb,
>
> Your comments regarding the futility of TA are amusing. "And did
> any squiggle-people predict the current bear market?" Yes, many
> did. But most of them wouldn't bother telling you about it. Unfortunately,
> you still think you understand what technical analysis is by reading
> about it from a Wikipedia page while eating a sandwich. It takes
> time to learn the art behind the science; in time you'll see the
> charts in a completely different way. This is about as kind a message
> as I can proffer considering that I gain nothing by telling you this.
> If you must know, this year I "used the squiggles" to:
>
> - short gold (DZZ) at $970/ounce;
> - short Encana (ECA) at $92/share;
> - buy SKF at $89/share (more than once);
> - short Goldman (GS) at $137/share;
> - short crude oil (HOD.TO) at $119/barrel;
> - sell CAD against USD at parity;
> - short SPY at 130.00/share (via SDS); and last but not least
> - short BRK/B at $4390/share.
>
> The list goes on. How many long-side trades do you see? I've only
> been doing this for 18 months and my measly initial couple of hundred
> grand bankroll isn't big enough to crack the billion mark yet; this
> and this alone is the reason that I'm writing you--I'm still in the
> market. My 135% year to date return, however, suits me just fine.
> Doubt me? Send me your postal address and I'll fedex you my trade
> tickets. Take this advice: keep your toilet shut before discounting
> a method you know absolutely nothing about.
>

Greenspan's Latest: Oil Boom Will Likely 'Go on Forever'

It is such a pity that puts on USO are so expensive and there aren't any leaps. otherwise i'd be tempted to prove Greenspan wrong.

Options Trader: Tuesday Outlook

Philip,
You say they can't sell??? i guess they actually can and, wait a minute, they do and for how much? all time high! Are you still shorting oil and all those evil doing oil companies and associated co-conspirators? i appreciate your articles, i really do. they are funny and entertaining. but it is getting too political, one sided and financially unsound. Kind of like Cramer. You don't want to be like Cramer do you?

Fed Rate Cut: Victory or Defeat?

Victory for some, defeat for others.
Banks moved up today, clearly a victory for them. They live off the spread, their USD denominated loans is backed by property that they don't care for in terms of real value, but do in terms of the USD value. So they badly need to bring USD down to a point where those properties backing bad loans they made aren't dropping in terms of the USD. Then they can mark to market and have their books in great shape! Great for them. I'm amazed how easy it was for them to pressure the fed into another huge cut. It looks like they will get their way. Moral of the story: history is bound to repeat itself, with some small variations.

Fed Cuts by 0.75% to 3.5%

"Alarmed by a weakening U.S. economic outlook and deteriorating credit and financial markets . . ."
I wish this was true. but the timing of this move suggests that the FED was alarmed by the sell off on the markets rather than economic outlook. If this was tied to economic outlook, he would have acted after getting some kind of an economic report, no?

It's Ugly Out There. What's Washington Waiting For?

I already told you i wasn't short. I am long diversified portfolio of instruments ranging from equities both foreign and domestic all the way to municipal bonds. I have some call options on various instruments and i occasionally write puts. I don't have any short positions at the moment.
I might buy a few quality stocks or calls on them tomorrow, but i'm more likely to wait a few days.
As for authors of the article. If you read my comments here you would notice that I am more concerned about moral hazard and less concerned with the panic. I don't think FED should change diapers for people, but I know he will, to a certain extent. When people scream that they are not being helped fast enough even with a helping and accommodating FED like the one we've got it makes me question their sanity, I'm sorry. If you are close to retirement your portfolio should have beta significantly below 1. In any event it should have beta you're comfortable with. Don't build your comfort on expectations that someone will bail you out or that price of a given asset "only goes up" or you'll end up owning 25 houses site unseen or a bunch of 0 down interest only no-doc lair loans on those houses, choice is yours.

It's Ugly Out There. What's Washington Waiting For?

BANKRUPTCY in the market? what are you saying?
where is foreign money? look at the numbers for foreign investment in the US over the last few years. all grew dramatically. from everywhere. China, Middle East, even Russia, India, etc.
citi, mer and other wrote off billions because they made bad decisions. they took on risks that they couldn't afford to take on, because someone wanted to get rich quick. many people did. some left holding the bag. regulators need to make changes to prevent this from happening in the future. this doesn't mean "bail everybody out".
7% drop is only as HUGE as you M A K E I T T O B E. it's all in your head. you're scared. that's OK. that means i'll be able to buy shares cheaper when all of you daytraders are wiped out waiting for "stimulus package" or some other kind of a miracle. if FED just came in every time there is a drop in the market and lowered rates what would he have to do every time the market goes up? raise them back i suppose? then you will be screaming at him for "killing your rally"? how is one 7% drop any different from several days going down little by little every day? Why is it so much more painful? don't look at days look at years. and ask yourself what does helicopter Ben need to do for you now so that you'd be set in 20 years?
don't worry too much. odds are Ben WILL overreact and help you. he WILL drop money off helicopters for you. I'm just hoping he'll have enough ammo left for when there is a REAL problem. like rising unemployment, deep recession (no, not the kind that the market votes for, but the kind that's measured by a couple of qtrs of negative GDP growth).

It's Ugly Out There. What's Washington Waiting For?

Oh now it's in a deep recession already?
I thought recession was just a possibility at this point, not a definite. I'm not too proud, it could always be doing better, but i just don't see the end of the world here or anywhere. By your measure (stock market apparently == economy in your view) the entire world is in deep recession. And the funny thing is, a couple of months ago it was doing great. Now = deep recession. By definition, it takes time to declare that we are in recession, btw.
Is Mr. Bernanke's job to maintain stability of your personal stock portfolio or is his job maintaining economic stability? He has acted and I'm sure he will continue to do so. All of this "credit crisis" stuff will eventually pass, but it can't be painless or it will be back all too soon. There is plenty of money out there. Foreign money is coming in.
The problems in the economy are pretty clear: Slow growth (policy changes may be needed), Inflation, especially in some sectors like energy, healthcare, housing. Housing is going to improve as bubble deflates. We need policy changes in energy and healthcare. The rest of the economy looks OK. Unemployment looks good. What are you on about?
What's your problem with shorts? They are there for a reason. No worse than those who pump stocks for a living.

It's Ugly Out There. What's Washington Waiting For?

Easy on shorts. They are there for a reason. This axis speech isn't going to get us anywhere.

No, i'm not on the short side. I'm very much long. Some of my long position has become somewhat more defensive lately, i bought some muni bonds, brk-a, etc. But obviously that didn't help me much in the last month or so. But . . . i keep this in perspective. Last month was bad. But last year was not so bad at all. I'm not going to be all upset about a given month, I don't play with the money i need next month to pay rent or something. It's there for retirement purposes if i ever actually retire. So not a big deal as far as I'm concerned. I'm even less concerned about % of trading days this or that, support levels broken or any other technical BS they come up with. So who is going to buy? I will. Who will hold? I will. Who the heck am I? Nobody. Why are we even talking about it? Just because you implied i was part of axis of evil or something :)))
Let's look at Buffet for example. Is he short? He might take a defensive position here and there, but I don't believe he is short or, by your definition, evil.
We already suffered you say? When exactly? Last year market did OK. There were some sell offs here and there but overall it was pretty flat for the year. Where is that suffering? Keep in mind i'm talking strictly wall street/investors. Of course individuals may have suffered due to loss of job or gambling on their home or something. That always happens, especially when bubbles burst. But the investor community for the most part just started to suffer about a month ago. I'm not sure we are done yet.
What are we supposed to do? I think I'll just look at some solid stocks I always wanted to buy but considered just too expensive and perhaps something will become cheap enough for me to either put new money in, or sell some defensive positions to buy those stocks or eve increase leverage if things really become cheap, as a last resort. Yes, perhaps I'll be "catching a falling knife" as they say, but I feel OK about long term holds as long as i didn't buy at the top. For some reason when i buy at the top i feel like a sucker, but that's just me. I'm sure there are businesses out there worth being invested in, both in US and abroad. Yes the market may panic and they may become another 20% cheaper. Yes maybe the economy will change such that those businesses wouldn't be "great to be invested in" anymore and you'd have to sell at a loss, but that's just the risks you are going to have to take if you want to play this game.
If you are looking for a different kind of game, like i put my money on red, if it's red, i take my money and run, if it's black, i scream "HELP", "Stimulus package", "axis of evil", etc till i get my money back . . . I'm sorry, i don't know of any such game. And If i knew, why would i share it with anyone? I'd just be busy playing it all the time getting rich :)

Recession Could Be Boon for Stocks - WSJ

I think you guys are all correct just have different time horizons. Yes dow didn't hold 12000 so it will go lower perhaps 11200 or maybe even 11000 in the near term. But if it happens soon enough we could start to move back up again and could even reach new highs by the end of the year, who knows. Now is the time to see who had made reasonable bets here and can stick around in this game for some time and who got over their head and has to leave the game for a while.

It's Ugly Out There. What's Washington Waiting For?

down 20% is not ridiculous, it is just a correction. market can't only go up can it? there is nothing wrong with going 30% up and then coming 20% down. if you focus only on the down and the panic, then this game is not worth it for you.
Do you really believe economy is linked to the market such that 20% drop in the market has to be "deserved by economy"?
Market will not go down endlessly everyday, that would really be ridiculous. It will only go down enough for equities to become cheap enough so that investors shift their resources away from defensive instruments back into more risky ones. Market came down because many felt like risk wasn't justified at these price levels. This is totally normal. If it needs to correct 20% so be it. The sooner that's over the better. The sooner it will start to climb up again as folks start to pick good cheap stocks.
Now for something else ridiculous . . . How can you say that there is no issue with bailing and bubbles? Has it really been so long now that we forgot what the latest bailout created? Where did high tech bubble come from? Where did housing bubble come from?
Oh yeah, someone wanted everybody to be confident about financial system. And I mean REALLY confident. Confident to a point where ANYONE could get a mortgage for ANY amount. No matter if they had a job, what if any credit history they had, no matter how overpriced the houses, how exaggerated the appraisals, in some cases to the point of being fraudulent. Now you want more confidence? No, we need those who allowed this to happen to pay the price for the risks they took. You might be thinking "bad, bad banker" at this point, right? WRONG.
Unfortunately this means more or less everybody at this point. No, not just the guy at countrywide, merril or citibank. YOU and ME too. YOU and I all knew this was going on and so did I. Yet we bought these securities knowing that shit will hit the fan eventually, or hoping that we will all be bailed out when it happens. Some of us didn't care much because our timeframe was longer and we don't care if the market had to correct 20% to solve this. Others hoped their timeframe was short enough so they would get out before this correction happened. Now whoever didn't get out in time is screaming "HELP" hoping that Bernanke, Washington, God or whoever will give some sort of temporary relief and that this for some reason will create a short but sharp enough bounce, just enough FOR THEM to get the heck out. Now this, my friends, is what's really ridiculous.
We need solid long term success in the market, not some short term relief rally. To get that solid success we need some basic risk-reward rules to work properly. If we bend the truth every time it hurts we will create more breading ground for scam artists who will try to become rich overnight by either taking risks they can't afford or by riding relief rallies based on inside information.

It's Ugly Out There. What's Washington Waiting For?

the only HELP i want from them is to not touch anything and let the market work out whatever issues it has. if someone took too much risk this is payback time. bailing people out only creates bubbles that will burst with a lot more pain. what are you on about exactly? SPY down 10%, 15% maybe? would you rather bubble it up and have it come down 50% when the bubble bursts? How is that going to work for investor confidence? I think if people can't handle 20% down they need to get the heck out of the kitchen instead of screaming HELP. and HELP from who? you want to sell you soul to the devil himself? :)

There's Just No Need For A Fed Cut

"Some people became"? how did that come about?
you make it sound like it just happened to them somehow.
like they did not make a decision to buy.
this is capitalism, people have choices.
when one makes a decision, one is responsible for it.
who created the bubble if not those irresponsible buyers who could not resist the "easy" mortgages in the environment where "houses never go down".
when someone makes a bad decision, i do feel sorry for them. that doesn't mean that they should be all bailed out though.
not a neocon here either, always been antiwar, not jsut when it's popular.

There's Just No Need For A Fed Cut

While we are on a subject of a FED bailout, let's look at some recent history (I'm talking LTCM, etc).
Some informed observers made observations that what Greenspan and company did back then actually created and/or inspired the bubble.
I'd like to give Bernanke the benefit of the doubt here. So far he's been walking the fine like pretty well, in my opinion. I hope it will continue this way. But if it doesn't a new bubble will likely be built soon enough. At least on paper. As USD will no doubt go down and that will take away some of the glory from this new bubble.

Many observers are saying that mortgage issues are limited to subprime. While it may look this way now, i believe if we dig deeper we may see that subprime was just a start. Alt-A next, then ARMs, then the rest of them.
Lending standards were and still are extremely relaxed across the board. In an environment like that fraud has tendency to grow to epic proportions.
The difference between subprime and conforming borrower is what exactly?
Is being an authorized user on other person's credit card really making one a better credit risk? How about a fake job reference from one of those "employment verification" service companies? Unless some people go to jail and media picks this up, fraud will continue. Going to jail takes time. Media is reporting what people want to hear. And people don't want to hear about home flippers going to jail. They want to hear about good, poor people who miscalculated their ability to afford the house, or, better yet, those who were lied to by those evil lenders. People want to hear about those good hard working folks getting bailed out. And of course this brilliant idea first came to the brilliant mind of future president! What a great "feel good" story. Who is going to pay for all of this? Oh, we'll just send Alfonso to China and he'll tell them to buy the paper, he'll tell them it's US government GUARANTEED! And then we'll all have to pay for all of this for years and years. But that's later . . . a different presidential candidate will be coming out with a feel good idea then.