Guillaume

The Next Phase of the Crisis Is Beginning with an Eye on China

I agree; it's quite irrelevant to demonstrate that there is a Chinese bubble or not since it could be going on for 10 years or one day - we all know that. Is this a "Nasdaq 2000, 3000, 4000" so far? who knows...
China has the power, the tools and the regulatory weapons to push it to pretty much where they want for quite some time if they wish to. As an investor, I am more focused on what is the best move & timing for them in terms of currency forced appreciation any time soon. My bet is on H1 2010.


On Nov 29 01:27 AM Moon Kil Woong wrote:

> China's bubble can last decades or pop overnight. Knowing it is there
> is not the question, everyone knows it. Predicting when it will deflate
> is the question. So far people have been wrong for about 20 years.
> A one party rule that controlls everything is hard to predict. They
> can keep things moving, manipulate prices, control the press, and
> hide facts, as long as the people remain docile. After that force
> is employed.
>
> Dubai is another autocratic command economy. It's just that the issue
> there is a power struggle between a feudalistic family system and
> those who take advantage of the economics there to gamble and get
> rich off of the government's implicit guarantee that they can mint
> and borrow as much as they want without regards for profit until
> the cows come home. The cows just got home and there is no hay.

Nothing Fuels a Market Rally Like Free Money

Less and less Bears teaching why the market "has to go down". did they capitulate, or maybe simply admit they were wrong, maybe?

If I compare with "seeking alpha" blogs in August or September, when Bears were still courageously fighting the rally by insulting the ones who were long, it looks like capitalution is in order.
Then it may be the top...

Fed Open Market Committee: Economic activity has picked up. Fed will purchase $1.25T of agency mortgage-backed securities and up to $200B of agency debt, gradually slowing the purchases to complete them by end of Q1 2010. Maintains federal funds rate at 0-0.25%, and conditions are likely to warrant "exceptionally low levels ... for an extended period." Resource slack means inflation will remain "subdued for some time."

Ok now let's be pratical:
whether we like or dont like what's going out there with the Fed is irrelevant, it is what it is, and going short S&P for "fundamental reasons" is going to be expensive for a little while.

You can't fight it right now, or you will be creamed...
Remember that the market can remain irrational much longer that you can remain solvant...

Is This a Sucker's Rally?

By Enignaman, I guess I am 3), goign with the trend.
Question is when is to sell?

Well, everyday, tens of articles explain why the market "should" go down, "has" to go down, these are the same people who were sayign the same thing since the end of May...

I understand and sympathize with the Fundamental analysis, the "smart ideas" that the recession isnt over, that by every analysis S&P fair value is not above 1050, etc... but I do not think that it does really matter for the near future.

it is not about a rally on Fundamentals but about new money allocation for a market that had gone "as cash as it could" in Q1 2009, at destressed levels.
Buying destressed assets does not mean this asset has become great, it just means it is just less destressed than before and that solid improvements are being anticipated.

I'll still remain long for the moment, accepting to be proved wrong one day and drop 5%, but that might be happening 10% higher before...

Dont fight it, going short will cost you money.
You may find find this rally irrational but remember that the market can remain irrational longer that you can remain solvant...

It's Time to Sell Equities and Look to These 3 Areas

I agree that there is no single alternative to the Usd as a reference currency.

But still, Central Banks around the world may just stop buying Usd to support it as they have been doing it for the past 10/15 years. At this point, they have accumulated more than $5trillion usd reserve. How much more can they afford buying? This is not a free option, someone has to print money to buy these reserves and every game has a limit. and one can smoke whatever he wants, but at the end of the day, this is inflationnary long term.

Where would be the Eur/usd without central banks defending the Usd since 1995? 1.60? 1.70?

Chinese exporters are starting to require to be paid in different currencies than the USd... Usd is everyday becoming more the currency in which foreigners do fund (replacing the Yen).... FDIs? Tell me what kind of US asset can be attractive for international investors...?

Give me just one reason why Usd should appreciate and who needs to buy some.
Period.




On Sep 18 06:07 PM sst381106 wrote:

> I am a believer that coherent strategy is key to successful long
> term investments. Moderate inflation correlated with expected GDP
> growth is necessity for long term growth and job creation. By moderate,
> I mean 2-3% for developed economies as they are expected to grow
> 2-4% annually and as high 8-10% for emerging markets. Danger of deflation
> are well know to Federal Reserve, Mr. Bernanke being a student of
> Great Depression and it was consistently increasing liquidity in
> the system to avoid deflation at all costs. I won't recommend Treasuries
> at these prices, because at the first sign of even POTENTIAL return
> to long term normal inflation levels of 2-3%, Treasuries will go
> down. Very likely, that markets at certain point in the future will
> start pricing a possibility of mid term inflation levels above long
> term normal which will put further down pressure on Treasuries.
>
>
> Gold is just volatile commodity and nothing else. It was correctly
> mentioned that gold correlation to inflation have been quite low
> over last 100 years, mostly because gold and platium has multiple
> uses in real economy and gold (platinum) prices in addition to inflation
> are influenced by real supply/demand situation. Gold is fairly priced
> at this point and possible upside will not compensate for implied
> risk.
>
> ALL world currencies have it flaws and it will wrong to single out
> US dollar as the most flawed. Euro zone economical situation is not
> any better then US and some European countries are in much worth.
> I would like specifically single out Baltic states, Ireland, Spain
> and Poland. European Central Bank is in the very difficult situation.
> On on hand, it wants to maintain conservative monetary policy because
> Germany, France, Italy, Greece are getting out of recession, but
> one the other hand Eastern European countries need a loose monetary
> policy for as long possible. Its really unclear what route will be
> taken over next 12-24 month, which will impact EUR value.
>
> Japan has significant structural problems in its economy and is in
> desperate need of reforms. I won't consider yen as safe heaven currency
> until these reforms are over which may never happen.
>
> As much as I agree with reasons presented for US dollar demise, I
> don't see viable alternative.
>
> The article was called "It's Time to Sell Equities and Look to These
> 3 Areas". I strongly disagree with all 3 recommendations. I will
> not sell equities at this point in long term diversified portfolio.
> I will not but Treasuries at least until yield on 30 year bond will
> rise to 6%. I recommend to stay out of gold at these price levels
> and I will stick with US dollar long term due to absence of any viable
> alternatives.

It's Time to Sell Equities and Look to These 3 Areas

I have to go with Wisdom on this:
the 60% reference is simply irrelevant. the march bottom was a random figure, based on desesperation and capitulation just before a true "boost vitamin" plan got injected, commodities and EM economies start to see signs of stabilization.

you may just way, S&P is 16% lower than on Aug 31, 2008, 2 weeks before the Lehman default, which was 30% lower than on Dec 31, 2007. Perspective look different from that angle.



On Sep 18 01:09 PM Ad Orientem wrote:

> Unfortunatly the evidence does not support this. Most of the cash
> flow has been into the bond market not the stock market by a margin
> of nearly of 10:1. The dollar's decline is because the United States
> is essentially bankrupt and we are printing money as fast as the
> paper and ink can be loaded into the machines.
>
> At some point this will come to a halt. But it will be a very painful
> halt. The FED will have to do what Paul Volker did to arrest the
> great inflation of the 1970's- early 80's. We need to raise interest
> rates sharply. But this would turn the current severe recession into
> a full blown depression. In short we are between a rock and a hard
> place.

Stimuluszilla Killed Japan and Is Heading Our Way

Is that a prediction or a prayer, by the way?



On Sep 18 08:16 PM Market-Tim3r wrote:

> this market has to fall further
>
> hat tip to tinyurl.com/n854tt for the good articles

Stimuluszilla Killed Japan and Is Heading Our Way

You keep repeating this, but I still wonder what this "further" means?
You mean "has to start to fall" maybe...

On Sep 18 08:16 PM Market-Tim3r wrote:

> this market has to fall further
>
> hat tip to tinyurl.com/n854tt for the good articles

Evaluating Current Market Levels with S&P 500 Having Reached My Fair Value Target

I like & concur with your analysis.
I guess I am part of group 2 actually.
still long as we speak, but will trigger between 1100 & 1200.

Where I diverge is on the probabilities. My sense is that group 3 is in my view the vast majority, combining retail & the professionals who have gone out no later than 1 year / 18 months ago. It was still time to cure their wounds in spring 2009 (if they still had a job) which may explain why they did not have the risk appetite to put any any money at risk.
I have learned from my past 20 years experience trading that my worst trading losses came from being short in a short squeeze or a bear market rally - not part of it this time, but I know what it feels like.

The sensation that group 3 is still fairly large & kicking gives a lot of support and confidence to group 1 & 2...



On Sep 18 04:36 PM TheFounder wrote:

> I observe 3 groups of traders:
> 1) people who believe the recession is over and we are in a real
> recovery related bull market (25% or less)
> 2) those who believe this is a bear market rally but one with strong
> momentum (either because of the stimulus or because of the strength
> of the pre March declines) which can take us to 1150-1200 (50%)<br/>3)
> those who sold too soon and are awaiting another decline to justify
> their action (25%).
>
> Groups # 1 and 2 are strong enough to support this rally. But it
> will be primarily group # 2 that take the market down when they will
> feel they had enough. Probably somewhere between 1100 and 1200.

Lessons from a Market 'En Fuego'

whats your point?


On Sep 18 03:29 PM Deepv wrote:

> THe S&amp;P 500 was 1056 on October 6, 2008, in middle of panic selloff.
> Anyone who bought that day is FLAT or earning a negative rel rate
> of return. You are all hyper day trader and should wear anchors around
> your neck with the note "March 9, 2009." IT is an irrelvant date
> unless you were a precog. Do some bottom up analysis jokers.

Lessons from a Market 'En Fuego'

I agree with you, it is actually quite funny how frustrated people express their anger for having missed the mother of all rallies.
I guess insulting those who captured it is a way to try to feel better about it.
Quite pathetic actually....

This kind of people has little chance of ever becoming successful over the long run since they do not have the minimum qualities required, such as humility and ability to simply admit when they are wrong.

On Sep 17 10:16 AM Themoose wrote:

> A sucker's rally.. I guess your a sucker if your up 50% ?
>
> come on people..stop listening to people with lame excuses for missing
> one of the greatest rallies ever...
>
> these are the people you DO NOT want to invest with..

Markets: Reversion to the Mean or a Really Mean Reversion?

Me as well, I had the same feeling: Late August, I thought the correction was coming, so I lightened up my long, but again this market failed to drop after trying over a few days.
I am long again, comforted by the solid support we saw when the market tried to go down and failed.
The strength of the rebound suggests that many Bears and Flats took the opportunity to come-in, too happy to be given a chance.

After this failed sell-off, the market's risk appetite is higher. No-one can fight it for the moment.

On Sep 15 10:26 AM optionsgirl wrote:

> Tracy, everything you said is true. It makes a lot of sense to hedge
> your long positions for "the day when all the suckers join in and
> create an opportunity on the short side". Use stops and puts or sell
> calls --whatever works, but we've got to keep our eyes on the trend
> to recognize a real reversal. I thought we were going to see one
> about 3 weeks ago, but it didn't happen.

U.S. Dollar Continues to Be the Best Market Indicator

yope,
I am waiting for the next "seekingalpha" bear-cryer, complaining that markets went up and usd went down today.... Again...

The day I don't see any complain published, it means the last Bear has capitulated, which means it will be time to sell...

S&P 500's PE Ratio of 139 Isn't Sustainable

Agree, P/E is quite a distorted indicator, it can be read or interpreted a million different ways, and rarely a good indicator for the next 3months - actually quite a poor one.

When Ebay or Yahoo were trading at P/E ratios around 150, in late 90s, it eventually collapsed later to low double digit, exept that in between, it went to 300 first.

I'd rather ride, and let the Bear write...

Markets: Reversion to the Mean or a Really Mean Reversion?

Yes!
I'll go along with these 7 points (any of these points weight more than the poor bull-fallacy argumentation up there).

Too many people - pro ot not - missed this rally. everyday they prey for the market to go down, write articles like this one up, try to convince the rest of the world they should not be long and making money, and their anger grows as the market keeps performing. it's painful, they resist it, up to when they will capitulate, it is only a matter of time & pain magnitude.

Let's let the teachers teach, and in the meantime, enjoy the ride...



On Sep 14 10:00 PM E Nuff Sed wrote:

> You missed a few big points,
> 1. First ever coordinated global stimulus.
> 2. BRIC story is not only intact but stronger than ever.
> 3. The USD has/is going down, all commodities and income producing
> assets have/will go up.
> 4. Interest rates are at rock bottom and they are not going any where
> for at least another year.
> 5. Cash is trash for reason no. 3 &amp; 4.
> 6. We are still down 33.3% from Oct 10, 2007.
> 7. Panic is being replaced with Anger and Envy with Greed lurking
> around the corner.
>
> How long have you been long TZA?