Thursday, July 12, 2007

Over the weekend

For you obsessed news traders maybe this will help you take a look at the Yen.

For those of you that feel all you have to do to trade successfully is read news stories, well, you get what you deserve. This is not doing your homework as I like to call it. I will be shocked if Buffett is buying Hovnanian. The hedgies will stop at nothing to juice a position. Good luck to those that bought Hovnanian on the fresh news !! lol. Your're gonna need it, along with a lot of patience.

The following article got me to thinking about this today. This is a sign of things to come, the first shot across the bow so to speak. I am of the firm belief as others have argued I am sure, of the coming resource wars. The combination of finite supply along with rising demand and skyrocketing prices is making governments now rethink their strategies. This coupled with rising social safety net obligations only magnify the situation. Why let others (private enterprise, especially foreigners) reap the benefits that belong to your people. Actually most politicians are no different than parasites like the Saudi and Kuwaiti (just to mention a few)royal families who view their nation's wealth as their private possession. Politicians can always and everywhere be counted on to never do what is right but to do what will keep their snout in the free for all trough.

The point is this, governments are going to get more active in the arena of nationalization or repo business as I like to call it. Russia(Sakhalin) and Venezuela(Orinoco) are 2 current active players in this arena. It will be done under the guise of national security, environmental compliance. cultural significance, you name it they will use it as cover. If you are going to own resource investments make sure they are in jurisdictions that respect private property rights. No one knows what the future may hold and the limits of government hubris knows no bounds and under the right environment anything is possible. Just something to think about.

It is my conclusion that what we are witnessing in the market is very cleverly devised distribution. For those unaware distribution is the process where one group of people (Wall Street) distribute stock to another (main street) so that they (main street) is left holding the bag. How do I know? Besides the tape action which is calling it out, history has shown us the same story over and over again. Be it the stock market of 1929, the gold market in 1980, Japanese stocks in 1989, the tech/telecom market of 1999 and most recently housing. In every case, the bagholders piled in in the late innings awaiting their fortunes. Only to realize they have been had once again. They then hang on with hopefulness, (its been said the market climbs a wall of worry and descends a slope of hope). waiting inordinate amounts of time(in most cases decades) trying to recoup their losses, as the early innings of the next mania develop. Do you start to see a pattern here. Do not let it happen to you. Leverage has been the underpinning of the liquidity tidal wave engulfing the asset markets. This leads me to my next thought.

My grandfather who was around for the 29' crash, one day asked me if I knew why people jumped to their deaths following the stock market crash. To which, I replied, cause they lost all their money. He shook his head no and retorted, no , they jumped not because they lost what they had but they lost what they didn't have.

Do not fall victim to the cheerleader of Bartiromo, Pisani, et al. They would not know common stock from livestock if it bit them you know where. The guys on Sportscenter know as much if not more than they so please do not be seduced. Don't look now but the Naz, remember that darling of an index, that CNBC and its assorted touts raved about back in 1999 is down only 47% from its highs. Good luck and good trading.

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