Monday, November 5, 2007

Monday Morning Thougths

Do you still believe the mess is contained. Do you still believe they have come clean with all their losses. If you do, please don't be offended, you should be playing at the slot machines instead of the markets.

Do not get caught up in the gossip and breaking news of CNBC, it is meaningless.


They will try to suck you in, telling you that blood is running in the streets, that the worst has passed and it's time to step up. I repeat stay away. This is only the beginning of the unfolding mess. I wish I could say something positive but I cannot regarding this (unfolding)derivative/CDO mess. Who cares that Stan O'Neal and Chuck Prince are out, it is meaningless in the big picture. The cancer still remains. Cutting rates does not make all the worthless paper magically valuable. Ask the Japanese what cutting rates to 0.50% does for it. You must eat the loss and start anew. Mike Shedlock who used to be an analyst at my old firm has constantly repeated that rate cuts were the problem so how can they be the solution. Think about that for a bit or at least give it at much time as you would an hour long sitcom.

The re-sets have not even started en mass are we are getting this. No news on commercial real estate losses yet so that means they do not exist right, the consumer is a mutually exclusive vacuum separate form commercial? Do you expect the suspension of common sense to make the data believable.

Do you believe the retailers can head into the tank, which they are, and the malls not be affected? Please open your eyes, embracing the facts does not make you a curmudgeon, a perma-bear, or unpatriotic. Actually it is unpatriotic to not report what is going on.

Caught Art Cashin on pompom tv this morning with Erin Burnett and he as usual minced no words, which were negative I might add, to which Ms. Burnett responded armaggedon ? Why is discussion of the bad or negative sensationalised. The implication is if you are bearish or negative, the world must be ending to which end no one may prosper and we are all headed to hell in a handbasket.

I had some clients who never wanted to hear the truth. They want good news all the time. Talk with them and everything is great, marriage, financial, etc. Sure it is, that's the reason we have record foreclosures, record divorce rates, a generation of kids on drugs (Ritalin, for proof check the local school vice principals office). I do not mean to rant but the dismissal/ omittal of blatant facts by the analytical and media community, that are sitting right in front of us, is criminal.

You disagree ? Okay try this one on, Oct 17-20 there was the Houston World Oil Conference. Did you hear about it on the nightly news? Did you read about it in the papers? No you did not. Instead you get the latest missing persons report, followed by the O.J. report, followed by the Britney Spears report. Do you get the picture yet.

My grandpa always told me that, (in speculating) he who turns over the most rocks usually finds what he is looking for. I think that also applies in life. Do your homework. These charts I post are not perfect, rather they are simple uncluttered and easy to understand. You want more technicals, go to the major firms, I worked at one, they are masters of the sizzle and NOT the steak. Baffle em' with the bullshit!

And the perma-bulls. These are the same people who made a fortune in the tech bubble and were genius's only to give it all back in the ensuring bear market. You have to be able to survive in both types of markets bull or bear. Yes cash and selling short are alternatives, contrary to what you local investment advisor(excuse me sales rep) is telling you.

I love to buy stocks as evidenced by my bullishness on crude, gold, coal, natural gas, the yen. Everything has a time and a place. Every dip is a buy to the rising tide lifts all boats crowd until one fine day is isn't anymore. And you sit there averaging down into oblivion like the tech crowd did. I again urge you to watch the movie "The Sting", the parallels to how they draw in the mark to the game is frighteningly similar to how CNBC/Wall Street draws in the public lemmings.

Sorry for the dissertation but I needed to get that out there. I will post some charts of interest mid-day. Good trading to you all.

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