Friday, March 28, 2008

Another Rant

I must admit there is most definitely no shortage of things to write about regarding the current goings on in the markets. Some days I just do not know where to start. As you know I prefer the charts when speculating but that does not stop me from having completely useless opinions as to what is happening and why its wrong but I digress.

I caught a story this morning out of China that the government their is trying to find ways to prop up the market. It seems to me just a few short months ago they were looking for ways to cool off the markets there. Why are they meddling, will they never learn? That was a rhetorical question, of course they won't. The government there, just like here, believes they know better. Can you think of a greater oxy moron?

I want to address all these pundits argue there is no recession and you should BUY STOCKS. Then, when the facts are so overwhelming that these same pundits cannot deny its existence any more, what do they say? Of course they say that these same signals discount recession already, it's priced in, the markets a discounting mechanism, BUY STOCKS. Do you notice a pattern here?

I want to make something very clear right here. I am a free market, Austrian school market participant. I believe the free market should rule everywhere and always, at all times. I hear all this banter about limits on this regulation or that. I have heard that the self policing doesn't work, Wall St. proved that and more oversight regulation and rules is necessary.

What is missed is that the problems are caused by all the tinkering and meddling. Good intentioned or not, THERE SHOULD BE ZERO INTERVENTION IN THE MARKETS PERIOD.
This applies to the Fed as well. Who are they to set interest rates? If you believe so why aren't they setting milk and bread prices. Wow, I better be careful they may be headed in that direction. Why are bank deposits guaranteed by anyone. Why should an investment account be insured by anyone. Why are taxpayers footing the bill for any private entity. Too big to fail is a pipe dream fosterd by career beaureacrats intent on protecting their careers and pensions.

If under this "Brave New World" if a bank wants to leverage itself up to 35 X its capital base then in the course of full disclosure, WHICH IS PARAMOUNT AND IS GETTING THE SHORTEST SHRIFT OF ALL, who am I to stop them. But you can be darn sure I won't have a nickel of my money on deposit with them.

I used to have clients come in my office and complain about a mutual fund, or a particular position in the portfolio, complaining how it only made, say 5% while their friends fund made 24%. My question was how? I proceeded to ask this one client, in particular the following question. If you gave me 100K and I got you 5% and you gave a competitor of mine another 100K and he got you 24% who gets your next 100K? Easy, she replied, the 24% guy. Next I asked if she knew I bought her government bonds for the 5% and he played craps in the back room of the social club downtown, would Mr. 24% still get her 100K?


I think you get the point. DISCLOSURE full and complete unobstructed DISCLOSURE.... in ENGLISH !


This means you need one disclosure regulator that has teeth. Quite frankly if this means bringing back the guillotine so be it. Fear can be quite a motivator! This way, if you want to gamble, go ahead and gamble. The shareholders, deposit holders, employees will all know up front what is going on. Heads you win and tails you lose, not like it is now with heads you win tails you still win and others shoulder your loss.

You lose you get wiped out. PERIOD. End of discussion.

No more taxpayer financed golden parachutes, or reckless subprime ponzi schemes. You want safety get a safe, or a shotgun. Or better yet find a bank with maybe gold in its vaults, or crude in storage. Sounds crazy huh. Real confidence.

Ask yourself a question, would you put money in a bank run by Warren Buffett? Notice how I said not owned by him but rather RUN by him. Why?

Because he owns M & T Bank, he doesn't run it day to day, absentee landlord, so to speak. Now I don't know the extent of MTB's problems and to what extent they are "in the muck" like the rest of the banks but the price action of their chart sure speaks to issues there.

My point is we don't need any guarantees, insurance, bailouts or the like if people are forced to accept their losses as readily as they accept their winnings.


Good speculating to you all.

Open Positions:
Long 6 units Currencyshares Japanese Yen ticker FXY @ $88.55 stop at $91.40
Long 1 unit Ultrashort China25 ticker FXP @ $84.55 stop at $84.85
Long 4 units Ultrashort Dow 30 ticker DXD @ $58.00 stop at $53.10
Long 2 units Ultrashort Real Estate ticker SRS @ $92.85 stop at $89.65
Long 2 units Ultrashort Financials ticker SKF @ $102.20 stop at $98.70
Long 1 units Ultrashort Emerging Mkts ticker EEV @ $83.3 stop at $79.45
Short 3 units of Deutsche Bank ticker DB @ $117.15 stop at $119.40
Short 2 units Citigroup ticker C @ $23.45 stop at $25.40
Short 2 units AGCO ticker AG @ $61.00 stop at $62.75
Short 2 untis Daimler AG ticker DAI @ $86.20 stop at $88.05

No comments: