Tuesday, September 30, 2008

The Morning After

Where oh where have the short sellers gone? Did you notice the lack of bids on many stocks yesterday afternoon. Punch up a 2 minute intraday chart on many stocks and you see lots of blank holes in the chart. To this you can thank Chris Cox for. Now we cannot say he never did anything for now he surely has.

I keep hearing voices, like Larry Lindsay and Newt Gingrich calling for suspension of mark to market as this will be the panacea the market is looking for. Newt has some concrete ideas but whoever is advising him and others on this matter need their head examined. This ignoring of fact will do nothing to address the problem and quite frankly is one of the major contributors to this mess.

It defies common sense and logic that they would promote this hogwash. Under this logic, in the aftermath of the tech bubble we should have suspend mark to market pricing. This was the Nasdaq never would have fallen 80% and everyone would still be solvent. Unfortunately that is not the way capitalism works. Under this hold to maturity the tech stocks would come back and be whole. Have you looked a some of the tech stocks from the bubble lately? Here we are 8 yrs later. You want more evidence, look no further than Japanese equities and real estate. Water seeks it's own level and you can rest assured the pricing on this toxic paper has found its own level. We don't like it and can kick and scream all we want it will not change the situation.

Be prepared for the touts to come out telling you to not panic, average down, stay the course. The same old playbook, which I have documented at length previously. I want to ask these pundits how that strategy worked with Japanese equities over the last 18 yrs. How did this strategy work with tech stocks over the last 8 yrs. How did that strategy work in the aftermath of the late 20's ? The U.S. equity market of the late 1920's did not get it's collective head above it's high water till 1953-1954.

This is fact which I share with you so you have some perspective. And if still inclined to listen to these biased experts who never met a market they didn't like, I hope you time horizon is calculated in decades. If so then more power to you and happy stock hunting to you.


Housekeeping notes;

I was stopped out of my long AEM position at $55.80 for a loss of about 4.5 pts on 1 unit.

I was stopped out of my long ATPG position at $16.90 for a loss of 1.5 pts on 1 unit.

I was stopped out of my long UNG position at $31.85 for a loss of 4pts on 1 unit.

Good speculating to you all and never forget that "an investor is a speculator who made a mistake and will not admit it".

Open Positions:
Long 1 unit Ultrashort 20yr Treasury ticker TBT @ $60.50 stop at $57.32
Long 2 units of Ultrashort S&P ticker SDS @ 61.75 stop at $57.69
Long 2 units of Ultrashort Dow ticker DXD @ $57.85 stop at $53.79
Short 1 unit Int'l Bus Machines ticker IBM @ $129.05 stop at $126.36
Short 2 units of Apple ticker AAPL @ $178.05 stop at $177.76
Short 2 units Salesforce.com ticker CRM @ $56.05 stop at $60.62
Long 2 units Hecla Mining ticker HL @ $5.20 stop at $3.89

No comments: