Saturday, October 4, 2008

Okay, Now What?

Could Fridays' action be the wake up call on the dis-connect between the stock market and what has been going on in the credit markets. Boy would I have loved to be in the room with Pelosi, Frank, Reid et al for the look on their faces as the markets reversed. upon passage of the bailout, ooops excuse me I meant to say rescue package!

I keep hearing people say we need to stabilize housing prices. Where were these people when house prices were on the rise? Surely they didn't look the other way because it suited their purpose for they were all over crude oil's rise lamenting and screaming for relief. You can rest assured more "bills" are coming down the pipe with you the taxpayer on the hook, in an effort to arrest housing's decline. Unfortunately there is absolutely nothing that can be done to stop this, including Mr. Gross's extremely intelligent friends idea of blowing up houses and starting over. Housing, like all else must run it's natural course whether we like it or not as this is how the markets work.

If you don't like it, I suggest we just close up shop period for everything else is window dressing.

The boys over at Comstock have another great read this week entitled "We Hope To Be Wrong", especially so for those in the denial camp who are slowly moving over to the realisation or acceptance camp. Realising that pom pom TV and its attendant shills have been part of the problems. Imagine trying to concentrate on a major league game of poker with a knockout attractive lady hovering over you plying you with drinks, trying to make conversation. Got the picture, now you see CNBC's role.

If it is financial, reporting and some insight you want then it is the internet you must turn to. Rick Santelli and Art Cashin are excluded, to which I would also exclude Diana Olick for her OBJECTIVE work in the real estate area.

Today's early news was the Citi/Wachovia/Wells fiasco. I am no way in favor of government, excuse me, TAXPAYER funds being used to fund, assist or backstop any deals, good or not. That said I realise the Wells deal is better for the taxpayer but rule of law is rule of law and it seems to me at first glance and not knowing all the gory details that Citi and Wachovia had a deal of necessity orchestrated by the FDIC. The issue here is that should the deal be overturned without compensation to Citi then we have another example of the rules being changed in the middle of the game, as Rick Santelli has said often this is a major problem right now.

Quick note to chief Keystone Cop Chris Cox of the SEC, who I know for sure is working diligently investigating Lloyd Blankfein's attendance at that AIG resurrection meeting, along with his statements of immaterial exposure to AIG when in fact it was 20 billion, and the insider trading spike in GS stock before the close the day before Buffett announced his injection of capital that of course was not needed, I suggest that since the ban on short selling financials and some select titans of global might like GM and GE is not working (GE by the way is down 18% since it was added to the NO SHORT list), you just cancel the ban and take the page from the Pakistani market authorities and just close the exchange.

Instead of getting the President and treasury and the Fed to declare the economy resilient get then to declare an ECONOMIC EMERGENCY, have the President declare economic martial law, and shut it all down. This way stocks cannot go down any more and all our problems will be solved.

You can then trot out the regular shills like Vince Farrell and other averaging down, buy the dips, Greenspan worshipping, never met a rate cut we didn't like, need a bull market to manage money charlatans who can echo how this is precisely the prudent thing to do to arrest this completely irrational, not echoing fundamentals panic in our market place. Cooler heads to prevail.

As has been said before the ONLY thing worse than someone who knows nothing, is someone who thinks they know something.

Housekeeping notes;

I was stopped out of 2 units of HL yesterday at $3.85 for a loss of about 1.5pts on 2 units.

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 ticker CRM @ $56.05 stop at $60.62

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