Thursday, October 9, 2008

Pain Avoidance

Many have heard of the old adage that adversity builds character. I disagree and as an old coach of mine used to always say adversity doesn't build character it reveals it. Well, this market is sure revealing the character of many of the leading lights of the market.

I caught a piece of Fast Money tonight and got to hear one of the traders, Joe Terranova, whine about how the government should be in this market buying futures to support the stock market. Yes you read that correctly, the government buying stock futures to prop the market up. You just cannot make this stuff up. I do not know Mr. Terranova and I am sure he is liked by all, did well on his SAT's and went to the finest of schools, but again he provides us with another example of the contagious disease of 'when I win, I am brilliant, when I lose, it's somebody elses' fault.'

Government buying futures huh, sure, great idea for tax dollars. Gee, Mr. Terranova wouldn't be stuck in a long position that is now severely underwater would he? Pathetic. Funny how these brilliant traders cannot find a mirror as this would surely reveal whom is to blame. Someone should introduce Mr. Terranova to stop loss orders and if he already knows about them then he should have nothing to complain about. Government buying futures. According to this perverse logic the government should have been selling futures into the tech bubble. Wanna bet he was mysteriously absent in arguing for that back then? I didn't think so.

Did anyone catch the debate this morning between Jim Chanos, head of Kynikos and former FDIC chair and current bandleader of the lets ditch mark to market crowd, Bill Isaac. It was great stuff, the shame is that it is occurring now when it should have happened back in 2005-2006 but we had more important stuff to worry about, things like American Idol and Flip that House.

Steve Forbes, is another of the lets ditch mark to market. I am truly amazed at the idiocy of these so called financial and policy experts. Sure, get rid of mark to market. Lets do more of what got us into this mess. Let's have a global coordinated 100 basis point rate cut. More of what got us into this mess. The history books yet to be written are going to question whether or not we had a room temperature IQ.

Everything is about pain avoidance. Slowdown in the economy, no problem just lower rates. Cannot afford a down payment on home, no problem create no money down mortgages. Cannot afford the monthly payments for the mortgage, no problem create a pay option negative amortization product. No bid on your portfolio of mortgage back securities, no problem move em' to level 3 category and carry em' at par. Pain avoidance at every turn. Now in the thick of this mess nothing has changed, every remedy that is proposed has its foundation based on this principle, pain avoidance.

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 of Ultrashort S&P ticker SDS @ 61.75 stops at $99.74
Long 1 unit of Ultrashort Dow ticker DXD @ $57.85 stop at $92.43
Long 1 unit of Ultrashort 20yr TBond ticker TBT @ $60.10 stop at $53.93
Long 1 unit of Agnico Eagle ticker AEM @ $48.80 stop at $43.61
Long 1 unit of Goldcorp ticker GG @ $29.50 stop at $24.42
Long 1 unit of Kinross Gold ticker KGC @ $15.40 stop at $12.98
Long 1 unit of Anglogold ticker AU at $17.90 stop at $15.39
Long 1 unit of Newmont Mining ticker NEM @ $34.85 stop at $31.86
Long 1 unit of Goldfields ticker GFI at $8.60 stop at $6.14
Short 1 unit Int'l Bus Machines ticker IBM @ $129.05 stop at $104.89
Short 2 units of Apple ticker AAPL @ $178.05 stop at $97.51/$102.21
Short 2 units ticker CRM @ $56.05 stop at $38.71/$42.12

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