Friday, January 2, 2009

Happy New Year.

Hope Springs Eternal

3 days up in a row and according to the pundits, bear market over. I just wonder how these superior market beings would react when a bear would call the bull market over under similar circumstances. Some may find this little litmus test of mine trivial and irrelevant but I beg to differ. It it works for bulls it should work for bears. It is the same reason I argue with bulls about the shorting on an uptick rule. Shouldn't there be a down tick rule to buy. I am waiting for someone to dissect this counterargument with logic. They want an uptick to occur before you can short yet they conveniently leave out the equal and opposite. I am no Isaac Newton but it seems logical no?

Here is a perfect example we have these gurus on TV telling us to buy this and buy that for a bounce. Fast Money which is one of the better financial TV shows, has it's pros continually telling viewers to buy for a bounce. Under my law of equal and opposite, where were these guys/gals telling viewers to short moves up and play the correction in the bull market. Logic would dictate that if you are playing a stock that has dropped from $50 to say $20 for a bounce to $25 or $27, you would expect and do the exact opposite. No? So where were the gurus with the advice to short a stock, one that has rallied from $20 to $50, short it for a correction back to $42-45, in the midst of the bull market. Invisible, that's where. Ahhh, never mind. I'm just splitting hairs, angry and picking on honest good natured people for no good reason.

YUP... HIP, HIP, HOORAY ! DING DONG THE BEAR IS DEAD !!

Is that better now?


The New Year has rung in with it much optimism. Now contrary to public opinion, I really am an optimistic person. I remained optimistic thru all 16 games played by my beloved Detroit Lions. Hoping, no, check that, praying they would win one game and avoid the history books as winless. But it was not to be as my Lions will now live in NFL sporting infamy.

That said, I NEVER, NEVER, EVER bet bullishly on the lions, (re: taking them to win or cover the spread) for they were, are and continue to be in a bear market and my readers know that in a bear market one can only have 3 positions, bearish, very bearish or neutral.

I keep hearing the bullish prognosticators, waxing bullishly as we continue to sit here in the midst of a bear market. One bullish prognosticator in particular, a cat named Spiropoulos I believe, made me chuckle the other day. He was sarcastically referring to how he only had 30 yrs experience doing this (the markets). So, if my math is correct Mr. Spiropoulos started on or about 1979, which means he for all intents knows one type of market, a bull, as this bull market was born in 1982. I am sure he is very bright, articulate and extremely well paid but that does not prevent the coloring of ones view.

I have remarked in the past that the game has changed and many are still playing with the old playbook. CNBC continues to treat any up move in the markets as "THE BOTTOM", and any multi day rally with euphoria. Learned nothing from the tech bubble, absolutely nothing. By the way for those keeping track, Nortel, that blue chip tech stalwart of said bubble currently trades today at $0.29.

Yes, you read that correctly folks, 29 cents per share, down from a high north of $850/share. Yes you read that correctly too folks, $850 per share.

Oh, I almost forget, we are now 8 years later from that $850. Keep listening to these talking fools, the same genius' who called for 2008 to be a big up year. Yeah, the same ones calling for 2009 to be an up year, and 2010 and 2011 and 2012.

Regular readers know I am not shy about calling out so called experts for their cluelessness, not because I enjoy doing so but because when sheer idiocy is on display it must be recognized for what it is whether or not the provider of it has 9 letters and designations after his name and a litany of congressional, senatorial and financial media representatives grovelling at his/her feet.

That said I came across the following article How to Prevent the Great Depression of 2009 out of the FT by one esteemed Professor Roger E.A. Farmer vice chair for graduate studies in the Dept. of Economics at UCLA and author of 2 upcoming books. Besides Prof. Farmer's standard ivory tower cluelessness, his comment in the article that took my breath away( like a slug to the stomach) was the following;

"It is time for a greatly increased role for monetary policy through direct intervention of central banks in world stock markets to prevent bubbles and crashes. Central banks control interest rates by buying and selling securities on the open market.

A logical extension of this idea is to pick an indexed basket of securities: one candidate in the US might be the S&P 500, and to control its price by buying and selling blocks of shares on the open market.

Even the credible announcement that a policy of this kind was being considered should be enough to boost the markets and restore consumer and investor confidence in the real economy.

Critics will argue that this policy is dangerous socialist meddling. But I am not arguing that the government should pick winners and losers: only that it should stabilise a broad basket of stocks."

You got that students? I am truly left speechless by his statements. I will offer my deepest sympathy to the poor souls whose children are enrolled in his classes as they donate their tuition cheques to this institution of higher learning in return for absolutely nothing and possibly less than nothing. To think that the public still antes up to learn this from the likes of Prof. Farmer goes a long way to explaining why we find ourselves in our current predicament. I don't know whats worse, the disease or the cure being offered by the legions of Professor Farmers out there.

Earlier this month in my post Stupidest Statement on Earth I took to task economics Prof. Ken Rosen of Cal-Berkley. Lucky for me I didn't hand him Ignoramus of the Year Award for if I had I might have to retract it to provide room for the good Prof. Farmer. What do you think the odds are they discuss economic theory? Or maybe should partner up in an investment management capacity.

I in no way, shape or form have all the answers but I sure as heck know what bullshit looks like and smells like without having to step in it or worse pay top dollar to learn it! Maybe in an attempt to set himself apart from his legions of zombified colleagues Prof. Farmer really doesn't believe his statement and is attempting to be humorous or maybe he's trying to made headlines to promote his new books.

Either way, idiocy is idiocy and the real shame of this that we have to look forward to year after year of Prof. Farmer's economic students infiltrating the the ranks of real world organizations, most probably and horrifically the Fed and Treasury.

We should all be afraid, very, very, afraid.

I want to wish all my readers and their families a safe, wonderful, and prosperous New Year. No matter what is in store for 2009 we will get through it, intact and in one piece, and will be the better for it. Hope for the best but be prepared and take precautions for the worst.

Housekeeping Notes;

On Wednesday ,
I was stopped out of my SRS position at $53 for a loss of about 1 pt on 1 unit.
I was stopped out of my SKF position at $102.10 for a loss of about 1 pt. on 1 unit.

And today,
I was stopped out of my SDS position at $69.40 for a loss of about a pt on 1 unit.
I was stopped out of AMZN this morning at $52.30 for a lost just over 3 pts on 1 unit.

Over the holidays I was emailed by a reader (thx for the note Al) asking if getting stopped out was frustrating and maybe a hint to get long. In a nutshell no or at least Al, not yet.

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:

Short 1 unit Darden ticker DRI @ $27.70
stop @ $30.12
Short 1 unit McDonald's ticker MCD @ $61.75
stop @ $64.22


2 comments:

Anonymous said...

Just to clarify... Bill Spiropoulos, President and CEO of CoreStates Capital Advisors, is in the fee for service business. They are an SEC Registered Investment Advisor and are strictly FEE based. The ONLY source of income to CoreStates AND to Bill is paid by the client for services rendered. CoreStates does not accept commissions for any reason. Maybe you should do your homework before you recklessly blog about someone's reputation.

http://www.corestates.us/?q=insights/learning_center/fiduciary_responsibility

Harleydog said...

Bill,

thx for the clarification or rather the sensitivity lesson on commissions versus fees and reckless blogging. Being politically correct was never my strong suit.

Lets do more homework as we recklessly blog

Hmmmm Commissions -
account up = commissions,
account down = commissions

As opposed to Fees for Service -
account up = fees
account down = fees

Okay everyone sing along with me now ..... you say potato I say potato you say tomatoe I say tomatoe.

oh yeah thx for reading.
HD