Thursday, July 15, 2010

Please Pay Attention to The Bonds

A friend graciously invited me to play in his club golf tournament, which I am the next few days so posting will be spotty.

I have just been sitting here watching, paying close attention to the things I pay close attention to. I want to address an issue a friend of mine brought up to me recently. We were discussing the state of the markets as he knows my work and he countered my bearish posture with this...

"I hear ya big guy, but I gotta tell ya rates are sooo low, corporations are sitting on tons of cash, all that money has gotta go somewhere and stocks are it."

First off, that conclusion is quite a leap. In my opinion corporations are raising cash for good reason..... big trouble dead ahead. As I have mentioned previously, if you go around and ask 10 local business owners if they are gonna expand and hire new workers in the next 12 months or if they would borrow 4, 3, or 2 million dollars, you name a figure if you like, to expand or buy a competitor and see how quick they look at you like a crack head and request a urine sample.

But let's put that aside for now and examine the issue of rates being soooo low. Rates on their face are low but one needs to examine real rates. If rates are 15% like in the early 80's and inflation is 13-14% your real rate is 1-2%. Right now I do not see any inflation but rather see deflation so a 3-4% yield with negative GDP, (yeah, yeah, yeah Steve Liesman GDP is up on stimulus, sure!) you have a real rate of 4, 5 or 6%. So you tell me if rates are sooo low.

Other than that
I have just been sitting here watching, paying close attention to the things I pay close attention to. I want to make something very clear to anyone reading this idiot blogger's blog. I urge you all, wait... check that... make that strenuously urge you to pay attention to the bonds and what they are doing!

I repeat, yet again, for those that thought I was kidding or was just being sarcastic, that the equity guys and gals rode the short bus to school. The bond cats are the ones you must pay attention to.

Now, later in life nothing has changed and you, being a participant in these capital markets, if they can still be called such, absolutely, positively and without equivocation must pay attention to what the bonds are saying.

Hint, it starts with 'D' and ends with 'tion' but one could argue it could also end with a 'ssion'
but then I would be accused of engaging in hyperbole.

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


Open Positions:
Long 1 unit Direxion Large Cap 3X Bear ticker BGZ @ $19.34
Long 2 units Direxion Small Cap 3X Bear ticker TZA @ $12.06
Long 1 unit Direxion Emerging Mkts 3X Bear ticker EDZ @ $60.50
Long 2 units Direxion Financial 3X Bear ticker FAZ @ $19.65
Long 2 units Ultrashort Xinhua China ticker FXP @ $42.45
Long 1 unit Ultrashort Real Estate ticker SRS @ $49.10
Long 2 units Direxion Tech 3X Bear ticker TYP @ $10.52
Long 1 unit US Dollar Bull ticker UUP @ $22.52 stop @ $22.52
Long 1 unit ishares Barclays 20yr Treas ticker TLT @ 92.15 stop @ $92.15
Long 1 unit ishares Barclays 20yr Treas ticker TLT @ 93.48 stop @93.48
Short 1 unit Apple ticker AAPL @ $275.20 stop @ $280.06

2 comments:

Anonymous said...

TZA at 12.06?

Harleydog said...

Anon, sorry will adjust for 1:5 reverse split. thx.
HD