this is what I meant by money supply increases lifting all boats. In todays environment, the most structurally sound boat is made of gold, of course (gold up another $10 this am).

This money has to go somewhere.

Bill
I updated friday's post depicting Durable Goods and Core Capital Equipment Orders, by adding the Semiconductor index(SOX). The Financial sector contributues 25% of IT spending. so, with the mortgage fiasco, it is not surprising that SOX
is performing so badly.

How can Bernanke possibly lower rates given what's going on here? This "reflation" is getting quite out of hand, Bill.

The dollar is just getting crushed. Today, China allowed the Yuan to move in order to stem inflation:

http://tinyurl.com/yuc8j3

The S&P futures are right now (about 1547) at resistance. Will the S&P pause there or just plow on forward to the recent highs?

Call me a fool, but I did sell my KRY premarket for a tidy profit. Holding Harmony gold which is crossing the 20 day to the good side and should be #1 with a bullett.

I think GRZ is looking pretty good here, as is AEZ.

number2son,

That's what I'm thinking... from a physiological stand point Bernanke has already been pegged "Helicopter Ben." I at least believe he is thinking right this very moment if he wants to be remembered in the history books this way.

Problem is I can't spell Bullet.

"this is what I meant by money supply increases lifting all boats."

Pity the unfortunate masses without boats, left to tread water -- perhaps fomenting revolution.

KRY opening 3.20+ this a.m.

Hoosier: *Psychologically* he is pegged as helicopter Ben!

Physiologically he is still pegged as a biped like us!

POG down some $8 in just half an hour. Currently $786. Anyone thinking of shorting it?

TM....."Oh what a feeling".

Craig,

Thanks for finding my quick typing typo funny!

All I'm saying is that as a human being like the rest of us, (and I completely agree with Leisa, I feel for the man), that there might be a counter reaction from him in response to "Gentle Ben" aka "Wimpy Ben." We all do it... we have our faults, and when the world is trying to make you out as something... one tends to try to compensate.

CREDIT BUBBLE BULLETIN
Structured finance under duress

http://www.atimes.com/atimes/Global_Economy/IJ30Dj02.html

M-G- will be trimming back on QID and waiting for another entry->"historic" highs and being short not the best combination? ;)

might look into EFU for diversification (EEV and FXP due to open for trading sometime this week)...good luck...

shorting gold? one only shorts a dying asset, not one that's in an awesome uptrend. shorting a rising asset is the way to poverty and madness.

a lot of people think...ok, this thing went up a lot, i'll merely reverse course and go short. WRONG!

craig- nice timing on TM..
green arrow- now up 30% on GS..
i've been treading water for 2 weeks, which is an appropriate price for leaving the party early...

2nd,
TM is Bill's call. He hinted at 117, the rest is patience and some luck.

and yes, i can see now that i was a fool...hey it happens.

My idea of shorting it is only a short term strategy over the next couple od days in case FED doesn't cut. Also I belive it is somewhat overbought and a correction in price should not be all that unthinkable. For longer term I agree it is an asset to be long as I was for the most of the time over the past 2 years.

Also I plan to go into FED decision with very slightly net short portfolio.

Being from Europe my position is also a bit difefrent because I have to measure my portfolio in Euros and I have to take into account EUR/USD position.

Long: RBY, KRY, URZ, SCU, PDS and a couple of European blue chips.

Short: S&P500, Eurostoxx50 and EUR/JPY

"but I did sell my KRY premarket for a tidy profit.." shark- the BOS title is all yours now...

KRY: Sold some at 3.30

The gold basis is tight this morning, sitting ~$1.

The short of gold operations have worked their magic by tightening the gold basis nearly into backwardation, which means that gold prices are to continue going up.

I'm watching the Russell 2K (RUT) and S&P 500 (SPX) closely this morning, both are trying to break through key resistance at 828 and 1543, respectively. If they can move through these areas together and with conviction, it's off to the races, imho.

If they don't, well that's another story.

M-G- cleared the table (UNG/DUG/SMN/SKF/QID) this morning, and probably out until after the FOMC...UNG was good for a gain but took losses on everything else...it may well all turn around later today, but that's my decision...good luck...

Am scaling out of KRY as it approaches prior support of 3.5-3.6. Want to be able to reload if the stock fails at this level.

TOMO this AM 8.75 Bil 1 day repo

Details at
http://tinyurl.com/yvvzwo

just wondering if anyone has any thoughts on
a prior question i posted last week about
the MFI indicator,
is this a good indicator to use in conjuntion w/ the RSI-7 to check for divergences/confirmations,
or does it not accurately fortell of sentiment changes the way RSI does?

any thoughts very much appreciated!!

Ok, Bill, I'll start it.

"Goldilocks" - term used to describe the U.S. economy, implying that it is "not too hot, not too cold", an optimal environment for equity prices to rise. This term is used extensively by Larry Kudlow and his cohorts at CNBC.

Bill, can you please elaborate also on HB&B term that you use so often.

Thanks

I tend to see a lot of questions on here about HBB and the "Gnomes", so I think terms like that should be addressed for anyone just joining in the discussion.

NXG up 6% at 2.99

Northgate Minerals announces proposal to acquire Perseverance Ltd.

2ndave,
Did you go long GS and short the financials? FWIW, my subscription service went long GS couple weeks ago. I went along because someone said something about making trades that feel to be the most difficult. Then again, I have to remind myself to not stay too long.
TM was on my list but darn it's hard to juggle all these balls. The one or so TA angle that I buy into is positive divergence btw rsi and price. Classic with TM. Sometimes it takes a while for the ship to turn. I sure like it as an indicator, particularly might be a good fit with Bill's method to pick an entry after a buy alert.

For Agriculture stocks...which are so extended...I did choose one from a list that I posted... AVD...chart looked less risk averse and fido research validated. Anyone else with this one?

Among etfs I have liked and held IXP..global tel..and recently paired it with AMX...brazil tel...

Warning: My cousin has a ton of money on the sidelines. The most passive prograstinator I know.He thinks I know something about the mkt. Ha! I suggested he start averaging in a yr ago and he told me last night that he has decided to put it all to work this week on the first down day.

Dr. Cosa,
Money flow index should indicate accumulation and distribution. Colin Twiggs uses a modified version of this as I recall and named it the Twiggs Money flow. Same kind of thing. When it's falling money is flowing out of whatever it is you are charting.

Glossary

Distinction between or comparison of RSI 7, 14 and 28 as seen on some charting services versus RSI 7 Daily, Weekly and Monthly.

jasper-

clarification on GS-> it was "green arrow" who went long in the 180 area, and is now up 30%...i've never had a position in the company...

assume you're still 45% long GDX and emerging mkts->and this morning at your high YTD ;)

NXG

A very necessary move for Northgate. With resource limitations and political difficulties at Kemess in BC, they had to look for acquisitions or just slowly die.
Too bad I bailed on this stock a couple weeks ago when I got tired of bad news and underperformance. Would have preferred to break even rather than take the loss.
Can't say I'm interested in getting back in.

"HB&B" - Humongous Brokers & Bankers, the Goldman Sachs and CitiGroups of the world. The HB&B control large amounts of capital that can be used to manipulate market prices.

"TOMOs" - Temporary Open Market Injections. Trillions of dollars in FED hands that are "loaned" to the HB&B, who in turn use the funds to manipulate prices, up or down, in various market sectors.

Since the close on 8/16,

GDX is up 43%
Media general/Worden gold stock industry up 50%

Wow!

2nd it isn't so much balls of steel as it is brains of %$^&. I should have held that sucker and you know it. The problem is when there's tons of activity premarket it can be very difficult to tell if it's a selling oppty or a buying one.

I'm a very good chart reader but a lousy "trader". Still working on the execution.

FWIW, the CBOE opened trading on Nov and Dec options for KRY. Last week, the near month was Jan '08.

D'ya think they expect a rise in speculation?

I sold some Nov. calls against my long position. Having been down this road so many times before, I know we may have a longer wait for the "grail".

I also note that the SPX was beaten back from the 1543 level. I'm expecting another try this afternoon. And I still think the bias is up through early Wednesday.

dr. cosa -

Money flow indicators (there are lots of them) seem always to involve in some way fprice times volume. (Elder's "force idex", Wordens'"time-sensitive-volume, moneystream, and balance of power", for example).

Since price and volume are the two main types of data a market delivers,it would seem key to incorporate volume. MA's, MACD, and RSI take only price into account.

Volume may be less important with highly liquid stocks (also subject to program trading) but with smaller caps, I think volume is key.

A system should have an sindicator which includes volume as well as price.

Gnomes...the grasping, overpaid, psychophantic bootlicking toadies who toil on behalf of HB&B. (and yes, I know who I'm talking about).

2ndave,
When I went on hiatus...I reduced holdings dramatically. Pm stocks reduced to 11%. GDX was zero. While away and it was showing a bounce I added 3% position. It was total equity exposure that was up to 45%. Hard for me to be miss opportunity,but it's good to learn moderation. Looks like this mkt is very clever at disappointment. Those buy and hold guys who committed to the emerging exposure are still gonna come out way way ahead even if they go thru a major drawdown. At some point they will protect profits.

ALTI having another good day....up over 8%.

Here's a tool that may be useful to implement on www.billcara.com - creates a sized search list on your blog similar to the one recently posted on Stockcharts.

http://www.eurekster.com/

Could be useful for identifying commonly searched terms. (& active stocks too)

I'm interested in learning more about terminology used for drill results in mining PR & how to interpret.

What's the difference between 15 min/30 min etc. RSI & why is it important?

ERIC-Q

Anyone have any thoughts on Ericsson? It had the snot beaten out of it a couple weeks ago on a very negative earnings surprise, but the magnitude of the stock price correction makes it look interesting. With RSI having been quite low for a couple of weeks since the drop, but the price being stable, I could envision a 10% upward move over a few weeks.

Impending Credit Market Supercriticality? http://tinyurl.com/2ymm8z

If fear is picking up ahead of the FOMC meeting and the discount window cannot help smooth these fraying edges, Wed.'s cut should be massive and kill any residual concern about moral hazard. Q. Will the equity markets get spooked at some point if credit managers start paring down exposure?

JML

Jock,
The august correction was a huge opportunity. Look at fxi or many of the ag chemical stocks in this time frame. True believers in the commodity story keep raking it in. I doubt "traders" did as well; in the long run, I guess it's a matter of comfort that one is protecting themselves. Though I just checked a momentum strategy with the cara 100. Trading on average once every two months, which is not that often, would have yielded an annualized return of 125%. There's gold all around us and the simple way would have worked, this time.

Scalping the NY open short, if it breaks to the downside just before or as NY opens is not a bad strategy, but you gotta keep your finger close to the 'buy' button to escape the occasional upside breakouts that will burn you. You will get it handed to you occasionaly. Losses will happen.

I was doing this very profitably earlier this year. However, I made two classic, deadly beginner mistakes. After pretty easily doubling my account in a month or two, doing this with gold mini's and a full gold contract, (also in that time frame a few VERY nice kerosene trades long, then short, then long all within a month and a half or so, and catching the end of a sugar move, helped a lot to get that account double) I then overloaded by taking on more contracts than I had any right to. Then I failed to get the heck out of the way of a big, sharp drop when I was long gold. I had plenty of time, relatively speaking in the split second gold futures world, to get out with a reasonable loss on the trade but did not. Result: blown up account.

Today is the classic example of this gold scalp trade, but it happens a lot. I wish I had some ability to analyize the 8-930Am price patterns over the last year or two, to make sure I'm not having 'passing car' syndrome.

But usually a strong break on the 8:15-8:30 timeframe, ESPECIALY to the downside, is a pretty good scalp opportunity (holy grail seekers: these patterns and signals for gold ALL work OK until you get faked out. Headfakes and quick reversals abound. This trade is no exception.) Upside breaks on the NY open are sometimes turned back sharply and quickly, within minutes or seconds, and so are a less reliable signal than a downward break on the NY open. Conversely, an upside break at the NY/Chicago close sometimes happens, especially if NY has been pushing it down all day.

Up or down, the NY open is often the source is a sharp reversal. If you are ready to hit the buy or sell button quickly, and escape just as quickly, you can, over time, make steady, though hair-raising profits.

I'm talking about scalping 4-8 dollars of movement. But hey, on a single 100 oz contract, I'd call it a good day.

PS I know a lot of us are trying to 'figure out' gold and this might seem like easy money. It is not, though it can be fast money. Try it with burnable money, because you will get burnt. Don't over-margin yourself. Elder says trading will reveal your personal weaknesses. Gold futures will do it even faster. Don't risk the mortgage and diaper money playing around here.

PPT: Plunge Protection Team. Created @ 1989 as an outgrowth of the President’s Working Group on Financial Markets, this group of government agencies, stock exchanges and HB&B are primarily responsible for preventing destabilizing stock market declines. Their footprints can be regularly seen in market manipulations.

Alternate PPT: In China known as the Pork Protection Team similar in concept to the U.S. Strategic Petroleum Reserve, but focuses on hog reserves to control pork prices from escalating out of control.

And you think you’ve had bad days: Someone actually bought 100 shares of global water ETF CGW at 399.99 this morning. Now trading back in the 26.43 area. I know we had discourse this weekend on water, but still . . . .

A few term used lately here...

HB&B - Humungous Bank and Broker
HBOP - Humungous Bail Out Package
POG - Price of Gold
RSIn - Relative Strength Index, n=Period (RSI7, RSI14, etc)

Adding to the term list:

HPEC - Humongous Private Equity Corporation

Bill:

I have been referring to your various sites for the past couple of months. I find them most interesting and educational.

You asked for input relative to terms and concepts that "newbies" may need further clarification on. I am trying to apply the "accumulation and distribution zones" technique to my situation (relatively good stock picker but poor in/out price executioner.) I have searched through your sites and have found scattered reference to them but I am difficulty determing the indicator to use (MAs,RSIs, candles..???). Some help in thia area would be appreciated.

Maybe a reference to a stock chart that is presently in these zones would help.

Thanks,

Dennis

PS..Your new picture shows a much healthier looking Bill than the one I first saw...All work and no play...BAD...all play and no work...BAD...but the happy medium is JUST RIGHT.

For the Glossary:
FETV= Financial Entertainment Television. aka=CNBC

That one always gives me a giggle :-)

Beyond glossary:

I would like to see HB&B expounded on, in terms of the conflicts inherent in combing banking and brokering. I know Bill has described this in the past, way back. Others may have commented on it, as well.

Clarification of the structural imbalances enjoyed by the sell-side would help us keep a fixed picture of what we are up against.

It would also help me when, after a few bourbons and a few bourbons more, I'm ranting at my friends who work in the belly of the HB&B beast.

Some more glossery items:

OPM - other peoples money

J6P - see this occasionally but don't know what it means

Tickee - consumers money for discretionary spending? something like that, but i've never seen an exact description.

Opened a 1/3 position in HERO at 25.30

WGDFF hits another new year to date and all time high and the troopers are all quiet on the Western Front:
WGDFF - Q 0.5 3.92 · 3.95 0.5 3.95 +0.19 5.1 216.5 848 146 3.77 3.983 3.77

golden7,

We're used to it now :)

J6P->Joe 6-Pack

Jock

"A system should have an indicator which includes volume as well as price"

Jock have you looked at Dr. Elders "Force Index"?
It incorporates volume. His formula is; FI=(CLOSE today - CLOSE yesterday)* VOLUME today. then smoothed w/a 13 period EMA and/or a 2 EMA.

I have been trying to learn it but have not had that "eureka" moment to say that I actually understand it.

Good Trading

Sure, Lazarus, Force Index is useful. Alex looks for divergences with price, and particularly sharp downspikes, which can suggest impending price rise. Alex'es programmer says FI is really the same as Worden's TSV (although Wordens won't tell.)

Alex relies mostly on on FI and MACD divergences from price in his core trading strategy.

Woops

Sorry Jock I should have read your post more carefully. Re-reading it I see you already know that

Here's an idea that's been fermenting like bad molasses...
Everyone knows the fed's going to cut. But the fed may not cut based on not wanting to send the dollar into a death-spiral.
Therefore, the penalty for being long stocks into the fed meeting is potential much greater than the penalty for being flat and buying after a possible cut.
I would imagine that others have this same feeling since I'm usually at least ten paces behind the smart money and carrying their luggage.
I am 3/4 expecting a dramatic drop/buying oppty occuring tomorrow or weds in some stocks at least.

seamus, Besides water, think that we have discussed ag stocks. Elsewhere here's a post about POT on another blog..up over 350% ytd...

"Like you say same story with dry bulk ships like Drys and nm etc,- fundamentals are outstanding and pe's are still very reasonable. stops always. "
....
reality is that DRYS is up over 600%. Are fundamentals that good in the chem sector for ag?

chris,
I think .25 cut will disappoint.....it's consensus now, yep, today is the last day to protect profits vs let her ride.

Trend Portfolio.

IBN and HDB are way up in the portfolio. Purchased on 10/22. 20% return on both...Have tightened up stops to 2 x ATR(20) ATR is average true range.

http://tinyurl.com/yoe5j2 - Portfolio
http://tinyurl.com/34tqpz - Forecast Page

I setup a forecasting page because I limit the portfolio to 12 - 14 Cara100 stocks but I have found many other Cara100's that were buys ( based on my trending analysis not RSI.

see past postings to get an idea of methodology.
Constructive criticism is welcome.

thx for the feedback on the MFI.

why do so many indicators rely on the closing price? is there a particular indicator that would match the RSI but use the average day's price using the price at the start of each hour in the trading day?

and to add to the above post,

if this already exists, is there an inticator
that can tell if the volume was stronger towards the upper range or lower range of the day which can help for momentum studies?

thanks!

jasper,

re POT

I've been looking at this for long time - never found an entry point. here is the story on POT:

http://www.atimes.com/atimes/Central_Asia/IH01Ag01.html

2nd ave, Wow thanks for remembering, that means a lot to me. I love learning from you guys. I was in Sept 18 @188.90 out Oct 29 @ 239.58 it is the only trade I've made over the last couple of months. While it was a nice move up it was only a small position(3 shares) from a very small portfolio resulting in a gain of less than $200. I plan to stay on the sideline until the Fed meeting this week, I think they will cut a quarter point at most,possibly no cut with some changes in other areas like the fed fund rate to help the banks but not put the fire sale on the dollar. That type of move would also help them get back control of gold and allow oil to come back down. Remember, I'm a newbie and this isn't advice just thoughts from a rookie and probably humor to those in the know.

dr. cosa,

not everyone day trades. I use the weekly chart more often than not, so it takes 3 months for real developments in the chart to grow.

You have to have a good appraisal for fundamentals for that to work, and I know this is where I make my mistakes.

The best indicator for daily and weekly charts is the CCI(8) and CCI(20) as the momentum is very sensitive to changes in share prices.

You would have to use it along with other indicators. daily - weekly - monthly assessements help. RSI MACD CMF Wilder's ADX Accumulaton/Distribution Parabolic SAR all help.

I have no interest in day trading.

2nd.

update: I sold QID @ small loss but UNG balanced it out.I'm in the waiting mode now since I don't have a VERY high tolerance for risk and that is all I see today. Don't want to gamble.

Thanks for caring.

Light and Love to all.

HUM: below 73 now
Opened at 81 this morning on strong earnings and increased forecast for next year.

My apologies for my rather late arrival on the scene today, but I have just posted my regular weekly article highlighting some memorable / thought-provoking quotes from market commentators during the past week, and briefly reviewing the week’s market action on the basis of economic statistics and few performance charts.

The link is: http://investmentpostcards.wordpress.com/2007/10/27/words-from-the-wise-for-the-week-that-was-oct-22-to-28-2007/

Please let me have your comments on these quotations.

Sell offs often start about 2pm/?
Waiting for the shoe to fall.

Has anyone here ever read/heard that when trading one should perform the action that provides the greatest psychological discomfort?

This is an issue that I'm grappling with and trying to understand. Sometimes honoring stops seems comforting and IS in fact the correct action, but generally the above principle appears to have validity.

I just noticed another article on Yahoo Finance saying we've all become Gloomy Gus's and should buy, to quote, " broad indexes of stocks and indexes of financials." The other one on Bloomberg said dividends are making bank stocks cheap. Am I wrong to feel incredulous!?

Any thoughts on why Silvercorp (SVM - one of Bill's picks) is soaring today?

Perhaps I find honoring stops to be comforting but others do not. More generally this involves staying with stocks that have advanced and not jumping on small profits which is the normal human tendency.

chris...An off the wall idea...set up two virtual accounts, each endowing you with a different personality. Review the results six months later. Kind of like ww2 in my head, real time. I can't wait for armistice without getting nuked.

Ben Stein on today's Yahoo!Finance article is urging the public to buy, 'benefiting from Wall Street's panic' as the sky isn't falling and whatever failing HB&B is sure to be bailed out - despite being run by 'fools who won't suffer one iota and will keep their humongous paychecks' -his words- but 'it's the right thing to do as allowing them to fail would cost prohibitively'. His words again.

Judging by that video link posted here the other day, where he advised people to buy 'the house they like' in the midst of the housing bubble, I'm tempted to go shopping two-year long puts as soon as this market launches on Wednesday or so. If it launches, that is.

M. prieur,

If treasuries are significantly overbought, then why are yields so high?

Its also no mistake that Market Tickers posts a YouTube of atomic bombs in their website, since the oil price is indicating a significant increase in geopolitical risk.

Disintermediation between the currencies will almost certainly have far more negative consequences for the world than Iran holding fissile materials.

Hooiser & NT

Re Water & Indiana Enviornmental Management Dept.

Took a lunch break and lo & behold, there's another article today in a Chicago paper on water and the Indiana Envior Mgmt Dept. entitled:

Hey Hoosiers: Keep It Clean

http://tinyurl.com/29gse4

Don't have the time right now to pull up the BP EPA history, but I'm sure if you google it or search at the Chicago Tribune or Sun-Times, you'll find it.

"Has anyone here ever read/heard that when trading one should perform the action that provides the greatest psychological discomfort?"

shark- if i were to hazard a guess as to why it works->everyone else will experience the same discomfort (and the emotional "pull" towards the side you're leaning to can be quite strong), making the opposite move a true contrarian trade...

board favourite Valgold hasnt had the run most golds have the past few weeks,
any thoughts on this?

and thx for those who answered the MFI questions,

always appreciated.

Hypothetically, if the fed doesn't decide to cut on Wed. generally the market will be down, but what about junior miners like wgdff? Lately they have moved with the broader market, but wouldn't the price of gold increase with no cut? And if the POG increases wouldn't the miners?

I realize that might be elementary stuff, but would like some help getting my head around it.

Jasper--- IMO, fundamentals for Agric. Chem. stocks like MON & SYT are very good. However, price now >70 RSI 7.

Agric. fertilizers like POT, MOS, TRA and others are impacted by price of nat gas which is low right now. Lots of global demand.

No current positions in above listed.

Did establish a position this morning under 53 for agriculture equipment manufacturer AG which reports earnings tomorrow.

On another note, saw ultrashort MZZ dip then rebound into positive territory where I sold for a small loss prior to the Fed meet. Just can’t trust an academic nicknamed “Helicopter Ben”. Although I generally hold positions longer, this week’s FOMC risk negates the position.

And now comes the last hour of the day, which has had a lot of push lately.

bwl,

A rate cut, holding other things equal, will make the price of gold increase. No rate cut is worse for the POG than a cut. That is because the interest rate is the price of money. If the price of the USD goes down (rate cut) then supply goes down, demand goes up, and the value of the USD goes up. This makes gold worth less than it was in terms of USD.

Remember though, the interest rate is not the only determinant of POG

Shark attack

I read an interesting article a while back. Should have saved the link I suppose as I can not give it the proper credit. I just printed the parts that resonated with me. Perhaps you will find the following interesting;

the setup was that people were asked to judge whether objects were the same or different. 1 test group made their choices in isolation. Others were told about the responses of a group of ringers.

those in isolation were correct 84%.
those told what the "ringers" thought were correct 59%
the upshot was;Brain scans showed that when the subjects followed the "peer group" ie ringers, activation in parts of the frontal cortex decreased as if social pressure was somehow overpowering the reflective or analytical part of the brain.

The article went on to state that "Social isolation (in this case means knowing what others think & going against it) activates parts of brain that are triggered by physical pain"....." In short you go along with the herd not because you want to but because it hurts not to."

After I read that I started practicing what I had read on this site ie Buying weakness. And yes it was & is hard for me to do but by-golly-gee I have been much more profitable by doing it.

If I can find the article again I will post the link.

From: http://www.dailypaul.com/node/4817

Jim Rogers Endorses Ron Paul!

Posted October 29th, 2007 by manystrom

Investors around the world know and respect Jim Rogers as a smart, successful, maverick investor. He was an original partner with George Soros - they founded the Quantum fund together. In the late 1990's, he turned bullish on commodities - notably gold, and predicted the beginning of a great bull market in commodities in his best selling, Hot Commodities.

Jim recently endorsed Ron Paul in a video interview with the Financial Times. In this excellent interview on the Financial Times website, he says that Ron Paul "is the only one I've seen in American politics that seems to have a clue with what's going on in the world..."

The whole interview is well worth your time - he begins by talking about the future direction of the US dollar - but his endorsement of Ron Paul comes at around the 4:45 mark. Unfortunately, emphasizing his reputation as an early adopter / maverick / contrarian, Jim goes on to say, "If I'm supporting him, there is no way he is going to win..." :-( This is not as bad as it sounds, since he has a reputation in the investment community of being unconventional and also right! So having Rogers put Ron Paul's name out there is huge!

Another interesting one:

You're a contestant on "Let's make a deal".
Monty Hall asks you to pick a door, # 1, 2 or 3. and you will win the prize behind the door. You pick door #1. At that point Monty says "Ok Carol, open door #2" revealing a pair of goats(he would never open the door that contains the real prize, a car or whatever).
Monty then asks you if you'd like to switch to door #3.
Do you want to switch?

First to answer correctly wins recognition.

vocabulary word Bill...

What do you mean by "punters"?

Shark - re: Monty Hall

Switch, Monty, Switch! Absolutely.

The laws of probability guide us.

kp84

recognition is yours kp84

shark attack:

if you pick door 1, your odds of winning are
1 in 3.

if door #2 is revealed to be goats, that means
there is a 1 in 2 chance of winning if you choose door #3

so you shoud pick door #3, odds are better than door 1!

i think!!!

opps missed someone picked it already!!!
but at least i showed my work!! ha!!!

Bill:

Thanks and Thanks - for the info about SVM and for the tip about it a few months back!

Any thoughts on HWCC? Thinking of establishing a small position here.

MU looks like a trade to the upside here.

That's almost correct Dr. The odds of the real prize being behind the 3rd door is are at that point actually 2/3 but you've got the idea.

dr.cosa: close but odds for door 3 are 2/3

http://www.mathforum.org/library/drmath/view/52143.html

another way to think about it: you pick a door - he lets you keep yours or switch to the other two. obviously you switch. when he shows you the goats behind one of those - he is basically showing which door the good prize is behind

Anyone having problems with Interactive Brokers today?

Yes, IB is down (their website status confirms that) and for longer time that I feel comfortable.

Jim Rogers - I'm not sure he has such a strong reputation as an investor. He's an entertaining guy with strong opinions, and no way of knowing how well he really does. That was the tone of a WSJ feature on him a few years ago.

Found it

By Jason Zweig, Money Magazine senior writer/columnist
August 23 2007: 1:38 PM EDT

http://money.cnn.com/2007/08/14/pf/zweig.moneymag/index.htm

Sorry for the long URL.
Anyway I got something good out of it. Hope you do too.

Seamus, I'm absolutely for keeping Lake Michigan clean. All the great lakes are a treasure for Canada & the U.S. Thanks for sharing that article, very interesting.

I got asked this stupid Monty Hall question on a job interview. It was a big tell that I was dealing with jerks (no offense shark, it's an interesting question, I just have a 'history' with it) There were other signals of it being a company of jerks, too, and I'm glad I didn't take the job. At the time, because MSOFT did it, these brain teaser interviews were sort of in vogue among small high tech companies.

Anyway, I got home, logged on, did some searches (in AltaVista - there was no Google yet) and found out that the 'Monty Hall' problem is a classic statistical problem, AND that it was STILL being argued, on both sides, by PhD level statisticians.

I was incridibly pissed and still am a little disgruntled that these birdbrains wasted all my time with this problem, acted smug about me not arriving at their answer, and that among high level academics it was still not really resolved.

Here's about ten pages on it, with pictures, diagrams and formulas. Have fun:

http://en.wikipedia.org/wiki/Monty_Hall_problem

Put it this way: Erdos got it wrong when he first attempted it, according to Wikipedia. We're talking about one of the greatest mathmaticians who ever lived.

I still want to punch those guys in the mouth who stuck me in a room 15 years ago and had me try to work it out when I was just applying for a stupid software testing job.

Anyway, don't take it personally shark. I'm just bitter. Gotta leave that maiden by the river. Maybe I'll meditate on it tonight.

Regards,

Mike
NYC

Don't tell my boss, but I've spent hours today seaching for a site to chart the Japanese 10 year bond. DecisionPoint has it, but it's a pay service.

Please, can someone tell me where I can chart this?

Thanks.

I'm currently reading Against the Gods - The Remarkable Story of Risk by Peter Bernstein. Incredible book.

It is incredible that Galileo would have failed grade 3 math, and numbers weren't readily adopted by Europeans until the 10th century.
http://en.wikipedia.org/wiki/Arabic_numerals

Complex risk & probability wasn't really adopted until the 17th century, mainly in the insurance industry.

"Imagine that you were given a choice between a gift of $25 for certain or an opportunity to play a game in which you stood a 50% chance of winning $50 and a 50% chance of winning nothing. The gamble has a mathematical expectation of $25 - the same amount as the gift - but the expectation is uncertain. Risk-averse peopel would choose the gift over the gamble. Different people, however, are risk-averse in different degrees."

According to the theory of utility, one person's idea of the best prize may be completely different than another persons.

http://pespmc1.vub.ac.be/asc/UTILITY.html

If you're living on a farm, maybe it makes more sense to win the goats than having to pay taxes on the new BMW... :)

Me, I like the manhole cover question.

http://en.wikipedia.org/wiki/Manhole_cover

Its surprising then, how the quants necessarily view the risks associated with their prize, that making money must be associated with complex mathematical formulae and not anything else.

Galileo's head probably would have exploded if he read this one...

Risk Management for Hedge Fund Portfolios
http://www.math.ethz.ch/~embrechts/RM/jaeger.pdf

It has an excellent overview of different risks and methods of analyzing risk.

Mike,

I guess we've both got our interview horror stories. In addition to the Crazy Eddie story of yesterday, once, later on, I was looking for seasonal work around Christmas at a big marketing company around here. It was part time temp job. I was completely qualified. The woman interviewing me didn't like me and decided I should take a bizarre IQ test. I failed. she didn't. And it didn't matter to either of us at all. Except that I had no money for Christmas presents.

Re US institutional tax-loss sales

Can anybody in the know confirm that October 31 is the last date for institutional tax-loss stock sales for the year? (i.e. realization of paper losses by US-taxable institutions so that the loss may counterbalance gains and reduce the Federal tax due). If so, is the period in question November-to-October? I spotted a reference to this date stated as such in a Yahoo Finance column, but it was too implicit to be complete.

Asking as this would partially attribute a seasonal element to any depressed US-listed stocks in late October.

Quants on risk - Of COURSE, risk management for quants has to involve fancy equations. Just as fundamental analysts will be fundamental, and surgeons will always want to operate !

Anon,
If you have an issue with the cxoadvisory.com guru ratings send them an email. I just sent them the following short message,
Re: Guru Stock Market Forecasting Grades
I read Fleckenstein, Jubak and Cara regularly. All three correctly predicted and are currently bang on with their positions regarding the U.S. mortgage and credit crisis, Fed rate cuts, the devaluation of the U.S. dollar, rising oil and gold prices and other market trends. Did you give them low scores for being ahead of the curve where investors need to be?

WGDFF was 2.45 that day Bill.
Anyone want in on WGDFF at 2.45 now? LOL!
It was 3.98 today...

We should all feel free to mention whatever we want, as long as pumping is not detected. I think when we do mention something, we should give our reasons, and even our concerns.

Tips are no more ideas to explore, to see if they make sense. I can read about a hundred 'great' ideas and take one. Once I do, it's mine. My responsibility. End of story. This is not some trading service.

I know Bill doesn't think it's funny, but the few times some poster has come back to throw some mention in his face as having tanked after he talked about it, I have to laugh. How pathetic. How "missing the point" can you be?

Furthermore, as I've learned, risk and money management are the real keys. One of those turtle guys was giving a class and tested a completely random entry system, and with proper risk management and position sizing, it made money. Those are the keys.

Should WGDFF have tanked and cost me money, I wouldn't be knocking on Cara's door, whining like a little baby. I'd step back, analyze what got me into the trade, what I was thinking after I heard about the company, why I let it hurt me so much (position size, poor stops, etc.) and move forward.

zenzen tarinai to

IBKR had a major snafu today - their system was down since 14:30 or so. I was a big fan of their service but now I am concerned. Fortunately today was fairly quiet and I did not really miss anything. This will likely have an impact on their share price though.

Just a reminder of how risky individual stocks can be:

5 day chart of WCG (WELLCARE HEALTHPLANS)
http://finance.yahoo.com/q/bc?s=WCG&t=5d

Bill Cara

Re: Site Rating BS

I don't pay any attention to those ratings services as they always seem to have their own agenda / bias. I know almost anybody can prove almost anything they want, pro or con, even with the "same data".

I see TV ads all the time where some company has won the car of the year award, yada yada, fine print says "car of the year for red two seat convertibles made on a Monday by left handed assembly line workers". IE meaningless award but the headlines look great.

Bill as far as this site goes, I've done my own survey over the last few months and I find that 100% of the participants here are very happy with the site. Now there may be someone somewhere with some gripe about something, but they are not here thus are not counted in this survey. So by my data this site gets a 100% positive rating, well actually about 110% now, keeps improving.

Bill and all, lets keep making it better.

Case, the Oct 31 rule I know about is from the FAQ at this link:

http://tinyurl.com/2xb34l

So why do Funds have to pay out these taxable gains?

Many mutual funds try to qualify as a "regulated investment company" under the Internal Revenue Code, so that they can "pass through" their income and gains to shareholders without having to pay taxes at the fund level on the dividends and capital gains they realize. This avoids a "double taxation" on that income - taxation at both the fund and shareholder level. To qualify as a regulated investment company for those purposes, the fund must pay out at least 90% of the income and gains it realizes for its tax year. In addition, to avoid penalty federal excise taxes at the fund level, each calendar year a fund must pay out 98% of its calendar year income and 98% of its capital gains realized through October 31 of each year.

I couldn't find the relevant IRS code that discusses regulated investment companies...

Gaming the Fed- as leisa pointed out, we have no edge...but we're all going to want to go into the announcement with a game plan anyway...

25 to 50 basis points may in fact come with an edge, since it would dovetail with fiscal year end for the large funds...if we use common sense and not try to make it any more complicated than that->funds have every incentive to drive prices up given the slightest excuse...so i would delay short entries either into the close, or the morning after...anything less than 25 basis points ->would lean towards taking short positions right away...

Jim Rogers calls Bernanke a "madman".

"He's going to be running those presses until we run out of trees" :

http://www.bloomberg.com/avp/avp.htm?clipSRC=mms://media2.bloomberg.com/cache/vrf9BycIRXOo.asf

2ndave...
came across this...former jazz pianist turns great investor...and reflects on traits of the great investor
http://www.beearly.com/pdfFiles/Sellers24102004.pdf

"Most great nations, at the peak of their economic power, become arrogant and wage great world wars at great cost, wasting vast resources, taking on huge debt, and ultimately burning themselves out." - Kevin Phillips

Paul B. Farrell on the cost of World War IV (Iran) :

http://www.marketwatch.com/news/story/world-war-iv-its-coming/story.aspx?guid=%7B9053D484%2DFADD%2D4D0E%2D8C76%2D597AB6784A8A%7D

Bill...

How can I contact your Swiss bank for information about opening an account?

Just another indication of the usefulness of the community around here.

Many thanks for everything...

I can't remember the Canadian business news channel that is online. tia

Jasper,

I read the Mark Sellers attachment. I am suspicious of people who succeed wildly at something and then proceed to tell the world that what they've accomplished is essentially impossible.

http://tinyurl.com/2sclbv

Caught in the endless tussle between greed and fear, investors continue to make all the same mistakes they ever have. We know we should buy low and sell high, and yet invariably we do exactly the opposite.

Just ask yourself which is likely to outperform over the next year: high-flying emerging markets or out-of-favour commercial property shares. Now try to imagine yourself selling your India fund, which has risen 40pc since August, and reinvesting the proceeds in British Land shares, down 31pc in the past 12 months. Difficult, isn't it?

If you recognise yourself in this dilemma, go and get a copy of Your Money and Your Brain.

It is likely to be one of your better investments.

If you don't know yourself, the stock market is an expensive place to find out.

tom.stevenson@telegraph.co.uk

Fastest MS-Vista portable tested to date by PC World is a MACINTOSH! - LOL

http://tinyurl.com/24a2cg

(you may have to click on photo 3 to get the writeup)

Disclosure: I do not currently have a position in AAPL, nor own a MAC! So, hold your fire, windows lovers ...

stktrader,

The Canadian business news channel is Business News Network.
http://www.bnn.ca/

Wow, I have big problems with this article.

1. That's a false choice.

2. British Real estate? That's a joke.

The shares are dropping like a rock with no end in sight.

A couple of REIT's:

BLND - closed today within a whisker of it's 52 week low, which was achieved this past Friday.

http://tinyurl.com/345g76

Hammerson
Closed today down 2.6% at the 52 week low, with no sign of an upturn.

http://tinyurl.com/345g76

Now, you have two grotesque charts. So if you don't have a technical reason to buy, is there a fundamental reason? Is there suddenly going to be some massive new demand for commercial real estate in Britain? I don't think so.

We're a little bit ahead of them over here on the real estate crash. We've already had articles calling the bottom for the past six months with a 100% level of incorrectness.

We're about to begin our own serious commercial real estate crash, too.

I'm all for buying hated assets, but not before they begin to A) show some sign of life or B) I have come to realize some fundamental reason for an expected recovery.

Real estate has neither. Lots of neither.

That article forgot to mention the hubris of calling bottoms and catching falling knives. And the necessity of having a reason to allocate capital, besides "it's fallen so far already."

Bill's RSI system is designed to handle just these situations, as far as I understand it. Presumably, one would have already done the homework to identify which REITs are of quality, though beaten down too far. Then you wait for the upturn and the buy signal from the RSI indicator.

There are plenty of other ways to catch the start of a move besides RSI-7. But this guy's flip example is just poorly chosen. I wonder if Stevenson is buying REIT shares?

(BTW, I say this as one of the 'smart guys' who bought puts on the broad indexes, because 'it's risen so far and everyone knows the US economy is due to fall' but I bet against the charts and got burned. From now on I watch the price as well as the fundamentals. And money flow. And intermarket analysis signals.

Besides, I think at this point I might just sell it all and buy bullion.)

Glossary items: backwardation
inflation ex inflation

Jasper, I really enjoyed the article by Mark Sellers. However, I disagree with his conclusion about not being able to learn/acquire new traits.

First, there is only going to be truly a small percentage of great investors in the world. Probably less than 1/100 of 1% and this is likely optimistic. However, we do not have to be great, but we do need to be better than average, or said another way, we need to be competent to be successful.

Second, one could read “Contrarian Investment Strategies” by David Dreman.

For trait #1 read Dreman’s Crisis investing chapter and work on applying it doing panic times.
For trait #2 either you are driven or you are not in this endeavor, if you are not you will be quickly separated from your money.
For trait #3 learning from past mistakes, I have excel spread sheets of every trade I’ve made in the last seven years. By studying past years, it was invariably large losses that affect performance most. Moral cut losses short.
For trait #4 common sense, those LTCM guys using 100:1 leverage must have thought they were “GOD.”
For trait #5 conviction helps one stick with your plan, but discipline trumps conviction.
For trait #6 learning to use both sides of your brain is probably most people’s weakness, but surely this can be improved through application.
For trait #7 living through volatility, volatility and risk is not the same. Dreman has a great chapter on this.

Again, I say that all these traits can be acquired or enhanced; it just depends on your desire to become competent. In any event, I will not buy into Sellers limiting thought on limitations.

About five or seven years ago I bought a copy of Dr. Van K. Tharp’s Peak Performance Course for $800 (a fair price IMHO is $200-$300). The course basically analyzed your mind and for more money Dr. Tharp was always happy to help you your mind.

However, when it came to trading/investing there were certain behaviors:

1. Daily self-analysis
2. Daily mental rehearsal
3. Developing a low-risk idea
4. Stalking
5. Action
6. Monitoring
7. Abort
8. Take profits
9. Daily debriefing
10. Periodic review

Finally, a last piece of advice, you do not have to catch every move!
There is always another opportunity!

The will to win is not nearly as important as the will to prepare to win.

Anonymous

The gold basis after short of gold operations has narrowed to ~$2.

This is very tight, so I see this as supportive of the price and indicative that the price will continue to move higher.

The situation is categorically different from August, where the gold basis had widened to ~$13.

jasper- thanks, great read...

I think that this pretty much sums it up:

Oct. 29 (Bloomberg) -- Federal Reserve Chairman Ben S. Bernanke and his colleagues sound as if they'd prefer to just say no to an interest-rate cut this week. The financial markets may not let them.

http://www.bloomberg.com/apps/news?pid=20601109&sid=aEnZejdWUzMk&refer=home