Hunter,
Thanks for the NOK report. I am looking at that stock today for a scale in.

freeze on interest rates for "certain troubled subprime home loans?"

what are the implications- obviously, if i am the lender, i have just given (my) borrowers a break, so i'm either a) taking a hit to lower the risk of a bigger hit, or b) expecting the Fed to lower rates to maintain my profitability...

Bill, how long do you think they can keep driving the markets up? btw, I completely agree with you about the politization of the Treasury and the Fed.

Of note to some:

"...CEO Sheldon Inwentash of Mega Uranium (MGA) bought 81,800 shares in the public market'

Interesting to look at his trading history and what happens after he buys and sells

Posted by: golfer at November 30, 2007 8:59 AM

Those of us wishing to short the market should target the S&P emini area of 1496-1501. Why is this a magnet for futures prices? The 50% retracement of the decline from mid October is roughly 1497; the 89 moving average is sitting at 1498.5; 1496 is a level that stopped the late October decline briefly and is the top of the Nov. 14 intra day rally; lastly 1496 iw the area that turned the monthly swing chart down. Since this is the final day of the month, I will agressively short e-minis if the market is trading in that general area going into the final hour. As everyone anticipates a mark up, wouldn't be surprising to see the gnomes cruelly push the market lower and aggressively unload inventory heading into the close. Good luck to all.

calvino- if you've been working three jobs to support house payments/car payments (and of course you and the spouse are leasing a Lexus and a Lincoln to keep up with the neighbors, none of whom will admit they can't afford it), driving the kids to private schools, reaching for the check on weekends with friends->much of this was on the back of double-digit increases in your home equity, which you refinanced every 6-12 months (cashing out a chunk each time)...a temporary freeze on rates is not going to save you, or the economy...the US is home to one of the most ingrained "entitlement" cultures in the world->lawyers making a living suing mom and pop corner stores for not having handicapped ramps/bathrooms, nurses ignoring patients b/c they are on union-mandated breaks, kids who can't read/write handed diplomas, and now it's the Fed's responsbility to bail out the homeowners who are of course entitled to own overpriced homes they can't afford...how did we get started down this road->we need to look in the mirror...

2nd_ave and all,

here is the link to the proposed sub prime bailout of home owners. if this gets passed next week and they cut rates (99%), then i would expect ferrari dealerships and high end condo shopping to pick up in january with bonuses.

http://tinyurl.com/27alyc

The overnight insanity in the futures stinks to high heaven. I'll take a nice hit on my TWM on the open.

You win again 'Headline News'.

But what, precisely, is driving this euphoria? Bernanke soporific speech?

Paulson's effort to stem foreclosures by cojoling banks into locking ARM teaser rates? How is that going to fly with the owners of those loans?

Or is it the weak personal income numbers? Can't be that, since they were only released 45 minutes ago and are no cause for buying this market.

I have to agree that this is just a big casino table after all and that the house has the game rigged against anyone who dares step inside their doors.

"we hens are driven by fear and have been taught (dummied down) and organized by their rules and regulations to make the kill an easy one."

Bill, you are not suggesting that we were TAUGHT that we shouldn't ask for too much of a raise if any at all and that we should just be grateful y that we have a job,(those of us that still do) or the "Protestant Work Ethic'...how did that one help the rich? or "Ours is not to wonder why,ours is just to do or die."

Heaven forbid....

Haven't heard from Isaiah in a couple days....he's likely hiding under his desk wondering WTF....

How are you doing 2nd? BH?

The admonition this AM about letting prices come to you is the same on both sides of the street.
There are no long side prices that come to you in this market, you sell the long side here.
It's the short side that presents itself here.

Let the ultra holders freak out and give you their shares.

We've been here before. How on earth can Ben cut on market weakness with the market rallying 500-600 pts in three or four days? Does the market look weak?
If something doesn't come along before Dec 11 to make it limp a bit, then HBH&B will have to shoot themselves in the foot to make it look like they need the cut.

BTW, did anybody catch Kudlow yesterday?
I about laughed myself silly.
He suddenly changed his strong dollar stance and suggested BB cut 50 basis points, to which his guest Mr. Angel said they should cut a full 100 basis pts and financial genius Art Lafferingstock agreed. Kudlow should be forced to report from now on as Bozo the clown, in full costume.

DIA, QQQ, XLF are looking sharply higher, yet IWM is looking flat or lower.

WTF...

I take it this doesn't stand for WORLD TENNIS Federation.

Craig:

"WTF"...I take it that WTF doesn't stand for World Tennis Federation.

n2- the trail to 1933 was littered with "headline news" that makes for good reading for market historians- wish i had the link (think it was posted on this blog sometime in the past year)...

reposting two paragraphs from bill's commentary today (know it's not going to diminish the pain of anyone holding ultrashorts, but it helps to take your focus off the headlines):

"Traders, though, are starting to pay attention. They know that in the words of Richard Russell, “Almost every sector that I examine or study is overpriced -- from the US stock market selling at over 18 times earnings to the Shanghai stock market selling at a ridiculous 55 times earnings. Housing is overpriced, commercial real estate is overpriced, land almost everywhere is overpriced, stocks everywhere are overpriced, most currencies are overpriced. You name it today, and it's probably overpriced.”
With economic conditions that are worsening by the week, the market picture will look gloomier in the near future, as Prof Bernanke says. And your portfolio will suffer unless you have taken steps to protect it."

"Don’t think this market can rally forever. Like musical chairs, the game can end on a heartbeat. Don’t get caught. Like 2000-2002, the pain will be too much to Bear."

good luck...

Here we go..Like I said weeks ago worst case senario for the BEARS a huge short squeeze on a FRIDAY...

Maybe DA BOYZ can take apart this rally on sunday night, before we can do anything about it...

Alright IWM sharply up too (who said WTF?)

GIX - Geologix

Press Release this morning. The San Agustin deposit just keeps on getting bigger.

http://tinyurl.com/ysatwh

The comparison to Goldcorp's Penasquito project is getting more realistic.

Take a look at Geologix.ca for a comparison on their presentation.

Goldcorp have stated that they are releasing information about their updated feasibility study. Their last study was completed before their last significant increase in reserves and was at 100,000 tpd operation. This feasibility study looks at 130,000 tpd.

Take a look at the inofrmation on Peneasquito on Goldcorps updated presentation and Webcast.

I read somewhere that the old Penasquito feasibility had a NPV of $1.6 Billion. GIX has approx 42 million fully diluted shares. Do the math.

Lots more drilling to come.

Disclosure - In case you haven't guessed I own GIX and Goldcorp shares and I am biased.

I can not believe any scenario except the market manipulation that Bill described. They are bidding up all the huge beta stocks and dragging the market with it. It is also true that they will have a hard time presenting the weak market case on the back of this rally. Is anyone willing to hold their short positions through this manipulation?

SiO2, the Russell 2K is up with everything else today. The IWM will follow.

Craig is right about this not being a day to buy, but as far as shorting goes, I think capital preservation is the key on days like this when it is VITAL to maintain discipline with respect to stops.

craig- WTF says it all (lol)...

I think i am staying all cash until the rate cut dec 11. then i shall pick and choose some april puts.

COST

TD Waterhouse technical analysis this morning describing a Bullish Symmetrical Continuation Triangle for Costco stock. They target $75 from current $67.

No position. No opinion. Just relaying info on this Cara100 stock.

->80% on QID/FXP, adding EEV...and renaming the watchlist WTF in craig's honor ;)

...and now it's the Fed's responsbility to bail out the homeowners who are of course entitled to own overpriced homes they can't afford...

2nd_ave--They probably do see it as their responsibility. There is a concept of noblesse oblige, which I think some people adhere to.

What a totally crappy day. The metals and miners are still in the shitter. So does this mean the primary risk now is defalation and not inflation?

Hi Craig,

I'm fine, considering that my ultra shorts are taking it on the chin. I'm looking to add to them.

On a positive note, I'm finally above water on my MNTA play and will looking for an exit point on it and my other remaining longs during this contrived market rally.

Larry Kudlow does the work of three men.....Moe, Larry & Curly. :^)

Regards

Sorry guys, but sometimes it fits!

Definitely uncomfortable here, I expect our friend Isaiah is too.

Did you reduce exposure 2nd?

VIQ: ">" = adding or subtracting?

number2son,
We've GOT inflation man! Or at least I sure do. Maybe there is an inflation cloud only over my head. C'mon, this is routine for the miners.

I think the metals and miners are down because the hot money is now bidding on equities, just a transfer effect. It appears that the greatest damage to my short positions has already been done, in the pre-market. I will be surprised if some of the manipulators don't break ranks soon and start taking their profits for the weekend. That is all we need. I think of the film Reservoir Dogs, I think that was the film, where all the hold up men turn on each other and eventually most are killed by their own. It's the true story of the Henry Hill mafia group.

I think the metals and miners are down because the hot money is now bidding on equities, just a transfer effect. It appears that the greatest damage to my short positions has already been done, in the pre-market. I will be surprised if some of the manipulators don't break ranks soon and start taking their profits for the weekend. That is all we need. I think of the film Reservoir Dogs, I think that was the film, where all the hold up men turn on each other and eventually most are killed by their own. It's the true story of the Henry Hill mafia group.

Added to my FXP in my retirement account just under 67.00....

My dear friends,

My pain is hard to BEAR but "there's no crying in baseball".

I hope you Listen to this today.
http://tinyurl.com/39mnqe

Light and Love to all.

Denny, true. But last time we heard this tune, gold and the miners rallied on increased inflation fears. Not this time.

Also, the NAPM-Chicago purchasing managers' index came in strong than expected today. A reading over fifty indicates an expanding business sector.

Someone needs to throw cold water on this rate cut hysteria.

denny- each and every one of our laws/customs started out as noble and responsible gestures...but at the extremes common sense is lost and they trap us into irresponsible and unsustainable behavior...in the examples above->providing handicapped access, wanting the best for your kids, not wanting to hold kids back from graduation, and helping people realize the dream of owning a home->no argument with the initial intent...but in each case either a judge, a parent, a school district, or a lender needs to step up and draw the line...

calvino, that's right. And now is the time to set your stops. That's what I'm going to do, anyway.

jiggs- moving from 60% (of a full position) to 80%...

Mom&Pop stuff:

Bill says:
Comments & Outlook
I continue to feel strongly that “the US market is being set up to take out HB&B positions and the positions of friends and family and corporate insiders whose business HB&B relies on”.

‘Take out’ means remove their support (HB&B etc)or stepping back with cash in hand from the market thus collapsing the market in a major sell off or down turn .. do I have it right Bill?

denny- let me turn the question around and ask if you think a freeze on rates is the right thing to do...

Sorry I tossed Commerce Bancorp yesterday... but at least I walked away from the table when the going was good.

QID is looking short term oversold but I'm going to wait to see whatever unfolds next week.

Anyone looking at Venezuelan gold miners these days? That permit is sure to get here soon. :)

Gartman:
My last free report today. I have only scanned it in the last week anyway. Comments; Sell all gold positions if it stays below 689 for an hour or so.

CFC was trading over $12 a few minutes ago!? Really feels like world tennis today.

number2,

I woke up to see 10% spikes on my shorts - the morning was as bad as it was ridiculous. I did not cover. The manipulators live in fear as well, although a different sort of fear. They know that the game only holds as long as one of them does not cheat, and take the money before the rest. All that it will take for this market to break is one of the price fixers to break ranks. And I believe that they are all watching each other as we speak.

"...last time we heard this tune, gold and the miners rallied on increased inflation fears. Not this time.

2nd_ave, GDX is still at the 50 day moving average. I just don't see a cause for concern about gold with inflation baked in the cake. Was the remark about hysteria given to mean you don't expect the Fed to cut to stimulate growth? I can't get my mind around that.

So as we suggested would happen in previous posts over the last few days, the U.S. stock market rallied into month-end. Also, Kohn and Bernanke confirming that the FOMC will cut again in December got the bulls energized for a push to the upside.

Technically, the market is still biased to the downside but we'll have to wait until at least Monday after the 10:00AM ISM Manufacturing number to see if the current upmove has additional staying power.

JWibbs
http://www.2globalmarkets.com

n2- think the above question was meant for you...

A follow up on my DOW Chemical trade from 11/23 -

Recap; "Made a LONG trade today!

First in a while. Bought DOW Dow Chemical. I thought I'd post my reasoning behind the trade.

First; I'm long oil (and other oil related holdings) and want a hedge if it tops here around $100. I bought DOW last summer for a great trade for the same reason, a hedge against gains in oil stock longs in portfolio (someone may remember this trade, a GREAT trade). DOW will perform well if it's costs decline (dropping of oil price). This is one reason why this trade is not for everyone, but is good for me now.

Second; DOW is in accumulation zone with support from former lows in this area and RSI's bottoming. DOW is a Cara 100.

Third; S&P has a 12 month target price of $50 based on a mid cycle P/E of 12 times estimated earnings of $4.25. Fundamentals with a dropping oil price are sound.

Fourth; yield is 4.2%, should provide some safety.

Fifth; I don't like the broad market long term, but could see a bounce through end of year, this is one of the safer trades FOR ME with that view.

In a nutshell, this is a hedge for dropping oil prices, risk is if oil continues to rise (other portfolio holdings will prosper) or if economy goes into recession (long IEF with gain of over 6% now on holding, good holding for recession). My intial purchase was 1/2 position, will add if downtrend is broken to upside or if it drops to July/August levels of last year (where I bought last trade at). I AM NOT RECOMMENDING THIS TRADE! I am simply trying to show how sometimes you need to think a little outside the box.

DISCLOSURE: I am long DOW and do not recommend this trade for anyone else.

Posted by: g034 at November 23, 2007 5:44 PM"

A quick peek at the Bigcharts Interactive Chart:

http://bigcharts.marketwatch.com/advchart/frames/frames.asp?symb=&time=&freq=

shows that as of this morning, this trade outperformed buying the S&P 500, Dow Jones Industrial Average and QQQQ by 1-2%. That equates to 20% to 50% more gains than those who bought the S&P, Dow or QQQQ's for this great couple day rally.

IMO,consistently buying Cara 100 stocks at positive fundamental and technical times has proved to outperform the market (In my experience anyway). This trade had the tailwinds from mentioned in my first post; falling oil, rising stock market, positive technical condition plus the fundamentals of a Cara 100 stock.

Hope this type of comment can help some of you guys out there. IMO, this type of trade is the most enjoyable (as well as the most profitable and less risky).

Good luck today!

wavesmash...

got some calls I'd like to sell ya on KRY to offset my loss:^)

stktrader...good call on direction This week's short squeeze has been sufficient to do its job -- i.e., make certain that no bear with the conviction to have stayed short could have survived...

"CFC was trading over $12 a few minutes ago!? Really feels like world tennis today."

that's right->CFC up 15%, DELL down 15%...

g034,
Thanks for the lesson. Regardless of the direction or success of the trade, a view into your thought process in selecting it is helpful.

BG,
Anyone thinking of taking a short position should sit on their hands for the next month. As Dirty Harry stated " Do ya feel lucky punk; make my day"

Thank you!

g034 re:DOW
they are also building a petrochemical plant worth $20B in partnership with the Saudi gov in SA. This one is on my buy list.

g034,
I think that many spend too much time looking at the charts and not the "old way" of looking at the fundamentals. I want to develop the skill of "kicking the tires". Warren Buffet studied the book Security Analysis by Graham. That book will be under the tree this Christmas at my home. Your posting in this fashion causes individuals to take note and after a time it begins to sink in that yours and Bill's method of analysis is the way to approach investing. Keep it coming!

G034,
I appreciate it very much....

"...last time we heard this tune, gold and the miners rallied on increased inflation fears. Not this time.

Mogambosez: you should be buying gold right now
http://www.atimes.com/atimes/Global_Economy/IL01Dj01.html

Looks like my Crude Oil puts might begin to start making money. I have until mid April to cash out.

Not sure why everyone is so negative here. I think we are working our way through this mess and a lot of positives are starting to occur.

1. Government is stepping in to help mortgage mess - will keep money in people's pockets to spend and keep the economy growing and will slow down the dumping of houses on the market and help provide some stability in this market.

2. Short term rates are being reduced which will improve the lending spread for banks and help them work through their losses, get back to being profitable and start lending again.

3. Inflation is coming down - lower interest rates will keep it from going to low and keep the value of good companies up as an inflation hedge.

4. There are a lot of cheap stocks out there. Perhaps you need to go outside the Cara 100 to find them, but I'm finding lots of them. Bob Marcin states over on thestreet.com, the average S&P 1500 stock is already down over 30% from their high. According to Irwin Michael of ABC Funds, there are lots of stocks trading below replacement cost, net asset and book values. Unless everything falls apart, there are some good values in the market.

Another thing to look at is the business cycle document Leisa posted a couple of days ago. When you read through this, it feels like we are in Phase 7 where commodities are displaying weakness and financials are starting to outperform. Phase 8 is where the market bottoms.

Finally, as I said before, we are still coming into an election and the Republicans need a good market in 2008 to have a chance of getting re-elected, so will do everything in their power to keep it going.

g034, AussieonTop, optionoracle:

this is 'cut n' paste' day for me...

thanks, you three wise guys.

regards

joey

Anyone looking at DUG today? With oil down a couple dollars a barrel and looking weak, the DIG index that this is the double inverse of is up sympathy with the main indices. Its odd that when oil was trading around $95 earlier in the weak DUG was at $44-5 and now is under $42.

There should be another round of selling for tax losses in mid-to-late Dec.

stktrader...

yes oil...I am looking at reentering my XOM puts also...Almost in my window:^)

Bill was dead on and I think XOM is dead money unless short....

Denny Phelps:

...and now it's the Fed's responsbility to bail out the homeowners..."

Is there any way this helps the lenders? ...

Probably not as they want a "free market" without gov't intervention... no free-lunches for us, keep that for those you describe as "homeowners who are of course entitled to own overpriced homes they can't afford..."

I think you over simplify.

2nd,
When you reference "60" ...does that indicate that you have sold or bought that percentage of your allocation for that position?

If so, why do you trade in 20% increments?

Why everyone is negative? Ok, the bank of Japan tried to manipulate the prices of real estate starting in 1990. The Fed should have learned the lesson there. That recession lasted 14 years.

2nd,
That post dropped a lot of text.... should have read..."when you reference 60%...does that indicate.....

I see some similarity between the market bounce in mid august with this bounce.
http://finance.yahoo.com/q/bc?s=%5EGSPC&t=6m&l=on&z=m&q=l&c=
Short term the market mood is up until the next major write down news hits the market. Did someone say "don't fight the trend"

Speaking of KRY, it seems to now be in a death spiral -- a combination of sector weakness and exhausted investors.

The country risk associated with VZ seems to ratchet up by the day. Chavez is becoming increasingly dictatorial and unpredictable. A terrible situation for anyone still involved KRY.

Re: Common sense and the law

There is no common sense in law in my view. It's more like a checklist. Make a bluff that all the boxes will be checked, and get a nice settlement. Force the hand, and the defense will cost as much as a settlement.

jaketh- start by considering what % of your portfolio you want to allocate to a position- then scale in 10-20% at a time (in spite of trying to buy on weakness, almost all of my positions initially move against me...can't time the bottom)...

#2,
I think that you are right on KRY except that it has nothing to do with the sector. They are not a miner of any value only a pre-permit holder. With the lack of buying interest the MM can move the stock down with ease. This could be the low point though with the vote on Sunday. But I think that no one in Ven is thinking about the KRY permit. That could be months off. I would be more concerned how KRY will finance themselves in the coming months with cash at 25 mil or less at this point. What would they have to offer stock at if dilution is coming? Who would want it? Who would lend them money? Who of value would want to join the company unless they are retired? Working CEO's, etc. want to work. Kry has none. Nobody wants to just sit around.

wavesmash:

want suggestions on how to short the TSX?

http://stockcharts.com/symsearch?tsx

scroll down and note several ETF's including some ProShares.

regards

joey

jaketh- the other thing you can do is try to trade around any position(s)- so i'm going to take the 20% lots i picked up in QID and FXP this morning and sell them now (into strength)- if they continue to go up, great...if not, i've at least taken a shot at reducing my basis...

calvino re post of 10:47. Interesting comparison to Japan. I heard someone suggest recently the dollar might become the next big carry trade currency.

jaketh- QID- 20% off at 38...since the gain was about $1, this effectively reduces my basis on the remaining 60% by $0.33->not much, but it helps, and boosts your psyche a little on an o/w tough day ;)

Man with the upcoming potential bail out of home owners i am finding it difficult to rationalize buying puts or selling calls. its really like a damn casino now.

Maybe i just wait it out and buy some call options on gold stocks only after gold finished the down trend, as Bill mentioned it would be coming down to a potential low of mid to low 700s.

Any thoughts from the group

stktrader November 30, 2007 10:34 AM

"... I think that many spend too much time looking at the charts and not the "old way" of looking at the fundamentals...."

Yes I agree and I'm trying to learn more on how to read and understand the fundamental side. But I still use TA & Charts to find the lower risk entry and exit points.

TA, part science part art, but it helps me with evaluating the short/med term cycles for my long term holdings. IE when to add and when to consider protecting some profits. Occasionally TA also identifies something good or bad before the news is out to the public. IE the insiders can't hide it on the tape.

stktrader, I agree about the KRY situation. It is losing the war of attrition. This is not deliberate, but KRY is rather a victim of VZ politics. Collateral damage.

Maybe this weekend's vote will change things. My hope is that it does, for the good of the country and those invested in its prosperity.

My last comment on KRY (I promise) ;)

Indexes are now below their gap open. Are the rats abandoning ship?

Took a nibble of TCK a couple of days ago hoping for a bounce. Well, here it is, 5% today. So do bounces like this usually have some legs or should i just take the 5% and run?

Ah the difficulty of selling. I have a storied history of clinging to my dogs and not letting profitable trades run... (getting better thanks to Bill and all commentators here of course)

TIA

NYUgrad, wouldn't it all depend on your time-frame? I mean, if the trend is to increasing money supply by not just this gov't but all gov'ts, the it would call for gold in the long run, in my mind. But short-term, you might as well buy an option on WTF.

number2son,

Been following them, as well.

Their press releases remind me of the childhood story, "The Little Boy Who KRYed Wolf".

Regards

stktrdr:

If WHAT stays below 689? Gold? Do you mean 689 or 789?

TIA

Is not gold and silver last to dance...??

Looks like "dancing with the stars" is over

And we all know what that means...

Loan strikes wrong note for Citigroup

By Dominic White and Jonathan Sibun
Last Updated: 1:45am GMT 30/11/2007

Credit squeeze thwarts US bank from syndicating any of the £2.5bn lent to private equity group Terra Firma to takeover EMI.
Citigroup has been unable to syndicate any of the £2.5bn loan it made to Terra Firma in the summer for the private equity group's leveraged takeover of struggling music company EMI.

http://tinyurl.com/2ezrxo

2nd,

QID up nearly 1% on the day.

Watch for a GOOG price target raise to $2000. :^)

Regards

The White House said this morning that it is premature to discuss bailing out subprime borrowers:

http://news.yahoo.com/s/nm/20071130/ts_nm/usa_subprime_bush_dc_1

Also, calculated risk had an important post about how 'subprime' is turning into an epithet. It is being used to refer to 'those' people who shouldn't have taken loans they didn't understand or couldn't pay. The poor and minorities are being implicitly blamed for this crisis by the rats fleeing the sinking ship.

NV:
Sorry. Gartman said bail on Gold at 789.00 usd unless one was hedged with puts to match.

re: KRY Number2son and Wavesmash -

I think KRY (and GRZ, and VAL.V)stock prices are mired in VZ politics, which looks ever more irrational and volatile.

Chavez is pursuing public "wars of words" with Pres. Uribe of Colombia (VZ's largest trading partner) and with the King of Spain (over over the King's "porque no te callas"- why don't you shut up - at the Latin Summit).

Chavez' referendum (which would allow him to run for as many terms as he wishes) is being opposed publicly by his ex-wife, and by the general who helped Chavez overturn the 1992 coup. Polls have the NO vote leading the pro-Chavez SI vote.

Voting on the referendum is Sunday Dec. 2nd. If Chavez loses, his supporters will likely take to the streets. If he wins, the opposition will allege voting fraud. (Chavez'gov't. owns the electronic voting company which conducts VZ elections.)

I don't see how stock in any publicly traded mining company whose future depends upon VZ properties can advance at this juncture.

FWIW - there are no guarantees, just educated guesses!

Don't look now but oil is topping, gold is getting killed (man that crystal ball is good), and the dollar has been climbing all week together with libor rates. That distinctly spells deflation. This pump job is the last ticket out of town for the good ol' boys. Who knows how long it lasts though.

I don't think the markets can rally consistently if the dollar climbs.

bg/BH- really does seem like a casino some days...could end up big today, but could also sell off hard...doing my best to stay upright on the cross-currents...

Don't look now but oil is topping, gold is getting killed (man that crystal ball is good), and the dollar has been climbing all week together with libor rates. That distinctly spells deflation. This pump job is the last ticket out of town for the good ol' boys. Who knows how long it lasts though.

I don't think the markets can rally consistently if the dollar climbs.

Anyone notice how the dollar seems to have turned up? Wouldn't that be supportive to the equity markets, except for the shiny metal ones, if it kept up for a while? Wondering though, how rate cut talk is dollar positive.

Denny -

That is the tell - dollar is going up and gold down even as Fed signals aggressive rate cutting regime. Deflation is taking hold and that is not good for equities or the economy.

The falling dollar has been supportive of equities as it makes assets more valuable in dollar terms and raises the value of foreign sales. A rising dollar does the opposite.

stktrdr / Bill:

Any thoughts about the rough timeframe for gold coming back?

Craig...

"Haven't heard from Isaiah in a couple days....he's likely hiding under his desk wondering WTF...."

More than that my friend... I am caught in the bear trap from last Tuesday and it hurts. At 3:10PM that day is when I said "W T F" ! ! ! !

Then 21 mins later at 3:31 ...I said "Ooooooo my gaaaaaaaaawd".... I knew then, I was done.

I didn't sell off earlier that day like you and 2nd did, but decided to hold off and looked for a 3-4PM sell off that I thought would happen and thus cash in on. NOPE!!!!! The trap snaped at 3:10 and I was stuck... with large holdings in QID/FPX/DXD/UNG.

So these past 2 days have been brutal to watch. Painfully brutal...

Today my Scottrade Elite window is off. I figure why watch and agonize over every tick up. And there have been many ticks, I been counting each one. :>)

I know eventually the market will fall back, but the lost opportunity to be able to ride that baby down is gone, and that really rubs salt in the wound.

But I have been periodically checking in throughout the day to see how my "Cara family" is doing. Looks like everyone here was too smart for the trap set by HB&B last Tuesday.

I'll be looking for everyone when you guys ride this baby down to record profits.

Remember...I'm trapped some where around 12,840.

See you then!

Isaiah,

Hang in there, buddy.

Perceptions can change rapidly in the market.

Regards

Jock, others:
Re Venezuela
On the 11:30 segment today on BNN (archived), the theme on 'The Commodities Report' was 'political risk' and the guest was a strategist from Washington based The Eurasia Group.
He seemed to assume that Chavez would prevail in the election...and for the miners - notably, KRY - no implications immediately; but long term, nationalization.

Someone please check my logic here.

Lets say I am a foreign investor denominated in Euros (make it just about any currency because they have all kicked the USD's arse). I am looking at the US markets and looking for attractive opportunities. Once I have identified names I am interested in, I decide on target buy prices - the catch being that I will set the bids at a floating USD price that is tied to an absolute amount of Euros.

As the USD makes up ground against the Euro, those bids trend lower and lower. In USD terms, the bids fall as the USD rises against the Euro.

This is how I envision foreign cash acting as an invisible "put" on equity markets. Then, it would make sense that as the dollar rallies back, those bids drop lower.

But right now we are seeing the USD and US equities simultaneously "gaining strength" (over the last few days). Is this just a case of the "market can remain insolvent longer than the investor can remain solvent" sort of situation? Is this a temporary phenomenon that will sort itself out when the US markets finally take the plunge?

Sorry in advance if my logic is massively flawed. I guess that is how we all learn though.

Bull Hunter

Thanks...

Now go "K I L L" this bull for me ! Ok?

Isaiah64v4,

YOU NOT ALONE !!!!

I'm doing time----- meditating, messing with my mind.

Remember, "It's life's illusions I recall", Joni Mitchell.

Go play with this:

http://tinyurl.com/yqyolr

and check the link in my am post... All Will Be Well my friend.

Isiah, I am feeling the pain, although the beta's are now feeling the body work done by the subprime, heloc, consumer sentiment, mfg index, well you know. Anyway Rimm is off 7%, yeay, and that filthiest of pigs, Bidu just turned red. I try to keep an eye out on the manipulators faves, that way at least I can see what hit me.

re. Japan - yes we are in danger of becoming the carry trade du jour, the buck and the gold, methinks are a part of this manipulation - the central banks are in on it also. If we become the carry trade, the bottom for the american peso would be hard to see.

2nd son, yes, the manipulators will flinch, they don't trust each other, there is no honor among thieves, and one of them will want to make sure he is the first to take the profits.

This is the market's version of the Feather river Project. Remember that one? They reversed the flow of the Feather River.

When water (or other effluent) starts running uphill, you simply must look around for blowers and suckers. This is one of those times.

Northvan,

"Any thoughts about the rough timeframe for gold coming back?"

Bill said that when he sees it, he will report it.

proudPapa:

"Ah the difficulty of selling. I have a storied history of clinging to my dogs and not letting profitable trades run..."

DITTO twice

I am backtesting my "should have let runs" with the "AZ DZ style" to my actual trading history.

I am using the RSIs as entry and exit signals in this exercise.

So far this is what I have come up with:

1. We all know that we cannot predict the EXACT top or the EXACT bottom.

2. Since I do not know the exact price to let my winners stop running BUT I do know that when their RSI drops below 70 there is a very good chance that they have stopped either for a REST or they are starting to head back to where they were or worse.

3. Since I now cannot predict whether it is a rest or it is going lower I have concluded that it makes more sense to "set them free" to do their own thing for a while.

4. I can always pick them up again or get on a different stock which has a good chance of going in the direction I that I think it is going based on its RSI.

5. This will cause me to trade more often so I have to be more cognizant of commission costs.

Fortunately, my brokerage has just recently reduced my trading fees substantially so that a trade that would have cost me say $250 is now going to cost me 9.99 will makes it much easier to pull the trigger.

6. I made my first actual sell of a winner using this "new to me" style this week and I am watching it do its thing...I think its resting and I am sleeping better.

7. I have more questions about these "zones" that need answers.

8. There are indicators other than the RSI that are a better fit for some of my past winners.

9. There is NO SUCH THING as a bad winner.

10. Just when I thought I had all the answers another question pops up.

10. Still learning after all these years.

11. I never want to stop learning.

RIMM isn't the only stock on Bill's "tell" watch list to be heading south today. Check out AAPL GOOG QCOM CSCO INTC & ORCL all underwater today. GILD is the only one up, with MSFT and EBAY even at the moment.
Do you think some of the boys are inching closer to the exits? Not wanting to hold over the weekend?

Who would have thunk what I'm reading on this blog. Namely, Bill is concerned about the little guy having to bear pain for his long portfolio while at this moment it seems the traders here are feeling the pain of being short. There's a lot to be said for not trying to short this mkt, and if one has to, then to restrict it to resistance, not support. spx resistance is commonly thought of as the 1490 area. The short guys can fall victim to the same greedy venom that us long guys do. I'm lightening up on equities myself...just small increments and likewise for gld long. Bill's guidance is very influential but it is a little hard to get timing exact.

isaiah- relax...at the very least, i think we need to retest SSE (Shanghai) 4300/SPY 145/DJIA 12,850...

moneygenie & calvino

Thanks for the encouragemnet fellows...

moneygenie.. I'll look for that link

Jasper"

"Greed and Fear"....."Long and Shorts"...."Puts and Calls"... "Buys and Sells"...."Happy and Sad"

Oh, if we just find that perfect balance.

BillySundance November 30, 2007 12:28 PM

Someone please check my logic here.

Yes interesting subject which as a Canadian investor I've been slowly trying to get my head around, the dance between, fiat currencies, commodities and stocks of particular countries. Trying to separate the fiat price change from the real world value change (buying power).

As I see it there are two categories; items which are internationally priced daily (most commodities) and things like domestic stocks which have adjustment lag due to the pre priced inventory in the pipeline, (gasoline at the pump, bread on the shelf or Widget Co. USA).

I can't analyze the lag part on stocks due to fiat exchange as it varies for each particular case.

But if I look at a fixed case with your example, say a bar of gold purchased in the US. Then as the USD rises the price of the bar will fall in USD terms, but at the same time the Euro has to fall so it will take more Euros to buy that bar and thus your bid at an absolute Euro number will never get filled.

Now as for US equities, I agree it should be an inverse relationship between a US stock price and USD fiat value, depending on lag time and also assuming there is no change in the real world value of the particular stock in question. But in the short term there are many other factors, geopolitical, future expectations etc which will override the math side.

I'm probably flawed also, someday I will see the light.

2nd

True... but your cup will be over flowing by that time.

My cup is broken! The trap cracked it. :>)

After clearing some losing positions, I look back and gleaned the following nugget of wisdom (or so i think :)

If you're clinging to an underwater position and it's oversold (RSI < 30), first of all, it doesn't mean it can't go lower.

If you insist on holding it for some recover (i.e. cause you believe the company isn't broken, but may be stuck in an industry downtrend), treat it as if you just bought it. By that I mean: don't expect to hold it back to breakeven, that could take years (if the company even survives). Instead, hold it till RSI goes above 70 and then breaches it on the downside.

In otherwords, fix past mistakes by now adhering to more rigid, non-emotional trading rules like the AZ/DZ system.

For case study, I've held Alamos Gold for FAR too long. Bought around $8 or $9, and am watching it now go down to $5 and change for the third time. Reading my own words here I feel like a complete idiot for holding this position so long.

Live and learn.

"nurses ignoring patients b/c they are on union-mandated breaks" per 2nd_ave at 9:20 today
As a retired physician, I must protest. You can certainly find a much better example than nurses, who IMO are among the hardest working professionals with tremendous responsibility and minuscule pay. Few are in unions. The fact that most hospitals are looking for nurses speaks for itself.
My mother broke her hip in late October; I have spent over a week in two different hospitals during that time and my respect for nurses and the care they provide grows greater. Meanwhile, my respect for my former physician colleagues in medicine continues to falter. But I won't elaborate on that.

proudPapa November 30, 2007 1:21 PM
Re dealing with existing holdings and losers

I agree it all depends on your point of reference. I'm mostly a med / long term holding scaling in and out as necessary, like Bill says your shouldn't own all the Cara 100 all the time.

Friends are always baffled by the fact that I don't know what I paid for a stock or what my breakeven point is. Well for me I usually forget within a few days after the purchase because to me it is irrelevant. Each time I check my portfolio (day week or whatever), I have what I have at that point in time. I make my decisions in the current, not on what I did in the past, adding and reducing as the market tells me.

In simple terms I consider all holdings as if I just bought them today and evaluate the upside and downside risk on that basis. But I still occasionally get married to an idea, I keep moving my line in the sand, then wishing I had sold last week and eventually it becomes a long term investment "lottery ticket" as there's no use selling it now.

A lot of people feel the need to get to breakeven so they can get there money back from that company. In my case I don't feel the company owes me anything, what happened was a better trader took my money. So I take what I've got and look for the best opportunity to make money, which in most cases means changing horses. I feel sorry for all those Nortel holders waiting for the stock to go back up to $1200 so they can break even, (their grandchildren won't see breakeven), if they changed horses a long time ago they might be up now.

Still living and learning.

Golfer,
you are soooo right.

Bill....I'm hoping that as much fun as you are having now, you really miss the good ole days when you did direct client services. And as for my hand at the helm, I second guess and over think so much that you could tell me the exact highs and lows and I would still have a problem. I confess that I am a malcontent seeking rehabilitation; fortunately , 2nd ave, mensch that he is, says that it couldn't happen to a better person. Best consolation I have had in a while!

RDR- i hear you, and agree that MOST RNs are very professional (as are most parents/school boards/attorneys)...i was (attempting) to use examples that (hopefully) point out the extremes to which the laws/rules are bent...what was going through my head at the time was a story from a friend who was upset with a nurse ignoring a patient "bell" while sitting at the nursing station reading a magazine...i'm sure you've encountered similar situations...(most nurses in the Bay Area are unionized)....

Several days ago I mentioned Alpine's Global Dynamic Fund (AOD), then trading at 17.03 as I recall. Exiting now at 18.49. Still think it merits consideration from a long-term perspective, and plan to reload at lower level should the opportunity present itself. I just don't trust HB&B to continue to prop things up over the weekend, or even into today's market close.

With respect to the short side, it’s always faster. Therefore you got to trade it and be quick, the quick and the dead.

Draw some short term trend lines off the October highs, what is this information telling you? Trade/act accordingly.

Have sold down my positions today from 20% long to 13%, most likely will be down to 10% by days end. The 5% of the 10% will be gold related for insurance.

Good luck to all in a difficult environment.

Bill,

I like your reference regarding the fox and the hens. The problem is, the anti-conformist hens get isolated and eaten one at a time by the fox. Like you indicated...organization among the hens is needed, only they don't have the long-term focus to get the job done.

The hens will only act if a severe crisis occurs.
The fox is cunning though...it continues to moderate the crisis, systematically isolating and eating the upset hens, eventually...getting its way.

Thought I would have fun with that...

Someone asked about TCK, I was trading this in mid October to early November. It was moving strangely on a daily basis up 5% down 5% up 4.5% down 5% in a very choppy fashion. I exited at 48 on November 1st.

So, if you ask me, I would take the profit here, for what its worth.

Franco Nevada returns to the TSX on Monday. $1.26 billion IPO priced at $15.20 per share. http://tinyurl.com/yvs898

Got stopped out of SKF and SRS Tuesday morning after giving back 1/3 of Mondays gains. Stayed in cash until today going long SKF at 90.99 and SRS at 102.55 again. Friday after market is confessional time so if their isn't a selloff today I expect one Monady.

This week played out almost exactly like Mr. Cara said it would.

Thanks Bill!

Gammon Gold (GRS) up over 8% today. Anyone know of any news?

IS THIS OLD OR NEW TO ANYONE?

Reuters
Morgan Stanley may face $5.7 billion Q4 writeoff: report
Friday November 30, 1:33 pm ET
NEW YORK (Reuters) -

Morgan Stanley (NYSE:MS - News) may face a fiscal fourth-quarter write-down of as much as $5.7 billion for mortgage-related losses, CNBC television said on Friday.
The pretax amount is $2 billion higher than the amount the Wall Street company said it will write down for mortgage-related trading losses in September and October. Morgan Stanley's fiscal fourth quarter ends this month.
On Thursday, Zoe Cruz was ousted as Morgan Stanley's co-president. Several analysts have said her departure is related to the mortgage losses.
Analysts on average expect Morgan Stanley to post a fourth-quarter loss of 4 cents per share, according to Reuters Estimates.

(Reporting by Jonathan Stempel, editing by Phil Berlowitz)

http://tinyurl.com/3cfv4k

NYUGrad -

Your concern about shorting and timeframes is spot on to what I had posted about yesterday, based heavily on new information gleaned from the following information:

http://www.mises.org/story/2772

I think that this changes the story a bit, likely more than a rate freeze. I'm wondering myself as to how I play a short strategy right now.

bb -

As to the negative sentiment you questioned, being absolutely serious, I thought you were making those comments tongue-in-cheek until reading all the way down. I would respond in this fashion:

1. People didn't have money to spend in the first place. Nearly 3/4 of a $trillion in consumer spending came from HELOCs the last few years. Kiss that goodbye. With the extensive credit contraction, reduced spending is going to add to the problem. With the catastrophe we are currently experiencing, rate resets are a small part of the problem. Look at the incredibly high % of borrowers who never made their first payment on loans at the teaser rates.

2. These rate cuts will make NO difference other than to deflate the dollar and destroy Americans' savings. Look at the LIBOR spreads - enormous. Forget about HB&B using the money to invest, they are desperate for cash to cover losses and debt service. This is an insolvency matter and nothing else.

3. Are you seriously suggesting that more rate cuts are needed to hedge reduced inflation? Where is inflation low right now? CPI numbers are a joke stemming from the switch to using inferior substitutes as core product prices rise. Please provide any data you are relying on.

4. As to currently cheap stocks, systemic risk is a viable threat that can pull them down to REALLY cheap. I think going long before seeing the extent to which all this plays out is very risky. Not to mention that recessionary pressures may hit EPS figures pretty hard, obviously spreading those multiples back out.

Not that I don't respect your viewpoint, just trying to debate it a bit.

Good luck all.

I do not know if this is relevant but a co-worker wife who is a mortgage broker recieved a fax this morning raising loan fees. I got the impression that the increase was unusual in some way. It may or may not be tied to the sub prime bailout.

Joey - re KRY, GRZ, VAL.V

Interesting BNN segment. Still, I think there ARE short-term implications of political strife: a slow-down in ministry approvals (12/15-1/15 are lost anyway to Holidays; thereafter it depends on the reaction to the referendum vote.)

Investor psychology suffers every time Chavez makes a move which seems irrational or reckless, so that investors would not reward mining approvals very generously in the short term.

Long-term, I think nationalization is actually LESS likely than aggressive taxation and regulation (as in most emerging markets). The VZ gov't mining corp. never did well in PM mining; and Chavez needs to provide jobs in Bolivar state.

GRZ and VAL.V seem to be playing the political game much better than KRY. I wouldn't be surprised to see GRZ and VAL.V do well, but down the road. Meantime, I think they'll get cheaper - with or without permits.

Some locals, ironically called the "boli-burgueses" (or the bolivarian bourgeois) have built profitable businesses under Chavez'"21st century socialism"

But they DO have to "dance with the music" ...

GRS : Volume picking up. Now up 12%.
Some positive news leaking out?

Brother...you have to drag it out of this mkt...

Made a couple round trips on GLD short, one on GDX.

NYSE A/D 3 to 1 today thus far. THis doesn't feel like it's being manipulate heavily today, so may likely hold my longs over the weekend (ultra long emerging markets (ADRE) since eod Monday.)

OT: Surprised no mention here about the Mayan long count calender ending in 2016....where we meet the big rock, or something.

Just got done listening to Jermey Grantham's conf call. You need to pay attention to Grantham and what he says. Not only is Grantham a great investor but he manages money for lots of important people ex. Dick Cheney is a client. I am writing as he is talking, excuse any typos....

Fed up with the Fed.

Fed should have moved earlier against the Housing bubble just as they should of against the internet tech bubble. They had the tools and the data to due such.

entering the 4th year of Presidential cycle. The pricing of the market either expensive or cheap is most important in this year. Not typcally a strong cycle anyway.

Maximum period of weakness is usually the 2nd yr of prez cycle = 2010. Most bears were in this prez cycle.

Expect the pattern of the markets trying to push down and the markets fighting for excuses to rally to continue climbing out of holes, bulls have edge still.

Does not expect a significant decline in the next year or so. 2010 is when he thinks the next bear will start.

Sees slow growth and with bad luck a possible recession but not calling for outright recession but we really don't know yet (jackppot question).

Profit margins historically high. Mean reverting. Timing is tricky but eventually come down.

He is currently positioned defensively. The advantage (relative value) of Intl and Emerging over US equities is diminshing. They see a dull market and a shift back to US high Quality and less in EAFE than in the past. Out of small caps and REITS since begining of year. They are still short RE in a hedge fund he runs.

Still see's emerging slowing down on the margin due to US but doesn't see them slowing down all that much. Emerging is so good not much room for improvement though still sees value.

There is really no under-valued asset class like back in 2000 when Small, R.E. Tips and bonds were.

Does not see the Japan situation as a good parallel to the US today, no elaboration.

Doesn't see anything that warrants higher multiples or valuation.

Question what if anything would propel the valuations, multiples of US stocks higher? If the dollar went into a free-fall this is the one x-factor that would propel the US high quality market would go much higher on multiple expansion - not calling for it but it's one thing.

To add alpha consider long (50% emerging + 50% US High Quality) then short 25% R2k. Mid Cap space is also an excellent space to short like SP400 names. He will managing his sisters pension fund which he runs like this soon.

-Keep these alternative viewpoints in mind, Peace.

JogyP,

Just saw that GRS move as well, parabolic on the intraday chart but on below average volume. I didn't think that was even possible!

Up over 15% on toronto exchange: GAM.TO

$HUI within striking distance of a monthly close below the May 2006 high of 401.96.

Thanks geckojb for passing along the info. I know Grantham is a big devotee of the presidential cycle - adding liquidity in election years to support the economy and incumbent president which flows into the market/economy. But the liquidity being created now seems to be flowing to shoring up bank balance sheets, not the economy or markets. I can't shake the feeling that next year may be different than previous cycles, though I am not comfortable disagreeing with Grantham.

Markets just tanked. We will see where they close. Right now there is a big tails up.

With GRS, the move is probably short covering.

HALIFAX, Nov. 26 /PRNewswire/ - Gammon Gold Inc. ("Gammon Gold") (TSX:GAM and
AMEX:GRS): Mr. Rene Marion, Chief Executive Officer of Gammon Gold, reported
today: "I am very pleased to report that the operations team in Mexico continue
to make significant progress, particularly at our flagship Ocampo mine, and
that we are committed to providing our shareholders with ongoing updates on our
progress starting on December 17th. We are confident that we will report
progress of our operations which will clearly demonstrate that the Ocampo mine
has started to turn the corner." Mr. Marion continued: "In fact, Management
remains confident in achieving its fourth quarter production target of a 10-15%
production improvement for Q4 that was provided during our recent Q3 conference
call as well as a significant decrease in cash costs per ounce. With many more
initiatives targeted for early to mid-2008, we anticipate that we will achieve
continued improvements as we move forward into 2008."

Gammon will issue ongoing monthly key performance indicator updates starting
on December 17th, 2007 for October and November as the Company continues to
successfully address various productivity challenges experienced in the second
and third quarters. During the latter part of the third quarter, the Company
launched numerous initiatives aimed at improving productivity and the positive
impact of these initiatives began to gain traction in October. Management is
very confident that material improvement will be achieved during the fourth
quarter.

Taking 75% of my ultra long emerging markets trade off the table today - into cash. If it pops again Monday I'll get some upside while greatly reducing downside. I still believe the current trend is down.

Thanks geckojb....always good to have a counterpoint. What you are describing in equity guidance pretty much reflects a trend analysis of what's working and what's not. A continuation trend without a bear is what I get from this ppoint of view...except his comment on the dollar free falling impact...not sure I understand that one.

FWIW earlier today I outlined my strategy for shorting the e-mini between 1496-1501. This was meant to be day trade only due to the manner with which the market advanced into the final trading day of November. Although the S&P dropped 19 points from the early morning high it didn't quite reach my shorting area and the trade never was activated. No biggie. It's easy to beat yourself up and have the demons from within whispering you're a dunce for having the direction correct (from up to down) and not have the smarts/conviction the act upon it. The trade didn't meet my criteria so you I didn't trade. As Bill repeatedly has urged us, "don't chase prices, let'um come to you." You can always find opportunities that fit your system and puts the risk/reward in your favor-as long as you have the money to do so. Have a good weekend.

Paging "Noodle"

Paging "Noodle"

Paging "Noodle"

Paging "Noodle"

Is there anyone out there, I have become comfortable numb.

Nice short-covering bounce into the close. Glad I took 75% off the table today.

Bill, have you ever looked into Tom DeMark's sequential buy / sell setups? If so, then do you find them of value?

TIA

Did the blog crash?

ouch, ECU dove 9% in the last 30 minutes today on a massive volume spike (7X avg). Needless to say, i'm underwater on this one now :(

This one of those block trades someone might be able to find out details on?

ECU - could be some manipulation; shaking the treese for weak hands, if you will. The resource report should be out any day now.

"After several years of warmer-than-usual winters, Canada’s about to take the plunge into what might be its coldest winter in 15 years." David Phillips climatologist

Natural gas prices going up?

Jock:
re:Venezuelan miners
what you say makes a lot more sense to me than the opinion of the strategist from the Washington based Eurasia Group.
Would you be responsive tp my promoting a guest spot for you on BNN?
You should have credentials...how about Junior Miner Project Co-ordinator for billcara.com?

regards
joey

"Montana fund sees $247 mln of withdrawals
Florida's investment woes spark subprime fears in other states"

SAN FRANCISCO (MarketWatch) -- Florida's investment troubles have triggered withdrawals from other states' funds as the subprime mortgage crisis continues to spread.
Florida halted withdrawals from a $15 billion local-government fund on Thursday after concerns over losses related to subprime mortgages prompted investors to pull roughly $10 billion out of the fund in recent weeks. See full story.
Other states are experiencing similar problems on a smaller scale.
The Montana Board of Investments, which manages the state's money, has seen $247 million withdrawn by local governments in the past three days from a $2.5 billion money-market-like fund called the Short Term Investment Pool.
"We've had some local government withdrawals in the past few days because of reports about Florida's problems," Carroll South, executive director at the Montana Board of Investments, said in an interview on Thursday.
Rating agency Standard & Poor's warned last month that it could downgrade a $4.8 billion investment pool run by King County, Wash., because of potential subprime exposures.
These problems show how far this year's subprime-fueled credit crisis has spread. Florida's Local Government Investment Pool, which had more than $27 billion in assets at the end of September, is like a money-market fund that's supposed to invest in ultra-safe assets to provide participants with a secure place to stash spare cash. But even these types of funds have been hit by the widening crunch.
States like Florida and Montana invested in so-called structured investment vehicles (SIVs) in search of higher yields.

Florida copycats

AlanM,

Thanks for your comments and I'm not saying that things are great here, but I don't think things are as bad as many are making them out to be. I think that, unless we have a major financial crisis, there are many cheap stocks which can be bought now. I also think that the likelyhood of a major financial crisis is not high with the Fed, Treasury, ECB, BofE all aware of the issues and working to address them. I think that Bush would have no problem putting a bill through for several hundred million dollars to "help the people with sub-prime mortgages". It is an election year and this could provide good PR, help with the housing issues and help the banks.

You say that $3/4 of trillion came out of HELOC's in the last few years. The US Economy is about 15 Trillion, if we assume 3% inflation for 2008 and 2% GDP group, that will make up $3/4 of a trillion right there.

Lower rates will help the banks and they will help increase the value of assets. They will help the banks as they will lower their cost of funds, so they will have increased interest spreads. They will help assets as they increase inflation (devalue the dollar) and reduce the competition for investment $'s. Inflation is generally good for stock prices as long as it is moderate and does not change quickly.

If I am wrong and there is a real financial crisis (eg. Fannie Mae blows up), then my position of being long here will definitely be wrong, but if there is no serious crisis, some of the stocks I am buying are:

Canadian Banks who have small sub-prime exposure and written most of it off already.
US Insurance Companies at 75% of book value with very little subprime exposure according to their SEC filings.
Base Metal companies with good growth prospects at 8 times next years earnings
Natural Gas companies at 60% of their Net Asset Value
Auto Parts makers at 40% of book value
AT&T at 12 times next years earnings