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

In general, I think enough is known about this crisis now that we can muddle through and stocks are cheap enough that their is limited downside and potential big upside if the economy is reasonable.

Korvus:

The two stocks I mentioned yesterday were WGI.TO and NPF-UN.TO.

I checked the historical data at Yahoo and WGI doesn't fit your criteria but NPF-UN.TO has been around for a couple of years.

Other xxx-UN.TO symbols will show the RSIs.

I am in no hurry as I can data myself but I know you aked for input and possible bugs.

http://www.indexindicators.com/

great site for market charts.

Bill - I have no problem with your timing. I will say I was going to jump on gold when it first broke below 800 a few days ago, but you reiterated your position that it will go lower and it did (and I listened). It saved me alot of money, which I put into another trade that netted me 12% in 2 days (bought CREE on the Phillips buying Genlyte news). Thanks!

I am learning from all, thanks to everyone!

2nd - re: unions - I don't think laziness in the nursing profession has to do with being unionized. Nurses know that they are in such great demand that they will never be fired, unionized or not. People who want to work and care about others will do the right thing, others will take advantage of the situation and sit around reading magazines. I see it in my teacher's lounge all the time, which is why I rarely go there.

One other point, I think technology is pretty much done for now here. Tech has been the leader the last few months and it needs a rest now and some other group will need to lead (not sure which one yet). If you look at today's markets all of the Industry groups were up today other than tech, so I think the rally is pretty broad based.

"others will take advantage of the situation and sit around reading magazines. I see it in my teacher's lounge all the time, which is why I rarely go there."

Sometimes it pays to find out WHAT they are reading or we begin to generalize.

bb -

I appreciate your additional comments as well.

As to inflation potentially making up for a shortfall in consumer spending, I'm not sure if I consider it an apples-to-apples analysis. For instance, the real reason I noted that was because it showed that it wasn't savings, investment profits, increases in discretionary income, etc. that was really driving consumption - it was increased leverage. That's long gone. And it's a double-edged sword, because increasing your debt-to-value ratio (HELOC drives debt up, real estate crash drives value down) leaves EVEN less consumer liquidity. To your point about inflation, yes, I agree, that for necessity items with price increases, spending will naturally elevate. But for entertainment, luxury items, autos, clothing, and on and on that are discretionary, they will plummet. That's why retailers set a precedent by starting their Black Friday sales 1-2 days early at prices that would kill margins as Bill noted today. If you look at $ spent per person, it was far lower than any time in recent history as well. And I'm not sure you're even considering the effect that that same inflation would have on the COGS of companies that provide those things, again eating away at any growth. I just don't see anything but decline. I will admit that I have heard of organized shopping trips coming here from Europe to take advantage of the currency disparity. What aggregate impact that will have, I am not well versed enough to estimate.

One other thing worth mentioning - your focus on subprime is just a diversion by the MSM. If you chart bond values with high-grade ratings over the last few months, you'll see that pervasively AAA to AA on down the line has fallen off a cliff. All debt it seems is now loaded with risk - or at least the sentiment from investors is that it is - because of the way that these tranches were packaged. I hope you REALLY pay attention to the total debt that these companies hold, with special mind to Level 1-3 assets. Michael Shedlock has written a lot about this and I think he's done a masterful job. You should check him out if you haven't already.

I do agree that I think the main point of contention between our discussion and most others as well is whether there will be a systemic failure of major industries. I am of course in the camp that believes that the homebuilders, financials, and producers of durable goods are in grave danger.

Disclosure: I am not in the least an expert on these matters, but I did stay at a Holiday Inn last night. LOL.

I wish the best for you in your trading though, and would be happy to be wrong.

Quoting Bill:

"I feel that if the financial stocks GM (Ditech), JPM, AXP, and C were not up so much today, this Dow would be down -100 points. Bulls, that's a lot of hope to put on financial stocks."

There is a lot of negativity on the financial Services. They have fallen quite a bit, and many of them have been historically great companies. At today's price, the dividend is quite good, but are we close to the bottom?

Here is the link to John Mugarian - another blogger whose comments is respected. He seems to be bullish on US Financials.

http://www.johnmugarian.com/2007/11/bank_stocks_the_solutions_are.html

May I ask for the community (and Bill) to comment on whether they've corrected enough to account for the uncertainties?

Thanks all,

Have you been reading on the newswires the Chavez rants; cut off oil to the US on Monday, nationalize Spanish banks, expel foreign journalist, military guarding the oil fields. He's getting nervious that he might lose the vote. What a nut. How did he ever get so far up the ladder?

bb -
"I think that, unless we have a major financial crisis, there are many cheap stocks which can be bought now."

You're drinking some strange kool-aid. Sober up man... a major financial crisis is occuring NOW.

There is a lot of levered loss to account for. Something like $1 to $3 trillion.
Buying financials now is like buying the first couple dips of the home builders when they "bottomed" all those times since 2006. Remember when those were supposed to have bottomed?

The financials have to go through the same painfully long process, perhaps longer, because the homebuilders didn't have Paulson's Pride to the rescue. No, they had to account for it blow by blow and sell assets for a loss, like *real* free enterprise.
Hank and Ben are gonna kill the $USD.

Louise Yamada was on Bloomberg this afternoon. Nice back-up to yesterday and today's Daily reports from Bill. She said this is a "kickback" rally in which to sell into. Hmmm, where have I heard that before?

moabmatt,

I believe that bb had mentioned that he had bought Canadian banks on the dip. The exposure of Canadian banks seems to be rather small (at least so far). The lending didn't get as crazy in Canada as it did in the US, although like everywhere else, banks and other institutions bought some American subprime MBSs. Buying some of the Canadian banks might not be a mistake at this point, especially if there are stop losses in place.

I am not comfortable investing in any bank yet, not even a Canadian one. I would like to let the illness run its course first. I have read enough - about natural gas bets gone wrong, Canadian SIVs and ABCP problems - to wonder what else is under wraps right now. I find it very difficult to assess risk. I am particularly concerned about derivatives and how a crisis there might play out.

bb you think you pretty much know the extent of the financial damage out there? That is a bold claim, and I wish you could tell me, particularly as it regards UBS and Citigroup. Subprime is a convenient whipping boy and a good distraction as well. However, commercial real estate is down in September, loan applications are down, securitizations are down and banks are sitting on 50 billion they can not securitize. Bloomberg reported that insurance has almost tripled for new commercial papaer. HELOC's - well you know what happened to WellsFargo and the 1.3 bil writeoff. And that is a conservative lender who outsourced a small percentage of its originations. Anyhow BB, just buy, buy, buy!

never mind with Citi, bb. They just disgorged it as I was penning my riposte - 64 bil in a SIV and Moody's is reviewing. Hope that helps the manipulators some more on Monday. If they could only use monopoly money, can you imagine how high they could run the index then? It takes time, paper and ink for the Treasury to make their bills, we need a shortcut.

You guys are missing the point. I'm not saying buy Citi or the homebuilders. I'm saying that there are lots of cheap stocks out there (especially small caps) that are undervalued and will make you money - unless there is a major financial crisis. Wells Fargo writing off $1.3 billion is not a major financial crisis. Etrade selling their mortgage portfolio for 25 cents on the dollar is not a major crisis. Even some homebuilders going bankrupt would not be a major financial crisis. Citigroup of Fannie or Freddie going bankrupt would be a major crisis.

What I'm saying that unless there is a major crisis, there are a lot cheap stocks out there that can be bought now. There are even stocks that Benjamin Graham would love that are selling for less than net asset value (meaning that the saleable assets minus liabilities are worth more than the market cap of the company) and you get the business for free. I'm buying these types of companies. Someone mentioned that I said to buy BMO earlier this week and I got in at $55.31, it's now it's at $63.44. There are opportunities like that out there now.

You are right that if the market tanks, these could very likely get even cheaper, but if there's no major bad news for the next while, they'll move up before you get the chance. You want to be buying value stocks (if you're a value type investor) when their cheap and being thrown out with the bad ones. I think now is a good time to be doing this.

isaiah- this one's for you

what i would do-

1. do not add to your positions beyond what you have now. you've already exceeded your (ideal) position size.

2. sit back and wait. because (a) you're holding ETFs (and not individual stocks- well, with the exception of UXG), and (b) you bought on weakness->i guarantee prices on the ultra-shorts will return to (and exceed) your basis...not saying i can ALMOST guarantee it, i absolutely guarantee it. (does that sound irresponsible- think it would be more so NOT to point it out)... there is indeed an ebb and flow to human nature, which is reflected in market behavior (which is, after all, composed of the collective buying and selling decisions of human beings)...although we cannot predict human behavior on an individual basis, i believe that on a global basis it is entirely predictable that this market will be taken down.

3. when prices return to your basis, sit and wait some more. you will be pleasantly surprised how much patience adds to your gains.

life is too short to waste time on what might have been, and certainly on pain that will pass (i think rather quickly)...i try to ignore the noise (be it headlines or the gloating of those trading the other direction) as best i can and focus on what works for me...life is not about the closing prices each day- it's more about how you handle your performance each day, and where you ultimately end up...and as mg points out, you are not the only passenger in your boat->navigate your way out of this, and have some faith in your destination...hope this helps...

2nd,

Wise words.

Patience is not only a virtue but the missing ingredient in many players arsenal of tactics.

Isaiah, I held MO (sorry, Bill :^)) for 8 years waiting for the big payoff, which has allowed me to play this game at a new financial level.

You'll be fine, my friend.

Regards to all and have a great weekend!

rob d-

"2nd - re: unions - I don't think laziness in the nursing profession has to do with being unionized. Nurses know that they are in such great demand that they will never be fired, unionized or not. People who want to work and care about others will do the right thing, others will take advantage of the situation and sit around reading magazines. I see it in my teacher's lounge all the time, which is why I rarely go there."

in my haste this morning i posted the first four examples that came to mind, and obviously offended several people, and i apologize.

both you and RDR go on to indicate displeasure with the conduct of many in your own professions, so i assume you can subsitute your own examples in place of mine when it comes to the relatively high level(s) of "entitlement" embedded in our laws and culture.

you're right, of course...unions are not the source of the problem...but i do believe a disproportionate number of 'problematic' employees/behaviors seek (and often find) shelter behind the shield of union representation/regulations...(let me repeat that i have no problem with unions or the legitimate bargaining strength they provide to their members)...

I respectfully add that I am not sure any of us here really knows the end outcome of anything with enough certainty to be using words like guarantee when advising another. There is one guarantee and that there are no sure things ever, espically when it comes to stock markets and where they are headed. Again, stating this with utmost respect.

geckojb- i understand your point, anticipated it, and debated the language of my posting all afternoon...however, i really believe that market cycles (which are merely the manifestation of human behavior) are very reliable. will also reiterate that isaiah did not buy on momentum. i know none of us can really guarantee the tide will come back in or that the sun will rise again, that recessions are a natural part of the business cycle, or even that the financial excesses of the last 15 years may need to unwind, but i would have no problem betting real money (as opposed to OPM) on any of them...

...and i'm also not joe namath masquerading as a cara blogger ;)

stktrader:

You asked, "Have you been reading on the newswires the Chavez rants; cut off oil to the US on Monday, nationalize Spanish banks, expel foreign journalist, military guarding the oil fields. He's getting nervious that he might lose the vote. What a nut. How did he ever get so far up the ladder?"
Maggy posted the symptoms of groupthink a couple of days ago, but her comment was ignored, blown off.
It seems to me that leaders rise to power by establishing a personality cult. They maintain their hold on the people by being populist and promoting groupthink.
In time, they are proven wrong, discredited and thrown out, but not until their supporters are thoroughly bankrupted.
Not just in Venezuela, but everywhere, including the financial blogsphere....

Pike, I have inferred your meaning. It is true, we are a bitter mob, foaming at the mouth. I am not claiming to speak for others, however, in groupthink, as you and Maggie astutely pointed out, there is no other. Being subsumed in groupthink, I can speak as a group, not as an individual. And your comparison of Bill Cara and Hugo Chavez is uncannily perceptive, both are prehensile, ambitious dictators, aligned not in ideology, but in their lust for power. I will try to individuate, to break the mental chains that I have willingly worn, as Bill's disciple. However as a groupthinker, is it in my power to do so, to be free?

This Citi disgorgement of 64.9 billion of bad debts has me thinking. First Citi knew that the Moody's warning was coming. Second, Citi and the rest of the coven ran the indexes as a pre-emptive strike against what is coming next. I do not think this weeks manipulation will be effective - did anyone see the dow scramble up the pole the last fiveteen minutes of trading? Someone really had to have it finish positive, even if that meant staying exposed over the weekend. Well, they just beat up Baby Bear, but now Mama Bear is coming home, and she is not going to be happy with the abuse Goldilocks visited on Baby Bear. I don't want to think what happens when Papa Bear comes inside.

g034,

Thanks for posting your detailed thinking re: Dow Chemical.

In addition to everything *nice* that has been said about DOW, I like the fact that it has enjoyed insider buying in the past year. That doesn't *prove* anything, of course, but I like the inside dollar vote of confidence.

I've also done really well with BASF, which is an ADR. Yield is a bit shy of 3%. I bought in May 2005; I'm up over 100% on the price alone.

And as Bill always reminds us, we trade prices here.

ALOHA !!

AussieOnTop ... Top five net sellers listed on Canadian Insiders is GG ... FYI !! On NOV 29 Ian and the boys were really cashing out those options!

ALOHA !!

VENEZUELA
Further country risk is being increased by the US government through the CIA. You guys have to understand that this stuff has been going on for many decades, especially in oil rich Third World countries.

In July of 2004 the USA sent a US Navy armada down to the Carribean just off Venezuela for "training exercises" ... Timed right when Chavez was to be "re-elected".

Now this latest CIA operation called "Operation Pliers" has Chavez enraged! I have to say rightfully so ... Your tax dollars at work!

READ ON:
CIA Operation "Pliers" Uncovered in Venezuela
November 28th 2007, by Eva Golinger

On a scarier note, an internal CIA memorandum has been obtained by Venezuelan counterintelligence from the US Embassy in Caracas that reveals a very sinister - almost fantastical, were it not true - plan to destabilize Venezuela during the coming days. The plan, titled "OPERATION PLIERS" was authored by CIA Officer Michael Middleton Steere and was addressed to CIA Director General Michael Hayden in Washington. Steere is stationed at the US Embassy in Caracas under the guise of a Regional Affairs Officer. The internal memorandum, dated November 20, 2007, references the "Advances of the Final Stage of Operation Pliers", and confirms that the operation is coordinated by the team of Human Intelligence (HUMINT) in Venezuela. The memo summarizes the different scenarios that the CIA has been working on in Venezuela for the upcoming referendum vote on December 2nd. The Electoral Scenario, as it's phrased, confirms that the voting tendencies will not change substantially before Sunday, December 2nd, and that the SI (YES) vote in favor of the constitutional reform has an advantage of about 10-13 points over the NO vote.

The above is part of the article and you can view the entire article which is very interesting at the link below to the website entitled: VENEZUELA ANALYSIS.COM ...

Ever since the 2004 US government failed intervention into Venezuela I have been sour on any companies operating there. I believe the bad feelings and the repercussions will continue under Chavez.

At this same site I read an article(The Open Veins Of Venezuela)published back in 2005 talking about the Imataca Forest Region which is near where KRY operates. It is a very negative article on foreign companies operating in Venezuela. In the end I believe Chavez is leaning towards hypertaxation of foreign miners. As an example foreign oil companies are now taxed at a 30%+ rate, but mining and forestry companies are only at a 5%-7% level which is one of the lowest in South America. Imagine if KRY and other miners are taxed at a 30% rate the same as oil companies?

As I have posted here in the past I used to live in Venezuela(Father with Chevron Oil)in the late 1950s back when all the nationalizing of oil started and one of the most vivid memories of Maracaibo where we lived was the strong military presence on display on public roads and everywhere.

Link: http://tinyurl.com/2g6gqj

ALOHA !!

There is this debate about inflation or deflation in the future!

WARS are HIGHLY inflationary PERIOD!!! Add in the US babyboomer crisis and now the derivatives crisis and I can see no immediate end to US government spending which begets more FED money printing which begets more inflationary pressure. All this latest FED TALK and their data is for the brainwashed masses who still believe anyone in Washington DC has a heart and that bailout and writeoffs are just business as usual in the USA without negative consequences!

The foreigners see this and will invest accordingly. Some of the foreigners like Russia and China are now in a position to profit from our mistaken foreign and domestic policies. Joint military exercises between Russia and China(two Communist countries)are heating up the COLD WAR once again with the profits from their exports to guess WHO? The USA and its allies! Of course the US defense contractors and their shareholders are loving it ...

Remember that a Nation that depends on foreigners for imports and debt is gravely at risk with a capital "R"!

All this will collapse the US Peso in the long run unless we implement a Paul Volker style tactic! That era had a different generation in charge of the money and politics of America. This time the baby boomers led by the two Vietnam draft dodgers are in charge! Immediate gratification is now a viable government policy that is being played out at every level from foreign policy to money policy to real estate and Wall Street! The long term consequences of "spend now and pay later" are socially ingrained in every American born from 1950 to 2007! The credit card companies know this ... Why would those in charge of government be any different? The motto now is "GET YOURS AND GET OUT" ...

We are gambling in stock markets based on fiat money. Its the same as building sand castles on shifting sands. You never know where you are going because there is no standard of value or standard of measure. Free floating currencies are just that ... they have no anchor in reality! Like a bouy set adrift in the open oceans of egos and debt! The World is awash in these fiat currencies ...

Because these cycles have often been repeated throughout financial history I do not believe they are coincidence or unplanned. CYCLE UP with easy credit NO FEAR that begets irrational exuberance ... CYCLE DOWN with inflation FEAR backed by a convenient war! UP AND DOWN THE FEAR CYCLE!! Some people call that a business cycle though ...

Nothing new under the SUN ... As I have said in the past the elite bankers like the ROTHSCHILDS have been playing this game long before the USA was a country!

Fear moves mountains and the US babyboomers were raised on fear! DUCK AND COVER!

Regarding chemical companies--there's a pretty hard cost linkage to natural gas (as it is with the fertilizer companies which are chemical companies too.

Calvino-I love your name. Why? Italo Calvino is one of my favorite authors. His book, If on a Winter's Night a Traveler, my absolute favorite book in life.

Geckojb: Thanks for posting GMO comments. He's been wary for a good while.

2nd_Ave: Are you giving out money back guarantees? You'll pardon my taking respectful issue with your absolutely guaranteeing that the prices will come back. The double shorts and double longs can accumulate very quick and very steep losses. By the time the prices come back to the bought levels, one can chew through much capital.

Kaimu: grain of salt department: the "source material" for the "operation pliers" article is a blog called "Postcards from the Revolution" whose author's bio (from the blog) reads:
"Venezuelan-American attorney, writer and investigator. Author of The Chávez Code: Cracking US Intervention in Venezuela (2005) and Bush vs. Chávez: Washington's War on Venezuela. A native New Yorker currently residing in Caracas, living passionately every moment of the Bolivarian Revolution." Maybe right, maybe wrong, but definitely from a pro-Chavez point of view. As a KRY holder, I find myself ironically hoping for a pro-socialist, pro-Chavez referendum vote this weekend to further my own selfish capitalist interests!

2nd, you should not be putting out statements like this about guaranteeing returns. You may be unduely influencing some newer investors to take foolish risks. With your obvious level of experience, you know that there are no guarantees in the market and I'm sure the market has made you (as well as the rest of us) make poor decision when we were certain we were right.

Hi Leisa,

I can attest to your statement that double shorts can accumulate quick losses. I'm still a bit underwater on my QID, which is my own fault for scaling in too soon.

Keep in mind that many of these double shorts pay dividends while you're waiting. QID currently pays about 5%. Not a great return but not chopped liver either.

I really enjoy following your adventures on The Perplexed Investor.

Regards

Certaily 2nd's intent was to apply some balm to Isaiah's wounds and ease his sufferings through the weekend. 2nd (and everyone) knows there is no "guarantee" per se, howsoever, Isaiah and other are in an irrevocable situation and appreciated the encouragement. It was a measured humanitarian gesture, offered up by a brother who is also a bit of a provocateur, judging from the feedback.

I don't want to dwell on this, but I would definately caution on being too bearish at this time.

Don Hays is in Barron's this week and calls for 100% allocation to equities and says the market has only been as cheap as it is now 5 days in the last 28 years and the market went up 30% - 40% from those other days.

http://tinyurl.com/yw9q2f

Also, thanks Golfer for pointing out the weather predictions. I've purchased a couple of small natural gas producers and drillers over the last 6 months with the theory that we have to get a normal winter again some year. Perhaps this will be the year! May average down here, because, unfortunately, I bought way too early, but if this prediction is right, the stocks are outrageously cheap.

There is a difference between group think and group support. For instance, would we say AA is burdened by group think? I see some aspects, but overall they are viewed by most of society as positive. This community supports one another, but they aren't a bunch of wussies.
We get many sides of a debate. This isn't Jonestown, it's a financial blog. No one is forcefully handing out kool aide.

For the most part people that post on a blog are sure enough of themselves to lay it on the line....not exactly a sign of group think.
And there are no consequences of speaking out here, no real negative reinforcement. Without that how can there be enforcement of any POV except the one that pays for the site to begin with? That's not group think, it's house rules.

I have to work pretty hard sometimes to not let my inner A-hole speak too loudly. I don't know if anyone else has to throttle themselves back, but I know for sure I think for myself and I bring my ideas here to be tested and debated by others, not to get agreement and to feel good in a group. Otherwise I could do the same sitting in a closet contemplating my navel.

If I wanted real group think I would join an organized religion or political party.

We are all interested in capital markets and social equity, but most of us have several routes to that common destination.

Isaiah, 2nd, Leisa, All:

I just read my latest CT Saturday post and the only concern I have at this point is the Hang Seng chart. Your FXP may be a problem, but the other indices are technically in your (short)favor according to CT by a factor of 3 to 1 of a DOW bear and 1 to 4 against.

If we get the DOW bear it is more likely the Hang Seng comes with it sooner or later.

It would pay to look at this report in order to set yourself up according to the TA.

The QID holders are looking alright and DXD/DOG owners aren't in that bad a position.
If oil continues it's plunge DUG will likely be alright too.

One area I'm thinking of, and one the group might have some idea of, is the pawnshops and paycheck lenders. In a serious fiscal downturn they will see increased business and margins.

re the guarantee post-

i think and type quickly when blogging, and this morning i am able to spot two errors immediately:

a) should have titled "for your eyes only," and
b) reference to being a "passenger in a boat" is way off (when's the last time a passenger navigated anything- in this case, he'd have to navigate his way around the other passengers just to clear his head)->should read "not the only sailor in these waters..."

i see no other errors..

should have "been" titled...

Hi Craig,

I've been investigating the pawn shop industry, thinking along the same lines as you are.

The CEO of EZPW was recently interviewed on BubbleVision. He said that during bad economic times his business sees an initial pop but that it doesn't last long and the pawn business eventually suffers as do other businesses.

Perhaps the way to play them is to take a position, wait for the initial pop and sell into it?

Regards

jaketh-

faith, doubt, and the ability to reach a goal/handle a loss->in sports, in love, in war, and in the mundane activities of everyday life...

to step outside one's conventional boundaries usually requires going beyond conventional wisdom...it's all mental, right?

thanks for your post

The bull trap appears to be doing it's magic, eh 2nd?

"in this case, he'd have to navigate his way around the other passengers just to clear his head"
I'm dying laughing at this one...
So much for group think....LOL!

Thanks BH, I think I'll look at some historical data and see what they do. If there is a recognizable pattern then see if it can be traded.

Craig,

Re: "group think versus group support"

I agree with your comments about group dialog. The difference between a deliberative group and a mob usually depends upon a degree of moderating control--literally, the "moderator". I value Bill's insistence upon orderly, responsible and relevant commentary. To color such oversight as "dictatorial" is to risk being regarded as sarcastically provocative, dull-witted or simply silly.

This blog is one of a few very rare forums where "group think" does not degenerate into "clueless mob dementia". Bill Cara somehow manages to foster an arena where contrarians do not fall into mere contrariness. I find him to be an ideal moderator of financial matters as well as an outstanding tutor.

Thank you, again, Bill. What you have created is greatly appreciated by many.

JOHOJO:

"Bill Cara somehow manages to foster an arena where contrarians do not fall into mere contrariness."

Great line, and true!

craig- if sailing in rough waters, would prefer to have fence-sitters in the passenger compartment, but i'd have to pick the trapped bear for a captain...

todd harrison asks whether a rate cut is now priced in, and we are now set up to sell-the-news:

http://tinyurl.com/33obtf

ALOHA !!

Magnolia ... The US Navy intervention and the attempt to assassinate Chavez back in 2004 prior to the election was reported in the London FT. None of this info ever seems to make it to mainstream American media. I wonder why?

Aside from that I guess these false CIA ops would be good fodder for Chavez to just confiscate foreign companies especially those friendly to the USA! Our faulty CIA intelligence got us into Iraq ...

My point is that governments don't need truth to act and are fast becoming unreliable as sources of well researched and honest data. I give you the tenth version of the US CPI as an example of how much the truth is valued in America today! Many other examples are trotted out into the financial press daily!

Bottomline Venezuela is a high risk venture! In my opinion partly due to the US government policies of intervention. If we were not talking about Venezuela then I'd say this last sentence about US government intervention could describe gambling in the US stock markets!

How much intervention can we Americans afford? We have military bases in 133 countries worldwide. Is anyone here going to actually tell us that these bases are there for the protection of freedom and democracy for citizens of these countries? I would say these bases are there in case US corporations need protection! This has been the theme since the first US military intervention back some 160 years ago in Tripoli, Libya! "To the shores of Tripoli" are lyrics in the US Marine hymn that describes a battle to secure free trade routes for US merchants in North African Muslim countries. WOW ... how much longer will our military be battling the Muslims and the rest of the World? More to the point is ... HOW MUCH LONGER CAN WE AFFORD THIS? I believe ... not much! I also believe the average investor will have no clue when this all comes home to roost financially. Right now the cost to battle the World isn't even mentioned on CNBC or by the US GAO! Historically speaking there is nothing more inflationary than for a government to go to WAR!

Maggie's post was incredibly obnoxious. So I blew it off.

She led in with something like "At the risk of being banned.." when, as far as I know, no on has been banned from here for dissenting views.

That was simply a passive-aggressive, unfounded, factually flawed accusation with zero basis, without even an attempt to provide a supporting example.

Furthermore, dissenting views are aired here ALL the time. bb, for example, has a current view of the market not many of us share, nor does Bill seem to, though I don't want to put words in anyone's mouth. But bb makes his argument and we slug it out, give and take, back and forth. I think it's great and all sides can learn from each other.

Cheerlead and you will get slapped down. Do it long enough and I guess you might get blacklisted. That's not groupthink. That's removing irresponsible expression of poorly formulated thoughts. I think we try to operate on a slightly higher intellectual plain here.

Frankly, Maggie's 'point' and I'm not sure there really was one, was an insult to our host, a point of view offered with little in the way of supporting argument, one that can pretty much only be seen as a crude slag at this blog.

Bill, and the regular posters and readers here, deserve a lot better.

2nd...

I agree that there is a guarantee the market will correct from this week and so will QID... just can't guarantee the timeframe, price, rate, or volatility!

Unless you know Isaiah's situation & are his advisor though, guarantee needs to be backed up with something! How about some long calls? Send him an email money transfer? Some insurance? :)

I'd rather lose 'what if' paper gains in this market than real dollar losses. Though I'm putting my foot in my mouth here with KRY, I don't have much to lose relative to a guy I met last week who lost $600k in Nortel with the "buy, hold & prosper" approach. His best investment was buying a bare-bones pre-fab home (no kitchen or bathroom), dropping it on the foundation on a Friday, putting in the plumbing, fridge & a bbq on Saturday, and sitting on the porch of his new cottage on Sunday night drinking beer with some shocked neighbours who hadn't seen a house go up in 3 days before.

Like Bill, I smell a rat in this market, though I'm not about to bet against it just yet. There's unlimited upside and limited downside here, so to speak. You can only go to $0. What happens to QID when it hits $0? :)

Perhaps it is all the bonuses from HB&B getting paid out that are flowing into the market. I hear some of the Canadian banks are paying out a few more $$$ than last year.

Jock,

Thanks for your insight into Venezuela. I hope that buying or holding in fear makes sense in KRY's case... rather than dumping it just yet. Don't see a long-term play here either but things should get interesting after this weekend. I'll stay at the table to see what this turns into.

I tried to get a ValGold order filled on Friday but it didn't hit my "1/2 the price of a postage stamp" stink bid.

Hi Kaimu,

Do you have a blog? I liked your story about buying the painting for $4k at an auction and looking at a huge paper gain. Gotta lose the caps on your posts though... it's starting to sound like end is nigh! :) Though I think in real life you're an optimist. Why else would you sell flowers and live in Hawaii?

Do you pay taxes on $4k sale price or the >$50k that the art is worth? How about real estate? Do you pay taxes on how much you think your house is worth or how much it is actually appraised at? What about stock? Gold? I think taxes also have something to do with what the market is doing and where money is flowing. Do pension funds pay taxes? How about commissions? What's the commission on selling $8B worth of stock, even a money market? HB&B is laughing all the way to Hong Kong I think....

Do you think people bought Hummers because the price of gas was cheap, or because they could get one for less than a Toyota with a tax break?

http://tinyurl.com/create.php

I see a rise in the sales of bikes over the next year in Canada. They just announced a PST cut on all bikes under $1k.

Do you think that art, and real estate are a better investment than gold? Your experience and comments seem to indicate this between the lines, though as with many people on this blog you could be defined as a true 'gold bug', or at least a 'gold miner bug'. Gold is really "supposed" to be just insurance against inflation, but with ETFs and internet trading it has turned into a speculative position, as currency has with FOREX trading. Same with Uranium, Moly, Silver, Nickel, Copper, etc. etc. Bubble has to burst on these sometime... as it has with Real Estate in the US.

I hear it's easier than ever to get a mortgage in Canada these days though, and the 55 year mortgage may be back soon.

What happens with deflation? At least with art other people can admire it too. That is the kind of paper that doesn't devaluate. Though I could admire a stack of gold bars sitting in my closet, it would be hard to hang them on the wall for others to see. They could let me buy more art though. I could borrow against the gold maybe? Choices choices... wish I had some gold bars...

I just ran some quick numbers with Christie's auction site. For 2007, they sold $7.5B worth of stuff. Their two best months? May & November. November was their best month of the year, with a 25% gain over May.

Their biggest location? Hong Kong. 2nd biggest? NY. New York in May had about 60% of HK's sales. In November, NY had 50% of HK sales. That works out to over $1 billion dollars that was earned in HK vs. NY in November.

November was still their best month of the year.

In November of 2000, they sold $643M.
November 2001 - $375M
November 2002 - $288M
November 2003 - $353M
November 2004 - $923M
November 2005 - $1.7B
November 2006 - $2.8B
November 2007 - $3.2B

I guess people are not too worried about shipping costs going up. If that's not a bubble I'm not sure what is.

In this market, I would feel comfortable doing a buy-and-hold on QID, as long as I'm not betting the farm or buying on margin. Perhaps it will be an early Christmas present?

(Disclaimer - I will probably be buying Christie's or Sotheby's stock early next week. The CEO exercised some options so he has less to worry about with the stock price! Perhaps he bought some art or wine!)

Kaimu, while I also question that source, sometimes the truth is uncovered in unusual places. Your point is dead on.

I have a particular point of view: our relations with the South Americans is one of the great squandered international relationships of all time. Even though we have kicked them around for decades, there was still a lot of love and respect for the US, until recently. That too, is one of the big failures of the current administration. The mood in SA towards us has changed for the worse and I don't see any good coming out of it.

Remember how the Bush administration was going to reinvigorate relations with South America and then he pretty much showed them his back once elected? They remember.

When 'peak everything' really gets rolling, and resources become even more important than they are now, we may rue the days when we regularly assassinated popular Latin rulers and in general treated SA like our private playground.

bb:
Re: your counterpoint...
Some of us come from different orientations as we try to dance our way through tough transitional points. I wonder if we may see and hear and organize our sensory experiences very differently. Relative strength, just give me the data to play the odds,is where I'm grounded. This strikes me a kind of downstream reacting. Upstream reacting seems to belong to those that have the courage, seasoned intuition, and well tuned internal computers to make sense of what's going on behind the curtain; they grasp the fundamentals. Bill integrates both orientations, and can navigate all the time horizons. He's the ultimate "generalist" which I truly mean as a tribute much as the dedicated doctors of yesterday were general practitioners. Not for me to try to categorize anyone, but what I'm trying to get to is how hard it is for myself to be drawn to the story line of this look down the road blog but still stick to my own knitting...i.e. I have to be myself, as long as my hands are at the helm. At the end of the day I don't want to ask myself, " wow, my Adrenalin level outperformed, but what about the bottom line?" All this to agree with you about our current market potential...a lot of lost opportunity if one is in all cash. Here is chart that shows a very simple all or in weekly trade signal. http://tinyurl.com/2f6joj
Sell and buy at macd extremes; othertimes, use rsi to sell and buy at 50 cross over. Caveat: get out of dodge and sit on your hands if close is below weekly 60ema. If one did this weekly and ignored all the noise, it would be good enough for many large asset class bets and no need to break down into sectors and still make darn good returns. No shorting needed, either. Interestingly, I've looked at this chart for years and never used it with the rigor that seems justified. Ahh, the noise is so interesting. ps...Bill's use of rsi is similar but just with a lot more finesse.

ALOHA !!

Wavesmash ... In real life optomists and pessimists are too judgemental. I am tired of good and bad labels but instead prefer to be called a "realist". I believe in "people" more than I do in "governments" or "banks". Governments and banks are parasites that feed off the productivity of others. I want to see a World where we have less government and less banks! Whats so radical about that? That World I want is in complete opposition to what the elite leaders of the World want. Most people no matter where I have gone in the World just want to be left alone in their pursuit of their own version of happiness.

My art story came out of a post by another Cara blogger talking about "putting all one's eggs in one basket"! That is something I have never done. My reasons for investing or acquiring assets are a great deal personal and not "just about profit" or "hedging"! You could call me a "gold bug" but I am really a "store of value bug"! I have never been a big saver in terms of holding things like Savings bonds or munis etc ... To me the worst asset you can accumulate and sit there starring at is fiat money! As long as I have been alive it buys less and less every year and within the past five years has been accelerating its lessening value! My priority in terms of accumulating "real assets" was to secure a spot on Earth where food and water are abundant and self perpetuating. You can't put a price on that kind of asset in terms of quality of life values and basic human needs ... Nothing has changed about that since caveman days! We all need to eat and drink water no matter how rich or poor we are ...

I like your study on Christie's and as I have said I believe Sotheby's is broadening its horizons and is also into the emerging markets. They like all US corporations go where the real "wealth" is. Except perhaps Ming Dynasty jade and vases are more popular than Picassos in Hong Kong! I really have not looked into that aspect yet. While betting on the bubble bursting can lead to a good QID profit if you time it right I am gambling that the entire "paper" industry will collapse and we will return to true value which has always been hard assets, things that are tangible and have always retained value. Perhaps the numbers you have published reflect not a bubble but are instead a reflection of the real buying power of global fiat dollars! A testament to "confidence" in hard assets! After all what you are looking for is a "store" of value in order to preserve your wealth. Today not even the banks know what their worth is and its all paper ... stuff that can be worthless in a New York minute or even a Hilo minute! Tangible assets have always had value and that includes art. Making a play on QID is essentially a one time shot. I gambled that the stock price of Enron would collapse and bought put options. Once Enron's price collapsed and I sold I was done with Enron and Enron options. I then had a fist full of fiats that I needed to find another vehicle for. So Enron puts like QID are only short term. Most people who win the lottery take that fiat and buy tangible assets because they know tangible assets will have value for a lifetime and will not expire or go broke! QID is just a means to a tangible asset ... Nick Leeson(Rogue Trader)did a "cut and paste" of a paper document proving Barings Bank was solvent in about an hour! Barings Bank was sold shortly thereafter to ING Bank for $2USD! There's your paper value for you ... The globe is awash in Nick Leeson's and Barings Banks now ... You can't "cut and paste" gold or a house or an apple pie! Gold is tangible and so are houses and so are Picassos and so is food! When humans "fear" they seek security in hard assets not banks full of paper. That has been proven historically time after time like a broken record! In every instance those who held hard assets or titles to hard assets survived financial calamity ...

MikeNYC ... Does anyone really think Chavez and Bush care about the truth or are they more interested in public perceptions and furthering their own agendas? Raising taxes will be done globally not just in Venezuela. Desperate governments do desperate things and "nationalizing" is on their list. In essence if KRY cannot pay their 30% tax or are late paying then the Venezuelan government owns them. One way or another its still "nationalizing" whether directly taking a company or by charging high tax rates!

GOVERNMENT IS ONLY AS HONEST AS ITS MONEY!!

Right now I trust no government on Earth ...