Cara’s Commentary & Community Chat, Friday, Aug. 28, 2009

[7:57am ET] The most important aspect of putting capital at risk is risk management. Today, regardless of price pumping in the equity market, the capital market is not stable, which brings us back to our first rule:

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  1. Bull Hunter(118083 comments)-
    August 28, 2009 at 12:23 pm

    Good morning.

    BA – PT Raised from $52 to $60 @ Jefferies & Co. Buy

    POT – Downgraded to Neutral @ UBS

  2. mSquare(118083 comments)-
    August 28, 2009 at 12:49 pm

    WAG (Walgreen) a Cara favorite since long, has been up far quicker than the market past few weeks. From the chart it looks ‘toppy’.

    I own shares from long ago and considering selling Oct $32.50/$34 Calls to protect downside.

    Would welcome opinions…

    This is a repost from yesterday as by the time this post went past moderators and was published, it was well over a few hours and with markets closed.

    • Craig(118083 comments)-
      August 28, 2009 at 1:02 pm

      Technically that WAG chart is trending and breaking to new highs. If you are feeling whoozy perhaps move up your stops and take partial profits, but if it were me I’d leave some on the table to run and let the market and my stops take me out. Who’s to say it won’t keep going? But the chart itself doesn’t appear to be rolling over.

      Edit: $32 is the new support.

  3. Bull Hunter(118083 comments)-
    August 28, 2009 at 12:58 pm

    VIP – PT Raised from $9 to $18.30 @ Credit Suisse. Neutral

  4. bsi87(118083 comments)-
    August 28, 2009 at 12:58 pm

    trailing buy stops on the above.

    Do your own homework.

    • bsi87(118083 comments)-
      August 28, 2009 at 2:49 pm

      long WTU at 2.896
      long TZA at 13.65
      long REW at 29.86

      sold DRYS at 6.43, 6 cents above pre market.
      had bought it yesterday at 5.70.

      Taking Bill’s message to heart, profits don’t last long in this market and one should trade what he sees, not what he believes.

      • Craig(118083 comments)-
        August 28, 2009 at 2:55 pm

        “Taking Bill’s message to heart, profits don’t last long in this market and one should trade what he sees, not what he believes.”

        Truly…no country for old investors….you gotta be a trader. Smoke em’ when you got em’.

  5. Ron Sen(118083 comments)-
    August 28, 2009 at 1:07 pm

    Thanks to the community for good discussion/feedback on Mr. Practical.

    Today it’s “data ex-data”, reminiscent of Barry Ritholtz’s term “inflation ex-inflation”.

    Consumer spending is UP*, as long as you emphasize cash for clunkers (CFC). Ex-CFC, it is down, as the new frugality/retrenchment prevails.

    In a deleveraging environment, adequate liquidity and debt reduction are the ‘appropriate’ response.

    • TN_blogger(118083 comments)-
      August 28, 2009 at 3:44 pm

      It is looking bad for the consumer for sure. Media is all too eager to lead us down this worn path of “it is all over”.

      However, consider the possibility of a business led capital spending cycle. What would that entail? Would it, could it bring some visibility to the equation?

      Just a nice thought…out of the box, so it has no protection and is fragile! Also however we need to temper this thought with the RSI values evident.

      • Grym(118083 comments)-
        August 28, 2009 at 5:57 pm


        Sure a business led capital spending cycle would change things, but with the consumer having been 70% of GDP and jobs still evaporating, houses increasingly being sold at a loss or simply walked away from why would business be spending?

        I think most CEOs know we are in for a long slog.

  6. Bull Hunter(118083 comments)-
    August 28, 2009 at 1:12 pm

    DELL – PT Raised from $13 to $17 @ Caris & Co. Average

    DIS – Stifel Nicolaus Initiates Coverage with a Hold.

  7. Craig(118083 comments)-
    August 28, 2009 at 1:24 pm

    When I first found Bill Cara dot com there was this guy, 2nd Avenue, I was captivated by his trading style and his posts and was immediately attracted to him as a person. I read all his posts and tried to learn as much from him as I could, because his inner sentiment indicator was something to behold. He rushed into burning equities when they scared the hell out of me and he preached position sizing when I didn’t have a clue what that meant. He always was kind and had an easy way about him and wanted to help others. What’s not to like about 2nd? I cultivated a friendship with him and exchanged ideas and e-mails and even though I’ve never personally met him, he revealed his real name and I mine to him, and I will endeavor to maintain that connection. I hope he continues to come here and post about his experiences, his successes which I know will be many, and his family who I don’t know, but I know will be well cared for, looked after and loved. If he doesn’t post here, and it looks like he may not as much as he will be a busy guy, I will miss that a lot and this blog will change. It won’t be the same, but I will take the years of contact, learning and experience onward and use what I learned from him in my daily life, and I hope he got as much from the experience as I did. It has been a lot of fun.

    Since we can no longer make it, girl,
    I found a new place to live my life.
    It’s really no place at all,
    Just a hole in the wall, you see.
    It’s cold and dusty but I let it be,
    Livin’ here without you,
    On Second Avenue.
    And since our stars took different paths,
    I guess I won’t be shavin’ in your looking glass.
    Guess my old friendly grin,
    Must have started to dim, somehow,
    And I certainly don’t need it now,
    Still, I keep smiling through,
    On Second Avenue.
    I can still see you standing
    There on the third-floor landing.
    The day you visited we hardly said a word.
    Outside it was rainin’,
    You said you couldn’t be stayin,
    And you went back to your flowers and your birds.
    Since we can no longer see the light
    The way we did when we kissed that night,
    Then all the things that we felt,
    Must eventually melt and fade,
    Like the frost on my window pane
    Where I wrote, “I Am You,”
    On Second Avenue.

    • Bull Hunter(118083 comments)-
      August 28, 2009 at 2:18 pm


      The first few sentences of your post took the words right out of my mouth.

      When I first found this place, I just lurked around for a few weeks, but there was this poster, 2nd Ave., who seemed like a friendly, knowledgeable and approachable person, and I started asking him questions.

      He made me feel welcome here.

      I wish 2nd all the best and hope that he checks in from time to time.


  8. Les(118083 comments)-
    August 28, 2009 at 1:25 pm

    I think it was Meredith Whitney who was calling GS a buy around the time it we had the volume spike there in July. Correct me if I’m wrong. My guess was distribution.

    These annotations were made at GS’s first retreat from resistance, which is clearly marked, and low and behold one month later it doesn’t look like its going any higher. Stoch is maxed out yet MACDh has yet to turn positive. Wouldn’t be surprised by a small positive movement before turning over again.

    On the second chart – NYA while its clear the NYSE composite is advancing as seen in the chart the underlying indicators are getting weaker. Advance decline issues show a flat top despite rising chart, what appears to be a high/low indicator on the bottom is weakening. I don’t know this chart very well, so if anyone can help clarify anything I might of misinterpreted, tis appreciated.

    I’m guessing the second chart is tied to musical chairs and rotating sectors. And probably the massive volume speculating in AIG and the other weaklings like C. Makes market go up, but doesn’t hide underlying weakness. It can be of course just the pause that refreshes. But Bill as we know is warning us to be on our toes.

    Not a recommendation etc etc.

  9. Luggie(118083 comments)-
    August 28, 2009 at 1:29 pm
  10. shark_attack(118083 comments)-
    August 28, 2009 at 1:29 pm

    check it out long today

  11. Les(118083 comments)-
    August 28, 2009 at 1:41 pm

    highlight your respective ticker and click on market depth in the options bar, found next to booktrader in my account.

  12. shark_attack(118083 comments)-
    August 28, 2009 at 1:48 pm

    friday morning action…..sideliners buy out of a sense of having missed the action and Teamonfuego sells ABK to them:)

  13. shark_attack(118083 comments)-
    August 28, 2009 at 1:50 pm

    I remember when I first got here stocks were gapping down dramatically on the open, and 2nd was buying the lows for quick daytrades. He was an inspiration to me too.

    I hope you’re just taking a break not disappearing.

  14. Les(118083 comments)-
    August 28, 2009 at 1:58 pm
  15. Bull Hunter(118083 comments)-
    August 28, 2009 at 2:02 pm

    BA – estimates lowered at Goldman. BA 2009 estimate was cut to $2.35 a share. Company is facing a non-cash charge for the re-classification of R&D costs. Neutral rating and $52 price target.

    BMY – Downgraded at Morgan Stanley from Overweight to Equal Weight solely on valuation, fundamentals remain intact. 2010 and 2011 EPS estimates set at $2.15 and $2.36, respectively. Maintain $23 price target.

    DELL – target boosted at Citigroup to $18. Company is seeing improving demand, along with the PC upgrade cycle. Buy rating.

    DELL – numbers increased at Barclays to $15 from $10 on positive stability and margins. 2010 and 2011 EPS estimates boosted to $0.89 from $0.85 and to $1.09 from $1.05, respectively. Reiterate Equal Weight rating.

  16. Chickenpookie(118083 comments)-
    August 28, 2009 at 2:03 pm

    “I say that because in any financial system, there must be checks and balances to assure that assets stay in balance with liabilities, and the Government and the Fed have been failing to do that. At the rate its going, the US Dollar ($USD) could go to 60 cents, 50 cents, and lower.”

    If this were the case, as I happen to believe it may be, $USD cash and/or US Treasuries wouldn’t be the best place to be. So if you’re not in the market, are you in cash?

    • allengg(118083 comments)-
      August 28, 2009 at 2:08 pm

      Then the question should be: which currency ?

      • Chickenpookie(118083 comments)-
        August 28, 2009 at 2:32 pm

        “Then the question should be: which currency ?”

        Correct! And if California doesn’t have enough water to flush the commodes in LA, they should add another 20ft to the Shasta Dam spillway.

        Don’t ya just gotta love a low-tech solution for a high-tech problem?

        • allengg(118083 comments)-
          August 28, 2009 at 3:02 pm

          Ah, chickenpookie, what a wonderful over simplification.

          Which currency ? rubles gold, diamonds, Euros, Irish punt,
          which will hold value ?

          Strangely, the MXN $ (peso) has held up, and this country is stable (for once)

          But currency should be a liquid asset, and we have relied on the US$ for many years.
          Did you know that the MXN$ as currency was the North American standard many years ago.
          The BritishPound was the currency of choice around 1900.

          Yet the doomsayers here predict a real drop in the US$ as currency.
          So, which currency to weather the storm ?

          • Chickenpookie(118083 comments)-
            August 28, 2009 at 3:16 pm

            allengg – Well, maybe we don’t need an alternative currency if we believe the market is overbought… It’s one or the other, right? How could it be both?

            Or, we could again look overseas at Hong Kong (EWH), Turkey (TUR) or Brazil (EWZ)?

          • allengg(118083 comments)-
            August 28, 2009 at 3:33 pm

            Ah so, the HK$ perhaps the most viable currency of all.

          • Chickenpookie(118083 comments)-
            August 28, 2009 at 4:10 pm

            “the HK$ perhaps the most viable currency of all.”

            I couldn’t say, no feeling on the subject except that the emerging market rallies have far exceed the US rally while the USD has been in decline… If the situation were to reverse, I’d expect to observe a near repeat of last year.

            My conclusion is this won’t happen, I believe from a global perspective, markets are still on the mend (IOO has just broken out of it’s wedge).

          • Dr. Strangelove(118083 comments)-
            August 28, 2009 at 4:58 pm

            allengg –

            Great question regarding which currency. I’m asking myself the same thing. Bill has suggested interest in trading DBV after the G20 meeting around Sept 25. Wait and see if these nations will restructure USD trade.

            I like BZF, an ETF focused on the Brazilian ‘Real’ which is not pegged to USD like Asian currencies.

            May switch to Interactive Brokers to get my USD demoninated in other currencies as an even better fix than currency ETFs.

            Kaimu trades SLR and SRL with great success on the ASX. I like that strategy.

            Jim Rogers very recently says he likes the Yen but didn’t elaborate.

            I guess the big question is how long can the Congress and Fed keep up the reflation (quantitative easing) to hold the USD around 78? Tomorrow? 3 months? 1 year? A decade? I believe the regionals and community banks will start to fold in droves this year and the confidence game could end in dramatic fashion. That gives me a sense of urgency to make a move out of USD. My only hedge against long-term USD decline is 19% of liquid assets in physical gold at the Perth Mint. I don’t want to go too much higher in metals and get too concentrated in one play.

            What to do? What to do? Any thoughts would be appreciated.

          • loannetter(118083 comments)-
            August 29, 2009 at 7:31 pm

            “Which bank?” Used to be a theme line and now just a reminder that we are all looking over our shoulders to figure out the folding order. Not if but when. The staggering FDIC exposure is hedged to the gills and we (taxpayers still breathing) are the hedgees.

            I am frankly amazed that trust in our currency and banks has persisted this long. My reading of ‘person on the street sentiment’ has certainly changed toward one of suspicion during the last year. What to do indeed!? I consider the AUD based on a resource rich country as well as NZD (more technology there). I am personally biased having ties in both countries.

  17. teamonfuego(118083 comments)-
    August 28, 2009 at 2:03 pm

    bought at 4.45

    Where is 2nd going?

  18. MarkW(118083 comments)-
    August 28, 2009 at 2:07 pm

  19. NYUGrad(118083 comments)-
    August 28, 2009 at 2:11 pm

    Thanks for your comments as I have learned from them.

    I too have 95% of my capital on the sidelines. And I too am beginning to feel the markets are no longer anything close to a prudent place to put one’s hard earned money in any time frame.

    I am however working away debt and rethinking of what to do with my money. I’ll send you a private message so we can keep in touch.

  20. shark_attack(118083 comments)-
    August 28, 2009 at 2:22 pm

    rode fannie

  21. Luggie(118083 comments)-
    August 28, 2009 at 2:36 pm

    Hi All – This one has returned from the dead – here is the latest buzz: The market for micro-turbines is expected to reach $2.4 to $8 billion by 2010, according to the Gas Research Institute with most of this market outside of the United States. Industry leaders anticipate that micro-turbines will generate up to 8% of the additional one million MW of power needed capacity in 2010. Took gains in mid 2008, but kept a position to monitor going forward. Happy Trading

    • teamonfuego(118083 comments)-
      August 28, 2009 at 2:38 pm

      That’s quite a range: $2.4 Billion to $8 Billion.

  22. Bull Hunter(118083 comments)-
    August 28, 2009 at 2:36 pm

    Some investing ideas:

  23. Les(118083 comments)-
    August 28, 2009 at 2:47 pm

    Seems its got earnings release Monday, time unknown. Given the momo play happening now I’m happy to collect green and palm it off to someone else. Given Vad’s dictum concerning risk management and selling into the crowd, which I have little concrete experience with, I thought a bird in the hand…

    Will see if it offers another entry point in the arvo.

    Regardless of its penny stock nature, that was a technical trade for me. Nice to know the daytrading crowd were in there as well turning it into a momentum trade. Didn’t hold back either – 95% of my account all in. I have a lot of clawing back to do.

    Look forward to more of that sort of results in the future.

    Friends for dinner. later.

  24. Bull Hunter(118083 comments)-
    August 28, 2009 at 2:54 pm

    Does anyone care to proffer an opinion on NGD (New Gold)?

    A few months back, my shares of WGW were converted to shares of NGD.

    If anyone has any insight into NGD, I’d love to read it.


    • Luggie(118083 comments)-
      August 28, 2009 at 4:12 pm

      Hi Bull – I know some of principals being R. Threlkeld from Western & C. Nelson from Mettalica having bought both of these stocks in the past on the strength of these people and their ore finding capabilities. In the trader’s vein though I would always take the gains after riding the horse for a while, but keep a residual position – keeping it in front of you for daily review for possible re-entry on gold or other factors showing weakness. Hate to answer your question having been out of the business for some years now and the “expert” level doesn’t hold here. Happy Trading

    • jock(118083 comments)-
      August 28, 2009 at 7:48 pm

      bullhunter –

      NGD was a 3-way merger between (pre-existing) New Gold, Metallica, Pik Gold, and The key thing about NewGold is that it not only strengthened 3 struggling juniors, but also brought together several of the “big dogs” of Toronto mining finance: Seymour Schulich, Ian Telford, a top fund manager at Sprott was buying and touting it, and have since brought in a star CEO.

      So, they’re well positioned to raise money when they need to. The “buzz” when they were created was that they wanted to grow into being the “next goldcorp”.

      They apparently have a mine in Brazil, which has proven disappointing, and a new flagship mine which has suffered delays. I expect their goals in general have been set back by the crisis. I think also there has been criticism of WGW as to grade and tonnage. The other side of that argument is that it provides them near-term profits and cashflows.

      What I’m writing is all kind of second-hand information from reading, and I haven’t really studied NGD. I’m also NOT an industry insider. But it’s a bit of background.

      Also interesting is that there just AREN’T many mid-tier gold miners. (Some estimate a dozen only.) SO, the concept of NewGold, to become a mid-tier is appealing, as seniors may someday prefer gobbling up one mid-tier with good operations to acquring a gaggle of ungainly juniors who have yet to become well-managed producers.

      SO, the strategy is compelling, but – as is so often the case – the execution is the hard part. That’s my impression.


      • cheapy(118083 comments)-
        August 28, 2009 at 8:24 pm

        The idea behind the WGW merger was that with WGW’s cash and cash flow, that NGD would have enough cash to complete the New Aften mine. The Ampari mine was written off, and doesn’t stand a chance of being a contributor with sub $1000 gold. At $1200, it would be worth running though, IMO.

        IMO, the recent dilution is multiple clues that tell me to avoid the stock as compared to others. If I were to guess, I’d say they are diluting when they thought they’d get the most per share, or because the numbers without that cash aren’t enough to cut it. Either isn’t good in my eyes, shorter term. Maybe longer term gold will zoom or they will get a good return on the money when its spent, I don’t know.

    • kaimu(118083 comments)-
      August 29, 2009 at 12:58 am

      ALOHA !!

      First … in junior mining there is no such thing as an “expert”! HA!! I doubt there is an “expert” at anything in life … The older I get the more I realize its all a sham anyway …

      BH … I was never fond of WGW even before the acquisition. NGD assumed low grades and some hefty debt tied to forward selling at $808USD so those sales are underwater now and they have been underwater for a long time. If I recall correctly it was some 423,000 ounces of Au tied up in that bank deal. A bank deal to finance $101MIL worth of MEGA BARRICK SIZE vehicles to run a mine on 1g/t or less grades. Threlkeld if I am not mistaken is an ex-Barrick exec which provides further stomach churning for me. I am not sure what sort of “expert” you become once you’ve been through the Barrick Mega Management School! Perhaps its their HEDGEBOOK MAXIMUS corporate philosophy … So, I think the WGW aspect of NGD was a poor choice. Peak Gold was a good choice. NGD isn’t profitable yet is it? I see Net Profit at (328%) … That’s not good! So when is the turnaround going to start?

      I can own a profitable ASX company with numerous mines in the pipeline who never funds projects using dilution or banks with a well seasoned management team from the ex WMC group, growing reserves, no debt, no hedge and mining average grades of 5g/t Au(no AU Eq)with some grades at 37g/t, for one fifth the cost of NGD right now. SLR …

      I have dropped off the TSX bandwagon for awhile now and went to the ASX and I tend to focus on companies based in Western Australia due to the extremely mining friendly environment there and my network I have in Perth, right across the spectrum from mining to refining to retail.

      DYODD though … I guess that’s a given!

      • cheapy(118083 comments)-
        August 29, 2009 at 1:19 am

        Re: WGW, it was certainly a bargain the days I was buying back sub $1. The same goes for NGD. Even at sub $2, both were bargains. The problem is that as the price rises, I find it harder and harder to justify holding the shares, and when they start diluting, I read it that mgmt is saying they don’t think its going to go higher or its not worth more, anyway.

        Like Bull Hunter, I had a huge WGW position at the time of the merger, as well as having a huge NGD position at the time. I was able to sell the NGD at good prices, but was trapped with the WGW being untradable for weeks there.

        No position at present.

        • Bull Hunter(118083 comments)-
          August 29, 2009 at 12:55 pm

          Thanks to all of you who responded.

          Looks like it’s time to take profit on this one.

          Have a great weekend.


  25. bsi87(118083 comments)-
    August 28, 2009 at 3:05 pm

    looking these over. ESLR looks interesting. Max pain is 2.50

    • bsi87(118083 comments)-
      August 28, 2009 at 3:10 pm

      one cancels all order on ESLR.

      1.60 limit (gun the sell stop at the recent low?) and

      buy stop 1.69/1.70 limit.

    • TN_blogger(118083 comments)-
      August 28, 2009 at 4:05 pm

      repost missing

  26. rosevillebill(118083 comments)-
    August 28, 2009 at 3:17 pm

    With cheap natural gas, I suspect we will get some good earnings from the utilities in the next reporting period along with a rosy outlook. Might be a good place to park a little cash so as to collect a dividend and perhaps a nice little pop in the stock you buy for next quarter.

    • BillySundance(118083 comments)-
      August 28, 2009 at 4:52 pm


      You might take a look at Calpine, which has the largest fleet of natural gas power plants in the country (also the largest geothermal, but still just a tiny fraction of their total fleet). I think they are in a good position to take advantage of the long-term recovery in natural gas/electricity markets but ultimately I think the recovery process will take a few years.

      Problem with utilities like electric and gas distribution right now is that many utilities are hedged with natural gas purchased (over the last few years) at much higher prices.

      So, I am not sure that cheap gas will necessarily mean easy short-term profits for utilities but I do think that the bottoming out process for natural gas will allow utilities to do much better long-term planning.

      FYI…..I just went long CPN at $12 a moment ago.

      • rosevillebill(118083 comments)-
        August 28, 2009 at 7:29 pm

        Thanks Billy. I remember Calpine from California’a recent spate with outrageous utility increases. I latched onto a little bit of Duke which pays a 6% dividend which was actually increased this last reporting period. I think they’re in line for a bunch of stimulus money in the near future. Wouldn’t mind seeing them selected for a new nuclear project either. It’s been real quite on the nuke front.

  27. photogray(118083 comments)-
    August 28, 2009 at 3:30 pm

    Thanks Les. I have found market depth via IB help index. Will drill deeper over the weekend.
    2nd. I don’t think we’ve ever really”chatted” but I listened. Position size is the easiest to recall but thanks just for putting your reasons and methodology out here. I sure learned your position size lesson, unfortunately it had the name FAZ!
    please keep us involved in your journey.
    peace from North Puget Sound

  28. teamonfuego(118083 comments)-
    August 28, 2009 at 3:46 pm

    sold remainder of my position at $1.86

  29. teamonfuego(118083 comments)-
    August 28, 2009 at 3:47 pm

    bought more at $4.54.

  30. teamonfuego(118083 comments)-
    August 28, 2009 at 4:25 pm

    hopped back in at $1.66, just above what should be support at $1.64.

    • teamonfuego(118083 comments)-
      August 28, 2009 at 7:34 pm

      Sold ABK at $1.77

      • MarkW(118083 comments)-
        August 28, 2009 at 7:50 pm

        Closed ERY, TZA, FAZ for profits.

  31. Vadym Graifer(118083 comments)-
    August 28, 2009 at 4:32 pm

    With all the “market is not a place for a reasonable investing/trading anymore” remarks, I thought I’d chime in and offer my point of view. Hope it initiates a healthy discussion.

    To see where I am coming from, consider that I:
    – have been trading every day (aside of vacations) for the last 13 years,
    – made every trading mistake known to humanity and couple I invented all on my own,
    – recovered from them after 2 years of learning curve and trade for a living ever since,
    – conversed with hundreds if not thousands of traders of all thinkable backgrounds, time frames and approaches.

    Here are some of things I see similar in any market, I’ll list them and you see if they sound familiar.

    1998 – 2000, tech boom, things go higher and higher and higher. Some are happy, making tons of money and talking about “new paradigm”… and some are not, losing their shirt on attempts to short the market, talking about how insane the run-up is, how irrational, predicting demise day after day, talking about manipulation and how impossible it’s become to trade. There are stocks here and there that turn into cult names, and groups of fanboys cheering them up. XYBR is louded as next MSFT, WAVX is predicted to go over 100, analysts say QCOM should go over 1000 when it trades at 700. KTEL goes from 5 to 20 and 30, and “realists” (your faithful was one of them and paid dearly for that) short it, and it proceeds to 80. Some make money trading what’s right in front of them; the rest is discussing how it should not be this way, trading their beliefs and losing money.

    2001 – 2003, tech crash and consequent bear market. Trend reverses, yet permabulls continue buying every new low thinking it’s just a pullback (new paradigm, remember?). Market proceeds lower and lower and lower, and seeing the magnitude of drops, a lot of people start talking about selling being overdone. Now it’s a move down that is considered insanely big. Each new leg down is being blamed on, guess what… manipulation of course. “Market became impossible to trade” is being heard from every corner Optimists average down and lose their shirt. Yesterday’s darlings start disappear altogether – simply go bankrupt, delisted etc. Some lucky names get bought out before the final crash, and its the suitors that get killed now. Quality companies lose their value at unthinkable rate – QCOM is nowhere near 700 anymore, and soon loses even 100; a lot of former highfliers go to lows some call insane (NT, JDSU anyone?). During all this some traders make money trading what’s right in front of them; the rest is discussing how it should not be this way, trading their beliefs and losing money.

    Bull market starts in the spring of 2003. No internet crazies anymore, but hey, there is always a place for “new paradigm”. Market goes higher and higher and higher, and a lot of people say it’s insane, housing is a babble, financials are overblown… and lose their shirt trying to short them.. some are making money… insert the end of the first two paragraphs.

    Housing finally bursts, crash ensues, bear market starts. Market proceeds lower and lower, and attempts to buy each new low become common and lead to new bursts of frustration and refrain of “insane, manipulation, impossible to trade”. Some are making money… etc

    Market puts a low in March of 2009, and starts making new highs – insane new highs, of course… you can finish this part now without me typing it all.

    See some things repeating themselves over and over again? Patterns in who makes money and who doesn’t? Patterns in language, in assigning the blame, in finding another scapegoat (day traders in tech boom, “frequent traders” now), in invoking all-encompassing word “manipulation” that makes some feel better but still doesn’t help them make money? Patterns in going against the trend, effectively fighting the market instead of being in tune with it? Patterns in trading ones own beliefs instead of market’s reality given us in prints on the tape? Patterns in thinking “if something doesn’t go according to my belief, it’s the market that is wrong but never I”?

    Just something to ponder and discuss.

    • allengg(118083 comments)-
      August 28, 2009 at 4:49 pm

      thank you Vad, you put the problem in concise terms.

      “how it should not be this way, trading their beliefs and losing money.”

      ……… we all trade on our beliefs ?
      and as Bill Cara says “follow the trends”, and when I go the opposite way, money follows.

      apologies to Bill for my shortcuts.

    • Les(118083 comments)-
      August 28, 2009 at 4:56 pm

      That’s what I want to hear Vad. The markets being a reflection of all our hopes, fears and insane dreams – don’t forget conspiracy stories, I love them:) I’ll be there trying to go with the trend in the process. I’ve certainly given up trying to short until the fat lady sings. (hope that’s not too offensive loannetter :p)

      My only hope is that Washington and Wall St. haven’t pushed their luck too far this time and the whole thing collapses.

      At the same time, I would welcome this change, albeit not the social conflict that would accompany this change.

      • Grym(118083 comments)-
        August 28, 2009 at 6:13 pm
      • loannetter(118083 comments)-
        August 29, 2009 at 6:53 pm

        Les, We are all shapes and sizes and colors and ages here… Vive la differance!

    • Chickenpookie(118083 comments)-
      August 28, 2009 at 5:01 pm

      The voice of experience rings loud and clear, thank you Vad!

    • Craig(118083 comments)-
      August 28, 2009 at 5:20 pm

      Thank you Vad. This is in light of your trading style, which fits these markets nicely. I am taking to it and worked out a system that is working for me.

      I think people try to out think the market, guess direction, get ahead/enter early, and then take losses and get discouraged. At least the happened to me…a lot.

      Now I’m purely technical. I find strong trending charts in strong sectors and trade using a 1 minute hourly chart. Simple chart, bars, volume, rsi. No level two, candles, etc etc. Too much to watch and it slows me down.
      Pretty simple, buy low rsi and start of green volume, sell strong RSI and start of red volume. A better trader could short the pullbacks. I’ve been doing this for a while and I make money. This system allows me to cut losses short right away, wait for a better entry. Just trade what you see, trying to be early or out guess the market causes losses and destroys confidence. Daytrading/scalping takes profits quickly, keeps risk under control, you live to trade another day/another minute.

      I do put on some swing trades too, but on pull backs on the same strong trending charts/sectors, and with relatively tight stops. As they hit first resistance I take half profits and tighten stops to allow for no loss and then let them run and if they pullback the market takes me out. The only risk is possible gaps down, but those can be avoided by proper first profits at resistance.

      I’ve completely given up trying clairvoyance. It is painful.

      Edit: I think the reason 2nd got discouraged was his trading style was contrarian, which is a killer method in strong trending markets, but in a sideways environment it can be discouraging. I sent him a few charts on a few equities I am trading and all of them have been up nicely, but we each have our own styles and sometimes you have to sit out if your style doesn’t fit the type of markets we have or if you are uncomfortable using another style of trading. IMO, investing, at least for now, is dead. Trade or lose is the new paradigm.

      • Vadym Graifer(118083 comments)-
        August 28, 2009 at 5:28 pm

        Music to my ears Craig. Beautiful robust approach. Depending on the market conditions, you may change some particular details of it in the future, but the philosophical foundation will remain the same. Trade what you see, not what you think – ever since I realized it frustration became thing of the past.

    • Telestar3d(118083 comments)-
      August 28, 2009 at 6:33 pm

      Vad writes: “Some make money trading what’s right in front of them; the rest is discussing how it should not be this way, trading their beliefs and losing money.” A very succinct statement!

      The market always tells you what to do aka, Trade what you see, not what you think. The problem is and what needs to be overcome is that we humans have biases (I’m working on it).

      Like Craig, when I stopped trading rock (down trending stocks going long) and started trading strong stocks in strong sectors my/your results seem to just naturally improve.

      Still, our human bias is what we need to remove and is what I think Vad’s point is. The first step to change is an awareness of the need to change.

    • White north(118083 comments)-
      August 28, 2009 at 8:16 pm

      Thanks Vad, it’s great insight for a rookie like me and puts things in perspective.

  32. FranSix(118083 comments)-
    August 28, 2009 at 4:36 pm
    • Luggie(118083 comments)-
      August 28, 2009 at 5:16 pm

      Hi Fran – Those guys are going about it all wrong. You gots to get the moss around the cut banks – and then pound out the mud and gunk from the moss — easy pickings since the gold is attached electrochemically to the carbon in the decaying moss banks. Happy Panning

    • Chickenpookie(118083 comments)-
      August 28, 2009 at 5:20 pm

      Ahh yes, speculators prospecting. There’s got to be a morning after…

      • Luggie(118083 comments)-
        August 28, 2009 at 5:25 pm

        Hi Poke – Suitable name for a panner/moss washer. Just watch out for the rogue waves. Happy Trading

    • cheapy(118083 comments)-
      August 28, 2009 at 8:14 pm

      There’s been better luck playing the panics of the market and buying coins with some of the profits after taxes were paid, IMO, than actually getting a shovel or hose and doing the work.

      Same goes for why the mining companies never seem to make any actual profit…

  33. baz22(118083 comments)-
    August 28, 2009 at 4:40 pm

    back surgery at Duke … uncomfortable, to say the least… good thing is a lot of help from friends and neighbors… all the work on weights and swimming seems like a memory, but know it will pay off… to stubborn not to get back… good too see new additions to the community… just small trades at this point, but starting long spots in select energy grid selects..

    • Chickenpookie(118083 comments)-
      August 29, 2009 at 4:20 am

      baz22 – Welcome back! Hope they didn’t perform a walletechtomy to your posterior region….

  34. Ron Sen(118083 comments)-
    August 28, 2009 at 4:44 pm

    Hi Vad,

    We either elect to participate or not. There’s a room in Washington constantly monitored with a 100 computer screens looking at markets around the world. If you’re not going to ‘intervene’ then why have the room?

    “The difference between intervention and manipulation is communication.” – Todd Harrison

    How do I know about the room? Jeff Saut of Raymond James said he had been in it at the Minyanville conference a few years back.

    All that being said, ‘how’s that gonna make us any money?’ The question should be “how do you get access” or “prevent access” to the information. When Reg FD came in, some very successful managers departed, if you get my drift.

    • Vadym Graifer(118083 comments)-
      August 28, 2009 at 4:50 pm

      Hi Ron,

      manipulation is a whole separate topic, and should start with definition, IMO. My point of view, very briefly: if by manipulation we mean ability of any entity to freely “assign” prices – it’s a myth, no one has such ability. If by manipulation we mean management (for the lack of better word) of the information flow to certain ends – of course, it does exist. It, however, is nothing particularly new, or strictly market related, and most importantly – it does not prevent an astute trader from making money. It’s simply another factor to incorporate in trading approach.

  35. M R Ducks(118083 comments)-
    August 28, 2009 at 4:47 pm

    Whether or not he knows what he is talking about, Howard Davidowitz is always fun to listen to.

  36. Ron Sen(118083 comments)-
    August 28, 2009 at 5:04 pm
    • Les(118083 comments)-
      August 28, 2009 at 5:26 pm

      Vad, I think someone is having a go at you! Your legend may have already been born!! From Ron Sen’s URL link:

      “Point being, when your humble editor looks at this market rally from a trading perspective, he does not see a bright-eyed Japanese grandmother puttering around in her garden. Instead he sees a 64-year-old Vladivostok dock worker… an ashen-faced, barrel-chested man with a heaving cough, a clogged aorta, and a mean addiction to Stolichnaya vodka and Sobranie cigarettes.”

      (insert smiley here)


      • Vadym Graifer(118083 comments)-
        August 28, 2009 at 5:32 pm

        LOL… nah, Ron wouldn’t do that to me… Ron?? 🙂

        (btw, cigarettes of choice for that layer of society was called Priema)

  37. David(118083 comments)-
    August 28, 2009 at 5:46 pm

    at $2.48, increasing my position by about 1/7. The recent drop in NG is scary… I am glad that it is not some stock, where the management might have pulled a “fast one” on the shareholders, who will see the stock go down to 0. The lower NG falls, the greater will be the ultimate percentage gain when it returns to the production cost of $6-$7. If it weren’t for the contango eating it up the NG ETFs, it would be a fool-proof trade now…

    • Freedom57(118083 comments)-
      August 28, 2009 at 6:56 pm

      Here’s a little more info (some of which I know you have) to consider in your scale-in plan. I recognize your methodology, entering with small “bite size” purchases, anticipating the possibility of further price drop. It’s one I have used for years.

      Today Henry Hub spot price dropped to $2.52; yesterday it was $2.76. Most retail investors don’t watch spot, but it is important. Here’s a site where you can see the spot at various NG hubs in the US, ICE (Intercontinental Exchange) data: does its roll to next month futures on the 7th (25%), 8th (25%) and 9th (50%) business day of the month. It should start the roll to Nov futures on Thursday, Sept. 10, because Sept. 7 is a non-business day (Labour Day in Canada). That’s less than two weeks from now. The last day of the roll should be Monday, Sept. 14, which is also the first day of the UNG roll. That should be an interesting period to watch because the imbedded value destruction due to contango is likely to be immense on that roll.

      Here are some recent futures quotes:
      Oct – $3.06
      Nov – $4.07
      Dec – $4.92

      This is a HUGE contango. Spot price has to rise significantly, and/or contango has to collapse, just to break even on at present prices (long term — over next 4-8 weeks :).

      One caller to BNN today stated he bought at $5 and at that time it was 50% of his portfolio. Bill Carrigan was diplomatic, but he should have told the guy that the probability of seeing at $5 again will not occur until the next share consolidation. Several other callers were interested in purchasing HNU but clearly had limited knowledge of what they would be buying. This will end badly for many people.

      I have made money, and lost money on this one several times, but at the present I just don’t see a probability of long term price gains. Like they say, “You can’t get there from here.” Maybe next year. But that’s what makes a market; many people don’t share my views and they might be right.

      Still short UNG. I’d be short a lot more, but I have no clue how they are going to resolve their unit structure, and it may be something I never contemplated.

      • SiO2(118083 comments)-
        August 28, 2009 at 7:23 pm

        Bravo F57. People here keep posting about buying UNG and HNU on whatever technicality they use, like they were buying FAS/FAZ a few months ago. Those two are things to stay away like the plague, but I have repeated myself too many times. What else can you do. Then a few have an eventual win at and the cycle continues.

        It should be noted that the contango price effect (i.e., destruction) does not happen at rollover, that’s just the number of contracts owned that drops. The destruction happens gradually on a daily basis. In other words, from today to Nov, were prices to remain as is, that’s a gradual drop of 38%…

        I have also mentioned to keep an eye on for a possible preview to see what happens when storage overflows. 1 month or 3 month chart of are eye openers. Today’s it’s down another 5% (and that’s a 1X ETF).

      • David(118083 comments)-
        August 29, 2009 at 8:15 am
  38. Bev(118083 comments)-
    August 28, 2009 at 6:01 pm

    Years ago Sprint gave me a prepaid phone card. I have about $16-13 left on it. It expires Aug 31, 2009.
    If anyone wants to use it to make a call here it is…

    To place a call, dial: 1-800-611-2431
    Card number:765-241-2662-034

    • kaimu(118083 comments)-
      August 29, 2009 at 12:25 am

      ALOHA !!

      Very cool Bev … Another act of kindness from the Caraista community!

  39. Fazeli(118083 comments)-
    August 28, 2009 at 6:16 pm

    I use to be quite active on the old site but life got in the way of the markets over the past 2 years. Still, one of the reasons I keep coming back here (other than Bill) is to read the posts of 2nd_ave, Craig, bsi87, Bull Hunter, David, Kaimu, Chickenpookie, Les, Vadym, and shark_attack. There are others, but I think I’ve learned more from this group of people than from most books and articles I’ve read about finance.

    There used to be MarkM. That seems like a long time ago now and I haven’t seen anything from him from my brief stints on the site. I’m sad to see 2nd_ave leave, though I wish him well with the software marketing endeavors (amongst others)!

    Thanks for the indirect day trading lessons…

  40. teamonfuego(118083 comments)-
    August 28, 2009 at 6:49 pm

    Gotta get that 9th day in a row of gains, right?

    • MarkW(118083 comments)-
      August 28, 2009 at 6:56 pm

      TOF- I’d agree if it wasn’t Friday. But I’m short and hoping for a little more at the close. 8 day history is against me though.

      • teamonfuego(118083 comments)-
        August 28, 2009 at 7:05 pm

        Yeah, maybe our long/short biases are getting in our way 🙂

        One thing I have noticed today is that the regional banks have remained strong despite a weak tape. Look at RF, ZION, HBAN…very solid strength in those names. I like HBAN the most out of those primarily because in terms of the technicals it has been flatlining and consolidating gains for several months now and has just started showing higher lows and higher highs. I also think they are well enough capitalized to survive this down cycle. I think the regional banks could make a lot of people a lot of money in 5 years.

  41. TN_blogger(118083 comments)-
    August 28, 2009 at 6:57 pm

    Notice his resoluteness… awesome!

  42. TN_blogger(118083 comments)-
    August 28, 2009 at 7:07 pm

    • johnuk(118083 comments)-
      August 28, 2009 at 7:30 pm
    • jock(118083 comments)-
      August 28, 2009 at 8:00 pm

      Let’s all go buy some brand new derivatives! Sounds like Geithner will bail us out if there’s a problem …

  43. Chickenpookie(118083 comments)-
    August 28, 2009 at 7:23 pm

    The total currently reported stands at $792B of the planned $1.25T

  44. Chickenpookie(118083 comments)-
    August 28, 2009 at 7:40 pm

    Craig – How far is this HIG rally going to go?

    • Craig(118083 comments)-
      August 28, 2009 at 8:46 pm

      Technically HIG runs into some resistance at $25.62 which is my take half profit target. There is sure to be a few trapped at that level and above that will want their $$$ back and will sell, but if/when it breaks through the overhead at about 33.40 or so it can run to 51.14 before the next resistance. The 52 week high is 72.29.

      Guy Adami from CNBC’s slow money said to sell it $4 ago…. I’m glad I don’t watch CNBC anymore! It’s also a pretty good day trade, so I’ve been trading it along the way in addition to a core position.

      • teamonfuego(118083 comments)-
        August 28, 2009 at 9:05 pm

        For what its worth I believe that he said sell at $23.

        • Chickenpookie(118083 comments)-
          August 28, 2009 at 10:17 pm

          Thanks for all the feedback on HIG, I’ma gonna watch it.

        • Craig(118083 comments)-
          August 28, 2009 at 11:19 pm

          “For what its worth I believe that he said sell at $23.”

          LOL! I wasn’t watching! I read it on the web site ( I think from the Street dot com) the day after he made the recommendation and it didn’t provide the target, but I made a butt load on it that day.

          I have no idea why he would say sell at $23. Technically at $23 it has $2.50 more in it before it hits any overhead. It had a decent long base and broke out/crossed the 200 dma at $13.40 where I wish I had seen it. Such is life!

          I’m just planning the trade and trading my plan with stops and a little day trading on the way. I can’t lose money at this point so no worries.

          XL has a steeper trend and went to 17.44 intraday today. I shared HIG with Dave Landry and he shared XL with me. Dave is on the higher highs beget higher highs bandwagon….hard to argue, we keep going higher.

  45. Luggie(118083 comments)-
    August 28, 2009 at 7:56 pm

    Hi All – Took a flyer on these today with entry level positions. Good addresses, great geologic enviornment, competent management and funds to move projects along for the time being. Happy Trading

  46. NYUGrad(118083 comments)-
    August 28, 2009 at 7:57 pm

    30% of last weeks entire trading vol came from 5 stocks

    If the govt in conjunction with hb&b want to keep the QE going and need to launder tax payer money to keep prices inflated, why not launder it to these 5 stocks above?

    Unless you believe mom and pop are causing those volumes through their broker/discount brokers.

    • Chickenpookie(118083 comments)-
      August 28, 2009 at 8:04 pm

      “C, AIG, CIT, FRE, FNM”

      Could it be these firms (granted, they ARE being propped up) are actually healing? Don’t they do business on a global basis and global markets certainly seem to be out of the gate and around the first bend?

      Are they moving their bad assets onto the FED’s balance sheet?

      Just trying to consider parts of the larger picture…

      • NYUGrad(118083 comments)-
        August 28, 2009 at 8:10 pm

        There have been no changes in leadership, no macro changes in the reasons they all plummeted in the 1st place, and no changes in earnings power at any of these companies.

        The last thing i will say on this matter is the govt and hb&b are about to pull the plug on free money. They cannot have the dollar go to zero. China has not even been buying the short term bonds in the past few rounds, after they already abandoned the long term paper.

        • davefairtex(118083 comments)-
          August 28, 2009 at 8:28 pm

          We’ve had a bunch of discussions about declining bank assets, ongoing lies about what they are worth, the regulators pretending all is well, and as a result the bankers get huge bonuses for a job well done. None of that has changed.

          I would be curious to know what the Fed is paying for those MBS it is buying. I guess if the Treasury couldn’t do it, the Fed felt it had to. Of course now our currency is backed by toxic waste debt instead of treasuries….gah. All of this just makes me upset. I don’t want to think about it.

      • Grym(118083 comments)-
        August 28, 2009 at 8:14 pm
        • cheapy(118083 comments)-
          August 28, 2009 at 8:28 pm

          yup, just print up some more good iou’s to hand out in replacement of the bad ones.

          taxpayer = the duped

        • Chickenpookie(118083 comments)-
          August 28, 2009 at 9:17 pm

          Grym – For the sake of curiosity, take a look at what I’ll call the bigger picture:

          Australia (EWA), Hong Kong (EWH), Turkey (TUR), Brazil (EWZ), Emerging markets (EEM), Global 100 (IOO), etc. Compare these to the $USD and the S&P. End of story?

          I question the notion that this global activity is all pump and my belief is if you’ve been sitting in cash ($USD), you’ve missed an important segment of the global economic recovery…

          • Grym(118083 comments)-
            August 28, 2009 at 11:43 pm
    • Lori Smyth(118083 comments)-
      August 28, 2009 at 8:49 pm

      I read an interesting statistic that 70% of stocks that go bankrupt double in value before they do. Caveat emptor

  47. cheapy(118083 comments)-
    August 28, 2009 at 8:27 pm

    Sorry, Bill, I think they will print as much debt as needed to maintain the illusion of their solvency, and it will be years down the road before the duped see their plight.

    I’m 75% metal, and 95% of the rest in cash, USD, I’m afraid.

  48. cheapy(118083 comments)-
    August 28, 2009 at 8:58 pm

    That says they want to keep a lid on it at $975 max, I guess, if they were shorting at $960

  49. lessmore(118083 comments)-
    August 28, 2009 at 9:42 pm

    134.58M shares outstanding. 130.53M traded today. At the end of the day some people must end up owners.

  50. teamonfuego(118083 comments)-
    August 28, 2009 at 10:19 pm

    Everyone says it but how many people do it? Starting late last year I decided that in order for me to make any profits in this market I needed to become more short term thinking in nature. That means never falling in love with any investment thesis and being open minded about both sides of an argument. While I could have stuck with a few of my investments (notably XL Capital when I bought it at $4 or USB and WFC when I bought them both at $9) and made significant money holding them longer term, it turns out that I have done even better by staying very short term in nature. I don’t trust the government and I don’t trust banks. I don’t trust phony money managers pumping up their holdings, nor do I trust financial web sites whose sole source of revenue is advertising from financial institutions. What I do trust is the volatility of these markets and the charts and that is far more important to me than believing in a story someone is telling me or some times even economic data that someone is spinning a web of lies about. My mantra is to gauge people’s sentiment and develop a story surrounding industries or companies, then look at the charts for particular buy/sell points that make sense from a risk/reward perspective. The only time I listen to people on CNBC or other shows is to gauge sentiment.

    • teamonfuego(118083 comments)-
      August 28, 2009 at 10:22 pm

      Case in point regarding sentiment gauging on CNBC: I remember vividly them having some trader on the show on I believe March 6th talking about how he and his team wrote down a list of any potential positives that could move the market higher and they couldn’t come up with one single positive. He said he was shorting this thing as a result. I remember thinking to myself that that was about as negative as you could get and that things might actually turn then.

      • TN_blogger(118083 comments)-
        August 28, 2009 at 10:28 pm

        sentiment analysis, isn’t it a wonderful thing? Do you know any CNBC jokes? My favorite is about bumpkin Bill Griffith…he certainly puts on a good show. The joke is something, something and then “for a thrill, go see Bill”

      • Vadym Graifer(118083 comments)-
        August 28, 2009 at 10:29 pm

        You pretty much described the gist of the “trade what you see” approach. Using the expressed sentiment as a backdrop against which to verify your read of the tape and deriving the entry signals from the divergence is a very powerful technique.

        If for some reason I don’t make CTAB conference, you are giving the lecture.

    • Lori Smyth(118083 comments)-
      August 28, 2009 at 10:45 pm

      TOF & Vad – you are both men whom all who follow this blog should pay attention to IMHO – charts don’t lie – can’t say that for governments, banks, chat rooms or talking heads on tout tv. Kudos to both of you for your no nonsense, common sense approach to trading. Thanx for sharing 🙂 Your thoughts are refreshing

      • Freedom57(118083 comments)-
        August 28, 2009 at 11:41 pm

        Lori, re: “charts don’t lie”

        Sometimes they do.

        People who have traded the old Vancouver Stock Exchange for any length of time will know promoters who could deliver the precise stock price, range, and volume (wash trading, painting the tape) that they needed to encourage the public to buy or sell (“shaking out the puppies”). After you get to know the promoters and their individual styles, you trade the promoters’ patterns, not the stock.

        While it must be more difficult to achieve, I see some of the same patterns on the bigger exchanges. Of course the Big Board promoters have CNBC to do their shill work.

        Since it’s quiet time on this board, I’ll share an anecdote. About 1995 when I was just getting into computerized trading (hand drawn charts, phone broker previously) I spotted a small, thinly traded VSE mining company that held an exploration property in a war-torn part of Africa. It was being held “in the box” between .41 and .49. Almost all the trades done at .41 and .49 were done through a boutique shop that I had never heard of.

        Then I checked the insider reports and, based on daily trades I had tracked, determined it was the CEO who was making those trades. He wasn’t even trying to hide it by using a variety of brokerages, or offshore accounts, etc. So I stole the spread from him. I bid .42 in 5,000 share lots, and sold at .48, same size, repeatedly.

        This went on for some time, and everyone was happy. The CEO had to make sure I got fed at both ends before he got to eat. Then he decided to teach me a lesson. I was holding some shares while I was on vacation in the Rockies with my kids. I checked stock prices daily in the papers and found that for 3 consecutive days 500 shares were traded at .48, and of course I was the seller. Now, that’s only a $240 trade less flat rate $29 commission (the best available to me at the time), making the trade a whole lot less profitable.

        I moved on. But it was fun while it lasted.

        • Lori Smyth(118083 comments)-
          August 29, 2009 at 2:38 am

          Ok, I will admit that manipulation does take place. Your experience was an interesting one. Just finished reading “Reminiscences of a Stock Operator” and know the precise game you were involved in. A good friend of mine insists that on the old Vancouver exchange “a mining stock was a hole in the ground with a liar on top.” 🙂

          • loannetter(118083 comments)-
            August 29, 2009 at 7:26 pm

            I loved “a mining stock was a hole in the ground with a liar on top.”
            So which holes have honest people (what Is the opposite of liar?) on top?!

          • Lori Smyth(118083 comments)-
            August 29, 2009 at 7:47 pm

            Loannetter – that is the million dollar question that all of us wish we had the answer for. Makes me much more cautious and makes me diligent about doing my homework before buying their stock. We all remember the Bre-X story. In Canada, the National Instrument 43-101 (NI 43-101) is a mineral resource classification scheme used for the public disclosure of information relating to mineral properties in Canada. The NI is a strict guideline for how public companies can disclose scientific and technical information about mineral projects on bourses supervised by the Canadian Securities Administrators.

            NI 43-101 is a national instrument for the Standards of Disclosure for Mineral Projects within Canada. The Instrument is a codified set of rules and guidelines for reporting and displaying information related to mineral properties owned by, or explored by, companies which report these results on stock exchanges within Canada. This includes foreign-owned mining entities who trade on stock exchanges overseen by the Canadian Securities Administrators, even if they only trade on Over The Counter (OTC) derivatives or other instrumented securities.
            Most publicly held mineral exploration and mining companies list on the TSX Venture Exchange (TSX-V) or the Toronto Stock Exchange (TSX).

            That being said I believe it is prudent to focus on companies that are cash-rich, with ounces in the ground or very near to production if looking at the junior resource companies. Also, look for situations where controllable risks are mitigated with an experienced management in place and good strategies for cost control and the ability to raise capital should it be required.

          • loannetter(118083 comments)-
            August 29, 2009 at 8:52 pm

            Thanks for the information, Lori!

          • jock(118083 comments)-
            August 30, 2009 at 2:03 am

            Lori –

            you wrote “I believe it is prudent to focus on companies that are cash-rich, with ounces in the ground or very near to production if looking at the junior resource companies. Also, look for situations where controllable risks are mitigated with an experienced management in place and good strategies for cost control and the ability to raise capital should it be required.”

            FWIW, I’m starting to think that the better “project generators” offer a higher risk/reward than the junior trying to fund, develop and JV their “flagship” deposit. Especially, if the project generator in question is agile and does deals early on for royalties on a number of properties. This can mean annuities which fund basic exploration for YEARS. Have a look at Altius or Fronteer, for example.

            I think the largest gains are when a discovery is turned into a project funded by a senior. FWIW

          • Menock(118083 comments)-
            August 30, 2009 at 12:59 am


            If I remember correctly, according to the Toronto Stock Exchange, there are over a thousand mining company stocks listed on the Toronto and Venture exchanges. I find the sector difficult to analyze. There are generally two different types of mines. open pit mines which prove up a big resource of typically not great grade and mine at a great rate, maybe 10,000 tons a day. Many precious metal mines are underground mines working vein systems, working higher grade and at higher cost per ton. Many vein systems are worked while exploration is underway and there may only be a 5 or so years of mine life proved up but a large adjacent claim that will hopefully be proved up as time goes on. Pit mines are more defined in advance.

            Since capital is costly in dilution at today’s share prices, early stage juniors are risky today, I look for projects near production or in early production.

            High grade projects are important not only for high return on capital, but to avoid possible low milling recoveries. All that rock mined has to be ground finer than sandpaper grit to float off the good stuff, and low grades tend to have problems. The cut off grade used to quantify the resource is a tip off for the liar factor of management. What is the ore value per ton of cut off grade, or more importantly the average grade at that cut off?

            Referring to underground mining now:
            If the value is close to $300 per ton I get real interested, but these projects are hard to find. When companies talk about production costs they do not include the cost of digging ramps and such to get to the ore face, these costs are required to be amortized. But they are ongoing and depreciation of about a year is common, so the production cost might be low by a third. Also consider average width of vein, if it is less than 2-3 meters there will be a lot of mine dilution, that means uneconomic rock blasted and milled unavoidably as part of mining, since those stopes and adits have to be big enough to work. Pick up a copy of Mining Explained for the basics from a used book online site, it’s cheap.

            I have begun to look for presentations in the Investor section of mining companies. Why own a company that doesn’t want to build interest in their stock by a well presented case. Whether or not they need a high stock price to raise capital efficiently, they still need to attract investors to benefit the stock price for shareholders.

            I like the Mexico silver mines in historical areas. Some have gold byproduct, some lead/zinc. Many were not worked with modern approaches since the revolution of the twenties and back then work often stopped when hard rock was hit or because of flooding. Costs are low in Mexico, typically no mining camps, workers go home after work, the workforce is experienced. These are mostly Toronto/Venture exchange listed companies.

            I have suggested to friends and family that they consider Precious Metals mutual funds and natural resource funds in the US Global Investors family of funds, Frank Holmes, principal. Bill has commented that Holmes is an OK guy.

            Investing in juniors is a lot of work. I did very well, but the sector was down 73% recently, the worst of any sector and I got hit hard even though I had the brains to mostly get out in July 2007. But I got back in too early, got beat up bad and have felt forced to play catch up in this recent move and the stress is more than I want. If the market tanks the dollar could go up again and the sector get killed again. I’ve been lightening up and scaling into a short position in SPY, still net long.

            If we get a peak oil drilling boom some year in the near future, the price of molybdenum will yield very high ore values. I have owned Roca Mines ROK.v, management might benefit from adult supervision, might be sitting on the mother lode. The bigger play in moly is Thompson Creek, TCM,to and Freeport McMoran, FCX has 2.5 billion pounds of moly in their Colorado mine. Other base metal miners I won’t own in this China government mandated bank lending short term stimulated global economy include, and I like both. has alot of moly byproduct.

            Long Minera Andes,, MNEAF, major shareholder, Chairman and CEO Rob McEwen, chart has not rebounded as many have. Mine in production, all cash flow going to debt to partner for at least a bit over a year, Have recently issued shares to raise money to explore their southern Argentina claim

            Long Gold Resources GORO.ob Idea from this site.

            Long Impact Silver IPT.v, Have working small mill, 3 mines in Mexico with claims covering an area that includes 1200 historical workings. Not doing a 43-101 to eliminate cost of feasibility study and they say they will not dilute, just explore and develop using cash flow. Also mentioned on this site I believe.

            Recently sold Fronteer, FRG, I like their story but took gains recently so I can sleep a little better.

            My thanks to Bill for this excellent blog. The daily comment, trader notes and weekly review are all very valuable.


  51. Lori Smyth(118083 comments)-
    August 28, 2009 at 10:37 pm
  52. dberryclan(118083 comments)-
    August 28, 2009 at 11:25 pm

    Read that insider selling is at high not seen since fall 2007…..what will the fall bring?

  53. bobbyo(118083 comments)-
    August 29, 2009 at 2:56 am

    Why is everyone eulogizing 2nd. What happened? The last post i remember from him is the 96% draw down. Was that for real? I thought that was just a hypothetical scenario. You guys got me worried. Really what is going on.

    • MarkW(118083 comments)-
      August 29, 2009 at 3:07 am

      Bob- 2nd’s post yesterday…

      Trading outpost/ Trading out post
      Submitted by 2nd_ave (3529 comments) on Thu, 08/27/2009 – 22:19 #43622

      This definition of outpost courtesy of Merriam-Webser: “an outlying or frontier settlement.”

      When’s the last time anyone has used the term ‘investing?’ No one here is investing, right? Everyone is trading. I spent part of the day watching the AIG short squeeze. Every bit as exciting (and then every bit as dull) as watching dice rolls. This market is no place for civilized investors.

      I’ll be diverting my attention to other projects for now:

      (a) I’ve been working with two partners on marketing a software product one of them has developed. He has existing accounts, so technically we’ll be helping him expand his customer base and market share. You could call it Three Guys and a Baby.

      (b) Opening a self-directed IRA, which will likely be used for real estate investments.

      (c) Readjusting to life without a 24/7 focus on the markets.

      So you could say, having hit the trading outpost, this is my trading out post.

      To everything there is a season. Keep you posted on my research into custodial IRAs and income property investment.

  54. RUATR8R(118083 comments)-
    August 29, 2009 at 3:53 am

    With all of this talk, the dollar will EVENTUALLY move lower. There is no reason for it to remain strong. However, there are a lot of Americans and others who don’t have any clue of the dollar’s daily strength/weakness. If the equity markets sell off in the Fall then there may be a spike of dollar strength since the selling of equities equals an increased demand for dollars. Sell the USD into strength at that time by purchasing other currencies, commodities, gold, assets, etc. This talk about dollar collapse may continue for a while. And, like the U.S. equities market, it may also have 9 lives. As far as a U.S. recovery, it is all smoke and mirrors. Global recovery is beginning but may stall as the U.S. continues to deteriorate.

    For people who don’t trade the forex markets daily, there is a bank that offers foreign currency CD’s and currency access accounts. I’m 20% in foreign cash with them. All currencies are fiat. Therefore, there are none that are completely risk-free. There are countries that have a stronger balance of payments:
    One needs to look at the country in much the same way company stock is valued. Does the country have natural resources, trade surpluses, fiscal surpluses, foreign investment, etc? Personally, I am holding Canadian dollar, Swiss franc, Norwegian Krone, Brazilian Real, Chinese Yuan/Renminbi, and the Euro. There are others such as Australian dollar, New Zealand dollar, and Japanese Yen. For someone exploring currencies, I like Chuck Butler to start: and the bank I was mentioning is

    Holding currency alone is very conservative. Right now I want to preserve capital. I have not yet ventured into the ASX like Kaimu. The best way to go long-term will be holding foreign assets denominated in foreign currency. So, trading on the ASX is my near-term goal.

    The USDX was down to 72 over a year ago. It is at 78 as of today. I’m always concerned there may be a dollar death spiral. But, with the Washington jugglers in action, they may be able to keep the balls in the air for a while longer with help from HB&B. If given a choice between the dollar and U.S. equities, I’ll take equities any day. If you’re really smart then you’ll get out altogether and go to other markets outside the U.S. IMHO

  55. Chickenpookie(118083 comments)-
    August 29, 2009 at 6:06 am

    Andrew Mayeda, Canwest News Service Published: Tuesday, July 28, 2009

    Reuters/Mark Blinch Canadian Finance Minister Jim Flaherty.

    OTTAWA — Finance Minister Jim Flaherty cautioned Tuesday that it’s too early to pronounce the recession over, as the number of Canadians collecting jobless benefits surged to the highest level since 1997.

    “No,” replied Mr. Flaherty, when asked whether he’s ready to declare the end of the recession. “I think the direction’s important. There are good signs that the economy has stabilized, and there are the beginnings of a recovery. And I wouldn’t put it any stronger than that.”

    Good work with the CYA there Jim!

    Not sure I understand the logic of selling $USD denominated bonds while the $USD is near a low though…

  56. FranSix(118083 comments)-
    August 29, 2009 at 1:28 pm

    They noted on fast money that Gubernerbankenator Hank Paulson has a substantial investment in bullion and gold miners. Viewers were were warned off ‘following in the footsteps of the bigger players’ because you have no way of knowing whether are actually hedged against you.

    Your Morning Smile

    • FranSix(118083 comments)-
      August 29, 2009 at 1:52 pm

      Sorry, that’s ARCH Gubernerbankenator.

      • Chickenpookie(118083 comments)-
        August 29, 2009 at 3:06 pm

        How about Arch Ubergubernerbankenator? If the market sells off, gold will tank along with it.

        And the trophy goes to: (not $USD)

        S&P is up 5% on the month, gold is up 2%, USD down 1%…

        Perhaps Obama should think about creating jobs as opposed to doing anything besides shutting down Wall Street’s government funded health care money pump.

        • davefairtex(118083 comments)-
          August 29, 2009 at 3:19 pm

          CP said -Perhaps Obama should think about creating jobs as opposed to doing anything besides shutting down Wall Street’s government funded health care money pump.

          I’m not exactly sure how the government can create jobs. I mean real, productive jobs, where people actually make things, not the census head-counting sort, or the bureaucrats-hand-out-money sort. I have not heard about a government “jobs creation” program which has resulted in good jobs being created. Maybe the defense industry stuff pays well, but that’s not building stuff that adds to standard of living, because all that stuff is designed to be blown up ultimately.

          Can anyone here remember a government jobs program which actually resulted in real, productive jobs being created?

          • Chickenpookie(118083 comments)-
            August 29, 2009 at 3:55 pm

            davefairtex – My first suggestion for Obama if he were to call and ask me, would be to provide small business tax relief. I think this would prove more productive than simply devaluing the $USD.

          • davefairtex(118083 comments)-
            August 29, 2009 at 4:00 pm

            CP – small business tax relief. If I owned a small business, I’d definitely be in favor of that.

            How would a small business tax relief plan work, and how would it help? Besides making small business owners very happy. 🙂

            I mean, all the outsourcing of jobs, how do we stop that? Do we want to stop that? I’m really at a loss with how to proceed. Even if I had a magic wand to wave, I don’t quite know what to wish for.

          • Craig(118083 comments)-
            August 29, 2009 at 4:24 pm

            1. Reduce or eliminate small business taxes. Make all taxes personal and subject to the AGI so to maximize write offs for small business.

            2. Increase taxes for outsourced income. Sooner or later there will be a desire to earn more yield on that income by repatriation.

            3. Eliminate the fed so capital can find it’s own risk/reward levels and will seek use for business with highest returns/least risk. Right now there’s zero incentive for savings, which is the life blood of business. Without capital it’s pretty difficult to have capitalism. These people think they can replace private capital with government spending and that’s a fools game.
            No one ever grew by increasing debt with no ability to pay or save, you grow by saving and getting a fair return on savings.

            4. Remove ALL taxes on savings and retirement accts. Capital seeking fair returns used for business expansion is a good thing for everyone.

          • Chickenpookie(118083 comments)-
            August 29, 2009 at 5:04 pm

            davefairtex – “How would a small business tax relief plan work, and how would it help? Besides making small business owners very happy.”

            You don’t believe that by reducing tax burden, the small business owner would be more inclined to retain and hire new employees? You cannot squeeze blood out of a turnip!

            Jobs outsourcing is discouraged by increasing small business taxation?

            Excellent! Perhaps Obama is on the right path to creating jobs then, because it appears taxes will be increasing!

            I would encourage Obama to eliminate all forms of federal taxation, the federal government should simply print the money they need to serve the public. That is, if the purpose of government is in truth public service as opposed to self interest…

          • FranSix(118083 comments)-
            August 29, 2009 at 5:10 pm

            OOPS- my bad.

            I think they were actually referring to Paulson & Co. Hedge fund’s move into the gold sector, not the ARCH Gubernabankenator.

          • Chickenpookie(118083 comments)-
            August 29, 2009 at 6:01 pm

            Nothing changes. If the market tanks, the $USD will gain while oil and gold lose.

          • davefairtex(118083 comments)-
            August 29, 2009 at 5:42 pm

            CP, I don’t have any sense that helping small business, vs. helping joe worker, would be better. Perhaps its because the small business owners I know have this great facility for charging their personal expenses to their business. It seems kinda unfair to the worker.

            So I guess that reducing tax burden on small business will certainly help them, but I’m not so certain it’s a surefire recipe for massive job creation. It seems like transferring the burden from the business owners to the workers, in terms of tax share. I’m not saying we should go after one particular party – just that things should probably be fair, I suppose.

            But again, I don’t really know. I”m really just musing out loud here, I don’t have strongly held opinions on this one.

            I have a sense that sending good jobs overseas is not such a good idea. Rewarding that seems ill-advised. Germany seems to be able to produce things pretty well without the jobs going off to China. I wonder how they make that happen?

            It is all about jobs, I think. How best to foster their creation, yet without making people play yet more crazy games with tax accountants to try and work the loopholes we create with unintended consequences.

          • Craig(118083 comments)-
            August 29, 2009 at 6:06 pm

            Dave, give everybody a tax break. Business people use savings to build businesses and take risks, so give them the business tax breaks. Capital for them to continue comes from savings. Not everyone is cut out to be a business owner so give those people tax free savings (their break) so they can continue to save and fund business or if they decide to start their own, have the funds to build a business and employ others, or to simply retire and consume whatever business owners make. It’s a win/win. We don’t have to shift the burden to one or the other, give both a break. It’s beneficial to both.
            BTW, running a household is a business, why don’t we give everyone the write of for those expenses? That would eliminate all that accounting mumbo jumbo and simply tax personal income for everyone. Then eliminate taxing that income twice by removing the tax on savings. This would make the fed useless and unneeded. when we had too much capital yields would decline (supply and demand) and when there was a need for more capital, yields would rise and capital would flow in to higher returns. Supply and demand…WHAT A CONCEPT.

          • Grym(118083 comments)-
            August 29, 2009 at 8:01 pm
          • davefairtex(118083 comments)-
            August 29, 2009 at 8:12 pm

            Grym, simply cutting taxes which favors just one group seems unfair to me, that’s all. It smacks of “more of the same” where the chosen few get special favors from Uncle Sam.

            Maybe we could be more clever in how we support business capex? I recall for very small businesses they could deduct capex purchases under a certain amount against current income.

          • kaimu(118083 comments)-
            August 29, 2009 at 8:27 pm

            ALOHA !!

            In Panama and Ghana a new small business has a ten year tax exemption! If your government is serious about “job creation” in the long term then that’s what you do …

          • Grym(118083 comments)-
            August 29, 2009 at 8:31 pm

            I have no problem with some others. I would leave out big business since they already get whole legislative programs in their favor.

            The American Jobs Creation Act of 2004 was nothing more than a substitute for government subsidies that were dropped to pacify the EU. It had no limits to or guarantee of jobs in the US. It mainly allowed corporations to bring home dollars the had made in foreign operations at a big tax break.

            They continue to off shore the American jobs.

          • kaimu(118083 comments)-
            August 29, 2009 at 8:34 pm

            ALOHA !!

            Grym posted – “They continue to off shore the American jobs.”

            They continue to offshore American business!

            At some point all that will be left of jobs in America is government sponsored union jobs … That’s all Public Works is now!

          • kaimu(118083 comments)-
            August 29, 2009 at 8:31 pm

            ALOHA !!!

            The numbers as of Aug 27th are:

            Social security – $501.7BIL USD
            Medicare – $447.6BIL
            Defense Vendors – $343.6BIL
            Medicaid – $226.1BIL

            But what you have to understand is the number for Defense Vendors is just for what the US Treasury spends on LMT and GD, goods and services and does not include military payroll and benefits, etc. Then where do VA outlays come in? I would include that as part of Defense spending overall. So as you can see Defense outlays would be much higher that $343.6BIL that I report above. In fact you also need to count “Supplemental Budgets”. I know the one this year Obama signed was for a total of $84BIL and $75.5 of that went to the military so if you just add that then Defense is equal to Medicare. It could be that it rivals and exceeds Social Security, it did during the Bush years so I have no doubt it will for Obama.

            Now those are annual budgets and not accumulated unfunded liabilities that you speak of in the TRILLIONS! Defense contractors are not as stupid as US Voters and will not accept IOUs! Those are the Government Account Series IOUs they speak of that will come due in future years and future generations once Obama and the GANG OF 535(Congress) are out of office and dead. So in reality Ted Kennedy’s spending legacy will live on forever until America defaults.

            I watched the movie “Gandhi” last night and I see absolutely no resemblance to Ted or even Obama! I like what Einstein said about “Gandhi”!

            What Americans put on pedestals now days is shameful!

          • terryC(118083 comments)-
            August 29, 2009 at 8:42 pm

            The other day there was an interesting thread here on the recently-built shopping mall in China that was nearly vacant. Imagine a large Chinese exporting/trading concern that has accumulated US Treasuries, fully aware of the stats being put up here re U.S. deficit spending. Taking a couple of hundred million of those Treasuries and putting it in the hands of a mall developer looks like a prescient move compared to the risks associated with continuing to hold/accumulate those treasuries. The ability to grow wealth in the future by filling the mall with shoppers over time, deriving rents etc. looks more promising than getting solid income and capital appreciation on those Treasuries going forward. Perhaps in China they are thinking ” Build it and they will come” while in the U.S. they are thinking ” Print it and they will buy it”. Time will soon tell which thinking has staying power.

          • Grym(118083 comments)-
            August 30, 2009 at 12:51 pm
          • Craig(118083 comments)-
            August 29, 2009 at 5:53 pm

            does anyone remember the good ol’ days after WWII when the USD was supreme, we had savings programs in the school to promote saving and we had capital to do things like national highway systems and even space exploration?

            Then our idiot politicians decided that communism was such a huge threat that they got us into what would have been unpopular empire wars if we had to actually PAY for them. This lead us to Viet Nam. In order to do the bidding of the Military Industrial Complex and placate the people who otherwise would have seen through this ridiculous ruse, our fearless leaders took the third leg of stability from the stool the Fed sat on and disconnected the dollar from the gold standard, which to a degree held things in check. (not completely though) But they had an unpopular war to pay for and they wanted to stay in office, which would have been impossible if the people had to actually bear the REAL cost of Viet Nam. So what to do? Well devalue the dollar of course, and the best way to do that? Yep, delink from gold. Has anyone noticed how fast we’ve gone downhill since then? Inflation (devaluing the USD) has happened at a break-neck pace ever since.

            So we have spineless idealogue self interested politicians to blame for the first big mistake, Viet Nam, and then compounding the error by not paying for it as we went, because they wanted to hold power more than defend the country or serve the people. It’s been downhill ever since.

            The only minor slow down happened when Volcker had the balls to let interest rates do what they needed to do in a normal capital cycle and climb to seek the proper risk/reward levels. We need that again.

            In order to increase jobs we need to do a few things at the same time, and none of them are as fast as the crack smoking method the Fed and those in power want as they would pay politically and as Warren Buffett says, those swimming without bathing suits would be exposed for the crooks they are.
            But these things must be done.

            Positive reinforcement (benefits) work great as incentives, but combined with disincentives they work even better. How many of you can move capital out of this country without being heavily taxed? Why do we allow companies to move capital in the form of cash and equipment with no disincentives then?
            We should tax them at 100% of that capital. This would give them the incentives to stay here and employ Americans or to rebuild entirely in a foreign country if they chose to. At the same time incentivise business to build and employ here with lower taxes that our foreign competitors. We can’t control state taxes but we could give business write offs for all state taxes (B&O, use, sales etc.) and the states would have to compete for businesses with their own tax codes, rates and so on. This would also benefit business and employment.

            Give business the capital needed by increasing our savings, the life blood of business and capitalism….capital. We need people to save because we have a Baby Boom that needs to retire, we need the elderly to save and then spend in their retirement for the necessities of life, we need the young to save for their futures, and we need to stop relying on the savings of others like the Chinese who would use their own savings to buy American rather than funding American consumerism debt. what a waste. Remove all taxes on savings and a portion of retirement accts. for certain incomes. Do we want to pay for Baby Boomers with public assistance or do we want them to fund their own retirements? Get rid of the taxes on retirement, let them consume when they retire and use the capital to build and employ until they unleash their retirement capital into the system. When they retire they will consume and drive the economy and employment further.

            None of this would be a quick fix and a few oxes would be gored along the way, but if we don’t do it we are doomed to default and the announcement we won the Cold War will be the biggest joke in history. As it stands now the Communist Chinese are giving us a lesson in true capitalism we may not survive.

            Do away with the fed, let interest rates seek the proper level, eliminate the empirical military system and let true competition happen. Competing with socialism and communism by BECOMING socialist or communist is plain stupid.
            We aren’t winning, we are prolonging or even hastening our defeat.
            A 12 step program for our government addiction better happen soon before we find our own bottom. If we got rid of a small percentage of our military empire the worry about healthcare costs would be miniscule.

            We are not being very smart. We could have all the jobs and capital we wanted if we would just get out if the way.

          • davefairtex(118083 comments)-
            August 29, 2009 at 6:09 pm

            Craig that all makes pretty good sense to me. But defense costs are a small proportion of medicare and social security costs, not the other way around. We pay defense as we go (more or less) yet SS and Medicare have – what was it, 60 trillion in unfunded liabilities accumulated?

            I’m not advocating for more defense here – I’m quite supportive of reducing Empire expenses. However, I want to make sure we’re seeing what the costs really are.

            One other practical issue. Politicians get elected these days by promising goodies for a subset of people. That’s where we’re at. I am not so sure they can get elected by actually getting out of people’s way.

            “I’m not here to promise you more goodies, but rather to get out of your way.’ It’s not very catchy. And Republicans say it all the time, but they never do it. Except for the banks. Both parties got out of the way of the banks, and see how well that turned out. We need to get in the way of too big to fail, and get out of the business of public support of institutions. I think. Yet Germany does just that, and like I said before, they seem to do pretty well.

            It’s a puzzle. And I sure don’t have the answer. How do we get there from here? And where exactly is there?

            I need an idea of what to wish for, I guess.

            Perhaps its the heat here in SF addling my brain. It’s *really* hot…

          • kaimu(118083 comments)-
            August 29, 2009 at 7:26 pm


            Davidfairtex posted-“But defense costs are a small proportion of medicare and social security costs, not the other way around.”

            They are not a “small portion” when you look at daily outlays. The top four outlays every single day for years on years are these four line items.

            – Social Security
            – Medicare
            – Medicaid
            – Defense Vendors

            I would add in the line item “Unclassified” except that I have no idea what it is.

            You also have to look at outlays as they pertain to beneficiaries. Who is the main benefactor of Defense spending and who is the main benefactor of Medicare and the entitlements?

            There has never been a way to argue that death and destruction, which is what militaries offer, is better than caring for your own populace in terms of their basic needs. What good is an Abrahms M1 Tank in your neighborhood? Just ask any citizen of Baghdad how that feels. Just how much has America benefited by being the World Police over the past fifty years?

            I did a review of “deficits” in this weeks TAX REVENUE BREAKDOWN and as it turns out I found a very interesting data point on monetary systems. Prior to WW1 we had a surplus. Then we got into WW1 and we had huge deficits based in WW1 era money of $13.3BIL USD at the height in 1919. Guess how much our deficit was in 1920? It was a surplus of $279MIL USD. The same went for WW2 and Korea yet when Nixon took us off the gold standard we never had another surplus until 1998 after 2001 there are no more surpluses. We never recovered from the Vietnam War and it was only due to the TECH BUBBLE and real estate bubble hitting at the same time that Clinton was able to get four years of surpluses. In terms of GDP/S the Clinton era surpluses were minuscule compared to the surpluses right after WW1 and WW2.

            So think of it … When we had a gold standard the recovery was extremely rapid. The recovery after WW1 was a one year time period. The recovery after WW2 was a two year time period. There has not been any recovery from Vietnam and the War On Terror.

            Why do we put up with a US FED that insists the gold standard is a barbarous relic? Imagine if we had WW3 this year and it ended in 2015 does anyone here believe that under the current monetary system we would have budget surpluses by 2017? The Vietnam War ended in 1975 and we did not have a budget surplus until 1998(23 years later) and even then the surplus was small under miraculous circumstances.

            What is a “deficit” anyway? In layman’s terms it is when your income is exceeded by your expenditures. What simplicity … DUH! When you and I face deficits we either get another job or cut back on spending and reduce our lifestyle. When the US Congress has deficit their solution is to spend more and intervene on free markets and legislate crony socialism. Somehow government thinks it is immune from deficits.

            You get what you vote for!

          • davefairtex(118083 comments)-
            August 29, 2009 at 8:03 pm

            Kaimu – could you quote me the numbers? From what you suggest here, national defense is less than any one of them taken individually. And that was my point. Cutting defense isn’t enough. The bulk of the spending isn’t there, it’s in Medicare, Medicaid, and Social Security.

            We can argue about what’s the right size for each area – I’m just trying to make sure we are being accurate in looking at the current size of each area. And it sounds like bloated, American Empire Expense defense comes in at #4. And that was my point.

          • Grym(118083 comments)-
            August 29, 2009 at 8:11 pm
          • Chickenpookie(118083 comments)-
            August 29, 2009 at 6:12 pm

            I’m hard pressed to find fault with any of that, those savings incentives would also help to recapitalize the banking industry.

          • cheapy(118083 comments)-
            August 30, 2009 at 12:34 am

            IMO, in a nutshell, you can’t borrow, import, or spend your way to prosperity. Government attempts at “investing” in the future all seem to end up as huge wastes of money, dumped squarely on those with influence. Look at all the recent futile attempts at “stimulus” for prime examples.

            Nor can alcoholics be cured with additional doses of whiskey. And these guys give legit drunks a bad name.

            Why is it that we need 10 times the lawyers per capita compared to other developed nations?

            And why is it that we manage to spend double per capita on healthcare compared to other nations that cover everyone, and manage to only cover maybe 85%? And even given that, the “cure” is to spend another trillion?

            We will need to offset the last 40 years of stupidity and gluttony to make America great once again. But how can we do that if we don’t, won’t or can’t EVEN SEE that it was stupid or gluttonous to live so far beyond our means for so many decades that we can’t even consider deciding to live within our means, and relearn how to improve those productive means instead of trying to get something for nothing (confetti money)?

            My answers would be very painful. Buffet’s Import Certificates idea could be implemented to stop the bleeding of jobs overseas, and to force a balanced diet of imports and exports. Balanced budget, line item veto, tax and spending cap amendments are desperately needed. The “empire” of having troops in 135 nations and trying to play world’s policeman needs to end, along with a very drastic pruning of defense forces to that needed to defend the nation rather than the world. Sound money… What a concept. Its so sad to see the counterfeiters running the Federal Reserve and Treasury at the direction of Wall Street’s shysters with the complicity of the Congress and courts.

            I really don’t trust them or see any hope of improvement, and that’s why I’m 75% or so precious metal. Self preservation….

            Sorry for the soapbox routine. I had to say it.

          • Chickenpookie(118083 comments)-
            August 30, 2009 at 1:58 am

            cheapy – “why is it that we manage to spend double per capita on healthcare compared to other nations that cover everyone, and manage to only cover maybe 85%? And even given that, the “cure” is to spend another trillion?”

            I think you already know why; Wall Street special interest groups have their tentacles deep into our health care system.

            The system is broken, according to Alex Gibney, the film maker responsible for producing a piece called “Money-Driven Medicine”.

            I suggest watching this documentary if you find the time, I think it does an excellent job of explaining much about why our health care system is uber-expensive…


          • Grym(118083 comments)-
            August 29, 2009 at 7:48 pm
        • FranSix(118083 comments)-
          August 29, 2009 at 3:58 pm

          Look, if the peso collapses, so does oil but not gold.

          The ARCH Gubernatorbankenator probably divested all long bond positions as well.

    • cheapy(118083 comments)-
      August 29, 2009 at 10:25 pm

      “They noted on fast money that Gubernerbankenator Hank Paulson has a substantial investment in bullion and gold miners.”

      I believe they were referring to the hedge fund mgr that made a killing when he predicted and bet on subprime causing a crisis, was it John Paulsen, whose fund recently bought gold bullion and AU?

  57. 4ever(118083 comments)-
    August 29, 2009 at 1:38 pm

    Bill, everyone here appreciates your insight. thank you for your wisdom in the daily reports. please go see or call your doctor this morning and at least get some rx drops for your eye. your eye will feel 2x better by tomorrow morning than if you let it heal on its own. sometimes we need a little extra help, and you might just feel good enough to write the w-i-r. Have a great one!

    • Bill Cara(118083 comments)-
      August 29, 2009 at 3:58 pm

      Strange, but within ten minutes of the warm compress on my eye, and some more Murine, I felt the pain disappear. So, after a couple hours relaxing in the hammock, I’m good to go now.

      • Lori Smyth(118083 comments)-
        August 29, 2009 at 5:38 pm

        Good to hear you are taking it easy relaxing on a hammock Bill, if only it were warm enough up here in Canada to do that. High of 17 today and cool temperatures forecast all week – this will officially go down in history as the summer that never was. No wonder you live where you do.

  58. Ron Sen(118083 comments)-
    August 29, 2009 at 2:10 pm
  59. johnuk(118083 comments)-
    August 29, 2009 at 2:50 pm
  60. shark_attack(118083 comments)-
    August 29, 2009 at 3:08 pm

    Today is my birthday (the 29th). Same day as Michael Jackson. I didn’t tell you last year because I didn’t need the accolades, but this year I do:).

    2nd…….I give it ’till Tuesday morning and he’ll be back……I hope…

    • Chickenpookie(118083 comments)-
      August 29, 2009 at 4:55 pm

      sharkie – Hippo Birdie 2 Ewe!

    • David(118083 comments)-
      August 29, 2009 at 5:30 pm

      When you look back a year from now on the time period between now and then, what would you like to be most proud of during this time period? I hope you achieve it!

      • shark_attack(118083 comments)-
        August 29, 2009 at 9:05 pm

        Thanks Chickenpookie, David, Loanetter, and everyone.

        Achieving great things is something we have and will do here, together, now and into the future. I’ve always said a few folks can exchange the right info and exponentially increase their gains. I’ve said it, I’ve seen it, I’ve done it. I just can’t wait for Monday. As sorry as I am to see old friends go, it didn’t have to be this way and I know now more than ever that this is the future for me. I redouble my efforts.

      • TN_blogger(118083 comments)-
        August 29, 2009 at 11:46 pm

        Hope your day is filled with peace…happy B day.

        • Illini(118083 comments)-
          August 30, 2009 at 1:28 am

          Yeh Shark, Happy BD. I had one mid-Aug and turned 69, between Bill and Grym. I note those kind of things. I was a little surprised to hear you were only 29. Pictured you as more of a hip,wizened bachelor of 39+. Also thought of you as a Jersey guy until you said CT. I don’t know why. Anyway, have a good 29th year, which BTW was the age I married. Hope your mom is doing OK these days.

          • shark_attack(118083 comments)-
            August 30, 2009 at 4:11 am


            Thanks for the good wishes…….No I’m not 29 anymore unfortunately. Much closer to 39:)

            I was referring top the 29th of August.

            Mom is doing great.

          • Chickenpookie(118083 comments)-
            August 30, 2009 at 4:21 am

            It’ beginning to sound as if sharkie WAS born yesterday!

          • Illini(118083 comments)-
            August 30, 2009 at 4:38 am

            Yes, and I don’t hold his youth against him, as Reagan said to Mondale, or something like that.

          • Chickenpookie(118083 comments)-
            August 30, 2009 at 5:45 am

            Mondale – Ding, ding, ding – Correct! Good memory, sharp as a tack. Better watch out though, sharkie’s gaining on you. Just a short few years ago you were more than twice his age and now that’s no longer the case.

  61. kaimu(118083 comments)-
    August 29, 2009 at 3:18 pm
    • davefairtex(118083 comments)-
      August 29, 2009 at 3:45 pm

      Kaimu I think you’re right about future taxes eating away at retirement accounts. That money is a prisoner of the government. I have one, and it makes me nervous! Luckily the bulk of my savings is outside that account.

      I have heard rumors of a “wealth tax” – i.e. where the government confiscates a portion of your savings “just because.” Now wouldn’t that be fun?

      I”m guessing this will happen, and more. How else will we pay down all that debt?

    • Chickenpookie(118083 comments)-
      August 30, 2009 at 2:20 am

      “As I have stated in the past I do not have a 401k or any other structured retirement account. I believe it will be used against us by our own government.”

      I’m rather certain if we look closely enough we can already find evidence.

  62. baz22(118083 comments)-
    August 29, 2009 at 3:27 pm

    It is Conquer and Destroy…. the pieces of the money chest will be fought for, and hard… taking no prisoners… The past 12 months is just the beginning…. Protect your capital.

  63. Chickenpookie(118083 comments)-
    August 29, 2009 at 4:26 pm
    • RUATR8R(118083 comments)-
      August 29, 2009 at 7:47 pm

      On days when the markets are not open, I really enjoy posts like this.

      I think I remember seeing articles in Prevention and others regarding skin lotions that were toxic. All of government agencies that are supposed to be protecting us are not. FDA, EPA, CDC. This gets me back to the topic of vaccines…but I won’t go there again. It just gets my blood boiling that the Swine Flu will be fast tracked into makeshift school clinics in the Fall. I’m sure drug companies are loving the government payments for these shots.

      Yesterday we went to the beach and I put sunscreen on just the shoulders of my palest two children. I understand the long-term effects of the sun but I think we are overdoing it for sunscreen protection. A lot of people don’t realize the sun has benefits as well. The skin produces vitamin D when exposed to sunlight. Vitamin D helps with absorption of calcium which in turn helps prevent osteoporosis. Sunlight also prevents depression. I think there is a happy medium with everything. Moderation is key.

      BTW…I found this link after I read CP’s post:

      • Les(118083 comments)-
        August 29, 2009 at 10:18 pm

        RUATR8R, another site for you:

        note the sunscreen guide on this page.

        Also note that I am having my first sunspot cut out at the age of 34, next month, due to significant sun exposure as a child under the Australian sun.

        happy search for balance in your exposure levels.

        • RUATR8R(118083 comments)-
          August 30, 2009 at 1:53 am

          Thanks for the website.
          Wow Les…sorry about all you are going through. It scares me when I have a spot or something pop up on my skin. I grew up in Miami, FL and swam competitively. We NEVER wore sunscreen. I’m 42 now. Nothing so far. But, these were the days when we used baby oil on our skin to get the deep tan on the weekends. This is before we knew better.

          We need to emphasize hats, coverups, etc. Also, limiting sun exposure to 10-20 minutes before applying sunscreen. Getting the benefits of the sun while trying to minimize risk. It is amazing many sunscreens are NOT effective anyway. The sunburn is probably this biggest thing to try to prevent. Melanin helps prevent skin cancer. If one gets tan slowly and stimulates the cells without damaging them by the burn then this is the best and most natural way to protect yourself. Genetics plays a big role. If one goes out in the sun only occasionally and gets burned each time then this person is at higher risk than someone who works in the sun on a daily basis. Also, how much do we know about the chemicals in the sunscreens and what they might be doing to the skin to cause it to not be able to defend itself properly?

          I found another site:

          “Melanoma arises from cells called melanocytes, which are normal pigment-producing cells in the skin. The melanocytes make a pigment called melanin, which gives skin its color and also acts as a sunscreen to protect against ultraviolet radiation. Light-skinned people have less melanin and are thus at more risk for damage from sun exposure than darker-skinned people, who have more melanin. In fact, the risk of developing melanoma is 10 times higher in the white population versus the non-white population.3”

  64. CaptK(118083 comments)-
    August 29, 2009 at 5:10 pm
  65. lessmore(118083 comments)-
    August 29, 2009 at 6:19 pm

    In my view most traders are: energetic, in that they are continuously looking from new trading opportunities; optimistic, in that they believe that most of their trades will be profitable and that any current losses on positions are merely a temporary discomfort; and aggressive in that they feel compelled to maximize their gains by taking on positions that are large enough to pose a threat to their savings.

    This is something that I have gleaned from reading trader chatter here and on other blogs. It does not apply to me since I am not an active trader. I make only about 10 trades a year and they are such a small percentage of my savings that I regard these trades as casino or horse race bets.

    I am just making this observation because I notice that some active traders have left this and other blogs. Perhaps they tried unsuccessfully to emulate the professionals.

  66. loannetter(118083 comments)-
    August 29, 2009 at 7:08 pm

    All happiness and kindness to you today!

    A wise old monk said to me once, “If you have enemy best to live in different town…easier to practice compassion from a safe distance”.

  67. jock(118083 comments)-
    August 29, 2009 at 7:16 pm

    UNG is trading at a 12-15% premium to natgas futures per an expert on BNN yesterday. One of the consequences of no new share issuance, I guess. Makes it like a closed-end fund, removing a key advantage of the ETF model.

    CEF (an actual closed-end fund)always is trading at a 10% premium per this calculator:

    It’s hard to get a break !

  68. RUATR8R(118083 comments)-
    August 29, 2009 at 7:34 pm


    Can you elaborate on where you think things will go with retirement accounts? Will they be confiscated and divided up for the “common good”. Will we have a privatized system? What do you do if you already have one? Do you liquidate and take the 10% penalty now? If tax rates end up at 50% for retirement accounts, as well as trading, well then I’d prefer the 10% now.

    • davefairtex(118083 comments)-
      August 29, 2009 at 7:44 pm

      There were proposals just last year to take retirement accounts and “convert” them into government sponsored accounts that would never lose money. All in the name of protecting the citizens, of course. Think that might eliminate the debt? I think so. Not so portable, no ability to shield your money from inflation, but it would never lose nominal value.

      Inflation is all about taxing retirement accounts. Same as the wealth tax. There’s a thousand ways to do it.

      • RUATR8R(118083 comments)-
        August 29, 2009 at 7:51 pm

        I remember that Dave. What does one do to anticipate this kind of move?

    • kaimu(118083 comments)-
      August 29, 2009 at 8:03 pm

      ALOHA !!

      I essentially believe they will be taxed to death! The only other possible conclusion is that they could be converted into a public TRUST and then they would be looted and filled with Government Account Series IOUs. These “securities” pay interest so long as the US Treasury can afford to pay. One of these trust funds is the Social Security Trust Fund. They key feature of these government securities(IOUs)is that they have no market and are “non-marketable” so in effect all the money that you and I and our parents have paid into Social Security and Medicare have been confiscated already. So the “confiscation” is ongoing. The only reason this PONZI scheme has not fallen apart is because of foreigners like China and US citizens who run to Treasuries as a reflex believing they are the premiere safe haven. In reality going into Treasuries is supporting the confiscation of your own retirement and exponential outlays and deficits.

      If we called a spade a spade in America then TAXES would be called “confiscation”! You tell me what else is it? US workers take a 54% capital loss every year before we place one single AIG day trade!

      Every politician from the ones who sold us out to the US FED in 1913 to the ones now who still support the US FED would have been branded traitors and hung from lamp posts by our Founding Fathers. We hand them medals!

  69. RUATR8R(118083 comments)-
    August 29, 2009 at 8:07 pm

    Okay. So, I have to have it spelled out for me.
    I know there are more avenues for wealth protection. I guess I need to attend the CTA event in January! I like to imagine who the faces are behind all these posts. I need to have good sign on and sign off phrases like Kaimu and others…

    “It is what it is” 🙂

  70. RUATR8R(118083 comments)-
    August 29, 2009 at 8:11 pm

    Kaimu….Thank you….

  71. Grym(118083 comments)-
    August 29, 2009 at 8:20 pm
  72. loannetter(118083 comments)-
    August 29, 2009 at 8:35 pm

    I saw the Atlanta premier of Gandhi in the Fox Theatre, a classic art deco museum of a place with golden elephants and an Arabian Nights theme with a projected sky on the domed ceiling featuing twinkling stars and moving clouds. At intermission the serve drinks at a real bar. But on that night when everyone walked out during the reel change no one spoke. It was as if we didn’t wish to break the spell we were under. Those images of a frail Gandhi walking to the sea to make salt (against the law) and spnning his own cotton thread to make his simple robe remain as the antithesis of our consumption based world.

    • kaimu(118083 comments)-
      August 29, 2009 at 8:50 pm

      ALOHA !!

      Loanletter – Very cool movie theatre and experience you had there!

      I never saw the movie in its entirety until last night and I watched it on a 15inch TV!! HA!!

      Do we ever need a Gandhi now, as the Brits called him “the tiny brown man in loin cloth” … I thought to myself America is Britain now! It’s total SHOOTING AN ELEPHANT SYNDROME!

      I thought of another reply to Boxer if I was the general being questioned, “Empire is as empire does ma’am!” HA!!

      God, I am sorry but I can not muster one single milliliter of respect for what governs America now and what has passed for government since 1971.

      It’s all Sodom and Gomorrah here! We are all witnesses to the crime …

    • stocksforliving(118083 comments)-
      August 30, 2009 at 4:38 pm

      thanks.i am from india and i proud that the older generation still have a high savings rate.By the way, the Gandhi family to which Indira Gandhi, Sonia Gandhi belong, are no way related to the great Mahatma Gandhi.They changed their surnames for political purposes.Does anyone track indian stock markets? if so please do post some technical analysis of high beta stocks

  73. RUATR8R(118083 comments)-
    August 29, 2009 at 9:31 pm

    Financial Times August 29/August 30 2009 p2
    News Digest: “S America fears over Obama plan”
    The Union of South American Nations is concerned the U.S. has been granted admission to 7 military bases in Columbia.

    As Ron Paul has been preaching about for such a long time, the U.S. needs to close bases around the world and does not need to be in everyone’s backyard. How can we continue to fund these military expansions? Haven’t we learned from the Cold War? We are at it with Russia again? Venezuela and Russia have been collaborating on military exercises so the U.S. needs to step up? The reasons being given in the article are terrorism and drug-trafficking. You gotta believe there is more to the story. The countries are right next door to each other!

    As a matter of fact…here is post from BBC News:

  74. MoKat(118083 comments)-
    August 29, 2009 at 10:18 pm

    Whirlpool announced closing their long standing Evansville refrigerator/freezer plant yesterday with 1100 jobs being eliminated. Production will be sent to Mexico.

    Cat and Navistar recently announced a joint venture with a Chinese heavy truck mfg.Stated objective was to sell into the heavy truck market in China and other select markets worldwide. I suspect it is a prelude to shifting more and more production to China, taking advantage of the huge wage differential between the US and China.

    The destruction of what’s left of our manufacturing base continues.

    • cheapy(118083 comments)-
      August 30, 2009 at 12:32 am

      By DESIGN our systems REWARD and FORCE outsourcing, pure and simple, so it would be silly to expect businesses not to outsource any and every job they can. Just the employer costs for social security and medicare alone here in the states would exceed the total cost of having that same employee overseas. Every burden we add onto employer’s backs results in more jobs lost. Why isn’t that completely obvious to everyone?

      • Illini(118083 comments)-
        August 30, 2009 at 2:21 am

        “By DESIGN our systems REWARD and FORCE outsourcing, pure and simple…”

        Hold on there Cheapy not cheap. For many years before NAFTA and other “Free Trade” agreements we had more manufacturing and a larger middle class which you and I and our parents benefited from, unless you were already a millionaire prior to the turn of the century. Now large corporations have become so powerful they can dictate lower wages in USA and labor is continually being forced to much lower levels which, horribly, may approach third world status.

        I am often an idealist but I sure wish that the poor countries could be lifted higher, faster so as not to cause so much pain so swiftly to the industrialized nations.

        • Craig(118083 comments)-
          August 30, 2009 at 3:35 am

          Hmmm. Lifted higher? I suggest they lift themselves while we lift ourselves (stop lifting?) by not importing.

          I see this like the guys standing with signs on freeway exits asking for money.
          When you really look at it, they have it better than the people they are mooching from. The moochers have no bills, no debt and all they have to do is SOMETHING for a wage. They would almost immediately be better off as they have no debt. The moochees (? drivers) owe for the car they’re driving, a house payment, insurance, taxes, credit cards, kids in college, etc. They need to put the shovel down and stop digging.

          Same for the U.S. and foreign countries. We are in debt up to our asses and they are starting more or less from scratch. We need to spend less, save more and import less and they need to do SOMETHING for income, to spend more for domestic consumption and use their savings. Like the off ramp moochers they are starting from even and we are in a hole.

          In short, they see what they need to do and they are doing it. We still don’t see our plight, but we better soon or we’ll be at a freeway exit with a sign soon.

        • cheapy(118083 comments)-
          August 30, 2009 at 3:40 am

          “Now large corporations have become so powerful they can dictate lower wages in USA and labor is continually being forced to much lower levels which, horribly, may approach third world status.

          I am often an idealist but I sure wish that the poor countries could be lifted higher, faster so as not to cause so much pain so swiftly to the industrialized nations.”


          I think its a LOT easier for the Corporations to close a factory when they have a “not enough sales” or “can’t produce at a profit” excuse, at which point the product gets supplied by a new or existing 3rd world plant, at a greatly reduced cost. They have been doing this one plant at a time since the 1970’s, gradually moving the production and jobs overseas as needed.

          I’m not saying its wrong to lift the 3rd world as a result, I’m just saying that there needs to be a reasonable balance on an ongoing basis between the sum of what we consume and what we produce, and that we shouldn’t be trying to pass the difference on to our children as a massive amount debt they will never be able to repay. That is what we have been doing since the 1970’s, and I’m saying its WRONG and needs to END.

          • Chickenpookie(118083 comments)-
            August 30, 2009 at 4:15 am

            “we shouldn’t be trying to pass the difference on to our children as a massive amount debt they will never be able to repay.”

            Obviously for Washington, it’s onward and upward concerning spending. I believe this isn’t sustainable at current levels, but don’t observe signs of cutbacks in the magnitude I would expect are necessary.

            There are only two ways I can see for maintaining this unsustainable burn rate: 1) Borrow, or 2) Devalue the currency.

            In terms of kicking the debt can down the road, borrowing does just this, but I think devaluing the currency does not. The currency should have naturally devalued over time due to excessive spending and debtload, but instead was kicked down the road and bottled through use of leverage and borrowing.

            The leverage tool has collapsed, and I suppose we’re waiting to discover if the borrowing tool collapses as well. If so, the end result will be, I believe, currency devaluation just as should have happened in the first place. We may now be witnessing the economic disconnection which was theorized mid last year but didn’t materialize as anticipated.

            If the $USD is devalued as should have occurred gradually over the last couple of decades, American products should once again become more competitive on a global basis.

            I don’t think the US will be successful leveraging or borrowing itself back to prosperity and if China were to become a responsible trade partner interested in maintaining the equity of their loans to the US, they would work to restore trade balance with the US.

          • Craig(118083 comments)-
            August 30, 2009 at 5:17 am

            alright…I’ve been reading these posts confirming what I already know.
            As I was putting together the Friday night music you tubes I came across this interview confirming the same thing. Really listen starting at 4:25.

            Then tell me….. why we are tolerating this bullshit? Why are we letting politicians, lobbyists and corporations STEAL OUR LIBERTY AND OUR FUTURE?
            WTF????? Why are we letting them LIVE? Are they not TRAITORS?
            WHAT ARE WE DOING? I mean, here’s this nice Canadian woman stating the obvious and we act like nothing is going on…..what gives?
            Do they know we won’t do anything? Isn’t it time to prove them wrong?
            Are we cattle being lead to our own slaughter or are we men?
            I’m just asking…..

          • Chickenpookie(118083 comments)-
            August 30, 2009 at 6:48 am

            Making vice sheik was the successful implementation of HB&B’s plan, our congress was complicit and still are. I can’t speak for current generations but I feel growing up in my sphere, those who remained aware were well prepared for dramatic eventualities. We knew something was wrong, we could identify the signs but were always shunned, turned away discounted, or manipulated into accepting the whitewashed status-quo.

            It’s not just some of congress, it’s essentially all of them. When was the last time a senator came to the capital of his state, stood on the stump, and explained to his supporters what was really happening in DC and how national business matters are really conducted there? Only a few are beginning to do this now that it’s too late…

            They’ve all got egg on their faces and still won’t admit to the web of deceit and corruption that has bankrupted the United States.

          • Illini(118083 comments)-
            August 30, 2009 at 4:31 am

            “I think its a LOT easier for the Corporations to close a factory when they have a “not enough sales” or “can’t produce at a profit” excuse, at which point the product gets supplied by a new or existing 3rd world plant, at a greatly reduced cost. They have been doing this one plant at a time since the 1970’s, gradually moving the production and jobs overseas as needed.”

            Yes, Cheapy. It started in 70’s, not with moving plants overseas but with imported cars from Japan and Germany. That later changed to assembly of those great cars in USA. I had a 76 Rabbit that was way ahead of anything except a Toyota.

            But Japan and Germany were not third world. They out-engineered us and produced great high efficiency products. Today, its merely a matter of who has the lowest labor cost no matter what else goes on. So we have smelly wallboard as well as unsafe shrimp and other food imports.

            EDIT: Actually, it started before that with moving textiles and other stuff to the deep south and then moved overseas. Follow the (lowest) money!

        • Grym(118083 comments)-
          August 30, 2009 at 3:37 pm
          • Ross(118083 comments)-
            August 30, 2009 at 4:03 pm

            I am reminded of a conversation I had with a sister in law some years back. She was planning to put braces on her kids teeth. I told her that their teeth were almost perfect. She reminded me that her husband was a journeyman electricial and that the braces were free, compliments of the union!

            A clear case of the ‘tragedy of the commons.’ The longer I live the the more I observe that common sense isn’t all that common.

  75. David(118083 comments)-
    August 29, 2009 at 11:16 pm

    As an addition to the signs of an impending sell-off that Bill mentioned in his Daily Report, I would like to note that the 15-day moving average of volume of the up-moving stocks on NYSE ($NYUPV in has been trending down since the beginning of August and is at the level now that has been associated with sell-offs in the past (e.g., in June).

    Moreover, the market breadth, which has been very solid throughout this rally, started showing divergence recently for some key groups of stocks. In particular, check out the following charts for NASDAQ 100 and for Russel 2000, which are usually among the leading indexes for the market:$NDX.htm$RUT.htm

    In both cases, the advance-decline line fell over the past week while the indexes themselves (as well as the S&P) has pretty much remained flat.

    Finally, the 3-month chart of the Shanghai composite, which was the leading indicator for the US market since 2008 (because it tracks well the amount of government-created liquidity in the Chinese financial system, with China being the engine of the global growth), is looking quite bearish now:

    I can list other indicators (such as $USD holding its ground firmly and EUR/JPY being way below its high for this rally), but I think the above will suffice.

    In the light of this evidence, I have just placed a buy stop limit order on TZA, stop at $14.40, limit at $14.50, for about 3% of my portfolio, which is net short already as it is.

  76. TN_blogger(118083 comments)-
    August 29, 2009 at 11:58 pm
  77. TN_blogger(118083 comments)-
    August 30, 2009 at 12:03 am
  78. TN_blogger(118083 comments)-
    August 30, 2009 at 12:15 am
  79. TN_blogger(118083 comments)-
    August 30, 2009 at 12:17 am
  80. David(118083 comments)-
    August 30, 2009 at 12:24 am

    Here is an interesting article I came across: “Insider Trading and Investor Sentiment Signaling U.S. Stock Market Top”

  81. jock(118083 comments)-
    August 30, 2009 at 2:14 am

    In The Sorrows of Empire, former cold-warrior Chalmers Johnson states that the US has over 700 military bases outside our borders. Well, I guess soon it will be 707 !

    Why Colombia needs US planes and troops I can’t understand. Hasn’t Pres. Uribe been trumpeting how his own troops freed Ingrid Betanourts and have shrunk the territory the FARC controls?

    America needs to acknowledge that we are BUSTED, and can no longer afford to have a “Southern Command” for Latin America, and an “Africa Command” etc.

    The “Defense Dept.” has to stop playing offense, and return to playing DEFENSE!

    • Chickenpookie(118083 comments)-
      August 30, 2009 at 2:57 am

      “The “Defense Dept.” has to stop playing offense, and return to playing DEFENSE!”

      It’s as though the entire country has become a global defense contractor, soon we won’t even manufacture bubblegum.

      • Illini(118083 comments)-
        August 30, 2009 at 3:43 am

        CP – “It’s as though the entire country has become a global defense contractor, soon we won’t even manufacture bubblegum.”

        This is so close to the truth. From a retired “defense industry” retiree. Dealt with most of the industrial giants from across the table. Not at the high levels, however. ( Not my fault… blame the pentagon and the Congress).

  82. Telestar3d(118083 comments)-
    August 30, 2009 at 5:13 am

    Regardless of what one thinks of his life, none of us are lily white, the Kennedy family paid a huge price in the loss of two sons for the USA.

    RIP Senator Kennedy

  83. Les(118083 comments)-
    August 30, 2009 at 7:24 am

    TBI:> If US Is Japan, S&P Will Soar 40% Over The Next Year

    If the US is really Japan, as many folks think, the S&P 500 could soar another 40% by December 2010 before it completely collapses, say Merrill Lynch Asia strategists Sadiq Currimbhoy, Arik Reiss, and Jacky Tang.

    Some investors like to compare the US to Japan. From a market perspective, plotting the Nikkei and the S&P500 shows no similarity. However, a peculiar variation shows an uncanny relationship…

  84. Les(118083 comments)-
    August 30, 2009 at 7:26 am

    Squeeze and pop opportunities for Monday

    • shark_attack(118083 comments)-
      August 31, 2009 at 12:58 am

      ETFC was already on my list of possible winners this week. Good info:)

      Gold’s going back over $1000 and beginning an upside breakout.

      Silver’s going back to $22 for starters.

      Sometime this fall, probably soon.

      • Ad(118083 comments)-
        August 31, 2009 at 1:32 am

        Any basis other than gut feel for those thoughts Sharkman?

        Just curious…

        • shark_attack(118083 comments)-
          August 31, 2009 at 2:53 am

          Charts of gold and silver look bullish to me.

      • Craig(118083 comments)-
        August 31, 2009 at 2:11 am

        “Associated Press
        E-Trade gains in heavy trading after debt swap
        Associated Press, 08.28.09, 04:15 PM EDT

        NEW YORK —

        Shares of online brokerage E-Trade Financial Corp. rose in heavy trading Friday following the completion of a deal that lets its bondholders convert debt into equity.

        Analysts pinned the jump on speculation-hungry buyers taking on a very cheap stock and a sense of increased confidence in E-Trade’s capital levels.

        The company on Tuesday completed a $1.74 billion debt exchange in an effort to bolster its capital position amid souring real estate-related investments.

        The new debt, split into two classes, is initially convertible into common shares at per-share rates of $1.03 and $1.55.

        ETrade shares climbed as high as $1.69 on Friday, and recently traded at $1.65, up 20 cents, or 14 percent. It has ranged from 59 cents to $3.97 over the past year.

        E-Trade “tends to be a very volatile stock,” said Raymond James analyst Patrick O’Shaughnessy. “When it has a big day like this, I just kind of take it in stride.”

        The debt swap has satisfied E-Trade’s regulators, and means company “distress” is highly unlikely down the road, said Morningstar analyst Jason Ren.

        Standard & Poor’s Equity analyst Matt Albrecht said the equity conversion was driving the huge volume. Based on the initial conversion prices, E-Trade said the debt was convertible into more than 1.68 billion new shares. E-Trade had 1.1 billion shares outstanding as of Aug. 3.

        While that would be highly dilutive for current shareholders, Albrecht said there’s just a lot of speculation in the market right now.

        “Investors in the last couple weeks are really willing to take on more risk,” he said.

        Standard & Poor’s Ratings Services on Wednesday upgraded E-Trade’s credit rating to ‘CCC’ from ‘CC.’ That’s still in junk territory.

        S&P said then that the debt swap modestly improved the company’s capital position, but E-Trade still carries a big amount of long-term debt and continues to have problems with deteriorating assets.’

        The stock holders also increased the float from 1.2 billion to 4 billion.
        I wonder if that’s good after a 13% gain on Friday……
        The securities sector fell from #2 to #16 over the last week or so and all but two, one being ETFC were down on Friday. If you follow sector action and believe equities trade with their sector….this speaks for itself.
        Although sometimes I doubt Shark and he ends up right, so take it for what it’s worth.

  85. Les(118083 comments)-
    August 30, 2009 at 7:52 am

    “we’re going right back into the tank”

  86. Les(118083 comments)-
    August 30, 2009 at 8:12 am

    not rolling over but consolidating for the next leg up.

    His chart interpretations suggest so.

  87. 2nd_ave(118083 comments)-
    August 30, 2009 at 1:44 pm
    • kaimu(118083 comments)-
      August 30, 2009 at 3:30 pm

      ALOHA !!

      2nd posted – “Why do most of us fund our retirement plans with stocks and bonds?”

      I totally agree …

      Warren Buffet during the dotcom era suggested to investors to only buy companies whose business model you understand. That is a simple concept but during that era and even today people jump right into pharma companies or internet software companies whose sole product you need to be a PhD biochemical engineer or computer software engineer to understand the pitfalls. One new patent or copyright or the FDA could wipe out your profits in one news release!

      Everyone understands the business model for real estate. Shelter has been one of the basic human needs since caveman days. Still there are pitfalls but such pitfalls can be mitigated by hiring a consultant to review your potential real estate buy prior to purchase. I remember during the SF real estate boom “home inspector” consultants were much in demand. If my memory serves me I think there was even a “home inspector” franchise.

      I think part of the attraction for liquidity these days is the instability of markets and economies brought on by unstable “floating currencies” and the nature of unlimited money. Government on all levels has done nothing to smooth that concern and in fact has contributed greatly to further the instability. Certainly buying a home in the 1960s was a no-brainer as there was not this “speculative” element in real estate as there is now. A sign of the times was the TV show FLIP THIS HOUSE … Is that show still on TV? The TV show I always enjoyed most related to housing was “This Old House”. I was very interested in renovations back in the 1980s and renovated two historical homes, over 80 years old, in Texas.

      So YES, I have no retirement plan per se, meaning nothing structured as is the norm. But I have to say it was well worth my time to invest outside the normal retirement fund mainstay, which here in America is usually stocks and bonds. Art and Oceania artifacts has been very lucrative for me and has zero exposure to SubPrime and derivatives and bank failures. I am very confident even though none of my art and artifacts are FDIC insured. HA!! I never have to worry about “trader taxes” or margin or SEC or HB&B … In fact when it comes to art HB&B and those overpaid Goldman Sachs employees are your friend!

      The most off the beaten path art for me has been HEI TIKI. Google it! Once I get involved in these “pursuits” I like to contact those who are in the know and learn from their experiences. For HEI TIKI I was very lucky to have known Prof Terrence Barrow from New Zealand. He wrote many books in his lifetime and as I was reading one I decided to contact him. Lucky for me he was living in Hawaii! He has since passed away but his later years prior to his death were spent here in Hawaii near the Bishop Museum. He and I consulted and he helped me pick up some HEI TIKI in auctions at Sotheby’s in NYC and some private auctions held in Paris, France, where I was able to buy an awesome HEI TIKI dating back to the 1700s. I have to say I got so absorbed into HEI TIKI that my wife had to intervene. HA!! That’s when you know you’re in over your head …


      My point is … mix and mingle with the most knowledgeable people in whatever field of “alternative” investing you decide to enter. It pays off in the long run! Part of the excitement for me was the research and the studies. On the art side I really enjoyed meeting artists and I still remain in contact with a number of artists even though I have not made any purchases in many years.

      Looks like 2nd is doing all that …

    • Chickenpookie(118083 comments)-
      August 30, 2009 at 3:43 pm
      • loannetter(118083 comments)-
        August 30, 2009 at 6:56 pm

        I concur on location. Dare I suggest the PNW for natural resources, temperate climate, lifestyle, air quality, proximity to Pacific Rim, technology and clean industries, green quotient, strong universitiy bang for buck and many best small cities to retire to! I would recommend the new condo market for investors as this is the hardest hit for lending risk. Fannie/Freddie and Gov won’t lend on ‘non warrantable’ projects so great bargains if you have 30% down (portfolio bank terms) or cash. Some amazing water view SFR and Condos properties are on the bank auction block as I write. Amazing values in the middle to upper middle price ranges ($300-800K). Even better value on vacant land.

        Local story:

    • Grym(118083 comments)-
      August 30, 2009 at 4:20 pm
  88. kaimu(118083 comments)-
    August 30, 2009 at 2:44 pm
  89. Ron Sen(118083 comments)-
    August 30, 2009 at 3:01 pm

    The other side of the trade, the far side of the trade.

  90. jock(118083 comments)-
    August 30, 2009 at 3:38 pm
  91. 2nd_ave(118083 comments)-
    August 30, 2009 at 4:04 pm

    “Why a Housing Rebound Could Take 20 Years (or 30 years in California)”

    What about the stock market? The article above references the fact that RE in Japan is still down 50% from peak. I shouldn’t have to remind anyone that the Nikkei is still down 75% from peak. That kind of relative resilience/performance/safety is a consideration in a retirement account.

    • Chickenpookie(118083 comments)-
      August 30, 2009 at 4:31 pm

      Yes, and for some topping on your cake, the Yen is up some 60% against the $USD over the period of Japan’s lost decade.

      • 2nd_ave(118083 comments)-
        August 30, 2009 at 4:44 pm


        (a) Managing RE need not be a headache, although self-directed IRAs are prohibited from renting to relatives. We have extensive contacts in the areas we’re interested in. Finding tenants who are able to ‘self-manage’ the property/properties would be ideal, which goes back to Kaimu’s idea of creating/maintaining networks. Tenant location may even be a priority when deciding on property location.

        (b) Re strength/weakness in the $USD. It moves the other way also. Isn’t Mr. Practical among those expecting strength in the dollar?

        • Chickenpookie(118083 comments)-
          August 30, 2009 at 5:51 pm

          “Re strength/weakness in the $USD. It moves the other way also. Isn’t Mr. Practical among those expecting strength in the dollar?”

          Yes, direction is a two-way street. I’m not sure what Mr. Practical is expecting, but I’m expecting more dollar weakness to come. I believe this will help to reverse the US real estate slide as well as create more US export revenue.

          My guess is the dollar downside “assist” should end when real estate prices begin to stabilize(bank losses level off or cease).

          Maybe your question is if real estate and the USD are falling at nearly the same rate, why not enter the real estate market now… My answer would have to be: Assuming you believe there’s more downside coming, why not move out of the USD, but not into real estate (yet).

          It very well could be we’re near the end of dollar downside, I suppose that’s the essence of what we’re trying to ascertain. When the dollar begins to rise, a rotation towards dollar should occur, gold and stocks will become weaker, maybe oil as well.

          Currently sugar and cotton are in backwardation (indicating market is expecting higher prices), probably due to rising economic activity and shortages. Oil and gold are in contango. I really should be tracking these closer…

          • davefairtex(118083 comments)-
            August 30, 2009 at 5:56 pm

            CP – how do you see dollar weakness as helping the residential real estate slide?

            My feeling is the opposite. Dollar weakness will bring more expensive everything to the US. This will cut down disposable income, which will make it more difficult for US citizens to buy property.

            When you’re paying more for gas, electricity, cars, TVs, clothing, you have less to spend on housing, no?

            I’m also betting foreigners won’t flock to the US to buy residential real estate.

            I’m assuming wages (in a 16% U6 unemployment environment) will hold steady.

          • Chickenpookie(118083 comments)-
            August 30, 2009 at 6:10 pm

            davefairtex – We have to consider both sides of the coin:

            “how do you see dollar weakness as helping the residential real estate slide?”

            People holding dollars will begin to realize their cash buys less and less everyday, providing incentive to invest in real estate.

            “Dollar weakness will bring more expensive everything to the US. This will cut down disposable income, which will make it more difficult for US citizens to buy property.”

            True, true, and true. However, a weaker dollar makes American products more competitive in a global environment (which arguably is growing) and your ability to convert resources into value added products for export is only partially affected by energy prices. Oil supply is variable as well as limited and under increasing demand worldwide. Cheap natural gas should also have an effect.

            I call it working yourself out of a hole by creating wealth, it’s likely to happen eventually…

          • davefairtex(118083 comments)-
            August 30, 2009 at 6:46 pm

            So CP, I’m with you on the INCENTIVE to buy real estate, I’m just concerned the actual declining ABILITY to buy real estate will trump that incentive. And dollar devaluation will take a huge bite out of ability. Most people don’t have tons of cash lying around to invest in RE – what was that percentage of folks who only had 6 months of savings again? 58%? The devaluation of the buck will knock out a bunch of marginal potential buyers, that’s my concern, at least in the near term. And that will torpedo prices even more. And since RE is a leveraged play, it doesn’t take a big decline in prices to completely wipe out your capital. That’s perhaps the biggest point – with RE, you’re leveraged 5:1, 10:1, or maybe 20:1.

            I think your megatrend of dollar devaluation leading to better competitiveness will play out the way you say, but its not something that happens next year – more like a slowly turning supertanker that gets onto a new course 10 years from now. Or do you see the rebound in production and jobs from dollar devaluation happening more rapidly than that?

            I also agree about the natgas, although if its cheap enough, someone will start to export it (in that same timeframe) thus soaking up the excess, making it more expensive locally.

            I think one of the better things that could happen to us in your “dollar devaluation is eventually good” timeframe is reducing our ability to buy foreign oil. Tough in the short term, but long term having our transport able to run on natgas seems like a real win. Really helps that balance of payments thing too.

          • Chickenpookie(118083 comments)-
            August 30, 2009 at 7:01 pm

            davefairtex – Yes, fair assessment.

            “I also agree about the natgas, although if its cheap enough, someone will start to export it (in that same timeframe) thus soaking up the excess, making it more expensive locally.”

            Okay, I’d like to question the concept of cheap US NG:


            And attempt to debunk the export theory… There is only one US facility licensed for export(specifically for Japan market), I suspect our congress is determined to disallow NG export.

            In the interest of arguing both sides.

          • davefairtex(118083 comments)-
            August 30, 2009 at 7:10 pm

            CP – if there’s a truckload of money to be made exporting natgas, I’m guessing Congressional determination (which we have seen wilts in the face of large amounts of money) may well fade. I guess it will depend on the price differential.

            Heck, either Canada or Mexico could decide to export, right?

            I’m on the fence about how real the new natgas drilling techniques and the resulting reserve additions will look like 20 years from now. I’m hopeful, but not yet convinced.

          • kaimu(118083 comments)-
            August 30, 2009 at 6:05 pm

            ALOHA !!

            CP posted – “I believe this will help to reverse the US real estate slide as well as create more US export revenue.”

            Well see, this is the crux with “floating” currencies … Do you think Japan and China are going to sit around and let the USD weaken so that their exports dry up? Same goes with the EU … Then there are the foreign cash inflows, which is part of the “real estate carry trade” that no exporting country wants to see abate either. They’re called “floating” but with the debt anchor wrapped firmly around all their necks they all should be renamed “sinking” currencies!

          • Chickenpookie(118083 comments)-
            August 30, 2009 at 6:38 pm

            kaimu – If by debt you are referring to leverage, then yes, if you have an ability to create more value than you consume, leverage can be an instrument to multiply your advantage.

            It’s definitely a double-edged sword, no doubt about it and the current amount of excessive debt could be enough to sink the US economy and cause default. The advantage of having the world’s reserve currency is being stretched to the limit.

            Another way to think of this might be in terms of our military… Although I’m proud of the good people who serve in our armed forces and I fully acknowledge their sacrifice, the fact remains that military is not a revenue generator in a direct sense, we have to consider how it’s all paid for. The devaluation of the reserve currency is a global tax which has paid for America’s abusive behaviors. It also keeps our military up and running. Is the world willing to continue paying the price?

  92. MoKat(118083 comments)-
    August 30, 2009 at 4:22 pm

    This story comes to me from the Detroit suburbs.

    A mortgage broker who has been down and out is back in business doing refi’s.

    He has stated that if a homeowner has a 700+ FICA score, has not been late on
    a mortgage payment and still has a job… a new mortgage is being created
    WITHOUT an appraisal !! The new mortgages are then quickly sold to a government mortgage agency such as Fannie,Freddie,FHA etc.

    He was also suprised that many clients are choosing adjustable mortgages rather than locking up a fixed rate.

    Reminds me of the old Ditech ads…”borrow up to 125% of your home’s value”
    except the new values may be upwards of 150%.

    It appears the government is willing to take the gamble that prices return to previous levels or that this is a better solution than foreclosure. The banksters get made whole and the government/taxpayer becomes the new owner of
    the phony mortgage. Brilliant huh?

    • loannetter(118083 comments)-
      August 30, 2009 at 6:44 pm

      Your guy is touting the streamline refis to lower interest rate, known as ‘rate and term’ not cash out transactions. So no new risk. Yes they are easy if you can prove a net tangible benefit to the borrower including recoup of costs within certain time frame. Anybody going for ARM loans who intends to keep the property beyond the fixed term should have their head examined.

      • Chickenpookie(118083 comments)-
        August 30, 2009 at 6:50 pm

        loannetter – I remember there used to be an ARM available years ago that fixed automatically after some period of time or set of circumstances. Are these still available, and what are they called?

        • loannetter(118083 comments)-
          August 30, 2009 at 7:01 pm

          Equity lines can be coverted to fixed if you keep an eye on trends. ARMs have different fuses
          –resetting yearly or monthly so caveat emptor!

  93. FranSix(118083 comments)-
    August 30, 2009 at 4:52 pm

    There’s been quite a bit of discussion about Japan. There has been a sweeping election victory as of today:

    Bond yields are about to rise,, one has to wonder whether Japanese investors will be hoarding bullion while the Yen is still strong.


    • Les(118083 comments)-
      August 30, 2009 at 5:05 pm

      Potential Euphoria in Japanese markets given historic change of government to spill over into US markets tomorrow?

      I remember JL remarking that maybe 1 session a month comes along where to punch through important resistance the market goes all out. Wondering if Japan has given the markets that moment tomorrow. (potentially powerful) Beginning of month as well, as Ron Sen points out.

  94. jock(118083 comments)-
    August 30, 2009 at 5:25 pm

    Otto reports in his(paid)IKN weekly that Rusoro’s production has risen sharply to 48K oz last quarter, cash costs are down to $322/oz. BUT less than half the production was sold.

    They’re obliged to sell their gold locally, and the discount to spot from local buyers has fallen to 34%. There’s the expectation Rusoro will be able to get approval to sell directly to the central bank. And as the best corporate political player in VZ, I expect they well may.

    Makes you wonder how others in other countries sell their gold.

    Yesterday on BNN, EGO’s CEO surprised me by saying that the average Chinese gold mine produces 20K oz./yr. And remember, China is now the leading gold producing nation in the world. That means a LOT of small mining operations. I bet all but the largest and politically best-connected are forced to sell to the gov’t at a greater than 34% discount to the world price.

    Does anybody out there know?

    • Chickenpookie(118083 comments)-
      August 30, 2009 at 5:59 pm

      “the discount to spot from local buyers has fallen to 34%.”

      The discount is rising, falling, or fixed? A falling discount would be in Rusoro’s favor.

      • jock(118083 comments)-
        August 30, 2009 at 10:13 pm

        Pookie –

        The discount to spot is rising. Whereas they may previously have been forced to sell at 16% below spot, now they must sell at 34% below spot. Not good for Rusoro.

        Anybody know if Chinese producers must sell locally and way below spot?

  95. bobbyo(118083 comments)-
    August 30, 2009 at 6:18 pm

    Hasn’t the Californification of the real estate market done enough damage. Should housing be unaffordable for everybody? Please keep the California real estate insanity confined within its borders. My state, Arizona, and Nevada will take years to recover from this last bubble. We don’t need new ways to play “flip that house.”

    • MarkW(118083 comments)-
      August 30, 2009 at 10:09 pm

      Bob- “Hasn’t the Californification of the real estate market done enough damage.”

      Don’t be ridiculous. This has only happened twice in my life time. I suspect we are just getting better at it! GL

  96. Pierre(118083 comments)-
    August 30, 2009 at 8:18 pm
  97. Menock(118083 comments)-
    August 30, 2009 at 9:30 pm

    A few weeks ago, clicking through the SEC homepage on my way to EDGAR, I noticed a box for submitting a complaint. Suffering fear and anger from the day’s reading of the ongoing train wreck that is the plutocratic kleptocracy of these 50 states, I filed a complaint with the SEC against the SEC. I just got a response.

    Dear Menock:

    Thank you for your email and taking the time to provide us with your comments.

    We welcome your comments because they help us to regulate and enforce the laws that assure fair and orderly securities markets.

    I have passed your views on to the people at the SEC who specialize in the issues you’ve raised. If they have any questions or wish to respond directly to your comments, they will contact you.

    Once again, thank you for taking the time to inform us of your views.


    Office of Investor Education and Advocacy
    U.S. Securities and Exchange Commission

    My complaint:

    Submitted: 2009-07-28
    Send Copy: A copy of this may be sent to the entity.

    Name: Menock
    Day Phone:
    Alt Phone:

    Name: SEC
    Type: Other
    Rep.: So Called Enforcement Agency
    Address: Big Brokers’s back pocket
    Revolving door

    Name: all
    Symbol: all
    Type: Equity security (general)

    Providable Documents:

    When are you going enforce the rules against front running against the big investment banks for starters?

    Or are you just a means of screwing the little people, who pay your salary, and protecting a criminal bankster class until you go work for them?

    Do your job for a change. And that is not supposed to be looking the other way when the exchange lets Goldman Sachs see order flow before everyone else so they can front run everyone.

    You appear guilty of dereliction of duty.

    With all due respect,


    My opinion of Ms. Howell’s response:
    That and two bucks will get me on the bus.

    • Chickenpookie(118083 comments)-
      August 31, 2009 at 2:11 am

      Menoc – I’m sure the answer will be much clearer once the SEC has completed their FED audit.

  98. jock(118083 comments)-
    August 30, 2009 at 10:22 pm

    the kaimu school of finance: might it be summarized as follows?

    1. buy (very cheaply) a variety of real assets that interest you and are likely to appreciate

    2. don’t sell

    3. no capital gains tax, no risk of trader tax

  99. David(118083 comments)-
    August 31, 2009 at 1:38 am

    sorry, double post

    • MarkW(118083 comments)-
      August 31, 2009 at 2:24 am

      David- This is more in response to your previous post…

      Let’s assume the following hypothetical is true:

      Client hires contractor to build a large project 1 1/2 years ago. Contractor starts project and the market proceeds to collapse. Client arranges for a loan to finish the project. Loan is funded @ 5.15%. Market recovers. Project is finished and client sells stock in his company, repays the entire loan. Client is a officer in one of the largest engineering software Co. in the world.

      Would you buy shares in his Co. today? Remember, interest rate on loan is only 5.15%. I wouldn’t.

  100. Chickenpookie(118083 comments)-
    August 31, 2009 at 1:54 am

    Bill said – “my car yesterday blew a starter motor”

    You might consider importing one of those Cuban hoopties…

    Looking forward to the Havana report. 😉

  101. David(118083 comments)-
    August 31, 2009 at 3:04 am

    Mark: I think you mentioned that you were supposed to meet with your “oil guy” last week. If you did meet him, would you mind sharing what he said about the NG prospects? How low can its price fall and how long can it stay there? How much should the spot price be in January?

    • MarkW(118083 comments)-
      August 31, 2009 at 3:52 am

      David- Yes, we did meet. This is a little hard for me, as another Carista followed me on a trade that didn’t turn out well for him. It has for me, but my time frame was different.

      So, I’ve been very careful about what I’ve been hearing.

      But I trust the back ground work that you do…so.

      You know who my oil guy is so let me say this. @3.00 all of the small independent gas plays go belly up. Their plan is to start an aggressive buying of the small independents. The key is how have they hedged their prices. From what I hear, not too well. Limit the players and the price will go up. Look at the price of CHK. It cost less when NG was 4.00. This is not an anomaly. Take a look.

      As for the spot price in January, I’m not sure. But I can tell you this. If you have a little longer time frame….Buy the Big boys. CHK, DVN, APA, etc. They are all consolidating here.

      • David(118083 comments)-
        August 31, 2009 at 4:25 am

        Mark, so how long do you think the NG spot price can stay below $3?

        As for buying major gas stocks (e.g., CHK), its chart over the past 6 months shows that it moved in an almost identical pattern with S&P, but with a higher beta. So if the S&P sells off now, the gas stocks will collapse as well. If, however, when S&P gets oversold the NG will be in an uptrend, then major gas stocks might become good buys. But not until S&P gets oversold, IMO.

        • MarkW(118083 comments)-
          August 31, 2009 at 4:42 am

          David- I don’t see it that way with the exception on APA which has a much larger oil play then CHK/DVN. However, if the S&P goes in the toilet, of course all issues will be hit. I remember last summer holding “V”, as the market tanked and it held up well until the bitter end. Earnings increasing along the way. It’s just the way it works.

          But if your forcing me to make an NG spot price call…4.80 in January.

          F57- This is your game…What am I (we) missing??

          • Freedom57(118083 comments)-
            August 31, 2009 at 2:10 pm


            I don’t think you’re missing much. I tend to trade the seasonal trends and fundamentals on NG. For me the long term focuses on first the end of injection season, and then the spring start of injection season. Short term are all the price fluctuations in between. The supply/demand/storage dynamics (including likely changes in each) need to be taken into account on a continuous basis.

            Last spring I was about as optimistic on NG as one could be, looking for a fall rally in price. I was the Dennis Kneale of NG, sure the curtailed drilling combined with rapid well depletion rates would result in in supply shortfall, which almost all analysts assured would be the case.

            That has not been the case. Take a look at the table linked below. Dry gas production this year has been higher in every month (June last month data available) than last year. While production on land has decreased somewhat, production in the Gulf that had been taken off line last year by hurricanes has come back on line.

            I find the EIA natural gas data and price forecasts a good starting point for my analysis, and use it until I find reason to not believe their forecast. Reading the “Reports” section at the below link should be mandatory for all NG traders, before accepting anyone else’s opinion holus bolus.

            It’s not just the number of rigs working. It’s also which rigs are working (efficient or inefficient), and where they are working (best plays or marginal plays). Apparently the number of drillers on horizontal plays has increased back to the levels of March. And the efficiency of drilling and completing the shale plays is increasing. They are cutting the times by perhaps 1/3, which means you can get the same production with fewer rigs.

            The biggest issue is how the dynamics play out as storage fills over the next two months. Canadian storage is basically full and wells are being capped. It’s only a matter of time until this occurs in the USA. In the meanwhile it’s a game of “chicken” where the big, well-capitalized, well-hedged producers are in a position to run the price down, putting the squeeze on smaller, less well-capitalized rivals.

            Storage does not fill uniformly across the nation. Some storage is already full or nearly full, while other storage has considerable room. But if the available storage is in one end of the country, and you are producing in the other end you have a problem. The producers closer to the storage have a competitive advantage. And as pipeline pressures rise, they may not allow you to put any more in. So your local hub price can drop very close to zero for a short period of time. This is the dynamic that I believe will continue to keep spot price depressed until the end of injection season. But I’m not a pro trader, nor am I in the industry.

            UNG premium continues to climb. Last Friday it got to 19.0% (UNG price of $11.13, NAV of $9.35). Spot NG was $2.52 on Friday.

  102. Chickenpookie(118083 comments)-
    August 31, 2009 at 3:08 am

    If renters are becoming buyers, are lower end owners taking advantage of the housing bust by moving on up?

    • loannetter(118083 comments)-
      August 31, 2009 at 4:16 am

      Nice try. just love articles like this making peachy generalities. Anyone who can still afford their home is 1. Staying put if they have a rate under 6% 2. Refinancing to a lower rate at fixed terms to stay put or 3. Refinancing for an energy efficient mortgage or renovation funds help them stay put. Unless folks need to move for practical reasons we just aren’t seeing the supersize me effect. BTW most credit unions also sell their loans and are in the same fix as banks depending on their particular underwriting standards. (just generalizing : )

    • Grym(118083 comments)-
      August 31, 2009 at 12:33 pm
  103. Illini(118083 comments)-
    August 31, 2009 at 3:14 am

    Nikkei went up after open but has faded to negative. Shanghai down 5%. Remember Japan election results. Called historic but is in the eye of the be-holder (of stocks).

    • Chickenpookie(118083 comments)-
      August 31, 2009 at 3:31 am

      I guess this should lower bond yields a bit. China must not be feeling well, can ya feel a touch of swan flu returning?

  104. David(118083 comments)-
    August 31, 2009 at 3:45 am

    5.3% to 2700, below the previous low at 2800:

    That should not be good for commodities and other world markets, as China is “the engine of global growth.” The S&P futures are down 0.5% now after being flat when Shanghai has just opened an hour ago. So the S&P traders are starting to pay more attention to Shanghai now, after dismissing its plunge in August as regular correction in an overheated market. If they decide now that the Shanghai market has *really* rolled over, then, I think, S&P will have a major correction as well.

    • MarkW(118083 comments)-
      August 31, 2009 at 4:00 am

      David/Illini- Every dip has been bought so it seems to me the next short entry would be at an up-turn.

      FD- As I hope you all must know, 95% cash (HEK, ADXM, RGBO) and have made a few coins with quick shorts for about a month.

    • Chickenpookie(118083 comments)-
      August 31, 2009 at 5:26 am

      FWIW – I’m not a buyer based on what I see tonight, this could change by tomorrow but I think the China syndrome is likely to telegraph.

      CHK is printing lower highs and higher lows so I think it will follow the market. If it doesn’t, that might reveal something though… Somebody needs to hit up alberio on the shale gas play to find out what’s up with the environmental issues, I keep hearing whispers of concern about water table contamination concerns.

  105. kaimu(118083 comments)-
    August 31, 2009 at 7:42 am

    ALOHA !!

    More retirement PONZI …

    Lowering the 401k limits … That would expose more of workers income to immediate taxation rather than deferred taxation. Thats the gist I get, yet that is not mentioned here. I see this as the “inch” in the “Give-Them-An-Inch Syndrome” … I know $500 isn’t much and the article says only 7% of workers run the limit, but its coming. The government wants your savings and your accumulated wealth.

    I have already shown how much capital gains is going up in 2011. The government wants your trading profits. So far I have never heard anyone here introduce me to their “trading partner”, Uncle Sam!

    Hey an annual 54% capital loss off the top before you even sign up for IB!

    Currently capital gains taxes, depending on your bracket, held one year or less range between 10% and 35%. In 2011 that range will be between 15% and 39.6%. That’s a 50% jump on the low side and a 13% hike on the high side. So the lower income taxpayer pays the higher capital gains taxes. Yeah, lets not let those “little guys” profit too much! So in 2011 reinvesting profits just got harder. I would not be surprised to see in the future a capital gains tax based on a hold period of “1 week or less”! HA!!

    The title says it all … We’ll see …

    READ ON:
    Cut Off From Savings?
    Sponsored by
    by Robert Powell
    Monday, August 31, 2009 MarketWatch

    Contribution limits for 401(k)s and other plans may decrease next year

    It’s starting to seem like retirees and those saving for retirement can’t catch a break.

    First comes news that there won’t be any cost-of-living increase for Social Security beneficiaries in 2010. Next we learn that beer prices are rising. And now we find that the maximum amount that you’re allowed to contribute to your retirement plans may decrease next year.

    “If recent inflation patterns continue into September, it’s possible there will be a decrease in the statutory limits on qualified retirement-plan contributions and benefits for 2010,” according to a report released by Mercer, the consulting firm, this week.

    According to Mercer, the limits for defined-contribution and defined-benefit plans — including the amount you can sock away in your 401(k) — are adjusted each year according to a statutory formula based on inflation. And depending on actual inflation levels for August and September, Mercer said the formula could produce limits for 2010 that are lower than those currently in effect for 2009.

    If that occurs, Mercer said employers will be looking to the IRS to decide whether the limits will remain unchanged or be reduced for 2010.

    Presently, you can sock away up to $16,500 in your 401(k) on a pre-tax basis or $22,000 if you’re age 50 and older. But given what’s happened to inflation of late, Mercer said Uncle Sam could reduce the amount you sock away by $500, down to $16,000.(more)

  106. Les(118083 comments)-
    August 31, 2009 at 8:05 am

    Was it Bill who suggested gold is coiling?

  107. Pillzilla(118083 comments)-
    September 1, 2009 at 7:41 pm

    UNG @ 10.61 closed out at 10.47
    SSO just now at 30.74

    Eyeing up VZ again for longer swing trade too.

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