Wednesday, November 12, 2008

IF YOU DOUBTED DOW sub-5000 before...

PLEASE heed this. I've been beating the crap out of you guys for a long time saying to sell SELL SELL, while most everyone else has been saying we'll see a bottom. Well, you know what? They are WRONG! The DOW will see sub-5000 and frankly I may be adjusting my target to 2500 shortly. I am doing the research, but I think that we should see 2500 or less when this is done.

Here is the inherent problem with the notion that this is the same as other bear markets. Bear markets are usually based on a few factors, one of which is valuation. That, in my opinion, is the least of the issues. Others include valuation based things like "bubbles". More importantly, though, is the economy, which includes unemployment, manufacturing, sales, etc. Even more importantly is consumer confidence and investor confidence. ALL these factors point to MUCH lower prices. BUT, none of them is the most important in this instance. In this instance you have what happened in 1929, a confluence of events and factors that has created what I've dubbed the PERFECT STORM of investor disaster, or the real Y2K, but of the stock market. Today we heard from Hank Paulson, whom you guys all know I have HUGE issues with. Those issues I've stated in depth here for a long while, and relentlessly. I feel like Franky the Repeater from Goodfellas. I keep repeating, repeating, repeating myself, yet I would be remiss if I didn't do so, given what I feel is the gravity of the situation. Today Paulson said what I've said again and again - the "bailout" was total BS and will go down as the biggest con job this country has ever known. They force fed everyone, including congress and the senate and investors and "main street" the notion that the government was going to buy all these toxic assets, create a market for them and the government would then be able to make money on these "assets". Many of you will recall that your buddy (not mine) the one and only BOOYAH HEAD proclaimed that it was so great, that the US Government was now the largest Hedge Fund ever, and that we would make money on this $700 BIL. That the taxpayers would BENEFIT from this money and would not be on the hook. This NONSENSE has been repeated AGAIN AND AGAIN AND AGAIN all over the financial media, as though it was true. Fund manager after fund manager has trekked onto CNBC and other places and told YOU that this is a good time to buy. Everyone from Suze Ormon, to Booyahhead, to all the other knuckleheads out there STILL keep saying if you have a 10 year horizon, now is a good time to buy buy buy! Dennis, the biggest knucklehead of them all has said repeatedly that there is "no way the market isn't going to be higher in 10 years". I am never one to plead victim, and I really loathe people who invest and then lose and blame someone else. Having said that, when someone or company basically guarantees that you will make money if you do something, that is cause for concern. The same as there is no way I could guarantee anyone here that I am right. I could be wrong, it's happened before, just ask any woman I've dated, they will tell you how wrong I can be about a whole host of things! All I can do is relate my opinion, and tell you what I am doing or thinking. I'm not licensed or registered, and I never would want to be. I'm just a dude who has an opinion, you read it, you do what you wish of your own volition. Win, lose or drawer its on you. If I guaranteed things then I'd be a lunatic, and frankly I'd advise none of you to take me seriously. Do I feel strongly about what I say? Absolutely. I am, however, not always right. It is irresponsible for these people to continuously pound the table that you should keep buying when there is no empirical evidence to support the thesis that we have "bottomed" or are anywhere near it. The notion that you should buy now and hold for 10 years and that historically that has paid off is another LIE that is perpetrated by the media, and by fund managers alike. There is an inherent conflict of interest in most of these people's and companies preach. Today we made a MINT in the chat room, and Option Trader, which you ALL should sign up for, is beyond rocking. BEYOND. We are calling double, after triple, after quadruple and it's so good that we are getting a ton of testimonials nearly every day. No guarantees that will continue, but the service has been INSANELY profitable for many. OK, lest I digress. Today's speech by Paulson is so bad that anyone buying ANY bank is, in my opinion, INSANE. My interpretation of what Paulson said today is that the nonsense that these toxic assets have no value, therefore banks like; C, BAC, WFC, COF, STI, NTRS and MANY MANY others, in my view, are in very serious trouble. That's why I called MS short, PFG short, BLK short, COF short after he was done. ALL winners in a big way. That's why I continue to LOVE GS short and feel that my target of $25 is probably overvaluing them. You have to listen to reality. BBY today said things are DONE for retail. After the close INTC said things are horrible. Now, look, I'm short and will remain exposed to the short side until we hit my targets. I put my money where my mouth is. I have made a FORTUNE in this market. Clients are RACKING UP in a HUGE way. YOU need to get off the sidelines and get in the game. You need to stop watching your finances drop off a cliff and do something about it. I can't promise anything. I can't promise you will make money and I certainly can't promise you that you won't LOSE money. Trading on any level is not for everyone. BUT, I think that this market continues to present GREAT profit/Ka-chingo opportunities for us. These opportunities won't always be here. Certainly if and when we do get to DOW 5000 or 2500 there will be less volatility and thus less opportunities. BUT, at some point we will be able to scoop things up and trade them LONG for swings. That time is NOT right now. I don't remember the last swing long I took. I think it was a loser, though. I'm pretty sure of it. ANYONE buying here for more than a trade is NUTS in my opinion. Just think about this - ALL (or almost all) of the so-called "experts" who keep saying now is a good time to buy have been saying that for roughly 2000 to 5000 points now. Dollar cost averaging is for suckers, in my new book coming out in March, Rule Your Freakin' Retirement (St.Martin's Press) I show a study that was done that disproves that dollar cost averaging actually works in the long haul. And, dollar cost averaging, as well as investing, always assumes that the market will go higher in the long haul. That is a very bad assumption. Do you realize how many fund managers, and BOOYAHHEAD who called the financials and the market bottom in July, have destroyed their clients by buying the financials? Even the Fast Money (Fast way to LOSE Money) people, some of whom are decent traders, have recommended owning GS, or some of the other banks. Or, selling puts against them. People have a very hard time believing that something is over. People stalk people, and they stalk the stock market, thinking that it's going to go up eventually, let me look for entries to buy these stocks. Look at C, I said many times it would see single digits. I said that when it was $40s. What Paulson said today should make C insolvent. From what I've read and the research I've done (and again, I'm not an expert researcher mind you), C has roughly $300 BIL in bad/toxic assets. The NY Times reported that MER has some $260 BIL in defaulting/toxic assets. The bill of goods the American people were sold is shameful. Do Paulson and Bernanke claim they didn't know these assets were worthless when they said that taxpayers should be on the hook for $700 BIL that I said from day 1 was throwing our money away? Who benefited from the $10 BIL each given to JPM, C, WFC and others? There should be an immediate investigation into what happened and who got that money! That's OUR money, folks! What happens when you give a company with $300 BIL in bad debt $10 BIL to help them? You throw $10 BIL into a garbage can, that's what happens! I wish I had the time, or that I had run the commercial I was going to run on CNBC when it happened giving my opinion and offering that I would personally oversee the $700 BILLION. Someone else needs to be in charge here. And, its going to get worse. The GM bailout again will be sold as an INVESTMENT, and sold that GM is too big to fail. This is another TOTAL LIE! GM has to be allowed to go into bankruptcy and to reorganize, otherwise its a 100% guarantee that they will keep coming back for more and more money. It's theft, folks, plain and simple. $700 BIL that WE will be on the hook for. I am sick to my stomach. Fed up. I feel like going to my window, opening it and yelling out - I'M MAD AS HELL AND I'M NOT GOING TO TAKE IT ANYMORE! If the American public paid attention everyone would do the same at the same time. In fact, I'm going to send an alert to the 100,000+ members we have and give everyone a time that anyone who feels the same can do just that. The thing is, right now most people don't realize how bad this is, and how big a lie this was/is. When the proverbial "S&*t" hits the fan, if I am right, it's going to be quite the ugly scene. As far as tomorrow goes, well, I lost my passport so I'm still in NYC! Hehe! So, I should be around, and Friday more redemptions come in from Hedge funds and such. So, seems hard to imagine we get any lasting rally here for now. The path of least resistence is DOWN, and should remain so for the time being. A retest of the supposed bottom may happen tomorrow. Does it hold? Well, it might, for now, but I think 7500 is coming sooner rather than later and if we were to break there then I will see you on the other side...of 5000! Keep trading, keep listening, the answers are always there for us if we are open to hearing them. Me? I'm just a dude who cares and who believes that after the dust settles there will be a better day, or two, or three. Until then I'll just keep plugging and keep the faith! Keep the faith despite the fact that some of our leaders are misleading knowingly. It's a shame, we should have let things fail and started over. The path we are going down will only keep us in a DEPRESSION for far longer than we should be in. The banking system has cancer, it's got cancer and its spreading, and unless we cut out the cancer the patient, our economy, is going to DIE. And, you know what? Everyone I said here now, as usual - I hope I'm wrong. I hope we never see 5000, I hope we never see 7500. I hope we go to 25,000 on the DOW, and I hope that everything they are doing helps, or better yet solves the problems. That would be wonderful, I would be SO happy to hear everyone tell me I suck, that ha-ha, I was wrong! That we all should have bought what many of these nutjobs say is the "buying opportunity of a lifetime". I hope so, but as I've said before - HOPE is a four letter word when it comes to your money, and your life. I should spell it like this, same as any other curse "H&*E" = HOPE. Be smart, protect your assets, don't be a deer in a headlight like most investors. Plan your life, and live it! As always - rule! Michael "Waxie" Parness Oh, and PS, sign up for OPTIONS TRADER for Gawds sake! :)


Jeanne Mancuso said...


The way you talk we're headed for a depression worse than the Great Depression...I think you're wrong. Those toxic assets you speak of are mostly mortgages backed by hard assets. What do you think, that all banks are going to fail and commerce will stop? It's true that the unemployment rate is around 6% but 94% are still employed. Don't get me wrong, things will probably get worse before they get better but the price of oil is reasonable again and that should have some impact. Once it gets bad enough (well before the Dow hits 5000) the problems will face a united front from the people in this country to resolve the issues. I think we are a resilient country and sometimes it takes extremes to bring out the best.

Waxie said...

Jeanne, unemployment will top out around 22 to 25% more than likely. And, its not 6% now, thats a bogus #. Don't believe the hype, the hype only tells you what you want to hear, sweetie. A united front of what people? If there was a united front they'd have stopped the bailout package that was BS as I called. I'm sorry, but naive will cost you everything you have, and this is naive in my opinion. But, if you want to buy the market, be my guest. I'll give you the rosary beads now.