Saturday, April 04, 2009

Some VERY valuable lessons indeed...

I've gotten a ton of emails lately, which is in part due to our increased popularity, and I think in part due to the "fear" factor. Forbes had an article last week about more and more people taking alternative routes to investing (hence many trading). I appreciate the comments and support all around, even if some of them are critical.

I think it's important to really look at the market here and just discuss what the difference is between reality, and the markets. I've gotten so many emails saying "things are so bad, how can the market go up, what am I missing?" Well, the perma bulls/pom pom wavers will tell you that its because the stock market is forward thinking, and therefore it leads 6 months to 9 months before we are actually out of the woods. And, yes, historically when we are truly going to see a bottom that comes into play. Far more often, though, these types of rallies die on a vine and turn just as fast as people realize that "whoops, our timing is a bit off!" and sell.

On Friday here I said I was wrong and my timing was off. The advantage to trading is that you can switch on a dime and Friday I made the adjustment and made a nice ka-chingo. Regardless, that's not really relevant. What's relevant is that we need to remember not to get too attached to REALITY. Look, whether you believe me, have a different take on things, or whatever, reality is that there aren't enough positives to justify a market rally much larger then what we've gotten. HOWEVER, that doesn't mean we won't go to 8500, or 9000 or even 10,000! Market reality is all based on psychology. Right now that psychology is that you don't want to miss the potentially bigger rally higher. I've said it before here many times, investors are much more worried about missing a rally then they are worried about losing money. It's clearly distorted, but that's human nature.

Many of the US banks are INSOLVENT, that's not me speculating, that's a fact. I've detailed that here many times. And, you simply can't have Timothy Guithner saying that $2 TRILLION probably isn't enough to solve the bank problems. Well, there ya go, proof positive, you can't have it both ways, if the banks aren't insolvent, then why would we need more than $2 TRILLION (hell, why would we need $2?) to bail them out?

The US Taxpayer is a CHUMP, we are all CHUMPS, total losers. We are being ripped off and no one says a word, its rather disgusting. I have two things for you to look at;

That's a short article I wrote.

BUT< even better, and a MUST watch (it's NOT me!);

The overall point of this post is to get anyone off the idea that reality has much, if at times - ANYTHING - to do with what the market gyrations are. I have no doubt that at some point the banks will be Nationalized. I think the problem is so much larger then they can possibly let on to then when it gets out all hell is gonna break loose. We are a very passive society, while in Europe they protest and get 10,000s of people participating, here we get less than 100 people going to Wall Street to protest. A lot of that has to do with the fact that even they are either misinformed or ill informed. It's too bad, I listened to what they all said on Friday and they are barking up the wrong tree. The issue has NOTHING to do with bank lending. ZERO. Bank lending doesn't create jobs, in fact bank lending when inappropriate will lead us right back in a loop to where we are trying to get out of. The same thing is being fraudulently perpetrated by the people in charge. We can't possibly get out of this doing what we are doing. I hope I'm wrong, that would be great, but it's not and that's reality. You can not inflate yourself out of an economic downturn of this magnitude, nor can you create another bubble and expect it to have better results then the last one! And, that's unfortunately what they are doing. It's a joke in my opinion, and the joke is on the US Taxpayer and the long term ramifications are so devastating that their worst nightmares are probably being set up by their actions now. Perhaps they figure that if it happens 10 years from now, at least they will be out of office so they won't have to deal with it.

The PBS interview I posted here is great, the guy talks about what I talk about, which is INTEGRITY, and the fact that this is a moral problem almost as much as anything else. And, in my opinion, the lies continue to be perpetrated. Until we hear the truth, we will get rallies, and crushings again and again and again. Because a market, and an economy, and perhaps a nation, based on lies can't help but eventually break down. It's a shame, I discussed the GS issues last week and it looked like they would do somehting about it, the fact that GS basically stole $18 BIL from the US Taxpayers, but lo and behold apparently GS is above the law, as usual. What a real shame that because they are well connected, and have their cronies everywhere, they continue to help keep the deceit, and get rewarded for it.

I am very disillusioned by our President at this point. Very. I had hoped for more integrity, and yet we have been force fed the same cast of characters and the same policies that have gotten us right smack dab into this. And, even worse, they all claim that what they are doing is "working". If I hear Ken Lewis spew his dang lies about how perfect BAC is, I will PUKE. Literally. Like projectile vomit puke, not just the chucky kind, ya know? Hehe.

OK, so as far as this coming week goes, I am unsure, other than to say I would look to the laggards. Typically in this kind of market the laggards play catch up. So, stocks like ACI, and our IGT we are already in tend to get nice moves even if the market pulls back a bit.

One more thing about the market that I've repeated again and again - the market creates the maximum loss, maximum pain to most investors. Remember, that while REALITY may not maen much day to day in terms of market movement, in the end it ALWAYS gets the nod. Water does indeed seek its proper levels. So, just as investors are jumping back in thinking that the water has no turds left now, they will be crushed when reality sets in. But, as always, I hope I'm wrong and I am NOT short the market here. Let's see what shakes out and go from there short term, we'll leave te long term/reality for investors to get suckered into playing.




FACTOR R said...

waxie i just loved that fight what about you ??

mauiman said...

since tax time is upon us, please let us know which services you use to pay taxes... u say you have an accountant? Does your accountant do your taxes for you or do you do them yourself? thanks, much help. From what I hear its cheaper to file yourself, but can be just as expensive as hiring someone to do it?

ajvsouza said...

Good point, Waxie. I am not a bearish trade but I can't accept that this market will go straight without a health correction. My feeling is that "everything was saved" because DOW reached 8K. Now starts the pain. There is no free lunch!!!

FACTOR R said...

Waxie great coments tks by the way big months for banks here are they gonna make money ? as you know JPM,WFC,BAC,C,GS and on and on they all gonna post in a couple days any idea ?

mauiman said...

This is a great video on how the government is trying to fix "the problem". It bascially explains what they are trying do, which basically just won't work. It sounds about right... What do you think??

In Debt We Trust said...

Replace "taxpayers" w/ "bond sellers" and everything becomes crystal clear.

We are headed towards 3 things:

a) higher interest rates; b) higher taxes; and c) higher levels of govt fraud.

Tiffany said...

thanks for the pbs link. If the banks are in such bad shape what does that bode for real estate in Manhatten, where something like 38 percent of the residents are directly or indirectly employed in the financial markets? I just heard it's already down 30% from the high, this must be the bottom right?

FACTOR R said...

Waxie very funny after that he got fire ???