“Optimism
is the madness of insisting that all is well when we
are miserable."
VOLTAIRE, Candide
“There is no means of avoiding the final collapse of a boom brought about by credit expansion. The alternative is only whether the crisis should come sooner as the result of a voluntary abandonment of further credit expansion, or later as a final and total catastrophe of the currency system involved."
- Ludwig von Mises
“It is impossible to introduce into society
a greater change and a greater evil than this:
the conversion of the law into an instrument of
plunder”
-Frederic Bastiat,
The Law
"Death is the only
wise adviser that we have. Whenever you feel
that everything is going wrong and you're about
to be annihilated, turn to your death and ask if
that is so. Your death will tell you that you're
wrong, that nothing really matters outside his
touch. Your death will tell you, 'I haven't
touched you yet'."
Who, then, is he who provides it all?
Go and find him and you will have once more
before you The Forgotten Man....The Forgotten Man is delving away in patient industry, supporting his family, paying his taxes, casting his vote, supporting the church and the school, reading his newspaper, and cheering for the politician of his admiration, but he is the only one for whom there is no provision in the great scramble and the big divide.
As soon as A observes something which seems
to him to be wrong, from which X is suffering, A
talks it over with B, and A and B then propose
to get a law passed to remedy the evil and help
X. Their law always proposes to determine what C
shall do for X, or in the better case, what A,
B, and C shall do for X.... [W]hat I want to do
is to look up C.... He is the man who never is
thought of.
November 30, 2008 - I often hear the clueless and uninformed talk about needs and the role government plays in fulfilling them. So, I ask you dear reader, what's it worth to ya? How much indentured servitude are you willing to endure each year for the wonderful benefits bestowed upon you by your gentle puppet master, our benevolent government? One month? Two months? Three? Hahahahahah. You silly, silly,
mooncalf! How about 6.7 months? Yes, more than half of your working life today is as a government slave. So, next time you find yourself quacking about government needing to do something, to do more, to provide this or that, take a good look in the mirror. Ask yourself how much more slavery you are willing to endure. There's a
critical mass breaking point out there somewhere.
I envied the snack shop we visited today in Newport. They, along with most other businesses
on this particular street only accepted cash. If I was business, I'd only take cash, too. Sadly, I'm a salary man. There's no way out if you are a salary man. You get screwed the
most as a middle class salary man. You are the
Forgotten Man. I do hope and pray my kids grow up wiser
than I, work for themselves in a cash run business and
live in silent satisfaction knowing their actions
act as the proverbial middle finger of defiance
pointed eastward. Cash business is the only
way going forward in America.
November 29, 2008 - More things to be thankful for:
crushed
ice,
peanuts,
fluffy
pillows
and a
comfortable
bed,
crossword
puzzles,
air
conditioning,
palm
trees,
mountain
trails,
weekends
and
holidays,
decent
paychecks,
plants
and
animals,
toe nail
clippers,
pizza,
disk
wheels,
olive
oil,
barolo,
the
female
figure
(preferably
tan, fit
and
brunette),
cute
little
asian
babies,
freedom
to
complain,
salt air
and that
mangrove
smell....A
worthy read. It shows how little we learn.
I'm pretty sure we're embedded in the great state of California for a while. I really do love it here. Could not imagine leaving for anywhere other than Hawaii, perhaps. I still get heart palpitations looking at Hawaii real estate. No lie. I got 'em last night during my bi-weekly Hawaiian real estate web surf session....We took the kids over to
Newport Beach / Balboa Island today - what a neat place.
The kids rode a Ferris Wheel and ate
Balboa Bars. One neat place down and about 5,000 more to go....Renee experienced several of her fifteen seconds of fame
today. Trader Joes had an art contest over
Thanksgiving and she won! Earlier today when the phone rang and caller ID showed Trader Joes on the line, I said, before answering
(actually I handed the phone to Donna because I
don't 'do' phones), "What the heck is Trader Joes calling
us for?" Man, her eyes lit up immediately.
She just knew she was going to win. She and
Donna are there right now picking up her prize.
I think it's candy. At least, Renee thinks
it's candy because she was trying to bribe Ray with
it all day. Candy for attention. Prepaid
bribery. They learn young....Last week I
decided to become a buyer in one of my IRA's.
I bought AA, BGG, CAG, DD, DOW, EWK, IR, NC and WHR.
All save EWK are stuff stocks (representing companies that actually make things) that have been beaten to oblivion. Their average dividend is paying 6.2% off my purchase price and most of these stocks are at early 90's price levels. Sure, they could drop another 50% or cut their dividends, but it's worth the risk given that we're talking a total investment equaling 3% of my net worth.
About 40% of this IRA still contains cash which I shall deploy over the next six months or so into these stocks
as I see fit - I'm patiently waiting for the next
leg down (which may never come).
November 28, 2008 - I hope everyone had a nice
Thanksgiving and spent a moment recognizing things
to be thankful for. I am thankful for: my
family, good health, happiness, knowing real love,
working limbs, eyesight, senses of taste and smell,
ability to hear, the sky, wind, earth and sea, fried
okra and collard greens, corn chowder, green tea ice
cream, Mexican beer and chips and salsa, that
instant rush when catching an overhead right,
beautiful sunrises and sunsets, the feeling of
relief after crossing the finish line, the joy of a
good book, the smell of coffee, a juicy mango,
making a good trade, shaving cream, soap and
deodorant, a hot shower, a cool ocean swim, seeing
the world, finding a porta potty in the nick of
time, toilet paper, figuring things out, free time,
riding my bike, sitting under a shade tree on a
summer day, the smell of a fresh rain, shooting
stars and fire flies, the ability to recognize
insignificance, and so on and so on....
It looks like the world supply of thirty
thousand dollar millionaires is
thinning. Where are they when all
those
beemer leases are looking for a new
home?
November 26, 2008 -
The Fed and its Lies. How I would love to
peer into the future ten years from now. I
expect to see profound change. I said several
months ago that when 'this' is over people will be
walking around
shell shocked. We are in for a rough ride.
2008 is only the prologue. 2009 will be a
cold, rainy day on the pave. 2010 will be
a punishing climb up the
Tourmalet. 2011 will feel like you were
spit out the back of the
team time trial. By 2012, you'll be facing
Mont Ventoux, dehydrated, with saddle sores and
a serious case of the runs. You'll wanna quit
and curl up in the back of the team car. Right
about then, the sun will begin to peer from the
clouds and those who saw the signs, reacted and
prepared properly in 2007-08 will have a fighting
chance. Pare your expenses, shun debt, save,
hedge against further potential stock declines (even
the hidden declines) and don't rely solely on
housing equity, social security or
pensions to save your skin.
November 25, 2008 - How's
this (and
this) for perspective. I'd say we are on
the road to the poor house. Unbelievable. This
is why I buy physical gold.
November 24, 2008 - Yahoo! It's sunny skies
again! Mr. Market has gone manic. Nice
for a trade, but this is nothing more than the eye
of the hurricane in my opinion. The
CDS grim reaper manifests in the shadows
drifting ever closer. S&P 500 to 500.
See it. Feel it.
Bye bye dollar. Hello tax man.
Lovely. Thanks,
government knuckleheads.
November 23, 2008 -
Will the government bail out Shitibank tonight?
It's the next soundtrack in the long line of broken
record banks. Unlike Lehman, they will be
deemed too big to fail and will be nationalized
along with JP Morgan soon after. Maybe the
market rallies off this news? I can't imagine
it's good for the dollar, though. I wonder if
Chuck Prince is out dancing somewhere tonight,
spending a little of that golden parachute?
November 22, 2008 p.m.- Here's a neat
website. A visual representation of the
performance of SP500 components. And, here's
another enlightening spreadsheet
I put together. Imagine yourself a young
investor back in '29. You walk into the local
brokerage house and a slick financial advisor talks
you into buying the DJ-30 telling you tales of
riches if you just buy and hold. Unfortunately
for you, it is September 27, 1929 - the day the the
Dow hit the high water mark of 386.10 right before
the start of the Great Crash. Thankfully, you
were young because over twenty five years would pass
before the Dow would breach 386.10 again. Yes,
the Dow finally closed above this mark on December
8, 1954 - at 393.10. Twenty five years for
nothing. Now, your advisor died long ago and
his son runs the business. Buy and hold says
he. It's the surest road to riches. You
are just so happy to have gotten back to even you
continue to hold because those juicy returns
promised long ago are right around the corner.
Thirty more years pass. You are really old
now. Practically bedridden. It is
December 7, 1984 and Dan Rather informs you on the
evening news that the Dow closed at 1163.20.
Your visiting grandson, a math whiz, calculates that
your fifty five year buy and hold strategy just
netted you a 2.0% annualized return! What!?
That simply can't be! My advisor told me I'd
earn 10-12% on average over the long haul. You
mean I suffered through fifty five years of stomach
churning volatility only to get my ass kicked by
inflation!? Nurse! Get my nitro glycerin
meds! I think this is the big one!
Unfortunately, it really was the big one and so you
never did get a chance to enjoy those juicy returns.
Your trusty advisor was a pall bearer at your
funeral. He strikes up a conversation with
your boy. 'Son', he says. 'Now I know
you've inherited a little cash. Trust me, boy.
Buy and hold.' Junior complies. Fifteen
more years pass. It is now January 14, 2000,
and the Dow closed at 11,722.98 - it's peak before
the dot com crash. Lo and behold! You
really did make out! Junior averaged 16.5%
over this period. Sadly, something else
happened during these fifteen years. A
veritable army of young, wet behind the ears
financial advisors cropped up during this period of
unprecedented stock market growth chanting buy and
hold incantations. An entire school of thought
propagated by CFP programs and MBA classes
brainwashes these impressionable young minds.
Armed with newly minty diplomas and credentials,
they spread across the land preaching their
strategy. Buy and hold. Dollar cost
average. After all, they can't pay their
mortgages by telling you to stick with cash.
Gotta earn those fees. So, Junior continued to
hold, and after almost nine more years the Dow
closed at 8046.42 on Friday. Juniors 16.5%
annualized return has been cut in half. Yes,
twenty four years of buy and hold landed him an 8.4%
return. Not too bad, relatively speaking.
But, certainly not so good, either.
Unfortunately, Junior will continue the path of buy
and hold and in a few more years, his return may
equal that of pops. 79 long years have gone by
since that brokerage house visit. And, 3.9%
average was all the family earned. Ok, ok, I
excluded dividends. But I also excluded
inflation.
November 22, 2008 a.m.- I am starting to leg into some
stocks and ETF's for my IRA which has been idle in
cash for some time. Granted, I think we
haven't witnessed ultimate bottom for the indexes
but that doesn't mean there aren't relative bargains
out there. I've been in and out of some of
these names for a trade but I think it is time to
just hold my nose and start accumulating in small
doses. A little here, a little there.
So, what am I looking at? AA, DOW, DD, IP, IR,
DXO(or USO), SHS, EWK, GDX, TBT, RSX, APC, TXT, UNG,
UYM, UDN are a few. Mostly stuff that's been beaten
to a bloody pulp but with a little prayer will
remain solvent! Say I fill 20% of the bucket
now and the remaining 4 x 20% buckets over the next
24 months. That should be a pretty safe bet.
I may not buy all of these. But, I guarantee
AA, DOW, DXO and IR will make the portfolio. I
especially like DXO. I've already bought it
and promptly went red, but does anyone really
believe oil will be $40 a barrel in ten years or
gasoline will stay under $2.00/gallon? I think
we're near screaming buy territory from a long term
front. Especially since the future dollar
printing effects haven't taken hold. My plan
on DXO is to buy another 1,000 shares each time it
drops a dollar. If it goes to 50 cents, I'll
put everything I own into it. Ok, now that
I've told you this don't go copy me. When it
all blows up and you lose everything you'll have
nobody to blame but yerself!...Obama's right on
schedule for
profligate government spending. Man, this
stuff is so obvious. I feel like I've stolen
the playbook a week ahead of the game. Get
ready for those printing presses and astronomical
budget deficits. Ok, time to go
for a run...Just got back from a 10 mile trail run.
The trail is my thinking office. I
burn more calories thinking than running
when I am out there. I decided to
add more gold to my holdings. I am
working up to a sizeable holding because
I just cannot get my head around our
nation's spending. Try as I do to
find a comforting solution, every door
is a trap. Every path is mined.
There's just no good way out. In
the end, we either default on our debts,
we print, we tax like hell or we do a
little of each. Facing these
options, how does our currency not
ultimately crash? Ok, maybe we
save like mad and pay our bills down.
That is a possibility I suppose. A
very remote one, indeed. It's hard
for a nation like ours to save when
saving increases unemployment and
unemployment reduces tax receipts which,
in turn, reduce our ability to service
our insane debts. Ugh! See
what I mean? All roads lead to
inflation and currency devaluation.
One year's salary in gold at today's
prices should help us hedge against this
probable event. So this is our
target acquisition balance. I've
been buying from
www.tulving.com. He's one of the few out
there today that actually has gold in stock.
It is very hard to come by nowadays. I've also
got some stashed at bullionvault.com. The nice
thing about holding the physical stuff is you can
sell some as needed, coin by coin, and nobody needs
to know how much you made on the transaction, if you
know what I mean. Not that I would ever
advocate doing such a thing.
November 21, 2008 - We got a late day bounce. Call it the Geithner bounce. I would feel much better about its longevity had the daily chart looked like that of gold. I don't particularly like a bounce created solely by a non-event news item such as the placement of some corrupt banker at the head of treasury.
Or, maybe the news item was
Old Bug Eyes taking the
secretary of
state slot. (How many more decades must one tired nation endure Bushs and Clintons?) By the way, did you see the movement in gold? That was something. Perhaps it is a telling sign that hedge fund liquidations have slowed? Maybe it's a realization that Bernanke is going to continue his quest to trash the dollar and the effects are just around the corner. Perhaps it is in response to this
news item....Ron Paul's a good guy with the right message but terrible
delivery. He just rambles on politely. My God, man. Go for the jugular! Hey, it may pay for you to go back and read this
speech by Helicopter Ben.
No real deflation here, folks. Not with a fiat system backed by nothing but a souped up printing press.
November 20, 2008 - I guess we had to settle for
unprecedented ugliness. I smell fear and
capitulation. I am irritated that I abandoned
my shorting game plan too early. I got bullish
and paid the price. My IRA now sits in the
red. We are going to get a bounce. Maybe
it starts tomorrow or maybe we have to wait until
December 1 (after mutual fund fiscal year end).
But, we are going to get one. And, it will be
a wicked run to the upside. Perhaps we get
30-40 percent from here over a few months.
Then, we shall resume downward to the ultimate
bottom of 4-500 on the S&P and 3-4,000 on the Dow.
This is one man's opinion. How do I know this
here right now is not the bottom? Well,
people still haven't sold out. They're hanging
onto their portfolios hoping for a return to the
good old days. They are planning retirement.
There's still hope out there. CNBC still has
ratings. Financial planners still have an
audience. People still believe that Obama
means 'change'. Unemployment hasn't reached an
apex. Civil strife hasn't begun in earnest.
Societal acrimony against the professional
athlete/celebrity in-your-face display of wealth and
inanity isn't even on the radar yet. In short,
we are slow to recognize our very own
Minsky Moment and we don't yet appreciate the
magnitude of our situation. (In case you
missed, read the second quote up above) Just wait a
year or so from now when the economy is really bad
and foreign governments decide they no longer want
to fund our deficits. There will come a day
when people just can't take any more bloodletting.
They will want out of stocks at all costs.
They will never want to even hear the words 'stock
market'. Suze Orman will lose her TV slot.
Financial planners will go back to selling used
cars. Uttering the phrases "buy and hold" or
"dollar cost average" in public will get you capped.
That, my friends, will be the sign of a market
bottom. The key between now and then is
maintaining what you have. It will be very
difficult because there will be obstacles yet known
to overcome. War, government confiscation,
currency implosion, theft, bank failure, who knows?
Maybe nothing. Maybe we all wake up from a bad
dream. Twelve years. The SP500 is back
to 1996 levels. This is what happens when you
live in an illusion propagated by criminals.
Our country is a massive ponzi scheme unwinding.
$5 of debt to produce $1 of GDP. In a country
that barely averages 3% annual GDP growth and only
because of insane debt usage and the deployment of
irresponsible government sponsored bubbles, how can
one expect 10-12% annual stock market growth?
It is impossible which is why there are 20+ year
periods within stock market history where a buy and
hold strategy is deadly. Today,
Zero Hour is upon us. Fed interest rate
policy is now useless. The Fed Funds rate is
effectively 0%. Can't go lower. Besides,
low interest rates got us into this mess to begin
with. How can they get us out? They
can't, because we're mired in too much debt.
Why would we want more? Wall Street banker
heads should roll. Congress heads should roll.
Instead, mom and pop heads will roll. I
believe we are in the beginning of Great Depression
II. I'm probably wrong and I hope I am.
But, I am playing it as such. And, my view of
the
market is centered on this belief. I
invite you to read
this and
this.
Wow!
November 19, 2008 - [Important
chart] Is it ok if I just delete that
last sentence from yesterday's post? What I
really meant to say was I think we're gonna have an
upside breakout but you have to turn the charts
upside down to see it. Gawd, that was ugly.
Maybe the wheels really are falling off. I
just can't believe the prices of some stocks.
Like AA. It's trading now at 1992 levels!
Stunning. Glad I sold when I did.
Although I must confess, I re-bought a few hundred
shares for my IRA this afternoon. We are
either going to get a solid bounce very soon or
tomorrow could be the continuance of some
unprecedented ugliness. How's that for a
worthless forecast, eh? I should be a Wall
Street analyst. There is a silver lining here,
though. We are now halfway through the pain
down to the ultimate bottom. I do hope
everyone reading this site hasn't been too damaged
by this unfortunate but unfortunately necessary
cleansing process. We still have a long way to
go and it won't be very fun. However, count
your blessings. By reading this I know you are
alive. Hopefully, you are healthy too.
One evening, back in 1985, I ended up stuck in an
elevator for a couple of hours somewhere between the
18th and 19th floor (if I recall correctly) of The
Castillian dormitory at the University of Texas at
Austin with a case of beer and a group of buddies.
We thought it would be fun to see what happens when
five guys jump up and down in unison. Of
course, we didn't think of the potential
consequences of this experiment nor did we have the
foresight to consider the biological side effects of
the young male human digestive system trying to
process and rid itself of excess alcohol consumption
within a tightly confined space. Anyhow, this
was where I met the good friend of my roommate.
You figure out pretty quickly in these conditions
whether or not you are going to like someone you've
just met. Anyhow, he's a guy I decided I'd
like. We bumped into one another a few more
times over those early years but that was about it.
I heard through my old roommate recently that his
buddy was stricken with pancreatic cancer. He
passed away this Saturday leaving a wife and two
boys while I was outside playing tennis with Donna
and Renee. This was my sad recognition.
So, what's the point here? The point is you
could die tomorrow. You could go blind.
You could become terminally ill. Love, family,
life, health trumps everything else. So grab
it by the bullhorns, hold tight and enjoy every
moment while you can. The economy, your money,
the world - all that stuff is secondary.
Manage it best you can, but remember the priorities.
November 18, 2008 - The idea of a taxpayer bailout
for the
auto companies is nauseating. Especially
for $73/hr union workers. You know, I am
constantly amazed by how often we hear requests for
some form of government help. Don't people
ever wonder where the darn money comes from?
Government is little more than an inefficient
machine controlled by sycophantic miscreants with
sharp elbows dedicated to robbing Peter in order to
pay Paul as a fuel source to maintain their engine
of power. And, as they say, government will
always have Paul's support. To steal from JK
Galbraith, this concept is so simple the mind is
repelled. And so, the thieving pigs continue
stealing our descendants blind. Those poor
little Peters. They have no idea the size of
the shit sandwich piggy baby boomers bequeath unto
them. There are too many Pauls in this
country. As the pigpauls run amok in the pen,
you end up with Iceland.
Those
folks are in for rough times and I feel sorry
for all the innocent citizens struck by the
metaphorical stray bullets sprayed incoherently from
the Mac-10 derivatives of corrupt bankers and
politicians. Too bad for them the Icelandic
Krona wasn't reserve currency....Fwiw, I think we
are about to have an upside breakout in the market.
I wouldn't trade on it, though!
November 17, 2008 - Lurking
danger in a secular bear market. Well, I
did tiptoe back into the market during my self
imposed three week market exile. I just had to
hit my old monthly standby - BIDU call options.
Sold 10 Novembers at a 220 strike late last week.
Olde Faithful worked her magic today, dropping
something like 25%. Sadly, I believe BIDU and
I shall part ways this month. The gift that
kept on giving these past eight months has now
reached a price level I am no longer comfortable
shorting. Options expire this Friday and we
shall move on. We had an amazing weekend.
Stunning weather non stop. Trail runs, bike
rides, tennis, massive tickle sessions and aerial
bedflops with Renee, and the beach. Hopefully,
this next weekend is more of the same plus a little
longboard surfing at Doheney...Within which investor
personality group do you reside? A
venturer am I...Wow! You'd need nerves of steel to
play around with
these. But, they sure would be fun on a
solid trend day. Hmmm.
November 16, 2008 - Scroll to the
bottom and read "The Only Cure for a Bubble."
It's a good article. So many are concerned
about deflation based on present
experience(depending on your definition). But,
I've been swayed by research (hopefully not too
corrupted by data mining) from the deflation camp to
believe we've got serious inflation headed our way.
You have to look ahead to see it. The focal
premise for inflation is US is not tied to a gold
standard, or any standard imposing unlimited
reflation possibilities. There's absolutely
nothing to prevent our government from
cranking up
the printing presses to prime the economy. Of
course, it will be illusory to those who are last in
line to receive the flood of new paper. But,
it will help the bankers. Anyhow, the gold and
farm land play is less about earning a return and
more about preserving value....Today's top 10
searches on Yahoo include #6 coupon codes, #8
balance transfers and #10 metal detectors. A
sign of the times. Six months from now I
predict #6 pitchforks, #8 torches and #10
stocks.
November 15, 2008 - It was such an incredible day
today I simply had to photograph it. 80
degrees. No humidity whatsoever. Not a
cloud in the sky. I took my camera on my 10
mile trail run and snapped a bunch of pics of my
favorite look out point.
This is the
Starr Ranch
owned and managed by the Audubon Society.
Donna was able to piece the photos together into a
panorama. Enjoy.
The Five Stages of Collapse. What's ya
gonna do? Keep yo head in the sand?
Pretend none of this is really happening?
Believe those economists that say everything will be
back to normal in Q2 2009? Hold those
portfolios until they're back to breakeven?
Maintain an unrealistic sales price on that suburban
home because it's extra special? Think
Iceland. Think South Korea
Asia in 1998.
Recognize that everything you were raised to believe
was normal was actually unsustainable fantasy.
A big box store on every street corner. Five
hundred credit card offerings in the mail each year.
0% financing. 100% LTV home loans.
Hummers. A world awash in plastic. Is
this just a slight economic dip before the
trajectory begins anew? Or is it the beginning
of forced change? I think the latter.
But, I've been uneasy about things for a very long
time. Most of my adult life, in fact. I
never could shake a feeling of imbalance.
Like when you're sitting in front of a high def flat
screen washing down an extra large pizza with a cold
import while watching images of starving African
kids with flies in their eyes. Sorry, but I'm
a mean reversion believer. I just think
something unpleasant awaits. I hope I am wrong
but it doesn't hurt to ponder the possibilities and
be proactive. Did you see how fast the stock
market fell in October? Do you understand that
bad stuff always happens quickly? That's
because it's bad. It's job is to take out as
many people as it can. Again, take
Iceland.
How would you like to wake up one day and find no
one willing to take your currency? You just
went from wealthy to poor in the blink of an eye and
it wasn't even your fault. It was the system
run by bankers and politicians that did you in.
Now you're hosed. I know. You think I am
a nut. I was a nut when I sold my house.
I was a nut when I got largely out of the market and
into cash back in 05ish. Now I am a nut for
acquiring gold coins and looking for farmland in the
countryside. We'll see. I'd like to find
three or four like minded people who'd like to pool
some cash together and buy 100 acres or so with a
longer term plan of creating a self sustaining
commune. I am being serious so don't laugh.
Email me only if a) you are interested and b) I like
you.
November 14, 2008 - I had a funny feeling
the markets were going to be unruly
today. This morning, as I stared
at my screen I thought to myself, 'Rob,
lately you've regretted not selling
every time you've seen a gain in your
holdings cuz the volatility just takes
it away.' So, I sold everything
(except my DECK and BOFL shorts).
Now, I sit purely in cash and am going
to take at least a few weeks off.
I really need a break. This market
is too crazy right now to trade with a
full time job. You can hardly get
up to go pee let alone leave for work.
Why people
continue to look to government for help (think
national healthcare) or think that government
can fix anything or that it can perform better
than private industry simply boggles my mind.
The reality is that things work in spite of
government. How many
examples do you need?..This
is just terrible! To think that those
poor unions will have to forgo raises, and
housing projects will be mothballed (we
certainly need more of those)! Oh, and
those recreational basketball leagues.
What on earth shall the people do without
recreational basketball leagues? Please,
Congress. Pretty, pretty please!
Help us! Think of those poor recreational
basketball players.
November 13, 2008 -
Interesting thought below. I've always
been perplexed by the workin' man treadmill of
life. Work more so you can buy more crap
largely ignoring the most important things in
life: family, health, outdoors, sanity.
But I guess that title means something. As
God is my witness, the day my child rearing job
is over, we become minimalist nature people - no
phone, no TV, off-grid, maybe 1 car (very
small), absolutely no cell phone or Blackberry,
no plastic, no packaged food, no house-filler
crap, lots of books and fresh produce. My
next book purchase:
This has been quite a trader's market.
Today was simply stunning. I
loaded up with QLD and SSO this morning
figuring we were due for an oversold
bounce. The market tanked and I
became a little concerned of my timing.
But, at 1pm on the dot, old faithful
started to blast off. Wifey called
me throughout the day fretting about our
balance (she has yet to develop nerves
of steel - a trait necessary for any
trader). I kept telling her not to
worry, but to make her feel better I
gave her a sell target since I am at
work and can't monitor things. She
sold out for a nice gain about an hour
before close. Unfortunately, that
was just before the meat of the returns
started to develop. Sigh.
Another bundle left on the table.
Ok, so we've tested the lows three times
now. Each time a level of support
is tested it takes out a layer of
buyers. Likewise, each time a
level of resistance is tested, it takes
out a layer of sellers. When we
test these lows again, look out below.
I heard on the news today that
economists are expecting the economy to
rebound by 2Q 2009. I want what
they're smoking. Well, I do
believe tomorrow I am going to start
building some positions in one of my
IRA's for a longer term hold. DXO
and UNG only. Here's the
reason why. Right now we're
experiencing the effects of demand
destruction due to the worldwide
recession. It's nice to see
gasoline prices drop over the past four
months from $4.65 to $2.45 a gallon at
my local station. This will no
doubt breed complacency and people will
probably go back to buying F350's unless
Ford ceases to exist. Anyhow, I
added to my AA position today.
Current holdings: AA, VZ, BCO, RSX
and short BOFL and DECK. BCO's a
little red but everything else is in the
money. AA's my biggest holding at
2,200 shares. The rest are chump
change. It was nice to see BOFL
finish in the red after a day like
today. Tells me they're sick.
I've got my eye on MON for a short.
Looks a lot like a bubble to me.
November 11, 2008 -
Squealing pigs (Goldman
is the biggest pig of all. Isn't
Hank Paulson an ex-Goldman guy? -
rhetorically asked. Where or where
are the pitchforks?) belly up to the
bailout trough. Further
enabled by the scum that is
Pelosi. Here's a fable:
A girl (US taxpayer) walks into a bar.
She orders a drink and strikes a
conversation with the guy next to her.
He (republicans) slips a little ghb into
her drink. His buddy (democrats)
takes her out back and, well, you know.
Moral of the story: You get screwed no
matter who's in office.
November 9, 2008 -
"Jim Smith was a talker—no ordinary
talker. . . a man given to blasphemous
eloquence. When he started cussing. . .
he could peel paint off a stove pipe."
I'm sure old Jim would've been proud of
the expletives muttered by a couple of
mountain biking newbies suffering along
his torturous trail yesterday.
I've been on some long, tiring rides
before. But this one ranks high on
the all time list. It was what I
like to call a deathbed day (the kind of
day I will recall with fondness upon my
deathbed) It's up there with the world
famous eleven hour Cuddeback-Gisclair
ride over the Aubisque back in '06.
There were trails where Donna and I felt
like
pigs in a pipeline the thicket was
so thick. There was the time I
went over my handlebars just moments
after I erroneously convinced myself I
could make that descent. I didn't.
Instead, I caught my privates with the
end of a handlebar and ended ten feet
down a ravine in fetal position crying
for mommy. We rode paths that
hadn't been traversed by a knobby tire
in years. We got seriously lost
and one bad decision led to another as
we drifted further away from home.
It's a funny thing being stuck up on a
mountain ridge two hours before sunset
knowing that under the best of
circumstances it would take four hours
to get home. We discovered that
once you've reached the ridgeline fire
trail it ain't so easy to get down as
there are only a handful of available
descents and they are miles apart.
So, you're sitting up there at
fifty-something hundred feet looking
down on your town, looking at L.A.,
looking at Catalina Island, looking
eastward as far as the eye can see and
there's no easy way down. It's
beautiful and you're happy to be there,
but you really do want to get down.
You start thinking about the nice meal
you aren't going to get to eat and the
comfortable, warm bed you won't be
sleeping in tonight. But you are
living and it beats the hell out of
sitting in front of the tube wasting
your life watching ESPN. Man, we
wanted to get down, though. As
tough as it was, I do think
Clarence was watching over us making
sure we'd be ok. We found a fresh,
unopened bottle of water at a point when
we were absolutely parched and out of
fluids. And, we found a couple of
forest service guys in an otherwise
desolate area who ultimately saved our
bacon and got us down to Silverado in
their trucks. Without them, we'd
have spending the night up there cold
and hungry. I'd do it again.
Recognizing that I don't know squat,
that I am not by any stretch an
investment advisor, don't pretend to be
one and that I spout gibberish daily on
things you should not listen to I've
offered to post a little
spreadsheet that
really highlights why capital
preservation is so important. Take
a look at the first row. Imagine
your investment is down 5%. If you
cut your losses there, you only need a
5.3% return to get back to even.
Assuming the market returns 8% on
average and further assuming inflation
runs at 3% and even further assuming you
can earn market returns, it will only
take you 1.06 years to recover your
loss. Now take a look at a 50%
loss scenario - 14.2 years just to break
even! Lesson: limit thy
losses. I've pared back some of my
holdings and now only hold AA, VZ, DD,
EWK and am short BOFL. They're all
in the green but will be cut at a
moments notice if things turn sour.
Here's a
screenshot of the
DJ-30 going back to 1896. I've
drawn a white trend line to show why I
think the Dow could go to 3,000-4,000.
You can see the kink in the trend
starting about 1982 - right about the
time this country embarked upon it's
twenty five year deficit spending debt
orgy. Of course, I could be wrong
and the Dow could go to 40,000.
I have to admit I was
faked out by the oil bubble. I really
did think the lion's share of the recent
price increase was due to peak oil. I
should have known that all things
experiencing hyperbolic rises are, in
fact, bubbles. I won't concede, however,
that oil will not resume it's trend
upward. It will once we've plodded
through this recession/depression and
reach the other side. So, what's the
next bubble staring us down? Government,
in my opinion. Government is a cancer
that continues to grow even in this
recession. Let's take California, for
example. Along with some rather
wimpy spending cuts, the California
governor wants to plug the dike in
California's exploding deficit by
increasing taxes. Pure genius. Increase
taxes to the citizenry right in the
middle of the worst recession (to be)
since the Great Depression. I'll
just adapt by making most of my
purchases out of state using ebay.
Government shortfalls are due to
government size and ridiculous
compensation schemes. Private citizens
watching their 401k's and home equity
evaporate will not receive tax increases
kindly while knowing public employees
enjoy the luxury of retiring at age
fifty on 90% of their incomes for life
via tax-funded pension programs. The
friction between private and public will
certainly amplify by late 2009 when the
U.S. unemployment rate reaches 11%. I am
going to keep a very open mind with
Obama. I wish him well and hope that he
does the right things. I'll give him six
months to a year to prove himself. I am
not encouraged, though, because he is,
after all a democrat and we are stuck
with a horrible democrat controlled
congress. I fear they will do some
amazingly stupid things in the face of
economic disaster. The big question on
my mind is: As we become a nation of
forced savers, as we import less, as
foreign nations receive fewer dollars
with which to reinvest into US debt, as
our federal spending explodes, as the
fed funds rate goes to zero, who will be
there to invest in our trillions of
dollars in future debt issuances? And,
at what interest rate? I see a very
steep yield curve in our future which
has it's own negative feedback
connotations with regard to employment
and housing prices, etc. Ugly, indeed. I
once had a quote up top by Edward Abbey
that stated, "Growth for the sake of
growth is the ideology of the cancer
cell." It struck me since I have always
questioned the reasoning behind such
philosophy. You see it everywhere.
Everyone always talks about growing. 'We
need to grow.' 'Our strategy is to
grow.' 'We want to be the largest
blankety blank in the blank.' And I
always wondered why pure growth was the
strategic focal point. I always thought
sustainable profitability growth should
be the goal, at least from a business
perspective. I've seen a lot of
bad/unnecessary growth in my lifetime.
I've seen a lot of bad management too.
I've concluded the growth mantra is
basically chanted by brainwashed,
uncreative lemmings many whom seem to
gravitate to the top of organizations.
Fortunately, my current employer seems
to be run by thoughtful people who
really appreciate our current economic
conditions and are adjusting
accordingly. .....This
site caught my eye. The book is ten
years old but still appears a relevant
read. It's on my reading list.
November 5, 2008 - And to think
this was written eight years ago!
By the by, where's Dick Cheney?....Fyi,
I am still sticking with my 400-500
ultimate destination prognostication for
the S&P 500 and 3,000-4,000 for the
DJ-30. It's goin' there. Before Obama's
re-election campaign. I trade and
invest accordingly.
November 4, 2008 - This election was
anticlimactic. Pretty obvious that
McCain didn't have a chance against that
streamlined man who thinks in slogans
and talks in bullets. I'm not sure what
'change' we're gonna get. What? Less
stupidity? Less government intrusion,
growth and spending? Uh huh. I
speed-channel surfed for about twenty
minutes this evening but just really
couldn't stomach watching the prime time
election coverage silliness. The camera
panning over throngs of hangers on,
flailing their arms, waving, smiling,
cheering with their signs for their man.
I'm mystified as to what type of person
does that. Are they groupies? Do they
feel like they've won something? I guess
there are a lot of needy folks out there
that get some sort of vicarious victory
feeling which they can't summons on
their own. Probably the same type of
folks who think it's alright for gubmint
to dig more into my pockets to ensure I
pay my 'fair share'. I'm sure I shall be
awestruck at the level of government
spending that lies ahead of us now that
the Dems are large and in charge...Here's
an example of absolutely moronic
journalism which fatigues me so. Yes,
the dollar gained against the euro
solely because of speculation tied to an
Obama victory. Never mind it's been
gaining since August for many reasons.
Today, Obama moved the currency markets.
November 1, 2008 - I really like Ron
Paul. I just wish he was more mean. He's
way too polite with Bernanke. He should
verbally drive that putz into a corner
and eviscerate him with humiliation.
Here's a good interview with
Marc Faber. Make note of what he
says during around 6:45 into the
interview. We've gone through a housing
bubble. We've gone through an equity
bubble. We've gone through a credit
bubble. What's the next bubble? I
believe it may be gold. At the moment,
I've allocated about 10% of my net worth
into gold. I'm not going any further
with it because it is likely that gold
will drop more in the near term. Perhaps
down into the high $500's. However, I
can imagine it reaching the $3,000 range
sometime within the next few years as
our government heads to the printing
presses.
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