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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?

                            

The choice we face is ominous:  We either accept world-wide authoritarian government holding together a flawed system, OR we restore the principles of the Constitution, limit government power, restore commodity money without a Federal Reserve system, reject world government, and promote the cause of peace by protecting liberty equally for all persons.  Freedom is the answer. [FWIW, my bet is on choice #1].  By the way, I forgot to wish everyone a happy "End the Fed Day" yesterday.

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:

Herbert Marcuse strongly criticizes consumerism, arguing consumerism is a form of social control in his book "One-Dimensional Man". He suggests that the system we live in may claim to be democratic, but it is actually authoritarian in that the few individuals are dictating our perceptions of freedom by only allowing us choices to buy for happiness. It is in this state of “unfreedom” in which consumers act irrationally by working more than they are required to fulfill actual basic needs, ignoring the psychologically destructive effects, ignoring the waste and environmental damage it causes, and also by searching for social connection through material items. It is even more irrational in the sense that the creation of new products, calling for the disposal of old products, fuels the economy and encourages the increased need to work more to buy more. An individual loses his or her humanity and becomes a tool to the industrial machine and a cog in the consumer machine. Additionally advertising sustains consumerism, which disintegrates societal demeanor, delivered in bulk and informing the masses that happiness can be bought, an idea that is psychologically damaging.

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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