October 10, 2007
I expect to see a dip of some kind this month. At least, that is what my trading strategy is all about. A minor panic is not out of the question. I am keeping a lot of cash available for just such an event. I might raise more cash soon.
October 2, 2007
Here is a link to 'Dreadful August For U.S. Home Sales', by Carl Gutierrez of Forbes.com.
And here is a link to 'House of Cards', by Jonathan R. Laing of Barrons. I quote it below.
Worse, Gundlach doesn't see much chance of a recovery in home prices until still later. Housing cycles in his experience typically trace elongated U-shapes rather than the V-type patterns so often seen in stock markets. For one thing, home-price information is often episodic and poorly-reported. Too, housing market fundamentals take a long time to play out, making shifts in market psychology far less mercurial than in the stock market."
October 1, 2007
Here are links to two articles that caught my eye. The first is 'Freddie Mac chief warns of recession', by Saskia Scholtes, David Wighton and Stacy-Marie Ishmael of the Financial Times.
The second is 'Is Florida Over?', by Conor Dougherty of the Wall Street Journal. I quote it below.
September 28, 2007
In his latest note to me Rich Kolon made a reference to this being the 'Britney' economy. I caught that right away because I have been thinking along the same lines.
This summer I had a patio full of young folks eating bbq. Most of the young men present, including my step son and my step daughter's boyfriend I would qualify as techies, in that they make all or part of their living solving computer related problems for other people. The youngsters were universally complaining about Apple's I-Phone, which had not been out very long. Their chief complaint was that it really did not do anything new...it just displayed old functions in a new way.
I told them that this kind of thing had been going on for a long time now. I told them about a conversation I'd had well over a decade earlier with two friends of mine who were all agog about HDTV. I burst their bubble when I reminded them that they'd still have to watch the crappy ads put out by our local Toyota dealer. Only on HDTV you'd be able to see bad ads in high definition.
'Putting lipstick on a pig' is a phrase that has been around for a very long time. A truely ancient phrase, that is a related idea, is 'a pig in a poke', which goes back to a centuries-old French story. Often technology just puts a pretty wrapper on something that is old, or something mundane, or something that is simply awful.
I also had to remind the young techies that Apple's ads had really not promised anything more than the display, and that Apple was going to sell a gazillion I-Phones, no new functions and all.
What technology has done well is to shrink the world, and that is not always a good idea. Last night I checked my phone messages and there was one from my wife's boss asking if the Casper office would be able to perform a particular chore on the 20th of October. The wife is not on this side of the continent right now. She's visiting her daugher in North Carolina. I am covering for her at her work. The boss wanted an immediate answer. But I decided I would be talking to my wife later that evening and to a coworker in the morning and I could then give the boss her answer today. I called both the boss's office and her cell phone and got an answering machine each time. So I left a message. Later in the day, while still at work, I got an email from the boss asking for an answer. I emailed back with the answer and reminded the boss that I had left that answer on her machine.
Did you get that? I left the message and the boss did not get it because she is only human and can access only so many communication devices at any given time. Technology has given us many more ways to reach other people and to access information. But does that mean we each need 12 televisions, 12 cell phones, and 12 computers? Is there some logical limit to all these gadgets? I think so. When some new device comes along do we really need to add it to the pile of gadgets we already have and can't use? What is the advantage to society as a whole to having teens text message? In particular I am thinking of the kid who rammed my wife's stationary car from behind this Spring, leaving no skid marks, and who emerged from his totalled vehicle still texting.
My generation went to college with land line phones. This generation has cell phones. Do we communicate better? I don't think so. The kids can put caller id on a cell phone and just do not answer the thing when the folks call. The biggest difference is that now we pay more to communicate less. Does that make sense?
The 'Britney' part comes in with the idea that everyone should have whatever they want when they want it. You make 60K per year and you want to buy your wife a million dollar house? No problem. You want to buy a new pickup? The million dollar house you bought two months ago is now worth 1,050,000. We'll refinance your house and you can pullout any equity you need to buy that pickup. Don't have a credit record and don't make any money? No problem. We'll get you a loan that forbids your lender from asking any inconvenient questions.
I know it is a faster paced world now. But I have serious doubts about the quality of the technology-driven conversations happening now. Do teens have better conversations now than they did when I was one? I have to doubt that. For one thing, what with their ears and eyeballs taken up by one gadget or another, they read a tiny fraction of what I did at their age. Quantity of communication is not quality.
My wife, in an attempt to justify all the money we spend per month on communications so she can 'stay in touch' with her kids, gave me the 'Britney' explanation. I reminded her that being able to invade their lives, their privacy at any moment during the day, might actually be viewed by some as invasive. Here we are trying to assist in growing these kids, then we hand them invasive technology which will give them (and in theory us) instant gratification. A large part of growing up is to learn to delay gratification. So, with the 'Britney' economy, and with the 'Britney' communications, aren't we killing the whole idea of delayed gratification? Aren't we, in a way, keeping the whole society from growing up?
September 27, 2007
Here is a link to 'New-Home Sales Tumble to 7-Year Low', by Jeannine Aversa, AP Economics Writer. I quote it below.
Of course, home builder stocks rose today in the markets.
Richard Kolon sent this link yesterday to 'Winter heating costs could rise an average 10.5%', by Barbara Hagenbaugh, of USA TODAY. So even if you did buy a house this year, can you afford to heat it?
Another link Rich sent me was this to ''Triple whammy' market opportunity; Commentary: Foreign ETFs are key to profiting from weak U.S. dollar', by Bill Donoghue of Marketwatch.com.
A third link Rich sent was this to 'Faber: How investors can beat hyper-inflation', by Dan Slater. I quote it below.
...Faber reckons the Fed under current and former chairman Ben Bernanke and Alan Greenspan has demonstrated breathtaking intellectual dishonesty. 'When asset prices are going up, they appear to believe there is no reason to interfere. They only interfere when asset prices are going down. That's a massively asymmetrical approach to the problem.'"
Here here! And if you think the FED is dishonest about what dangers it choses to fight, you really should take another look at how it calculates inflation. Faber mentions that in this article, but I don't think even he realizes just how skewed that data is. My back of the envelope calculation is that real inflation has run about eight percent a year for the past ten years. The FED and the Feds simply lie to us about it, and we accept the lie.
Rich says that he has a lot of his money in foreign stocks and/or ETFs. I looked carefully at them and a lot of the good ones seem over-bought right now and should correct down to where I might buy them. Meanwhile, I bought a couple of stocks listed on the NYSE with good foreign exposure: Boeing and Toyota.
September 24, 2007
It was gratifying for me to see stocks up this morning because the averages have been looking toppy, particularly the S&P 500. I used the upswing to sell half my CROX, all my YHOO and OXPS. Then I bought some QSII, which just barely made it into my top 8 this weekend.
September 19, 2007
I guess there is a rational explanation for all those puts. Here is, courtesy of Duncan, a link to 'Dispelling the 'Bin Laden' Options Trades', by Steven Smith and Aaron L. Task of TheStreet.com. I quote below.
Currently there are about 63,000 700/1700 boxes open. Perper expects that once the September options expire, you will see similar boxes established in the December series. As to why the September 700 put has over 116,000 contracts open, Perper thinks a good portion of that was created from the prior rollover when April options expired.
The positions in question had option industry experts perplexed to come up with a rational explanation, which are far from the best or most efficient way to profit from what would be outlier events."
And here is a link to 'Business-As-Usual; Socionomics of the Food Section', by Kevin Depew of Minyanville.com. This is a thought provoking article.
September 18, 2007
Here is a link to a wild one sent to me by Duncan: 'Analysts Dismiss Suspicious "new 9/11" Trades', by Paul Joseph Watson of PrisonPlanet.com. I quote below.
The anonymous trader only stands to make money if the market crashes by a third to a half before September 21st, which is when the put options expire."
I would note that very few people or even institutions can afford to lose that kind of gamble. Someone with serious money thinks he knows something the rest of us don't know.
There was a lot of euphoric buying of the home builders today. On that theme, here is a link to 'Don't Bet the Ranch', by Jonathan R. Laing of Reuters.
...Radian's forecast assumes that U.S. home prices over the next three-and-a-half years will remain essentially flat, with areas of price strength compensating for areas of weakness. Such optimism, however, is fast leaching out of the housing markets with the relentless rise in foreclosures and unsold home inventories. The S&P/Case-Shiller composite index of home values showed a shocking 3.2% year-over-year price decline in the second quarter. Based on "repeat sales" of properties in 20 metropolitan areas, the index is a more reliable reflection of reality than the median sales prices favored by the real-estate- broker community."
What seems obvious to me, but seemingly no one else, is that Bernanke is easing money for the real banks. But the mortgage problems this economy is facing were created by the shaddow banks, the 'not real banks' who created 'not real mortgages' for a bunch of people who had no business getting mortgages in the first place. Bernanke assumes that easing money for real banks is going to loosen up the credit market for the shaddow mortgage companies. Why should it? Why should real banks lift a finger to help out the 'not real banks?' And how, oh Helicopter Ben, is it in their best interests to do so? If I were a big bank that wrote real mortgages and played the game by the rules, I'd use the FED money to cover my own butt and to hell with those greedy bums who created the problem. I'd let them drown.
Here is a link to 'Will the Fed Reverse the Housing Slump?', by DAVID LEONHARDT of the New York Times. I quote it below.
Then came a real estate boom unlike any before it. By last year, this ratio of prices to incomes had suddenly shot up to 4.5. For it to return to its old level, home prices would have to fall by an almost unthinkable one-third, and probably more in California, Florida and the Northeast.
There are good reasons to believe that the real estate slump won't be quite that severe - more on that shortly - but there is also reason to think the slump still has a long way to go. That's why the Fed went further than most Wall Street analysts expected yesterday, cutting interest rates by half a percentage point and announcing, in effect, that it is now on a recession watch."
Home prices are falling, falling even as you read this, and they are going to keep falling for as long as two years. This is going to affect the economy in a negative way. The home that was for sale for $240,000 in January may eventually sell for $160,000. In the process, someone is going to take a really big hit. The obvious targets are financials of all shapes and sizes. So beware.
The Orange Section got it right on September 6, when he stated that house prices have risen beyond the ability of median income folks to pay. Now that the 'not real mortgages' have gone away prices must fall.
On that note, here is a really cheery article titled 'Home builder confidence drops more in Sept: NAHB', by Al Yoon of Rueters. Oh, and here is the companion article: 'August foreclosure filings highest since Jan 05'.
It is going to be tough to sell new houses in the future. The home builders themselves think so. So why did their stocks go up today? Euphoria ... a feeling I believe that will be short lived. The FED is on Recession Watch. The FED believes the effects of housing are going to be stronger in the future than they have been in the past, hense the cut. Oh, and did I just see the DJIA put in the right hand shoulder of a head-and-shoulders formation?
September 16, 2007
The only article that caught my eye this weekend was 'Rate Cuts Will Make Inflation Problem Worse', by Donald Luskin of SmartMoney.com. I quote it below.
Sure, there are people who imagine that housing prices are going to fall 20%, and that wouldn't be pretty. But that's just a possibility for the future. In reality, the economy appears to be doing quite well by almost all indicators.
Yet the panic is a reality, too. And after a while, whether or not the panic is really justified, it becomes a self-fulfilling prophecy. We may be looking at a situation in which the economy will fall into recession for no better reason than because people fear that it will."
Jay Steele sends along a note. He reccomend using this Chart at TimingCharts.com for any short term timing. I think I will add it to my arsenel of tools.
For those interested in commodities, Jay reccomends giving a look at this trading platform at http://www.stagecoachtrading.net/. I will stay away from that hornet's nest and keep playing the game I know. http://timingcharts.com/
September 13, 2007
I have been pretty actively trading of late. Here is what I have been doing.
Sept. 7 - Sell RGLD
Sept. 11 - Sell COGT
Sept. 11 - Sell FMCN
Sept. 11 - Sell NTES
Sept. 11 - Buy GLD
Sept. 13 - Buy SMSI
Sept. 13 - Buy NMX
I think gold is going to keep rising through September. I think that next week will be extremely squirly with the markets every which direction. After next week, we will hear a lot of talk about a recession. That's all it will be is talk. But it will affect markets.
September 9, 2007
Here is a link to 'Rate Cuts Could Lead to Ugly Inflation Woes', by Donald Luskin of Smart Money.com. I quote the article below.
Have you seen what's happened to the price of oil this week? It's up to within a percent or two of all-time highs.
Have you seen what's happened to the dollar on foreign exchange markets this week? As I write it's making new all-time lows.
There's just one word for all that: inflation."
I also note that Countrywide may cut up to 12,000 jobs, or 20% of its workforce. This kind of layoff has already begun at its rivals. But that's still a lot of folks to dump onto the labor market.
September 6, 2007
Richard Kolon responded to my question, as I'd hoped he would. Here is his response.
For example, years ago when housing prices were rising, they were creating a higher inflation number. So the government switched to rental costs to replace house prices in computing inflation numbers.
When housing is hot, there are fewer people who want to rent, which keeps rental costs contained.
At the same time, renters deciding to own their homes creates demand that sends house prices higher. But the government doesn't include that in the inflation figure.
Also some inflation is exported when the M3 gets spent or invested overseas. Overseas labor may not be as efficient, but sometimes they are a lower cost factor, keeping the price lower to our consumers.
And there is now more money that can be used to chase limited supplies of certain products or resources. And I have been very successful at playing that angle.
For the average American, a 2% inflation is pure fiction. There are lots of services we buy from other Americans, and we pay much more each year for them.
Excess money supply (M3) will get spent or invested, and those items in demand will invariably go up in price.
(You know this! LOL.)
Maybe we will eat more bananas in our future and less apples and cherries."
The Orange Section also writes. Here are his thoughts.
However, as we all know, the real estate market isn't that simple. The Subprime Lenders are having some serious issues and as such standard on lending our tightening up considerably. For the home buyer this means it is harder to get credit. This seems to me to serve as an agent that increased the gap outlined above.
If the industry goes back to requiring money down on home loans, current prices would dictate between $25,000 and $60,000 for a new home buyer. Those prices would most definitely have to come back to earth or there would be very few buyers in the market.
Now I don't know how any of this is going to play out, but it seems to me that the credit providers are becoming quite risk adverse as is typical in a bust cycle. I think that over the next year houses are much more likely to get cheaper than more expensive."
Here is a set of links that bring a mixed message to the table. That is about what could be expected for this month.
'ADP Report Finds Slowing Job Growth', by Andrew Farrell of Forbes.com.
'Retailers get back-to-school boost in August', by Karen Jacobs.
'Economy shows strength despite credit turmoil', by Joanne Morrison.
Meanwhile the market looks forward to the FOMC meeting on the 18th. If no rate cut will be good for stocks, then a cut will be bad.
September 2, 2007
Richard Kolon writes that:
Some of his previous writings are available here: http://www.321gold. com/archives/archives_authors.php
Here he warns of the "credit expansion that has gone completely out of control" in this 2004 article.
In order to stave off the recessionary implications of paying off this large amount debt, the U.S. government has responded by increasing M3 money supply to excess:
http://www. nowandfutures.com/key_stats.html
Page down once to see the incredible growth in M3, now at a 14%+ rate. This is occurring at the same time as unemployment is starting to creep up, the next stage of the layoffs due to the deflation of the sub-prime asset bubble and the slowdown in house sales.
If you can figure out the next asset bubble to be generated by all this excess M3 money, there's a lot of devaluable dollars in your future.
Goodbye Kurt."
But Rich, the Feds tell us that inflation is proceeding at a modest rate. How can we reconcile that with a huge growth in M3?
In response to my scenario for the next 6 weeks Duncan responds: "'We should still expect a C Wave that may go as low as the terminus of the A Wave (DJI 12,000), but that is unlikely.' It's becoming more likely as events unfold."
The most interesting read I found out there this weekend is this: 'Not Cutting Rates Best Thing for Markets', by Donald Luskin of SmartMoney.com. I quote it below.
Well, no! The reason the Fed won't cut rates is that it doesn't need to, because there's no recession on the horizon. And if there's no recession on the horizon, and if earnings are booming, then why would stocks care whether or not the Fed cuts rates?
Six weeks ago, stocks were at all-time highs, and no one in the market expected the Fed to cut rates. Now stocks are off about 6%, and everyone expects the Fed to cut rates. Fine - but how can people say that stocks will perform better when the Fed cuts rates? From what I can see, the more people expect the Fed to cut rates, the worse stocks perform.
In fact, I did a study looking day by day at how the market has moved over the last six weeks, compared to how Fed rate cut expectations have moved. What do you know? Whenever expectations for rate cuts flared up, stocks went down. When rate cut expectations diminished, stocks went up.
So why do people say that stocks will rally when there's a rate cut, and that they'll implode if there is no cut? Based on the evidence, it's exactly the opposite. The truth is that nothing would make the stock market happier than for there to be no need for a rate cut in the first place."
I have long thought that the clearest message the FOMC could send to the markets that the economy is alright would be to not cut rates. Cutting rates is an open admission by the FED that the economy is getting worse. Not cutting rates is the all clear signal. If Luskin turns out to be right and Bernanke is not going to cut rates, how does that effect the next 6 weeks?
I think it may shake markets at first, then the markets will respond well. So, overall, it would be a positive factor. But it will panic those fund managers who have to sell to raise cash because they will realize that there will be no quick fix for their problems. So, I think it would add to the coming September volatility on the positive side of the equation.
August 31, 2007
Yesterday I had time to do a lot of reading online. Here are some reads that caught my eye. The first is 'Detroit's Dilemma', by Igor Greenwald of Smartmoney.com. He's saying that GM's stock price might see a bounce when GM and the UAW resolve their current talks. I say it might be a shorting opportunity. There is going to be some really bad news out there about new car sales numbers, brought on by the decline of house values.
Another interesting read was 'Gene Inger's column on DecisionPoint.com.' Inger makes a good defense of Bernanke and the FED, and warns that those who are the chief complainers are the folks who made this mess in the first place. They just want to 'turn the machines back on' after the game is long over. Inger wants the FED to have the space to do its job. Inger praises Merrill Lynch's earlier downgrade of financials. He goes on to say that he has been, "holding back money normally allotted for big-cap or technology plays in expectation of a serious decline ideally commencing from and early-to-mid-July high." This ties in nicely with what Florida had to say yesterday.
Here is a link to 'Lehman Drags Down The Street', by Evelyn M. Rusli of Forbes.com. Rusli describes the impact of Lehman's downgrade of the other financial stocks on Thursday's markets. Ouch!
The last read was 'Other Shoe Yet to Drop on Financial Stocks', by James B. Stewart of SmartMoney.com. I quote the article below.
...I doubt the market has fully priced the likelihood of more bad news on the buyout front, just as it failed to anticipate the severity of the subprime defaults."
Indeed! I would like to lay out a possible scenario for my readers. Let us assume that:
That housing prices will keep slumping into the fall, thus lowering the prospects for builders, mortgage companies, real estate folks, ad naseum.
That Inger is correct in expecting large caps and technology to be a buy come fall.
That Florida is right when he says we are in the fifth week of a ten week downdraft.
Here is how that all could be, how all that could happen. Hedge Fund managers, mutual fund managers, and retirement fund managers face the first real crunch toward the end of September, which contains a tripple witching day, and which marks the end of the third quarter. Should these managers want to keep some of the bones burried a while longer, they are going to need to raise cash. How do they do that?
Typically they are going to sell their quality to cover for the non-so-great quality they still have on their books. That means they are going to sell their big winners and their big caps. If this happens the averages, particularly DJIA, are toast. Small and medium caps could hold up somewhat, but the big guys are going to get sold.
The markets will take a hit in the last half of September with selling peaking on the last trading day which is the 28th. When the dust settles in the first days of October, I would expect the markets to still be shakey and we could have (but probably won't have) a 1987 October event. What I would expect is more downward movement in that first week of October, with some panic selling, and that would conform to Inger's expectations nicely. It would also conform to some historic norms.
August 30, 2007
Florida wrote me a nice note and I thought I would share his thinking with all of you. He sees some grim news out there for some stocks.
I now understand why retail outlets want you to sign up for their credit card. Their return on credit and late fees far surpasses selling any markup they might occur versus the profit on any item sold. This however is going to be the next nightmare in COD'S.
I am remiss in sending you this analysis upon today's decline, but we are in the 5th week of the 10 week down cycle. The next 3 weeks should be very difficult for those patterns. If other securities are trading in their own patterns they should find some shelter. Those that are exposed to complete cyclic failure are doomed for the next 12-18 months. A possible 2002 retreat for those that are already in significant downtrends.
The FTSE has always been a good lead indicator, which is something with little discussion. Today we hear of Europe's potential exposure to derivatives. Hopefully we unloaded the trash to those of proper lineage."
August 29, 2007
Yesterday was ugly. Not only did all the stocks I own go down, including the shorts, but so did all the stocks in my system...every one of them, some 60 stocks in all. OUCH!
I would expect a little rebound today.
August 27, 2007
Here is a link to 'Taking a Loss Is Harder Than It Seems', by Jonathan Hoenig if Smartmoney.com. It is a nice piece on trade craft. I quote it below.
As diligent investors, we've gone to the shareholders meetings and participated on the company's Yahoo message board. We've pored over the annual report and had the quarterly filings automatically emailed as soon as they're released. We've listened to the conference calls with management and read dozens of research reports. We've invested our money and our time. It's painful to see all that effort go down the tubes with a sell order."
I was not the only one who took exception to what Bill Gross said. Here is a link to 'Bond Manager Says Don't Bail Out Subprime', by Brett Arends of TheStreet.com.
August 26, 2007
Big Dave MacCarter sent me this link to 'Where's Waldo? Where's W?' by Bill Gross. I quote it below.
Gross goes on to suggest that 'W' and the Congress should bail out all the home owners with ARMs so that we would not face a catastrophic 10% decline in all housing across the country. Rarely have I found myself at such odds with an idea coming from the esteemed Mr. Gross. This is a terrible idea.
What Gross, and like minded people, don't say is that we have seen an unprecedented rise in housing...a nation-wide boom as it were in what a house is worth...housing inflation run rampant. This is the kind of boom that used to be seen in mineral rich areas of the country, including my own hometown, when there was a run on a particular mineral, say oil. When oil is in demand it creates boom towns and housing goes through the roof because there just are not enough roofs in town to cover everyone who wants to live there.
My own house, in ten years, is worth now 75 percent more than it was. That's not unusual in an oil town when oil is in demand. The difference this time is that this is what has been happening all over the country. Do you suppose I could absorb a ten percent hit? Sure. The folks who can't absorb that are the folks who were betting on the come, the folks who just had to have the housing market keep going up. I'm sorry, but long term, we would be a lot healthier if we took the hit now.
Where's the inflation?
In the past ten years, my house has undergone what I would describe as pretty normal maintainence. Floor coverings have been changed. Minor electrical work has been done. A new set of shingles was installed and it has been painted two or three times on the outside - normal stuff. The basic building, the basic value of the building has not changed. So how does one account for the change in price? It's the land. Since the structure of my house, the basic building materials, could be replaced with the same dollar amount of materials, what has gone up is the value of the lot itself. Even when I add in the value of my labor to put the building materials together into a livable space, the lot is worth three times what it was ten years ago. Land has trippled in value. Isn't that a bit excessive?
What I don't get is why the government should bail me out when I am irresponsible. If we bail people out now because they were stupid or greedy what is next? Do we bail folks out because they spent too much and ran their credit cards up past the point of being able to pay them? Right now we provide bankruptcy relief. But instead, should we just issue them a government grant, write them a check? Do we bail folks out because they lost money in the stock market? Should those folks all get checks too?
This is one time when the government should not do a lot...just enough to keep the whole system running and nothing more. Let market forces work and let people feel the pain. Otherwise, we might as well legislate where the level of the DJIA must be at the end of each quarter.
August 21, 2007
Duncan sent along a link to one of the best articles I have read in a long time. Here is a link to 'The Panic of 2007', by John Mauldin on the RealClearPolitics.com site. I quote that article below.
So the funds sold collateral to make the margin calls. And guess what? They had to take less than face value. And that lowered the value of those bonds on everyone's books. Which means the banks went to anyone holding those bonds and demanded more margin money and gave less credit, which created more selling and fewer buyers. The cost of hedging became expensive. It started a vicious cycle. In May, the Bear Stearns fund blew up, and the rout began in full earnest. The chart below is from www.markit.com. You can look at any of the scores of indices they track, and see that the problems began in February.
...'For the first time in over a year the Fed is now implicitly admitting that they underestimated the downside growth risk: until now the official Fed view was that the housing recession was contained and bottoming out and not spilling over to other sectors of the economy; and that the sub-prime problems were also a niche and contained problem. The sudden shift to a strong easing bias suggests that the Fed miscalculated until now the damage to the economy and to financial markets of the housing recession and its real and financial spillovers.'"
I have been a busy guy in these markets. Between the 15th and the 21st I purchased NTES, ICE, CMED, FMCN, AAPL, and AOB. I sold all of my GLD and half of my COGT. I am pretty happy with my trades thus far. I am keeping my shorts on BSC and DHI because I do not believe their pain is over.
August 19, 2007
Duncan sent along this link to 'Cramer Takes Credit for Fed Rate Cut; Then He Doesn't', by Michael Janofsky. Cramer comes off here as very arrogant.
Ben Smith sent along this link to 'Shorting Cramer', by Bill Alpert. This is an article originally from Barrons. I quote it below.
The problem with Cramer, with watching Cramer and believing everything that comes out of his mouth, is that this is a guy who makes over 7,000 calls a year on stocks. Anyone who does that is going to be wrong most of the time. My own problems with Cramer stem from two sources.
One -- Cramer comes across to me as very New York centric, very Wall Street centric. This is understandable in that this has been the man's life. But the traders and fund managers in New York are not the whole world. Their pain is not necessarily everyone else's, and I think Cramer has a hard time wrapping his brain around that fact.
I've not personally met very many natives of New York City. I appologize in advance to all the New Yorkers I have never met for what I am about to say. But the New Yorkers I have run into were the most parochial folks I have ever met. Let me give you an example. I once attended a one-week school for commercial hardware that was held at the University of Houston. The University of Houston is set up for this kind of thing. It has a hotel on campus that is part of its Conrad Hilton School for Hotel Management. Present were hardware estimators, manufaturer's agents, and representatives from all over the United States and Canada.
There was a coctail party the night before classes. I was holding a drink and talking to a couple of Canadians from the eastern seaboard, when a guy started circling the three of us. We all wore name tags, and I could tell from his that he was from New York City. My guess is that this was the first time he'd ever been so far away from home. He kept looking at my name tag. Finally he screwed up his courage and approached me.
"You're from Wyoming?" he asked me. I confirmed that indeed I was.
"Well, then," he wanted to know. "How did you get here?"
He was serious. So I treated him like a mushroom and fed him bullshit. I told him we had a big stockade around town and that if you get up early, about 3 am in the morning, you can slip out of town on a horse before the natives get up. Its a hard fifty mile ride to Douglas. From there you can catch a stagecoach to Cheyenne. Of course Cheyenne has some modern conveniences and you can catch a train to Denver. Denver, of course, has an airport, so I was able to fly from there to Houston. The two Canadians pitched in and helped sell the story and the New Yorker was a true believer by the time he left us. I didn't have the heart to tell him that the average house in Wyoming had electrical power before the average apartment in New York City did, or that the first cable television company in the United States was started in Casper, Wyoming. -- Back to Cramer.
Two -- Cramer and I have an honest disagreement about what makes stocks rise. I have been doing research on my own, and experimentation on my own for a long time now and I am more confident betting on my own method than I am betting on Cramer's. I find Cramer to be honest in his opions, but he recommends stocks I would never touch...or he recommends stocks I would like to buy but at much lower levels. I like to buy good stocks at bargain prices. I may be funny, but I find I make money that way. Cramer will recommend stocks that are at their 52-week highs - simply riding the momentum.
