Rich Mans Advice

As you know, “The Fly” is in the business of making money for rich people. Even though many of you are destitute poor guys with less than a pot to piss in; I am going to give you some high end advice.

The markets are severely oversold. Using all fundamental metrics, one must get long into this carnage. The problem is the fear of systemic failure, which may lead to rampant protectionism and the end of globalization as we know it.

So, with that pleasant thought in mind, here’s what I am doing:

On an account size of 1million, I have 500k in double inverse etf’s, like [[SKF]] or [[SRS]] . In addition, I am going long deeply oversold commodity stocks, for two reasons:

1. Dollar strength is overdone.

2. Valuations are rifuckulous.

My buy list includes The Mosaic Company [[MOS]] , National-Oilwell Varco, Inc. [[NOV]] , Occidental Petroleum Corporation [[OXY]] and Chevron Corporation [[CVX]] .

When buying stocks, in this tape, I am using a “legging in” approach. Meaning: if I intend to purchase 2,000 shares of a stock, I will execute that one trade in 250-500 share increments over an entire day, or in some cases multiple days. There is nothing wrong with waiting for the market to subside. And, there is nothing wrong with missing the exact bottom.

Out of 1million, my long equity exposure is approximately 40%, or 400k, leaving 10% or 100k in cash.

Here’s the dicey part:

On a whim of a major directional shift, I will deploy the 100k, or even lever up, and get long a double upside etf, like [[DIG]] or [[ROM]] .

Regarding my inverse etf’s, I will likely reduce my short exposure early next week, barring a complete collapse in the market.

The point of the game is survival. Cash is king, but entirely pointless. If you are going to attempt to navigate this tape, put your biases aside and protect your downside.

Now fuck off.

NOTE: Today I closed out my [[FXY]] position. That trade is also overdone.

NOTE II: Of course to pull off such a strategy, as mentioned above, timing is everything. Luck for me, I have a fucking time machine.

This is the softest crash I’ve endured all week. What kind of shit is this? By now, I am accustomed to BIG moves. I was hoping to see 10-20% down, just for the sheer entertainment value of it all. Instead, I get this shit?

WTF!?!

Anyway, there is marginal strength creeping back into ag names, specifically The Mosaic Company [[MOS]] . Also, there is a bunch of other shit going on; but who cares?

I am just really pissed off that a giant shark did not bite off the head of Joe the Plumbers pension fund and send that fucker seaworthy. This is alarming.

God willing, the margin clerks will “school house” the idiots who are buying this dip.

My position, as always, is long commodities, short banks.

In the meantime, here is a fine tune for you clown fuckers on Wall Street to enjoy, prior to the 3:00 margin call hour.

Be careful, I heard clowns are running around Wall Street, indiscriminately raping people.

Listen up young brokers: today is the day you decide to go back to school, in order to pursue a different profession. Don’t do it to yourself. I am telling you now, all the money in the world cannot make up for the years lost, via stress, navigating this business. Hurry up and quit now. Tell your boss to go fuck his dead dog and a dozen eggs, then proceed to urinate on the trading desk.

In other news, going over the morning numbers, it appears Plutonium Petey will come out of this crash unscathed. I will “enjoy” large cocked losses in all longs. However, the oversized nature of my [[SKF]] position will wipe out my losses and more. Actually, I may end up making money today, unlike some other 4th tier homo bloggers.

I know I’ve been espousing some faggy “epic rally,” via buying a bunch of bullshit stocks. However, a few days ago, I felt something was wrong with the asshole-ish way the market was trading; hence I ate some humble pie and went short banks.

No use discussing spilt milk.

Today will be ugly. I would expect our markets to dip down 10%, before recovering. Do not chase this fucker on the first sign of a rally. Remember, we’ve been going down all week. The margin clerks will be out there selling, hardcore. And, the hedgies will be blowing out in size, come 2:00.

Even if we go green, early this morning, there is a chance we can give it all back towards the end of the session, thanks to forced selling.

The Forex markets are a fucking mess. It is no surprise to see the Japanese markets diving the hardest, considering it is their banks that are being ape raped by the unwinding of the carry trade.

If you end up losing tonnes [sic] of money today, chill the fuck out; grab a bear and laugh it out. It’s only stupid green paper, with hideous faces on them.

During the beginning of 2008, most of you thought I was nuts for being so bearish. My largest positions were [[FXP]] , [[SRS]] and [[SKF]] , following a late 2007 beat down being long Hansen Natural Corporation [[HANS]] , NutriSystem Inc. [[NTRI]] and Buffalo Wild Wings [[BWLD]] . After years of being bullish, I promptly switched to the dark side after seeing signs of excess in China, Europe and of course here in the states.

During the first month of 2008, I fucking nailed the market, making more than 20%, inside of a few short weeks. I was betting against ag and oil in a big way, via short Monsanto Company [[MON]] , Potash Corp./Saskatchewan (USA) [[POT]] and long [[SMN]] and [[DUG]] . My cost basis on SMN was as low as $27, same with DUG.

I was shorting POT at $220 and MON @ $135.

In addition, I had big bets against chinese stocks, including China Mobile Ltd. (ADR) [[CHL]] and China Life Insurance Company Ltd. (ADR) [[LFC]] .

After a rally in the markets, during Feb-April, everyone jumped back on the global growth train, bidding up shares of commodity and engineering stocks. They even bid up banks.

I got lit aflame during those months, giving back nearly all of my year to date gains.

However, with egregious fervor, I shorted banks stocks with impunity, including BSC, LEH, Morgan Stanley [[MS]] , Merrill Lynch & Co., Inc. [[MER]] and a variety of regionals like First Midwest Bancorp, Inc. [[FMBI]] , Valley National Bancorp [[VLY]] , Cathay General Bancorp [[CATY]] and PacWest Bancorp [[PACW]] . Also, I had heavy positions in all of the inverse etf’s, throwing some new ones into the mix: [[REW]] , [[EFU]] and [[EEV]] .

After some monster wins, following the Bear collapse, the market rallied again. Knowing it was all bullshit, I weathered the storm and kept averaging into my ag and bank shorts. Unfortunately, I could not deal with the fuckers who operate SMN or POT, for they were operated by the devil himself. I ended up closing out both positions for big losses.

No worries, there was still LEH to lean on.

I did a lot of research into the banks and selected “The Four Horseman of Certain Death,” which included [[FED]] , [[DSL]] , Corus Bankshares, Inc. [[CORS]] and First Horizon National Corporation [[FHN]] . Needless to say, over the next few months, I banked ridiculous coin, shorting the shit out of weak banks.

After that, the market tore my face off during an egregious August rally. I waited patiently and began placing big bets against ‘global growth’ plays, including Vulcan Materials Company [[VMC]] , Terex Corporation [[TEX]] , Caterpillar Inc. [[CAT]] , Martin Marietta Materials, Inc. [[MLM]] and Jacobs Engineering Group Inc. [[JEC]] .

When Fannie and Freddie got busted out, the market began to change. As a short seller, I was encouraged to press my bets, even making [un]fortune cookies for Legg Mason, Inc. [[LM]] and LEH—taking down monster short positions in both names, north of $40.

I levered up and shorted all I could in any bank that had exposure to FNM, FRE or LEH, thinking they (LEH) would go belly up. I shorted AXA (ADR) [[AXA]] , Pzena Investment Management, Inc. [[PZN]] , CapitalSource, Inc. [[CSE]] , PacWest Bancorp [[PACW]] , Janus Capital Group Inc. [[JNS]] and even a casino Las Vegas Sands Corp. [[LVS]] .

I ended up riding LEH down to the high single digits, before covering. Following the LEH collapse, the whole system was in jeopardy. There were rumors that Morgan Stanley [[MS]] , Merrill Lynch & Co., Inc. [[MER]] and Goldman Sachs Group, Inc. [[GS]] could be next. The gov’t cheese makers would have none of that.

Aside from Pzena Investment Management, Inc. [[PZN]] and Legg Mason, Inc. [[LM]] , I actually lost money on my last round of shorts, due to government fuckery. They banned short selling, offered a bailout and tried to manipulate the markets higher. In hindsight, that sign of desperation was a prelude of the crash to come.

Over the past month, I am batting like .666 on the ridiculous string of market crashes/massive melt ups. I had some shorts in a variety of auto plays, like AmeriCredit Corp. [[ACF]] , AutoNation, Inc. [[AN]] and Cummins Inc. [[CMI]] , but quickly ditched them, for fear of getting squeezed. I’ve maintained intermittent positions in [[SRS]] , [[SKF]] and [[FXP]] , in between crashes. I’ve been hurt just a few days this month, like yesterday, being long stocks—thinking we are at a level where it makes sense to build long positions.

However, after yesterday’s debacle, again, I was reminded of the unique situation this market and country is in. I cannot believe we will stop going lower, because “we are low enough” anymore. Looking back on my trading success this year, one thing is abundantly clear: do not trust the bull, for it is made from chocolate and it will begin to melt as soon as the temperature rises.

Thinking over the state of the markets, I have no intentions of building long term long positions. Any long on my sheets will be for a trade and trade only. Moreover, I will keep my bias to the downside, until we see legitimate signs of a real economic turn.

NOTE: This is sort of a rehash of my year or thinking out loud.

[youtube:http://www.youtube.com/watch?v=2s3e40z9lOA&feature=related 450 300]

Today, I heard of dedicated short sellers offering to suck their own cocks, should the market close green. You must understand the conviction of these men. Mind you, they’d be willing to suck their own dicks, in order to prove a point.

I must say, for as crazy as I am, I’d never consider such obscene arrangements. As a matter of fact, I might consider such a bet to be quite gay. Regular hot dog gobblers, these men are.

All jokes aside, today’s action bodes well for bulls, as they stared death in the eyes, then ran away like little bitches and took an alternative route higher. Many stocks were still down. However, I like the relative strength in names like National-Oilwell Varco, Inc. [[NOV]] , [[M]] and Occidental Petroleum Corporation [[OXY]] .

In hindsight, of course it would have been worthwhile to sell my [[SKF]] 17 points higher; but that’s not the point of the position. It is a hedge, not an avenue of potential profit.

As an aside, into the closing rally, I bulked up on [[ROM]] and [[EEM]] .

This will be an unprecedented Fly Buy post, in order to give you fuckers a sneak peak inside of my oversized brain.

With The Mosaic Company [[MOS]] down $4+, I am buying 250 share lots, up to 2,000 shares, in an effort to bring my cost basis down.

With National-Oilwell Varco, Inc. [[NOV]] sub $25, I am buying 250 share lots, up to 3,000 shares, in an effort to profit from the pending bounce in crude names.

With Arch Coal, Inc. [[ACI]] around $19 , I am buying 250 share lots, up to 2,000 shares (of which I sold yesterday), in order to get more exposure to an oversold sector.

I am not buying [[SKF]] , over $160. However, as mentioned earlier, it is my biggest position. What’s important to note is my unwillingness to sell it, due to my desire to remain hedged. It can go down $20 tomorrow and it will not phase me, providing my commodity plays go up.

NOTE: Should the market continue to crater, the losses in my commodity names are now acceptable, considering my overweight position in SKF. Also, I blew out of some of my [[TBT]] for a loss, in order to raise my cash position, above 10%.

All of you gold fuckers should wear red noses and prance around the office in big purple boots, made from beets. You idiots thought the yellow metal would protect you from “the coming financial Armageddon.” Talk show hosts, like Michael Savage, prostituted themselves at the altar of the ancient currency, like baboons in an apron, making rich folks laugh.

I just had to get that off my chest.

Into the closing hour, I am fully loaded with [[SKF]] . After selling 1/4th of my position this morning, I reloaded the boat, on a whim that market fuckery is just around the corner. Presently, [[SKF]] is my largest position.

Frankly, I amazed to see [[SRS]] up at these levels, so quickly, As you know, I’ve been a HUGE hater of commercial RE; but, regrettably, I am not able to profit from its ongoing demise.

The irony.

Sometime soon, this market will bounce and rip off the heads of long term bears. However, at least for today, it appears the bears have won.

Get hedged or die slow.

NOTE: My top 5 positions are: [[SKF]] , National-Oilwell Varco, Inc. [[NOV]] , The Mosaic Company [[MOS]] , cash, [[TBT]]

Following the last two days of POW-PING, those filthy, disgusting margin clerks will be selling shit this afternoon, most definitely. So don’t be surprised to see a little volatility towards the end of the day.

The Mosaic Company [[MOS]] is getting the stuffing kicked out of it, over fears that Cargill (a majority shareholder) is going to blow out of their position, due to nonsensical management. Here is the SEC filing.

Let me tell you, if people are scared of Cargill blowing out of their position, after a 75% decline, they are fucking idiots. Or, if Cargill actually sells MOS, down 75%, they are idiots. Either way, someone is an idiot. With my money, yet again, I will take one final stab at the MOS, sub $30,  for it is on sale.

For the most part, the markets are stable, with noticeable weakness in the banks. Should we close strong today, I would expect a follow through day tomorrow. But I am not betting on it.

One thing to note: our fucking friends from the middle east are panicking, with oil down at these levels. Expect those fuckers to cut production, in a big way, in an effort to jump start the price of crude higher.

If you are 100% long, with no hedges, you are playing with fire. The markets are entirely illogical. You cannot reason with the animal spirits. At a minimum, you should be hedged by 25%, with an addition 10% in cash.

I am 99% sure the market will goose step higher in November. However, before we can enjoy such fascist behavior, we need to finish up October. With the Presidency nearly guaranteed to Obama, Wall Street needs to price in shit, such as higher taxes.

Did you know, during the great depression, taxes went from high 20’s to 70% for rich folk? Perhaps we will get to enjoy such draconian measures, sometime soon. After all, fuck the rich guys; let’s help the homeless.

With my money, I sold 1/4th of my [[SKF]] position, north of $155. I didn’t do anything with the proceeds. It’s sort of just sitting there, doing nothing. Also, I was quite pleased to see National-Oilwell Varco, Inc. [[NOV]] crush numbers. In a normal tape, that fucker would be up 25%, right now.

I repeat: I am not selling ANY National-Oilwell Varco, Inc. [[NOV]] and The Mosaic Company [[MOS]] , at these levels. Fuck that.

And, finally, you fuckers need to bring cogent ideas to the comments section. It’s become some sort of mob hangout, where imbeciles run around naked—each trying to “outidiot” one another. I can’t say I am surprised; but for fucks sake, show mercy on the people with IQ’s north of 90.

Finally, I do not trust this market. I think it is imperative that one stay long, with protective shorts. For example, long Freeport-McMoRan Copper & Gold Inc. [[FCX]] and short the underlying metal, via [[BOM]] . Into strength, I will continue to add to [[SKF]] , hopefully sub $150, until I am fully hedged.