iBankCoin
18 years in Wall Street, left after finding out it was all horseshit. Founder/ Master and Commander: iBankCoin, finance news and commentary from the future.
Joined Nov 10, 2007
17,003 Blog Posts

2010: The Year Bankruptcy Paid Off (year end review)

From GM to CIT to AIG to C to LEA, 2010 was the year when moral hazard went out the door. Companies with fucked up balance sheets, like SIRI, CPWM and FTK, stared into the abyss and spit, pissed and shit in it. It was a year that transformed losers into winners, sort of like black magic, but only cooler. We threw hundreds of billions at the wall and prayed for it to stick. Luckily for us, it did!

I understand why investors were hesitant to invest this year, as the normal order of things disconnected. Markets aren’t supposed to go higher on the prospects of sovereign nations going belly up; but they did, nonetheless. At the same time, the main drivers of growth, namely China and Brazil, sat out the great rally of 2010, allowing western nations like Germany and the United States to steal their plantain fried rice. It all makes sense, if you think about it. Like it or not, we are highly levered to Chinese growth, same with Germany. And, like Senator Gint likes to say, “as long as China is pegged to the U.S. dollar, we are their central bank.” In essence, Bernanke is the overlord of all things Chinese, raping and pillaging along the way, a local magistrate if you will.

Commodities were big standouts, with outsized gains in Cotton, Corn, Coffee and pretty much everything but Natural gas and Cocoa. They went up on the prospects of a weak dollar; but the dollar went up too, so go figure. Treasuries were a non-event, year over year, and tech stocks surged higher, led by lunatics invested in NFLX, PCLN, AMZN, CRM, APKT and FFIV, just to name a few.

As the year winds down, expectations are very high for 2011. You will see my predictions for 2011 in about a week. To summarize my notes, I think it will be a mixed bag.

At the moment, I am thinking about adding some dollars to municipal bonds, in light of robust January seasonality. And, I am pulling in the reigns here, upping my cash position close to 40%. It is tempting to short a little, if only for a hedge. However, I’ve been burned too many times this year, banking on disaster. I’d rather lower my beta, via large cash position, and buy dips. If I was interested in hedging, I’d bet against oil. But that seems like a lunatic trade now, especially in light of all the snow on the ground and asset allocation models pining for $100 crude.

In short, celebrate the New Year’s without fear. Lighten up the load and take some hard fought gains. There will be plenty of time in 2011 to buy Maseratis and new homes, off of equity gains.

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45 comments

  1. DIG

    Oil to $120? Any target on EXK?

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    • Teapotdome

      I expect to hold EXK for at least two quarters. I will only sell early if total loses on it get to 10% or gains exceed 50%.

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      • teapotdome

        Note I bought 85% of my EXK at 6.65. If I bought most of it above 7.00 I would allow for more losses as it goes through this correction.

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      • '30's Style

        I expect to hold EXK for at least two quarters
        So, you don’t believe the China short article you posted?

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    • teapotdome

      One reason why you want to hold on to silver and silver producers in 2011:
      http://seekingalpha.com/article/243617-is-china-behind-the-big-silver-short

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      • JakeGint

        I will purchase your EXK from you at $5.85.

        Be there or be square.

        _______

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        • teapotdome

          You trade like an Eli Manning interception.

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          • alphadawgg

            Woise den dat.

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          • JakeGint

            I pity those born with no ear for metaphor. The apt, and much more fitting zinger would have been,

            You trade like Eli Manning passes.

            And lately, there’s been nothing “woise.”

            ___

            You are still top- ticking, however.

            __

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          • teapotdome

            I didn’t mean to say you were bad, I meant to say at 5.85 you would be robbing me. I used Eli Manning because it is language I know you understand.

            I trust though that my understanding of the present silver market will put me into the playoffs.

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          • JakeGint

            You could be right… if the dollar continues to break here. However, silver and gold are back in their resistance areas again.

            No offense taken, btw, no matter your intent. We are often japing one another here. It’s a locker room kind of thing, not to be taken seriously.

            _______________

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  2. Mr. President

    Mr. Fly, may I ask you a random question?
    What percentage of your personal, liquid assets do you keep away from equities?
    Just curious, is all.

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  3. DUG

    Oil drops before it goes up here.

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  4. drummerboy

    the ben bernanke is more slick than the inter webs think. the bigger question is,how does he try to smooth out the next few years,or does he go visit bernie in the clink on consultations for keeping up the charade with china,and the non working,working middle class. fuck the popcorn,i’ll roast a pig and get a keg to watch that. bankruptcy is the only tool in the box that a corporation use’s to break from a union………

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  5. scott

    Bravo Sir Fly. Excellent summation with the appropriate descriptive adjectives…

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  6. TeahouseOnTheTracks
    TeahouseOnTheTracks

    Rising rates can’t be good for CRE … Time for SRS Fly?

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  7. Po Pimp

    The $147 top in oil was pegged almost to the day that GS came out with their $200 / bbl prediction. Six months later it was at $33.

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  8. Subcomandante Beaverflaps

    Great writing lately, Senor.

    All the best for 2011.

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  9. Aristotle

    I would hate to be in the bottom of the abyss with all of that nastiness raining down upon me.

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    • teapotdome

      the beauty of an abyss is there are always things lower that you can piss/spit on.

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  10. booyah

    $CERN for $100 roll?

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  11. riggedgame

    Joe Terranova is a fuckin’ maroon. He says “There will be huge inflows of capital into this market in January, and it has to flow to stocks like Apple and Google”.

    Well – Google THIS Apple, Dipshitz Joe! And quit trying to SCREW the public!

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  12. testicules

    Whenever the “Usual Suspects” gets out in front of the camera and says “BUY THIS SHIT”…wait for one week and go short

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  13. Cascadian

    Unlike us, the Chinese will work their ass off all day and into the night for an extra half-bowl of rice.

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  14. JakeGint

    Shall you be the rat, or the rat terrier?

    __________

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  15. StocksRider

    Is it just me or do Dennis Gartman and Doug Kass look alike? When their predictions come apart, they can say it was the other who said it.

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  16. Trading_Nymph

    good piece…

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