Before I get into my number one hedge, let’s recap this mornings events. Apparently a German bund auction failed. Germany is saying it was a “technical difficulty.” However, the market is saying “fuck a panzer tank” by punishing german bunds. Here’s a summary of this mornings European bond blow ups.
Belgium +8.6% to 5.51%
Germany +7.5% to 2.06%
Denmark +2.4% to 1.98%
Austria +4.2% to 3.65%
Czech +5.2% to 4.21%
France +4.3% to 3.68%
Italy +2.3% to 6.98%
Spain +1.1% to 6.67%
Finland +3.1% to 2.76%
Hungary +2.6% to 8.54%
Ireland +6.1% to 8.27%
Okay, can you even begin to fathom the situation in Europe now? The cost of capital is soaring, pan Europe, and the money seems to be evaporating into thin air. Equities are trending lower, alongside precious metals. The only beneficiaries are dollar/treasuries/yen. Taking into consideration the current trends, bond vigilantes will likely make a run on German bunds now, crush Europe, then spread worldwide. The question is, how long until European banks sell US treasuries to fill capital short-falls? Eventually they will need to repatriate funds, no?
Things look grim.
It’s clear to me that the Turkey Gods have been brined and cooked. It was a high probability trade, based on recent history, that failed. What else is new? 2011 has been marked with one high probability trade after another going bust.
Regarding my #1 hedge: it’s income/non risk assets. The mistake I see a lot of investors make is allocating too much of their liquid net worth into equities. This is a huge mistake. The market hasn’t been a very reliable place to grow your money. Frankly, you are better off buying art at a Sotheby’s auction, than fucking around with TNA vs TZA. Losses endured during 2011 should not change your lifestyle, because your total market exposure should not total more than 50% of liquid assets. Some men take their pay checks and dump it into stocks. That’s not investing, but gambling. When you gamble, you make irrational decisions–a sure-fire way to lose money. Take your time and keep your exposure down to a level you can afford to lose.
I rarely take on new accounts for a reason. First, I have never and would never accept money derived from the internet. It’s a dirty place and I do not wish to commingle my internet life with my real life. But in my real life, I only accept 1-3 new accounts per year, all strictly screened for minimum net worth requirements. I do not want to invest money on behalf of someone who cannot afford to lose money. People who have a lot to lose tend to act like fucking retards when the going gets tough. It’s important to ex out emotions, as much as possible, when placing bets. That’s what they are. Let’s face it.
In summary, the world is fucked for Thanksgiving and you’re better off buying crates of high quality wine, than fucking around with stocks. They’re for asshats.
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Dow down another 2-300 today minimum??
don’t bother with Sotheby’s, anyone wanting art call me…
Brutally honest, as usual !
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Brünnhilde’s Immolation Scene ?
Nice post. Happy Thanksgiving Fly.
Fly Bottom. Bet the house.
I couldn’t disagree more with this advice. But it will take 10 years before one of us is proven wrong.
About investing in wine? Or what?
So you think it’s a good idea to put more than 50% of liquid net worth into stocks?
Let me guess, you’re a fucking broker?
No, I’m a fucking investor.
Do you expect someone to tell you when the right time to invest is?
No. But I do know it’s naivety to think the only way to grow assets is through stocks. For the record, I think you are a broker.
That’s funny. If I was would I really write that last line above?
Never used a broker, never had a broker, never will have a broker…I thought you were a broker in your past life?
Barrons had a good quote this weekend in Streetwise from a hedge fund manager that the range of outcomes are so wide (bull or bear) that you should play small here. I just wonder how many retail investors are still in this market?
Pretty much what I said in last nights post.
Yes, that was an excellent post. I feel the same way, with the added stress of a frozen MF account. Not sure how much I will lose out of my cash there. Sooo frustrating.
Kraut balls and Schnitzel piled high on the table this year….
I’m in SMH for day trade $28.92.
And Happy T’giving to all.
And now some INTC,NVLS for day trades.
Actually I think the German bunds back up is the best thing that’s happened provided the fear doesn’t spread and they act quickly.
The reason is that this may finally get the pigheaded Germans to come to their senses and allow the ECB some breathing room.
I know we’ve argued about this before, J, but I’m just going to restate. The Germans are not going to trade their principles for some economic relief.
If it’s a choice between their sovereignty or some more cheaper interest on debt, they’ll sink the EU whilst flipping the bird.
*more cheaper
Jesus that sounds retarded. I evidently didn’t hit backspace enough times.
There is indeed a problem with funding countries whose governments throw money around like confetti. I don’t totally understand the situation, but I can understand the viewpoint that pouring your money into a bottomless pit is not going to solve anything.
German restated today their ardent refusal to backstop EU with eurobonds.
Okay, then the game’s up. There’s nothing more to be said other than the whole fucking thing comes falling on our heads.
I don’t see any way that the euro does not go to par against the dollar, even if they don’t print. But countries can voluntarily exit the euro, issue their own currencies, and restructure.
It would be very expensive, and very time consuming, but it can also be done without a total collapse of the financial system.
You know, I’m short the Euro and the Aussie at the moment, however I trading a short Euro position with scared money.
If there’s deflation in Europe we could see a shortage of that currency and see it rev up higher.. perhaps not as a sustained trade, but as a temporary one that fucks all the shorts.
Agreed, if Europeans need euros enough it can definitely send the euro higher.
I’m thinking (hoping) that foreign accounts receivables will offset that though as trade partners start asking “why the fuck am I holding this shit?”
They can exit the Euro but the cost for all them strong or weak is still to stay with the Euro.
It would cost Germany 600 billion in direct costs and possibly that and more indirectly too according to Credit Suisse.
Cain
I don’t see this mess as an economic but of a structural problem with the way the Euro was set up.
If the Germans don’t see reason then it’s all over rover.
Perhaps, I’m overly optimistic but I simply don’t believe Merkal.
Bonds do look ready to roll, is that going to be your big bet?
dude, no big bets, period …
to survive, all bets need to be small because most likely it will be wrong and will be screwed !!!
to bet big and wrong is as painful as getting one of your balls rip off by the market …
Bought more INTC for day trade.
People act crazy when it comes to money and divorce.
Having known some Divorce lawyers I would say at least half keep a weapon locked in their drawer, just in case.
Well, you know the saying “All’s fair in love and war” and the competition for money is war.
There was a gap that needed to be filled around SPX 1170. Has been filled. Time to load up on longs.
Are you willing to suck your own cock again, providing you are wrong?
I wasn’t the one LONG and unhedged the last 100 points down. The FAZmobile served its purpose.
ARGGGGGGG
Fly, this may be the most wisdom you’ve ever spouted in a blog post. People need to get this!
Bought a small(about 5X7) unframed Picasso for $7,800. Think that was a wise idea? Anyway, it’s sitting on an unopened and unmarked case of what was billed as 2011 Nouveau Beaujolais.
I bet it does better than GMCR over the next 10 years.
Beaujolais Nouveau is fruit juice, not wine.
But I used to drink it too, 30 years ago when I first started drinking wine…enjoy it while you can, you will eventually wonder why you did.
bah.. and meh.. 30 years ago… lol.
beaujolais is fine. subtle and unpretentious. unlike others. but just great and enjoyable. it’s a light wine and can be enjoyed as such. matched with the right meal it can be very good. i prefer it to most white ones with white fish. in the summer. refreshing.
white wine?
I’d rather stick needles in my eye.
Picasso, Calder & Dali are among the most counterfeited artists on the market. Very important to buy from an established dealer/auction house and save all authentication documents and other evidence of provenance.
I passed on a Lucien Freud for about the same $$$ about a month before his death and regret it.
Oh, and if you’re keeping your art locked up and hidden away, you’re cheating yourself out of at least 50% of the value of owning it.
There are months when buying the dip makes you money and minutes when buying the dip gets you killed.
suck you own cocks? haha.
This is great. I am short insurance, PL,LNC. how these fools going to pay these annuities?
If I’m wrong so be it.
regards
chuck
I’d really like to hear more about this thesis.
I agree with the idea, but so far the bond market has been a great investment for them including this year.
Going forward that will be different but there will always be yield plays for them. And they are so much better shape than SS.
Maybe it is just a “perception” short.
So it’s time for the inverse Monopoly card? “Go directly to Home, print $200 trillion, start over”. I like my rent houses.
There’s too much debt and not enough cash. You turn on the printing press something really really bad is going to happen.
vintage fender guitars, and amps. vintage snare drums.
http://www.reuters.com/article/2011/11/23/us-eurozone-idUSTRE7AM0R620111123
It’s a game of chicken, once the EZ agrees to the treaty it’s money printing time.
Sweet, that’ll only take 6-12 months.
Indeed. Just bought a case of some nice hand picked pinots, Californian, Oregonian and Burgundian…
Have a good turkey day, fly.
Now you tell us.