Down the Sewer Pipe

Fuck you CNBC for putting that fat fuck Phil Lebow on teevee today, talking up the auto sector. That’s the last fucking sector, in the whole entire world, I’d want to own here, save some bullshit Chinese burritos fraud stocks. We’re down 8 straight days and now many of you asshats are going short? Good luck. I suppose, to a large extent, it’s all a crapshot.

The only redeeming thing about this whole mess, for me, is witnessing Obama and Congress fail, on an epic level, in trying to turn this economy around. They are sitting ducks, dead in the water, future ghosts.

If I was 100% long today, I’d visit my friends office and punch the shit out of his sheetrock, in an uncontrollable exhibition of rage, then calmly walk out as if nothing happened. It’s days like this that makes me want to throw firecrackers at people or slap pedestrians in the face with hot slices of pizza.

If this market trades down tomorrow, that will make 9 straight days down. This is a KARL DENNINGER, ZEROHEDGE, DOUBLE BLUE BLAZER, APOCALYPTIC dive lower, no safety net. If you are a bear, this is your chance to kill everyone and eat their brains. You must pray for state failures and civil wars, famine and pestilence. Throw in a little epidemic, and I believe this market can go lower.

In the meantime, like a fucking idiot taking an MCAT exam, I sit here waiting for someone to give me the answers. The mood is outright morbid and we need Uncle Ben to get his “press on” so we can feel a little bit better about ourselves.

I could not help myself.

I bought TNA sub $67.5

TLT is gapping higher, as predicted by history. Over the past 9 years, TLT has gained in the month of August every single time, with an average return north of 3.5%. The market is getting killed today because investors have had enough with the excuses and ineptitude of our government. When you throw in the Italian and Spanish sovereign debt crisis, you have a recipe of sheer panic.

I was wrong when I said we’d rally on the debt ceiling deal. We had the initial reaction yesterday, but gave up the ghost quickly due to the meatball throwers in Italy. To be honest, given the news, I don’t know why I am long stocks. As a point in fact, I have every reason to be 100% cash or short. When buying into the blood, it never feels right and the headline risk is always against you. It’s the very definition of contrarian investing.

Despite being 50% cash and selling out of my DECK position near the high of the day, I am down 1% today, led by losses in TEX, FLS, WNR and my intra-day purchase gone south TDC.

For the sake of retaining my sanity, I will be adhering to strict stop losses, in order to protect my gains.

I started a new position in EMN.

With the sale of my largest position, DECK, and smaller purchase of TDC, I am now 50% cash/50% long. The market looks like shit, but I haven’t been hurt during this decline. As a matter of fact, I missed the majority of the decline, while in cash. And, I was able to cherry pick some good stocks that bucked the trend, going up in a down tape.

So, I can afford to risk a little here, waiting for a rally. Truth be told, I am tempted to go long some gold and silver stocks here. However, I am refraining from doing so, just for the sake of keeping it light.

Although I’ve been successful at managing risk during this period, I’ve been a little antsy over the headline news and would prefer, simply for the sake of quality of life, to not have too much equity exposure at this time.

Some of my new positions, FLS and TEX, are down since I bought them. My line in the sand for all new positions is -5% to -10%, with exception to GSVC because of the nature of their business and small float.

WNR is trading off, following MPC’s earnings. Again, in my opinion, there is no comparison between the two companies. WNR has run up a lot in recent weeks, so I would not be shocked to see it sell off on good news. However, I am fairly confident they will report solid results, so—for me—it’s worth holding.

Finally, VXX is going up, hitting my put position and XIV. I am giving the VXX time to soil itself, as it always does. Right now the market is for shit, so don’t expect miracles. My current thesis is “wait for the bounce,” so holding VXX puts a little longer meshes with that frame of thought.

I started a new position in TDC.

Disclaimer: If you buy TDC because of this post, the President, for no apparent reason, will veto the debt ceiling bill. And, you may lose money.

I sold out of DECK.

I am officially up 120% on my DECK 92.5 calls. Believe me, trading options is not as easy as I make it look. Throughout the years, I’ve definitely lost more than I’ve made. Nevertheless, I am making up lost ground rather quickly these days.

The market is weak due to Italian and Spanish bond spreads blowing out versus German. I don’t see how this will be resolved amicably. I was discussing these important matters with my wife last night, who knows nothing about finance. Her strong recommendation was for Europe and the U.S. to “take their medicine” and restructure their debt. I tried to explain to her how that would mess up the status quo and how I would prefer the old can kick. Then she retorted, “why, so our children will have to deal with these issues later?”

I find it funny that someone, who knows nothing about finance or how the debt crisis is proceeding, could be so confident about what needs to be done, yet global policy makers are juggling balls while their respective countries get burned.

As much as I want things to continue “as is” because it’s convenient for me, I suppose it cannot. Eventually, hard decisions, by brave people, are going to have to be made. Everyone will take a hit, no matter what. However, we will be better for it later, after the losses are taken and things are “reset.”

For now, we will continue the charade, making believe the banks are solvent, until the tipping point. For Europe, that tipping point is a lot closer than people think. No algorithm will be able to predict failure, so you’re gonna have to use intuition and common sense going forward.

In the meantime, I am banking stupid coin on DECK here, as it is my largest position. A sharp rally is coming. We just need a spark to get this car, made from dynamite sticks, going again.

I am certain you find my candor to be both refreshing and vexatious all at the same time. I sit here, fireside, smoking both a pipe and a cigar, mostly for pleasure and to irritate Mrs. Fly, while gobbling down unhealthy portions of single malt scotch. As I flick my ashes into the fire, I imagine each ash is an American congressman, sent to his own private incinerator. The fact that I’ve been forced to watch CSPAN for more than a week makes me want to become a rebel leader, financing armed revolt against my local garrison.

But no, I am an honest tax paying citizen, just like the rest of you, trying to live my life as comfortably and seamlessly as possible. The big difference between being desolate poor, skate boarding off vacated refrigerators, and rich as fuck, is the ability to not waste time (no gekko). I don’t need to haggle with asshats over prices or worry about getting the #1 or #5 meal at Mcdonald’s. If I wanted to, I could splurge for both, AND MORE. Believe me, I am completely and utterly grateful that my genetic code came out better than my peers, as it enables me to outstrip them every step of the way.

While we are sitting here together, quietly chatting about world events, politics and money, I will let you in on a little secret. Are you ready?

The secret is, you shouldn’t be so cross with me over your lack of emotional fortitude. Look not to my flaws as a teacher, but look within your inabilities to be a good student. I said that shit in a Japanese accent, so you know.

I’m not entirely sure I am making the right moves here, staying long into carnage. I’ve made my career using a certain set of disciplines and standards that have proven to be enormously beneficial for myself and my family. I am using said ideals right now and you can share the wisdom, via The PPT, if you choose to do so.

The reality is we are OVERSOLD. As a matter of fact, if I wasn’t so afraid of our ruling elite, I’d be 90% long right here. But, I’m up about 16.5% for the year, into turmoil. It would be feebleminded of me to discard risk management in the middle of summer, in the midst of grave uncertainty. Either way, I will gain more than 30% this year; you can count on that. And, furthermore, I will expand my domain into several new geographic locales, where the iBC ruling guard will oversee FOXCONN like mechanical precision, all thanks and praise to The Grand Recursive Order Of Knights Of The Lambda Calculus.

My pipe is just about done and I am heading back into the parlor for late night cup of Earl Gray. Sleep well and dedicate a prayer to your majestical creator, with the explicit intent to better the equity prices of my largest positions: DECK, WNR and GSVC, as payment for this intimate, heartfelt, fireside.

If a client came to me and said “Fly, I have $30,000 for you to manage. Will you please help?” I’d have no choice but to laugh in his face, throw wine on his mustache and challenge him to a “death match” inside of a phone booth lined with metal spikes.

People from the internets: I NEVER want to hear about your trials and tribulations. I do not care if you are having a difficult time reading this tape, because I’m not.

See, I’m on fucking fire here, banging out one hit after another. They call me “The Hit Factory.” While sharing my views and trades here on iBC, you need to exhibit proper decorum by not expressing your small minded opinions. It makes for poor spectacle and only highlights the shallow depths of your cognitive thinking.

I challenge you to watch me very closely and witness greatness. It is rare for you to witness such things, in a country filled with mediocre fuck ups. I am exactly what this country needs right now, greatness through showmanship, coupled with extreme acts of random and egregious violence.