I just want to say that I am not surprised by the Fed or the subsequent market action. However, I am a bit pertubed over my status with the gods, with regard to my largest equity holding: AREX.
This company was mangled because they had “too much” natural gas exposure, comprising 40% of revenues. So, I got to thinking “Fly, natty is going higher, since the whole country is inside of an iced cube. Go long the company that was punished the most for producing natty.”
Makes sense, no?
Apparently not, as the shares of AREX are now being treated as an oil producer. Sometimes, every so often, the machinations of the market, the inconsistencies, get me so angry I could throw a homeless man down a idle sewer hole.
I’m not buying the dip and will likely hold everything until I am motivated to get back into the markets.
No one knows why the futures are lower. Don’t be silly. It’s quite ridiculous to go from +10 to -10, without a morsel of news. But then again, the very dumbest people on the face of the planet trade S&P futures. I’d be surprised to learn that any of these people understand the faintest thing about markets and know how to eat with utensils–savage animals devouring hero sandwiches for lunch.
My cable is down today, for reasons that defy logic. But do not fear, Le Fly (as he is popularly known in France) shall watch the carnage, courtesy of back up hot spot device. Always have a back up, contingency plan, in the event things do no go “swimmingly.”
As for me, I don’t expect my largest position, AREX, to move much today. Most of Americans are buried under the snow, desperate to get a little warmth near their radiators. I have a few others things, irons in the fire so to say, but mainly positioned for this pullback–25% cash.
Let the carnage begin and, as always, I look forward to buying your margin liquidations.
Observation: It seems the market topped when Maria Bartiroma (sp?) left CNBC. Odd no?
On the back of that monumental Obama state of the union address, where he motivated every single american to become a factory worker in Detroit, I expect the market to rip tits to the upside tomorrow. However, it’s a Fed day, so anything can happen.
Here is what I said on Sunday night, inside of The PPT blog (just the conclusion)
In short, the Oversold signal is most effective after 3 days from the original signal. Judging on past results, one could begin buying on Monday and continue to add to position until Wednesday, in order to properly play the signal. I’d set some stops underneath newly acquired shares of about -10% below basis, just in case “this time is different.” In order to buy into a bad market, faith and patience is required. It’s always scary to buy into what feels like doom. However, the market hasn’t disappointed us in years and we’d be remiss to not give it the benefit of the doubt now.
My strategy played out a little different, for a reason. For one, I was fully invested in a lot of semi-liquid biotech. Into strength, I’ve been able to sell PRAN, RPTP and BALT, while cutting losses in ATOS and BMRN. I am left with high beta tech and natural gas that could very easily offer me high beta returns; so I didn’t lose much by selling, with respect to the rally to come.
I intend to sell into this strength and position myself to buy the blood. It’s very possible that we go straight up from here. But with Asian sovereign debt yields on the move higher, I like my chances of being a skeptic here.
It’s gonna be a long year, so bide your time and don’t force trades.
The market went up and I sold into it, yadda, yadda, yadda. You know I held long because of The PPT oversold signal and the market responded in kind today, preserving its flawless record over the past 6 months. But I have more important things to discuss, like the commodity of time and how invaluable it truly is.
My time, given my annual income, is worth many thousands of dollars per hour. I tend to choose to spend my time wisely, not in a slavish manner by any means. I indulge myself whenever I get the urge. Hell, why else am I here on this God foresaken planet? It certainly isn’t just to help you bozos figure out the market.
Anyway, I just wanted to say that I saw the mini-series KLONDIKE, starring the guy from Game of Thrones, the one killed like a stupid idiot at “The Red Wedding”, Rob Stark aka “King of the North.” JESUS CHRIST was that a bad and frustrating movie. It was the most ridiculous thing I’ve seen in years, if not decades.
The part when the guy, somehow or another, managed to hide all of his gold in the toilet, filled to the brim with shit, clinched it for me. I nearly lost it at the end when “The King of the North” was fondling a fucking orange.
If time is something that you deem to be valuable, DO NOT WATCH KLONDIKE, for you will regret the decision for the rest of your natural lives.
A very stupid broker I once knew used to say “I am making lateral moves” to the boardroom, whenever he did a bunch of trades. Keeping with that comedic tone, I swapped out of some of my RPTP and tripled my position in AREX.
With the polar vortex freezing the noses and feet of America, I am bullish on natty here and less bullish on biotech hand grenades, in light of the risk off environment. In other words, take the bounces to reduce risk.
Oh come on already. Day rates for capsizes just fell by another 10%, to levels that I never thought I’d see again. These seamen out there, moving stuff around, heading towards China, hemorrhaging money now.
Most of these companies are losing $10,000 per day now and BALT is in an especially tenuous spot, being 100% tethered to spot–having just doubled its fleet. Ouch.
This is all about iron ore, demand emanating from China.
I recall getting mud-stomped into the ground when I was fresh in the business, in 1997 through 1998. I told this tale several times here (you can find it under “Fly stories”). The long and the short of it is, I was very green and very ignorant to the world around me, just like most of you. I’d carelessly run about the city, drinking beers and throwing money away on sterotypical broker stuff. All the while, a storm was brewing, as plain as day; but I was too focused on commissions and how I might make them get bigger.
Over the past several months, borrowing costs in Asia have skyrocketed. Some of their currencies are being dislodged and a general sense of anxiety is now in the air. This all has to do with our Federal Reserve and how QE money found its way into Asia. The good news is, many asian nations have decent reserves and aren’t levered up like us. However, borrowing costs are borrowing costs and that’s gonna eat away at growth, as evidenced by the Dry Bulk shipping rate collapse.
Have a look at some 10 yr bond yields in Asian and South America, terribly reminiscent of the European crisis of a few years ago. Turkey Thailand Taiwan South Africa Singapore Russia Malaysia Indonesia India Hong Kong Colombia China Brazil
Someone just threw a BRIC through our facade and reminded us how incredibly fragile the world of finance is. Back in 1998, I wanted to die, instead of looking at the market every day. Markets like that drive men to alcoholism and/or abject poverty. Just when you thought the market couldn’t go lower, it went down so hard you felt as if you were living in a comical world, where up was down and down was in hell. I do recall, however, DELL managed to trade up during that time, as it was a hyper-growth stock back then and everyone wanted in.
Let’s look at SHIBOR (interbank lending in China)
And here is the wonderful “SPY action” from 1998, the wonder year, the year that broke me and then made me.
If you haven’t raised cash already, it’s not too late, as this thing looks like it’s just getting started. Plus anyway, now is a good time to ditch the speculative stuff and place the high quality stocks, that are now discounted, onto the proverbial front burner.
We’re teetering on the edge and shorts are pressing their bets. Ahead of a two day Fed meeting, the stakes are high. In light of recent “emerging market” dislocation, will The Bearded Clam opt to let the spigot loose with fiat cash? Or will he embark on the stupid plan of tapering?
The world wants to know and judging by today’s action, if nothing is done, we’re heading lower.
As for me, I am dealing with the punches, upped my cash to about 18%. I’d like to up my cash holdings to about 25% into strength. However, if “this time is different,” I will capitulate.
I am not chasing this bounce, nor selling into it. I am not looking for ideas either. I am simply trying to manage my current holdings, deciding upon possible “average down” points of interest and where I might want to liquidate. Truth be told, the best opportunities come when things look the bleakest. If that’s the case, this is Bleak House and I’ll be your Dickens, guiding you through the mud towards winship.
