THE CLIFF IS COMING

Make no mistake about it, we’re going over the cliff and the United Steaks is going to be humiliated on the world stage, all the while our congressmen smirk–looking at polling data.

Markets will crash because our word is no longer gold. Gold is gold, so that might do okay. I am at a cross-roads, unsure what to do. On one hand, the markets should continue higher based upon QE. On the other, we have a temporary phenomenon–crushing the soul and spirit of the plebian investor.

Part of me wants to sell short to hedge, another part leverage up and wait for a resolution. But I cannot and will not rely upon the caprices and the whims of the sick perverts who work in Washington DC. Therefore, I will do without joyous grandeur in exchange for conservative austerity.

That being said, I will not sell BALT under $7, nor NSTG under $15. I will hold onto MODN because half of its market cap is in cash and YELP is a permanent fixture in the house of Fly.

It doesn’t matter what I think is going to happen. All that matters is what’s in front of my face. What I see is red ink, stocks bleeding out because of the specter of a debt ceiling breach. I’d like to hold the stocks in my portfolio because I believe they’re cheap. But they’re just stocks, frankly, and can easily be replaced.

I sold my entire MHO and FLTX positions, locking in 5 and 11% losses, respectively. I didn’t sell them because I felt they were going to trade lower. I sold them because they are lower. When “non-core” stocks breach 5 and 10% levels for me, I either double down or sell them. Due to the onerous tone of the market, I decided to sell them and raise 30% cash. I trimmed a few other things too, little stakes, here and there–bringing my current cash position to about 33%.

Naturally, I am on the prowl for fresh ideas, looking to make back the losses that I just locked in. But I am going to take my time, behave like a Congressman, without all of the traditional degeneracy that affixes itself to that position.

I couldn’t help but reflect on the flash crash of 2010 last night (here are my blogs for May, 2010). On the day of the flash crash, I had an endoscopy done, to make sure I wasn’t dying of stomach cancer (I was going through a period of hypochondria). It just so happened that 15% of my book was long VXX into the melee. After seeing what happened that day, I bought more VXX, eventually upping my position to more than 30% of my book. My bet was we’d retest the flash crash lows, and we did. I ended up making 50% on that position, setting the stage for terrific 2010 asset performance.

Unfortunately, VXX served as an albatross for me, during the dark days of 2011-2012. But we won’t delve into the negatives this morning.

I can’t help but to admire the craziness of our beloved elected officials. We are assuming they won’t force us to default on our debt, mainly because it’s crazy to do so.

And?

These guys are lunatics, completely detached from reality and business. The more I hear these trolls talk, the more I worry about them pushing us over the cliff. They just don’t care about the consequences, plain and simple.

I can see this market getting very ugly, the closer we get to 10/17. The democrats refuse to negotiate, because they don’t care. The republicans, especially the tea party folks, aren’t afraid of defaulting on our debt. Do you know why?

THEY DON’T CARE about the real consequences, because they’re ideologues.

Do not try to understand why irrational people behave the way they do. I am starting to think riding this out may prove to be a very costly wait and may opt for the sidelines instead.

I know everyone loves to hate Jim Cramer, including me. We all sit atop our high perches and besmirch, over and over again–because we’re better, sans his $500 million net worth. We poke fun at “how stupid he is” and “how bad his picks are,” even go as far as to suggest he’s a contrarian indicator–part of a short selling cabal alongside his ageless friend, Herbert Greenberg.

All that aside, who puts in the effort that Jimmy does, day in and day out? Each and every morning, the man must drink a large mug, brimming with Columbian cocaine–just to get started. He’s on in the morning, the afternoon, and again during Mad Money. In case the “markets are in turmoil,” Jimmy stays up with us for as long as the CNBC will let him, discussing the market, trying to offer sage advice.

I shouldn’t be so hard on Cramer, since I could never do what he does. Tonight was his 2,000th show and I’d like to congratulate him for doing the public a service. He might not get every call right and he might even muck up a few (who doesn’t?); but, he soldiers on and aims to win on a daily basis, while you perverts and drug addicts make fun of him from your Lazy Boy recliners.

I have a seasonality engine running inside of The PPT. For those of you who are without coin, peasants, unable to afford the mere $1 per day for our services, I offer you charitable data this evening. Very soon, your eyes will feast upon seasonality data for the month of October. After doing so, you should probably go to bed, dream about the fortunes to come.

It appears my computer is broken, as I was unable to furnish the data promised. Out of 4 pages, I gave you 3/4ths of 1. You’re just going to have to “imagine the list,” as you get ready for bed.

Good evening.

I am waiting for better prices. Although, I must admit, YELP was a beast today, as well as a number of shipping stocks. But the crux of this rally has been sold. Fear is contagious and the media is working extra hard to crush the spirit of the beleaguered retail investor.

Following yesterday’s drubbing, I am up just 0.5%, thanks to a milquetoast showing in the majority of my holdings. I’m not afraid to lose money, so this is part of the process.

If a deal is struck, even to delay the inevitable, stocks will rally. If we go over the cliff on 10/17, panic will set in and stocks will sell off. I want to be in a position to buy bargains and that’s hard to do when you’re 100% long. In theory, this should not affect one’s investment decisions, since it’s self-inflicted.

I’m sticking with the odds, betting that this new congressional crisis resolves itself, trapping foolhardy shorts once again. The Fed is working overtime and the shippers are banking coin.

I like my position and will wait for the pop.

If anyone is familiar with NY sports radio, then you will greatly appreciate this comedy gold.

I am pretty bored out of my mind, as I am fully invested and do not feel the urge to leverage up into Congressional stupidity. I am watching a documentary called “Red Obsession” and am amazed at the insanity of the chinese arrivistes–clamouring for Bordeaux wine like crack-heads in the South of Bronx.

I am pleased to see BALT trending higher and logical people take positions. My YELP is above $70 again and I am halfway towards making up yesterday’s losses.

As for FLTX: it is an earnings play, betting against the mentally ill at Seeking Alpha. I don’t know why so many challenged people gravitate to that site. It must have something to do with the owners of Seeking Alpha. I don’t know.

CREE caught a Goldman upgrade today, a very bold call considering they missed earnings.

At any rate, I have nothing to offer you but confidence. If something comes up, you’ll be right at the top of the list of people to tell.

Back to my documentary.

The BDI is down 9 this morning, basically unchanged thanks to strength in Supramax rates. By the way, Handysize rates haven’t budged during this small BDI pullback. The BDI is being dragged lower by Capesize rates, which are up 300% over the past two months. Any reasonable human being would surmise this pullback to be a healthy aspect of a bull market in its nascency.

Back to BALT.

Have a look at their profit and loss statement, over the past year.

Cost of revenue is pretty much mailed in every qt at $4.5 mill. SG&A is also extremely predictable at $1.8 mill and “others” has been no more than $3.72mill over the past 4 qts, bringing total expenditures to around $9.9 million per qt.

Now the problem with BALT, as well as many other Dry Bulkers, has been the top line. Their revenues have sucked, thanks to depressed rates. However, in recent weeks, rates have changed, rather dramatically.

Let’s have a sterile, scientific, look at BALT’s current revenue rates.

Total fleet: 11 (2 additional Handysize ships added since last qt)

Capesize: 2 @ $36,069 per day- $72,138

Supramax: 4 @ $11,369 per day-  $45,476

Handysize: 5 @ $5,940 per day-  $29,700

Total: $147,314

According to today’s rates, BALT is generating $147,314 per day. If you extrapolate that over 90 days, they should make $13,258,260–providing capacity remains at 99.9%.

In summary, total expenses amount to $110,000 per day. With revenues at $147,314 per day, BALT stands to make $37,314, every single day or $3.35 million dollars over the next quarter. Considering BALT’s position of returning earnings to shareholders, expect a special dividend to be announced over the next quarter or two.

It’s pointless to scour the market for deals at a time when our government is purposely hurting itself. I’d rather shoot myself out from a carnivale cannon and juggle for the elderly.

I’ve made my bed and BALT is my largest position now. I didn’t buy any today, because momentum stocks tend to get flushed when things get tenuous. Well, things are tenuous now and I doubt many people are calculating the amount of coin they are making now. All they see is a chart, coupled with yahoo and stocktwits messages. That’s it.

The blindness of others is my edge.

Aside from that, I am still heavily long MHO, NSTG, YELP, FLTX and MODN. I own a pastiche of bastards and pirates and shall make my fortune that way.

I am tired from today’s workout and busy drinking this here “JAW-JACKER” pumpkin ale. Always remember that the people on the teevee are extraordinarily stupid and are unaware of the truth.

This dip is a gift, but timing is everything.