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Dr. Fly

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.

Trading From 10,000 Feet Above

You fuckers need to understand something:

“The Fly” is up more than 45% this year. In other words, I can afford to take chances that most of you cannot. Sure, I sold my inverse etf’s today, then went long, betting on some sort of miraculous turnaround. But, even if I am wrong, what am I risking? Money?

Money is an ass.

I still have more than 30% cash and a whole lot of leverage, if needed. So, basically, I am just moonlighting, trying to pick off a few good scalps, while drinking my excessively large can of Monster Energy Soda.

Much to my chagrin, the trading desk is having “technical difficulties” this morning, which in turn is encouraging me to murder my trader/servant.

I have all sorts of fun shit to do today, none of which is of any concern of yours, by the way. Just know, “The Fly” is kicking the chicken livers out of idle chickens and his football team is undefeated this year.

Top picks: [[UYG]] , National-Oilwell Varco, Inc. [[NOV]] , [[DIG]] , The Mosaic Company [[MOS]] , [[EEM]]

UPDATE: I am down to 25% cash. I will freeze all additional buys until tomorrow.

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The Holiday’s Are Not Going to be Good for Everyone

Art Cashin wouldn’t be happy if the market fell 5,000 points today. That old bastard is one big fucktard. I don’t care if he’s been trading since the great depression; there has never been a market as bad as this—sans Japan circa 2008.

All of you chart chomping motherfuckers must be BESIDES yourselves, as the imaginary levels you built up for yourself fail and fail again. On the other hand, men with very high IQ’s, such as myself, game this market as if they were selling crack cocaine in the back of the White House (I have no idea what that meant).

With my money, I intend to cover my hedges today. I have a hunch; therefore I am going with it.

Going back to my “rich mans advice” post:

Half of my money is in bearish instruments. I will cover all of my shorts and sell my inverse etf’s at once, leaving the proceeds in cash. Doing this will put my cash position at around 57%, with another 43% long, specifically in commodities.

With the cash, I will start buying on dips, in increments, leaving no more than 25% in money markets.

More on this later.

UPDATE: I sold all of my [[SKF]] . With the proceeds, I bought [[DIG]] , [[ROM]] , National-Oilwell Varco, Inc. [[NOV]] and The Mosaic Company [[MOS]] . Presently, I have more than 40% in cash.

UPDATE II: I bought 100,000 [[UYG]] @ $8.12.

UPDATE III: Buying 1,000 share blocks of [[EEM]] , starting from 19.45.

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Get Ready for the Great Big Forex Fuck Up

The giant leg downs in foreign currencies, ex-Japan, are indicative of western money running for cover. Without a doubt, the next giant shoe will emerge in the emerging markets, ironically. Whether it comes in the form of national default, or widespread runs on foreign banks, one thing is abundantly clear: western investors have zero tolerance for risk.

One of the side caveats to the forex fuckery is the amount of exposure multi-national corporations have in Aussie, Euro, South American and Pac rim hedges. I guaranfuckingtee you, very soon, we will hear of all sorts of “forex related losses,” with hedges gone wrong, amidst calamitous drops in some high yield currencies.

In short, the dollar and yen have been the notable beneficiaries. It should not be a surprise to find out, sometime soon, Japanese banks have raped themselves, yet again, by lending money to Eastern European morons. And, let’s not forget, Japanese banks fund just about everything in Asia.

So, to sum things up:

European banks and corporations will soon reveal massive levels of rapery, via South American parties gone sour . American banks do not have the exposure to Latin America, like the Euro trash. However, our corporations are sure to have chockful of forex hedges gone wrong, as we like to sell our shit abroad in size. Chinese banks are toasty. And, Korean banks are the laughing stock of the Universe.

It’s just one more chapter to the greatest financial fuck up in the history of modern finance.

UPDATE: [youtube:http://www.youtube.com/watch?v=3-_-IKcoULE 450 300]

Wood’s favorite guy.

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Don’t Be a Loser!

[youtube:http://www.youtube.com/watch?v=MEV2dqojopY 450 300]

This one goes out to you small town homos.

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Get Your Coke Ready

I bet you drug addicts thought I meant cocaine. Fucking losers.

So, here we are, rallying into the final hour. God bless.

All of my commodity stocks are booking higher, while my bank shorts rally up. Once again, I do not care where [[SKF]] goes. Providing my commodity plays book higher, the pullback in SKF is acceptable.

To clarify: my hedges are for a specific time period, not price level. I will look to take some hedges off, early next week.

I need to run along, for I am busy doing things that make me money. However, while I am gone, just know, “The Fly” hates you and will work very hard to undermine your opinions, no matter what.

NOTE: Bullish or bearish, you fuckers got to love the price levels in the oils names, especially Chevron Corporation [[CVX]] . The oil men with cash will use this weakness to acquire assets on sale. I insist, National-Oilwell Varco, Inc. [[NOV]] is ghetto cheap.

NOTE II: Shame on CNBC for their disgraceful coverage today, tossing caution to the side and cheerleading the bull case, like fucking retarded imbeciles, despite the present dangers.

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Rich Mans Advice

As you know, “The Fly” is in the business of making money for rich people. Even though many of you are destitute poor guys with less than a pot to piss in; I am going to give you some high end advice.

The markets are severely oversold. Using all fundamental metrics, one must get long into this carnage. The problem is the fear of systemic failure, which may lead to rampant protectionism and the end of globalization as we know it.

So, with that pleasant thought in mind, here’s what I am doing:

On an account size of 1million, I have 500k in double inverse etf’s, like [[SKF]] or [[SRS]] . In addition, I am going long deeply oversold commodity stocks, for two reasons:

1. Dollar strength is overdone.

2. Valuations are rifuckulous.

My buy list includes The Mosaic Company [[MOS]] , National-Oilwell Varco, Inc. [[NOV]] , Occidental Petroleum Corporation [[OXY]] and Chevron Corporation [[CVX]] .

When buying stocks, in this tape, I am using a “legging in” approach. Meaning: if I intend to purchase 2,000 shares of a stock, I will execute that one trade in 250-500 share increments over an entire day, or in some cases multiple days. There is nothing wrong with waiting for the market to subside. And, there is nothing wrong with missing the exact bottom.

Out of 1million, my long equity exposure is approximately 40%, or 400k, leaving 10% or 100k in cash.

Here’s the dicey part:

On a whim of a major directional shift, I will deploy the 100k, or even lever up, and get long a double upside etf, like [[DIG]] or [[ROM]] .

Regarding my inverse etf’s, I will likely reduce my short exposure early next week, barring a complete collapse in the market.

The point of the game is survival. Cash is king, but entirely pointless. If you are going to attempt to navigate this tape, put your biases aside and protect your downside.

Now fuck off.

NOTE: Today I closed out my [[FXY]] position. That trade is also overdone.

NOTE II: Of course to pull off such a strategy, as mentioned above, timing is everything. Luck for me, I have a fucking time machine.

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Not Done Yet

This is the softest crash I’ve endured all week. What kind of shit is this? By now, I am accustomed to BIG moves. I was hoping to see 10-20% down, just for the sheer entertainment value of it all. Instead, I get this shit?

WTF!?!

Anyway, there is marginal strength creeping back into ag names, specifically The Mosaic Company [[MOS]] . Also, there is a bunch of other shit going on; but who cares?

I am just really pissed off that a giant shark did not bite off the head of Joe the Plumbers pension fund and send that fucker seaworthy. This is alarming.

God willing, the margin clerks will “school house” the idiots who are buying this dip.

My position, as always, is long commodities, short banks.

In the meantime, here is a fine tune for you clown fuckers on Wall Street to enjoy, prior to the 3:00 margin call hour.

[youtube:http://www.youtube.com/watch?v=fB5tbTpQvsM 450 300]

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MELTDOWN

Be careful, I heard clowns are running around Wall Street, indiscriminately raping people.

Listen up young brokers: today is the day you decide to go back to school, in order to pursue a different profession. Don’t do it to yourself. I am telling you now, all the money in the world cannot make up for the years lost, via stress, navigating this business. Hurry up and quit now. Tell your boss to go fuck his dead dog and a dozen eggs, then proceed to urinate on the trading desk.

In other news, going over the morning numbers, it appears Plutonium Petey will come out of this crash unscathed. I will “enjoy” large cocked losses in all longs. However, the oversized nature of my [[SKF]] position will wipe out my losses and more. Actually, I may end up making money today, unlike some other 4th tier homo bloggers.

I know I’ve been espousing some faggy “epic rally,” via buying a bunch of bullshit stocks. However, a few days ago, I felt something was wrong with the asshole-ish way the market was trading; hence I ate some humble pie and went short banks.

No use discussing spilt milk.

Today will be ugly. I would expect our markets to dip down 10%, before recovering. Do not chase this fucker on the first sign of a rally. Remember, we’ve been going down all week. The margin clerks will be out there selling, hardcore. And, the hedgies will be blowing out in size, come 2:00.

Even if we go green, early this morning, there is a chance we can give it all back towards the end of the session, thanks to forced selling.

The Forex markets are a fucking mess. It is no surprise to see the Japanese markets diving the hardest, considering it is their banks that are being ape raped by the unwinding of the carry trade.

If you end up losing tonnes [sic] of money today, chill the fuck out; grab a bear and laugh it out. It’s only stupid green paper, with hideous faces on them.

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End of an Era

During the beginning of 2008, most of you thought I was nuts for being so bearish. My largest positions were [[FXP]] , [[SRS]] and [[SKF]] , following a late 2007 beat down being long Hansen Natural Corporation [[HANS]] , NutriSystem Inc. [[NTRI]] and Buffalo Wild Wings [[BWLD]] . After years of being bullish, I promptly switched to the dark side after seeing signs of excess in China, Europe and of course here in the states.

During the first month of 2008, I fucking nailed the market, making more than 20%, inside of a few short weeks. I was betting against ag and oil in a big way, via short Monsanto Company [[MON]] , Potash Corp./Saskatchewan (USA) [[POT]] and long [[SMN]] and [[DUG]] . My cost basis on SMN was as low as $27, same with DUG.

I was shorting POT at $220 and MON @ $135.

In addition, I had big bets against chinese stocks, including China Mobile Ltd. (ADR) [[CHL]] and China Life Insurance Company Ltd. (ADR) [[LFC]] .

After a rally in the markets, during Feb-April, everyone jumped back on the global growth train, bidding up shares of commodity and engineering stocks. They even bid up banks.

I got lit aflame during those months, giving back nearly all of my year to date gains.

However, with egregious fervor, I shorted banks stocks with impunity, including BSC, LEH, Morgan Stanley [[MS]] , Merrill Lynch & Co., Inc. [[MER]] and a variety of regionals like First Midwest Bancorp, Inc. [[FMBI]] , Valley National Bancorp [[VLY]] , Cathay General Bancorp [[CATY]] and PacWest Bancorp [[PACW]] . Also, I had heavy positions in all of the inverse etf’s, throwing some new ones into the mix: [[REW]] , [[EFU]] and [[EEV]] .

After some monster wins, following the Bear collapse, the market rallied again. Knowing it was all bullshit, I weathered the storm and kept averaging into my ag and bank shorts. Unfortunately, I could not deal with the fuckers who operate SMN or POT, for they were operated by the devil himself. I ended up closing out both positions for big losses.

No worries, there was still LEH to lean on.

I did a lot of research into the banks and selected “The Four Horseman of Certain Death,” which included [[FED]] , [[DSL]] , Corus Bankshares, Inc. [[CORS]] and First Horizon National Corporation [[FHN]] . Needless to say, over the next few months, I banked ridiculous coin, shorting the shit out of weak banks.

After that, the market tore my face off during an egregious August rally. I waited patiently and began placing big bets against ‘global growth’ plays, including Vulcan Materials Company [[VMC]] , Terex Corporation [[TEX]] , Caterpillar Inc. [[CAT]] , Martin Marietta Materials, Inc. [[MLM]] and Jacobs Engineering Group Inc. [[JEC]] .

When Fannie and Freddie got busted out, the market began to change. As a short seller, I was encouraged to press my bets, even making [un]fortune cookies for Legg Mason, Inc. [[LM]] and LEH—taking down monster short positions in both names, north of $40.

I levered up and shorted all I could in any bank that had exposure to FNM, FRE or LEH, thinking they (LEH) would go belly up. I shorted AXA (ADR) [[AXA]] , Pzena Investment Management, Inc. [[PZN]] , CapitalSource, Inc. [[CSE]] , PacWest Bancorp [[PACW]] , Janus Capital Group Inc. [[JNS]] and even a casino Las Vegas Sands Corp. [[LVS]] .

I ended up riding LEH down to the high single digits, before covering. Following the LEH collapse, the whole system was in jeopardy. There were rumors that Morgan Stanley [[MS]] , Merrill Lynch & Co., Inc. [[MER]] and Goldman Sachs Group, Inc. [[GS]] could be next. The gov’t cheese makers would have none of that.

Aside from Pzena Investment Management, Inc. [[PZN]] and Legg Mason, Inc. [[LM]] , I actually lost money on my last round of shorts, due to government fuckery. They banned short selling, offered a bailout and tried to manipulate the markets higher. In hindsight, that sign of desperation was a prelude of the crash to come.

Over the past month, I am batting like .666 on the ridiculous string of market crashes/massive melt ups. I had some shorts in a variety of auto plays, like AmeriCredit Corp. [[ACF]] , AutoNation, Inc. [[AN]] and Cummins Inc. [[CMI]] , but quickly ditched them, for fear of getting squeezed. I’ve maintained intermittent positions in [[SRS]] , [[SKF]] and [[FXP]] , in between crashes. I’ve been hurt just a few days this month, like yesterday, being long stocks—thinking we are at a level where it makes sense to build long positions.

However, after yesterday’s debacle, again, I was reminded of the unique situation this market and country is in. I cannot believe we will stop going lower, because “we are low enough” anymore. Looking back on my trading success this year, one thing is abundantly clear: do not trust the bull, for it is made from chocolate and it will begin to melt as soon as the temperature rises.

Thinking over the state of the markets, I have no intentions of building long term long positions. Any long on my sheets will be for a trade and trade only. Moreover, I will keep my bias to the downside, until we see legitimate signs of a real economic turn.

NOTE: This is sort of a rehash of my year or thinking out loud.

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