iWin (Updated)

At least where oil is concerned, as ERX now spirals back below $70 a share.

Sadly, the rest of my positions are getting hammered. If I didn’t have the hedge, the losses would be far more horrific.

Times like this require trust. Do I trust myself and my analysis of my investments? Have I done a sufficiently good job that the pieces I’m holding can weather the storm? My entire plan has been centered around selecting gold amongst garbage and trusting that the garbage man can tell the difference.

If I’ve fucked up, it will hurt extremely badly.

As my entire strategy at this moment revolves around keeping a small amount of cash reinforced with a cracked out hedge against what will hopefully be resilient positions, losses do not deter me now. The deeper we dive, the more profitable it will be when I reverse off the bottom and margin myself long hard.

The game is afoot, friends. And the 9th floor is open for war.

Update:

Take a look at the oil futures.

I am back in my office, eating a nice French style sandwich, after a pleasant weekend abroad.

I had the pleasure of attending a wedding on Saturday, and spent most of Sunday sleeping in the sun outside.

And today, after preparing myself for a melt up, I’ve so far been gifted both a meltdown in crude, as well as relative resilience in the rest of my portfolio. However, as I write this, it looks like the Dow is correcting upward, so maybe we end up for the day?

Either way, I don’t care much. This market is feeling lazy, but the ball is in the hands of those who would see the market go higher. The opposing view has already scored up, if you follow me.

Yes, it does look like crude is now easing under 1% losses for the day. Late day rally, perhaps, is coming.

I’m not changing my tune, however. After all, my opinion of this market is not based on what the market is doing in the mean or the moment. I’m hanging out at the fringe, where risk management and asset unwinding can’t touch me. But hey, keep feeling comfortable in commodities and, to a lesser extent, treasuries.

I’ll give you a hint: short term treasuries are the most dangerous here. Yet, you all seem to be eating them up. I will dance on your graves if the U.S. delays interest payments, as your money is held in limbo.

My positions remain, AEC, CLP, MGM, BG, CCJ, AWK, short ERX, silver and cash.

So oil is recovering here, on this lazy Friday afternoon of trading.

It will not dissuade me in the slightest. Next week, I will be back at it, waiting on the impending collapse of crude oil prices. I have the backing of a European crisis. I have the support of foreign producers. And I am in line with the conserving American consumer.

Monday. Or perhaps next week. Or thereafter. But the supply glut is coming. And I will use it to drive oil speculators off a cliff.

Later, though. Now, I am taking an early weekend. Let the dollar bears push the line back; they will get what’s coming to them.

Whatever I said yesterday about a depression being likely, I really don’t mean it. We’re going to experience a slowdown because we’re running hot and need to consolidate positions. Also, jobs reports are going to look worse than they are because the millions of people who were taken out of unemployment statistics, but were really always going to start looking for work again, are coming back.

In many respects, that’s a good thing.

Our economy’s due for a correction, the dollar’s due to strengthen, and there’s a lot of shit coming up in the next two to three years, like healthcare reform compliance issues. So people are taking a foot off the pedal and industry is slowing down a bit.

I really don’t think this ends in the Great Recession 2.0. I think it ends in politicians rethinking some of their mandates on the economy and a large cessation of power from government. However, if Europe gets crushed enough, then it may drag us back into a downward move as trade dries up.

But depressions, unlike recessions, are very difficult things to get yourself into. They require apathy – one might even suggest intent – to refuse to help yourself out. A refusal to accept losses and restructure things must be ingrained.

In the world of prices, I anticipate the market retraces over summer while bonds, being subject to tax revenues which are about to be reduced once again, are also shunned. Cash is king, especially the dollar, unless the Fed starts currency bombing (they don’t need to buy treasuries, that’s just their favorite move. They could also just start buying assets on public markets). Select equities will also perform well (see my portfolio). Crude is shit.

But I think Bernanke & Co. is interested in letting things settle and seeing if they don’t find a bottom on their own. The patient scientist must observe, now and again, without interfering too much.

The market has given up the open’s gains already, while for some inexplicable reason crude pushes higher.

My office is inundated with commentary from the pols, especially vermin from CNN, explaining how spending cuts will unquestionably lead to a global depression.

Guess what. That’s probably already going to happen regardless.

You don’t destroy this much wealth and not have fallout. The US government keeping a relative pittance of citizens employed while simultaneous controlling a quarter of the country’s transactions is not going to stave off that reality. In fact, looking at the kinds of people you find in our government, I’m guessing it’s making things worse.

Everyone wants to be the French, circa the late 1920’s. Manipulating their currency and coming out on top for it.

But everyone is trying to be the French after WWI at the same time. It only worked for them because they were selling to everyone else. We can’t all be the cheap labor all at once. So instead, you have currencies all racing against each other to the bottom, and it’s exacerbating the situation.

Frankly, I’m all about playing chicken with the debt ceiling. Best case, the government gets much slimmer. Worst case, it gets much slimmer anyways, but a few people get their fingers bit in the process.

The most likely outcome of this though is the US Government is forced to give up discretionary expenditures and reform entitlement, plus fire some of their bloated workforce, and afterwards the certainty of the currency brings back cheap imports.

I love me some cheap imports.

Into the bell and practically without exception, positions are getting hammered in a mass rush for dollar exposure.

My REITs are being brutalized, down 3% and 5%, and my only up positions for the day are CCJ (go figure) and my short of ERX.

However, it is important to remember that the selling is too widespread. Seeing the market hemorrhage like this can cause you to challenge your perceptions of the market and reality. However, many, if not most, of these sell offs are head fakes and false positives, created by the need of groups to readjust exposure at any cost.

I am not worried about any of my positions, from a stand point of their business dealings and prospects. In fact, it’s quite the opposite. So it’s important not to panic and start creating problems for myself.

I intend to make money on every future transaction in my current allotment. I will cover my hedge for a gain, and sell my positions for the same. You will all witness as oil trades to $60, and the basic necessities comprising the rest of my investments – water, food, and shelter – recover to be priced at new highs.

Into the close, I am indifferently positioned while comfortably seated in my high-back chair.