iBankCoin
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.
Joined Nov 10, 2007
23,534 Blog Posts

Irresponsible to Buy Here

Money managers know they cannot keep this charade going. They know, while this recent rally feels good, it’s all based upon far reaching assumptions.

For example: The recent buying frenzy into “early cycle” stocks (retail, homies, banks) is absurd, considering we are pricing the end of a recession that has not even begun.

Anyone manging their money on that premise is delusional or fucktarded.

Your choice.

I’ll say it again, Federal Reserve rate cuts do not ensure the market will go higher. As a matter of fact, markets do better when the Fed is raising rates. Furthermore, the only reason we rapidly emerged from the last recession (2000-2003) was due to the creation of the housing bubble, coupled with good tax cuts.

Do we really want to create another housing bubble? And, if the democrats get in, kiss those tax cuts goodbye, by the way.

Remember, we have a consumer based economy. As of right now, unemployment is on the rise. Wages are being squeezed. The dollar is depreciating. Credit is still very tight for people with 800 FICO scores. It is non-existent for people with damaged credit. Finally, home values are not reflating.

Tell me, over the next six months, how does this scenario change?

As far as I’m concerned, I cannot get overly bullish until the jobs market improves.

What good is a fucking solvent bank when people are unemployed?

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37 comments

  1. ottnott

    The one thing that has changed is Ben’s vehicle.

    He’s stopped using the helicopter – you can’t drop $60 billion a month with a dinky thing like that.

    He’s now Cargo Jet Ben:
    http://site-images.ws/cust/32444904521414291717010619496207182261/AN-225-1.jpg

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  2. Alvari40

    But has all the shit been factored in and have we already seen the bottom. Not that it is straight up from here, but has the bottom been set so that what we get is vol chops to the up and down side? If the bottom has been set, and I dont think it has, then people are free to buy here, walk away and plan their Spring vacation. Extent of credit insurer fuckup is a big unknown, extent of next wave of writeoffs is unknown, and extent of the damage pulse through the system is unknown – so, there is no way everything can be priced in. That’s not to say, gorge on shorts and reverse etfs, that means stay cautious. Personally, I went back to the short side with DXD, SKF, SRS, but that may change next week because I am a short term trader. No way I am loking into long favs right now in this climate. I personally look for a nice bottom formation. V bottoms are for asshats. They fail, much, much more than they pay off.

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  3. Dinosaur Trader

    Everyone needs to take a breath, invest their life’s savings in SWC and all will be okay.

    Who cares about a recession when you’re FUCKING RICH?

    SWC to $300.

    -DT

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  4. buylo

    Fly, I trust you will be getting plenty of employment due your superb keyboard performance at the party, esp at Romanian weddings, lots of silver coin to be had

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  5. The Fly

    Yes. I can play the electronic keyboard, better than most.

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  6. DT,

    Rolling my fabulous profits from SWC into PAL before the train leaves the station.

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  7. ottnott

    But, I agree. The Fed is telling us that they are trying to avert a catastrophic lockup in the credit markets, not that they plan to prevent or end a recession.

    This is emergency treatment going on. The longer-term problems remain.

    Lending hasn’t slowed because rates were too high. Lending has slowed because too many borrowers are overextended and too many asset prices are too high and because the securitization process has been used for too long to shovel crap to buyers.

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  8. Van

    I’ve actually seen house prices RISE in my area (Los Angeles). Although Zillow is hugely optimistic in its house valuations, it is a good indicator for changes in price. I’m looking to buy some property and I’ve seen prices rise about 5% in the areas around here over the last couple of months or so… I guess a 20% correction was enough for greedy speculators – now that they can get paid to borrow money with the recent and future rate cuts. Let the housing bubble return!

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  9. CubsRock

    KBH is up 80% in 2 weeks and Cramer is buying a house! Subprime mess must be over…

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  10. Steve

    You keep saying recession as if it’s a sure thing and that is where your thesis goes wrong. We will not go into a recession based on housing alone and that is why you can’t figure out that we have already bottomed.

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  11. Steve

    Oh and your sweeping statement that credit is tight for those with good credit is incorrect as well. I just refi’d my house for 5.3% with no problem at all and my score is just under 800.

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  12. bulliSHIT

    Fly, very well said. i think the market tanks hard in the last hour. i hope the suckers buying this market get their balls blown off. why would you buy here? what is the upside — 300 points to 13k.

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  13. JJ

    Fly, that’s one nasty looking monthly candle on SKF, you sure you want to fight the idiots?

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  14. CAP

    “Oh and your sweeping statement that credit is tight for those with good credit is incorrect as well. I just refi’d my house for 5.3% with no problem at all and my score is just under 800.”

    Good for you Steve. 95% of Americans don’t have a FICO of anywhere near 800. The average FICO is around 680. Now that you refinanced your house why don’t you do us a favor and start spending that money to make up for those 95% of Americans who can’t refinance and cash out their home. I’m sure you’re spending alone can hold up the entire US economy.

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  15. ottnott

    No, Zillow numbers are totally worthless.

    Case-Shiller numbers are good, but take a while to come out. If you are looking at more recent numbers, they are much improved if you can find them adjusted to $ per square foot.

    That said, it wouldn’t be unreasonable to see a few bumps up in the longer-term downward trend. But the trend is still solidly in place, with huge amounts of inventory, large numbers of foreclosures still hitting, and plenty of 2005-2007 loans to reset or recast.

    LA County had 53,722 residential properties for sale at the end of Jan., versus just 36,715 at end Jan. 2007.

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  16. Helicopter "Britney Spears" Ben
    Helicopter "Britney Spears" Ben

    I’ve got a really fucking big chopper, bitches….and a printing press…and a sharp knife. Tokyo 1990’s style, here we come baby!

    How can the “bottom” be priced in here is noone knows where the bottom may lie, because noone knows what scary creatures lurk in the closet of the financials? I mean, seriously, you can’t price in what is unknown.

    And while the Offical Government Numbers may not reflect a recession, how can you not see one in the tea leaves?

    GDP cratering
    Unemployment rising
    Real inflation upwelling
    Foreclosures skyrocketing
    Credit market seizing up. Hell, I can cut rates to zero, but what good will that do if lenders wont lend because their standards are so tight?

    Oh, one other thing. I didn’t cut rates 1.25% in a week “just because”….chew on that….

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  17. wow

    Zillow is the worst thing to use for your economic indicators. It’s flawed beyond belief.

    The rates dropping and the increased loan limits don’t mean shit if people can’t afford to buy an overpriced shack. Throw in the factor that all the “creative loans” are dead, who exactly is going to be snapping up all these housing bargains?

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  18. TraderCaddy

    Calvino-Nice call on SNDK-made for a nice daytrade. Dumping my SMH from this AM into this rally before the weekend.

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  19. Steve

    CAP why don’t you do me a favor and fuck off. I was only addressing fly’s statement, not the general credit situation. You must be calvino’s little brother.

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  20. The Fly

    So, if we have bottomed for the year (after two weeks of downside), the market should march higher from here, printing a 10-15% gain, while the economy slows to a halt.

    Great thesis.

    Come back in 6 months and tell me how that’s working for you.

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  21. ottnott

    Steve: I’m sure the homebuilders are thrilled that you are able to refinance your home.

    It is an undisputable fact that huge numbers of potential homebuyers have been locked out by the combination of still-high home prices and tightening credit standards.

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  22. wow

    As far as I know, you aren’t going to be able to refinance a house that is underwater… so that will elminate everyone from 2003ish – 2007ish.

    And the recession is going to be based on consumer spending, which has kept the economy afloat for the past few years. Is everyone going to be in dire straights? No, but the large % of asshats who bought a house with 120% financing, or who have tapped out their HELOCs are f’ed for a long time. Its going to be a big enough % of people to bring consumer spending wayyyyy down.

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  23. Steve

    “So, if we have bottomed for the year (after two weeks of downside), the market should march higher from here, printing a 10-15% gain, while the economy slows to a halt.”

    Uh…no. I think we will most likely dance around the 1370 level on the S&P with a retest to flush out the weak hands.

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  24. Dr T

    What you fucktards are missing is that the MMs and hedgies are simply taking advantage of all the bearishness out there and putting the squeeze on the shorts. You may fret all you want, put forward numbers and reasons that the economy is tanking, and curse Ben and Paul, but as long as the big money finds it profitable to shake the shorts out, they will keep pushing the market up. And just when everyone starts taking long positions, the market will tank, priming for new shorts to squeeze. Chew on that.

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  25. TraderCaddy

    The market is a discounting tool. If this is a bottom (I have no clue) then we won’t see any economic recovery for about six months. If in fact we have seen a bottom in stocks then that was either no recession or one of the shorter ones I have ever seen.

    The case for a bottom is interesting as there has been a clear change in leadership to the crap of’07.

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  26. calvino

    Yea Doctor, I know, you know, but the fuckgame is on and it’s working. Still these fucking menstruating cows are geeting handups every day on the rally. Ubbergeek ‘I had to get married to get laid’ Bill did it today. Lying fucks at MBIA yesterdayThe bearded cummguzzler with the helicopter shitbombs Wednesday. These cows are getting a fix evey fucking day, and at my fucking expense.

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  27. alphadawgg

    I’m not Steve. I just wanted everybody to know that.

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  28. PoorOkie

    You guys aren’t wrong on the SKF, you’re just “early”.

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  29. Helicopter Ben

    Evidence that the bottom is not yet in:

    New Debit Card Borrows Against 401k

    In a move that financial analysts are calling a dangerous gamble, one company is offering a debit card that lets you tap into your 401k savings.

    With the threat of a recession looming, many families are looking for ways to get some quick cash to make it through these hard times.

    In a move that financial analysts are calling a dangerous gamble, one company is offering a debit card that lets you tap into your 401k savings.

    Borrowing against your 401k isn’t a new concept, but financial planners say making that money so easily accessible through a debit card greatly increases the potential danger. Money taken out of a 401k now could mean less money left for retirement.

    The Reserve Solutions ReservePlus debit card lets employees borrow against their 401k plan by making withdrawals at ATMs, paying interest on the money withdrawn.

    http://www.myfoxdc.com/myfox/pages/Home/Detail;jsessionid=2CA9DF3F3FA445A74302C268A26D2DFC?contentId=5644269&version=3&locale=EN-US&layoutCode=TSTY&pageId=1.1.1&sflg=1

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  30. alphadawgg

    If you cut through all the bullshit, news media, government reports, etc., etc…..it all comes down to Econ 101. Supply and demand.

    I try to ignore all the noise, bullshit (CNBC) and market minutiae and focus on the main issue of supply and demand for stocks. More willing buyers than sellers willing to sell, the prices go up. More willing sellers than buyers willing to buy, prices decline. “Resistance” is where there is supply. “Support” is where there is demand. It really is that simple.

    Who cares what the economy is doing? We are talking about the stock market, related, but a different animal. The economy is important as far as us getting the goods and services that we need, and jobs to keep our wives happy and children fed. But, boys, we make money in the market—a shrewedly veiled and legalized form of gambling.

    That’s why technical analysis tools are critical at this juncture. As you well know, fundamental analysis tells us what to buy. Technical analysis tells us when to buy (or sell).

    To use a cliche….KISS.

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  31. Juice

    Fly: You truly have turned into what you hate – ergo, an old grizzly bear; rationalizing, justifying why you are not taking part in this party thrown by your central bankers.

    The point of managing moolah is to make moolah; intellectualizing is for professors.

    You made & played a great call to start the year but you should have booked that trade when you were up 30% in 3 weeks. I mean, wtf ?! Hindsight is easy, sure .. the bear will be back … maybe in March, maybe next week for a day or two … who knows, but retarded bulls have the baton & are off to Pamplona .

    Best not to get in their way.

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  32. alphadawgg

    Juice,
    You make a valid point. The market is all about making money, not analyzing all the information out there. There’s too much of it. Barring having a calulator brain, most mortals cannot handle the information overload.

    I agree, make the money while it’s there and be ready to take an opposite position and viewpoint, even though it makes you look like George Costanza.

    I say that with all due respect to “The Fly” and the rest of the internets. People make money in this game in different ways. There is no one “right” way. The “right” way for you is the one that makes you money.

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  33. Juice

    Alpha – yeah, info overload is destructive to ones financial & mental wealth.

    Absolutely, there are many ways to skin a cat.

    Fly’s off to a great start in any case. No disrespect intended.

    I bot a few hedges today … some SKF SRS a few shorts … this is kinda frothy, not that it can’t get kinda frothier

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  34. alphadawgg

    With the market running up again today, this is where we all need to claim residence in Missouri. Keeping stops tight with some hedging—good idea.

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  35. TraderCaddy

    I don’t know how much $$ Fly has under management but he can’t trade as much as me or some of the others here. He has clients to answer to and has to keep his trading and costs down otherwise they will probably bitch about it. I’m sure he has various hedges in place to protect profits.

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  36. alphadawgg

    TC-
    Yes, he can. Even if “The Fly” is managing money for separate client accounts, as opposed to a hedge fund, he can still do block trades in a particular position for those accounts in aggregate, and move in and out quite easily. Assuming he does all that on a “discretionary” basis, which would make sense, from an operational standpoint.

    The exception is if he is managing a multi-billon dollar position in a stock, or one that is thinly traded, then your are right, it would be difficult.

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  37. rickh

    This is first time in my life when I don’t know what to say. After reading all comments I’m shocked. What has happened with our society, with our young generation? They are commenting terrible information, their lexis sounds terrible. Is that true, that only words they know is “cool”, “cute” and cussing words? What are they thinking of? It’s better not to think about it, it’s too sad

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