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
23,599 Blog Posts

Nothing Like the Smell of Capitalism in the Morning

Thanks to “King Dollar” and mind boggling losses in the financials, the market is running. God willing, we shall see another 300 billion in writedowns, in order to get an even bigger short squeeze. After all, [[MER]] losing more than 40 billion, over the past 6 months, is a good thing.

“The Fly” relishes the idea of buying broken banks, in the midst of a horrific lending cycle. It’s sort of like hiring a secretary with two broken arms and a speech impediment—always a good idea.

Thankfully, I went against my better judgment and bought a few banks yesterday. Hell, I did it for the sport of it. As a result, my [[UYG]], [[STI]] and [[MS]] positions are speed racing, while my dumbass shorts eat dirt and feel the blade of bullshit.

Also, as an aside, my 200% inverse ETF’s are not fairing too well, as Mother Market deems it necessary to debank “Plutonium Petey” for having too large a gain, year to date. I will accept this punishment, only on a temporary basis.

Just know, for every [[BWLD]] there is a [[ERTS]]. For every [[DNA]] there is a [[ELN]].

Without delving into detail, I can tell you the banks have overextended themselves, yet again. If you want to buy stuff, look around in other sectors. The banks are too volatile and home to many degenerate OTB guys.

With my money, I will buy more [[MS]], while waiting for the top to hit the banks, giving “The Fly” an opportunity to “average down” on [[SKF]].

Look, there are many things I can be doing now. However, I choose to handle one thing at a time. Right now, I need to punch my way out of the SKF-SRS-FXP box I find myself in.

Aside from that, I am long [[WB]], [[LAZ]], [[JOE]], [[HD]], [[BAP]], [[AIZ]], [[MVIS]], [[SBUX]] and [[CLNE]].

NOTE: Long MS-short [[TCB]] is a great pair trade.

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16 comments

  1. kidstock

    This is the ideal level from which to be selling short / taking profits…stocks will trade with down oil, just as they did when oil was on the rise.

    Upside is capped from here. The move above SPX 1250 executed more of the panicky shorts. Now that FNM/FRE have been patched with Bullshit Bush Bandaids there are no catalysts for the upside until investors get a better read on the extent of the writeoffs relating from the sale of CDO’s.

    Sell ’em.

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  2. CubsRock

    E*trade won’t let me short RKH 🙁

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  3. Mr Practical

    http://www.minyanville.com/articles/short-squeeze-deflation-Credit-Fed-government/index/a/18277

    The Bigger Picture
    Mr Practical Jul 30, 2008 9:00 am

    Government making mistake of piling up debt, squeezing middle class.

    A trader friend opined to me yesterday that he “hears” that there are lots of “shorts” in the credit markets and it could get “squeezed”.

    Minyans need to look past this type of talk. As the deflationary process unfolds, we’re going to be exposed to all kinds of such talk, innuendo, and mis-information. First of all the credit markets are not really structured like that. There are very few ways to “short” it. There are a few indexes, which may be crowded because of the lack of them, that people can short to hedge their exposure or bet on declines in price, but the relative notional shorts compared to the longs is insignificant.

    But this is not really the point. The big picture is this. For the last twenty years the Federal Reserve has used the banking system to expand the credit base of the economy. They kept interest rates low to encourage borrowing. Beginning in 2001 and 2002 the Federal Reserve went into overdrive, driving real interest rates negative and thus encouraging massive speculation in credit. The result is a money supply six times normal relative to GDP but more importantly one bloated with debt with virtually no relative savings to support it.

    The system is now broken as evidenced by the TAF facility: the very definition of this is “the financial system has no more capital left and the TAF is the only way the Federal Reserve can get capital back in the system. So the Federal Reserve has taken bad debts in exchange for capital onto their balance sheet. This makes them very nervous. It’s not a far fetched thought to believe that the new SEC rules were specifically implemented to drive financial stocks up in order to allow them to raise capital through stock offerings. The capital would make it more probable that these banks are eventually able to take the bad debt back from the Fed. This serves as a warning to those who are tempted to fall for this and buy financial stocks on these secondary stock offerings.

    Again, we here from apologists that banks selling stock will “heal” the system. But again that’s not how it works. It only transfers wealth from one part of the system to another because wealth is not being created. There’s no production, only transfer. It’s a hallmark of deflation that companies sell stock. That is deflationary. People have to use cash to buy stock. So cash goes from investors who have less cash to buy things with, to banks who use it to write down debt. But the point is banks selling stocks to investors reduces liquidity, it does not increase it.

    The government’s strategy is to buy time. It always is. Time allows it to slowly drain wealth from the poor/middle class and re-distribute it to the rich who own the financial system. The only important thing to me and what I think Minyanville is all about is to try to help people not be one of them.

    As risk grows, lower yours. Stay out of risky assets. Stay out of debt. Don’t be tempted by the trading types. All their little “tells” sound good but they don’t work in a market like this. Don’t bottom fish unless you have excess capital you’re willing to lose. There will be opportunity at some point, and you’re going to want to have savings when that occurs, but it’s far from here and you will know when it happens. You’ll be able to find an investment where the returns are adequate to low risk. Today we only have returns subject to very high risk (possible high returns or possible negative returns versus high risk).

    Risk is high. Keep yours low. Be patient.

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  4. Mushroomz

    Whats the word on FTK?

    Does your smart friend still like it?

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  5. The Fly

    Shroom:

    Yes and he is never wrong. I might start buying it again.

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  6. 4th Quarter and low on Viagra
    4th Quarter and low on Viagra

    http://www.rallymonkey.com/video/kenindex.swf

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  7. DSB

    “Couldn’t help but make me feel ashamed to live in a land Where justice (& the market) is a game”
    -Dylan

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  8. FLY YOU ARE FULL OF SHIT

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  9. TraderCaddy

    WOW!! Just felt some earthquake tremors here in Central Florida. Wait a second. Nope. It was just Governor Crist jetting his ass back into Florida after working on his tan in Europe as the Florida economy implodes.

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  10. Larry Kudlow

    i always said, free market capitalism is the best path to prosperity….

    DRILL DRILL DRILL!!!!

    snifff sniiiiiiiiiiiiiffffffff

    Good blow that is..

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  11. Prospectus

    Who says all the news in retail is bad?

    http://www.theonion.com/content/news/new_linens_n_shit_opens

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  12. jeff

    Prepare for the next false flag attak.

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  13. DB

    I know you sold out of FMCN Fly but it has looked good the past 2 days. It hasn’t broken the downtrend that started in March yet but still some nice movement. With Baidu reporting good advertising spending I like this one.

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  14. Scum Bucket Bitchez
    Scum Bucket Bitchez

    Some news for the FTK LVRS

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  15. jeff

    Fly – you appear to be wise man.

    Please review my fluoride info for you and the small flys.

    Eugenics at work.

    http://toxicfoodalert.com/tiki-index.php?page=Fluoride

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  16. Scum Bucket Bitchez
    Scum Bucket Bitchez

    The US$ pummels the Shekel, woohoo! $50 oil anyone?

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