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
23,445 Blog Posts

The Dow is Broken

Keep talking about crude oil coming down, see where it gets you.

There is no debating the dangerous position the Dow 30 is in right now. Over the next year, we can have 3 Dow components going belly up: American International Group, Inc. [[AIG]] , General Motors Corporation [[GM]] and Citigroup Inc. [[C]] .

Yeah, I said it: Citigroup.

I chuckle at the people on the tv who say things like “Citi isn’t going anywhere. They’ll be around.”

Says who?

Because it makes you feel better about your personal impotence?

Listen to me: “The Fly” had his best day of the year today, up more than 8%.

I am so leveraged and so one sided, it’s a bit scary. However, I have the utmost conviction in my actions, so much I took an oath to cease the foul language until the Dow hits 11,000—as you know.

Still, with all of the big gains today, nothing vexes me more than seeing strength in Vulcan Materials Company [[VMC]] . Typically, when a stock is strong into a bad tape, it is a sign of strength. However, in this case, I believe it is a case of sheer stupidity.

Nobody is going to buy them. They are saddled with Florida Rock and a load of debt. They are increasing prices, as volume declines. Can you believe that?

Essentially, their customers (homebuilders, contractors) are ordering less/going out of business, yet they have the gall to raise prices by 8%. Unreal.

Soon enough, they will destroy their customers to the point of no return. Like the health care industry, Vulcan is cannibalizing their client base, in order to keep the stock price high. This is mismanagement 101.

Frankly, and respectfully, they deserve to be punished for these actions, via a much lower share price.

Update: David Einhorn on a range of topics:

[youtube:http://www.youtube.com/watch?v=IcfMdY1BDhs 450 300] If you enjoy the content at iBankCoin, please follow us on Twitter

40 comments

  1. Gio

    Up 8%! Damn. How hard did you have to try to resist swearing? I know why you’re up though… FXP and SKF. 10 footers today.

    Seeing AIG damaged like that makes me worry.

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  2. Kiwin

    Will AIG and C issue lube instead of dividends now?

    I am sure their shareholders would appreciate the gesture.

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  3. Charlie Dow

    The Dow is a priced-weighted index. Those low priced stocks don’t contribute as much as IBM, JNJ, and PG to the average.

    You know that.

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  4. chivasontherocks
    chivasontherocks

    congrats on your great day.

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  5. The Fly

    Why thank you, Chivas. My condolences on your day.

    Gio:

    I am also short LEH.

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  6. Juancho

    Fly, are you pantsing MER as well?

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  7. Rally Monkey

    You can’t keep a good monkey down. I’ll be back.

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  8. recusancy

    Charlie… Those stocks may not contribute at all by next year. That’s what Fly’s getting at.

    Fly, what are you averaged in at for your LEH short? Above 19? And do you have a price target on it? Zero perhaps?

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  9. Klingon shortseller
    Klingon shortseller

    Nice work Fly.
    I don’t blame Vulcan mgmt for raising prices. Their customers will go belly up w or w/o an increase.
    Leveraging into a crash, now that deserves pain – which mgmt will undoubtedly feel, not nearly enough.
    The rest is just in the wrong business at the wrong time – should have had some diworsification – another mgmt induced problem.

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  10. SpockGint

    Captain, it’s a fascinating reading I’m getting from the sensors right now…

    It seems sensors indicate that VMC closed exactly on the top side of that short term triangle it’s been forming since yesterday’s surprise high, and at about three hours from the triangle’s tip (it will be “done” at 10:50 am tomorrow, fyi).

    Volume senSORs indicate distribution throughout much of the day, with a possible “covering close” within the last ten minutes of trading.

    While this trade — in the short term — may be as sticky as that time we all had “Klingons circling Uranus,” I do believe we should have resolution of our quandary tomorrow before 11:00.

    Spock out.

    ___

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  11. big snacks

    you have to be careful here.. this mkt will whip you around.. i expect that golds/nat gas will do better tomorrow. a bit of a contra friday play.. SD just reported a great #.

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  12. big snacks

    fly i would not “bear up” to much here.. the mkt had a down day today, but with aig,wmt and axp it had alot to digest. it was very orderly

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  13. Dr. McCoy "Bones" Gint
    Dr. McCoy "Bones" Gint

    Damnit Spock, you pointy eared parlimentarian, speak ENGLISH!

    For fuck’s sake, I’m a country apothecary, NOT SIR JOHN FUCKING TEMPLETON!

    __

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  14. PharmPhucker

    How’s that RIG working for all you circle jerks who couldn’t stop talking about it last week? The oil trade is dead. Stick a fork in it. Oil and oil services are going lower. Bet you my warehouse full of fly paper that I’m right.

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  15. JakeGint

    Speaking of “Florida Rock,” my partner is down in the Destin Area, staying in one of those beautiful St. Joe development joints.

    Nothing but for sale signs and half built condo buildings all along that whole Ft. Walton-Panama City-Port St. Joe strip (Rts. 98/30), he says.

    Regions Bank (RF) — “el Smokula,” he says.

    I told him to start writing down other bank names he sees down there… like my “Pasadena strategy.”

    ___

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  16. TraderCaddy

    Would that be the Watercolor Seaside development? I hear it’s pretty nice.

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  17. Ryan

    I agree most heartedly. I was up a couple percent today as well. all my bank puts are starting to look nice.

    Ryan

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  18. JakeGint

    TC — yeah, Watercolor is real purty.

    And sold out, I’m pretty sure. Would that were so for the rest of the crap they put up along that stretch of beach…

    They are going to need an “Overstock.com” just for beach vacation homes soon.

    _____

    I would like to buy me some JOE in the low twenties.

    __

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  19. KC Trader

    Funny comment on the CROX conference call after market. At the end, a Wachovia analyst asked about Crocs showing loyalty to their shareholders who have not sold their shares while the stock has plummeted this past year. Croc’s executives just evaded the question and noted they were aggressively paying debt.

    Does Wachovia require a high school education for employees to work there? How does he expect Crocs to buy back shares when they don’t have the cash flow. Crocs doesn’t have Microsoft cash.

    Either Wachovia or a business partner has some assets of CROX, Wachovia wants to assist CROX in raising funds through stock offering at these levels, or that man was really stupid.

    Gregory of Wachovia-A job interview.

    I am thinking the stupidity part.

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  20. Juancho

    Jake-

    No prob, just take a HELOC on the time-share.

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  21. BUSTER

    I have been short RF from 11.22 Watching it as it is my main bank. Pulled my do-re-me out weeks ago. They are toast.

    BTW, RF bought AmSouth years ago, the firm with the worst ticker in history: ASO

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  22. Scum Bucket Bitchez
    Scum Bucket Bitchez

    Eat shit and die Fly.

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  23. mrkcbill

    Linked from Big Picture. Funny

    http://takeareport.com/

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  24. Dr. Hairy Taco

    Do you like your taco with hair on it?

    Fuck everyone that reads this post. Yeah, that means fuck you.

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  25. Aris

    i propose that we rename the index symbols as such:

    $SPX becomes $FUCKO

    $INDU becomes $IOWA

    $COMPQ becomes $RAPE

    and fuck VMC. a fucking cement plant in the winter home of the mob? shocker. why don’t you just start the RICO investigation now.

    ps: i didn’t need to drop a deuce on my neighbor’s car today, as PRXL ran straight the fuck up this morning, and joe granville told me to get out at 33.97

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  26. Market Fool

    There is sheer genius in this post.

    FLY, can I buy you a ribeye and a $330 bottle of tequila?

    You deserve it.

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  27. Market Fool

    “$SPX becomes $FUCKO”

    LMAO!

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  28. FRK

    I worked on that deal, florida rock has phosphate which if you look at IPHS is not something you want to bet against right now

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  29. The Fly

    FRK

    Yeah,they also have volume down 25% yoy.

    That’s something I want to bet against.

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  30. boca

    Only 431 more Dow points to go before we get our normal Fly back.

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  31. Kiwin

    Anyone have any thoughts on DRIV? I have been contemplating buying some, a good possibility I will after another shit show from Mother Market.

    And why the hell is the Euro dropping so hard?

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  32. Junk Spread

    That’s a nice bottom DRIV has put in. I’d like to have seen it close above $42.75 on better volume, but you’ve got a nice crossover of the 50DMA over the 200DMA. Not much resistance until about $54, but I’d also like to have had more accumulation at the bottom. Set your stop in this shit storm of a market and bank some cash, dude.

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  33. boca

    My sincere reassessment of the situation is that Fly will keep his promise not to swear until Dow 11k, partly because he is a man who keeps his word, and partly out of sheer stubbornness.

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  34. chivasontherocks
    chivasontherocks

    i guess the fucker may never curse again for a long time.

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  35. Art Cashin

    So it WAS you that kicked me down the stairway…..

    …cocksucker

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  36. Employee8

    Jake …. Palm Bay,FL is another overbuilt area …. Indian River there had lots of exposure but taken over by RY.

    Listing of FL banks by region:

    http://www.us-banks.net/us/florida/index.html

    Economic perspective from SBCF (nid-atl fl coast):

    http://www.fnb-tc.com/util/EconomicPers.jsp

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  37. Molecool

    “I took an oath to cease the foul language until the Dow hits 11,000”

    Oh – come on!!! You can’t do that to us! Your postings have been lighting my days as of late. Keep the nasty coming.

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  38. chivasontherocks
    chivasontherocks

    city national of fl. just got taken over by a spanish bank. deal closes next month.

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  39. Employee8

    Guess we missed this one:

    http://www1.snl.com/irweblinkx/corporateprofile.aspx?iid=4047177

    But here’s a big sunbelt bank covering ft walton beach area with a global footprint based in Argentina of all places …. room on the downside yet too.

    http://www.compassbank.com/compass/

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