Mathematical Precision Yet Again

Pardon my imprudence for interrupting your evening with yet another blog. However, I thought it was a good time to update you all on my Silvery Reversal post from last week. Happily for my good friend, Senator Gint, both gold and silver have saved him from a rude opening to 2012. Out of nowhere, inflation seems to be the trade. However, I warn you now, be careful about acting in haste and do not forget the insolvent realties in Europe.

Here are the results from The PPT proposed ZSL short.

Naturally, one would assume that this is mere coincidence, an aberration of sorts. The truth is, this is the 15th of 16 previous occasions that The PPT has nailed ZSL, almost to the day.

What next?

Well, I added one last round of TZA today, completing the third tranche of my buying program. Should this trade end up a loser, I am willing to accept that. The whole idea is adhering to certain disciplines and believing in them, especially when your faith in them are tested.

Having said all of that, I enjoyed a 1.65% rally in my holdings today. I will be selling into strength, but not all. My target cash percentage goal is anywhere from 40-60%. As you could understand, I was in no way largely exposed to the market elements today, as most of you vagrant gamblers made north of 5%.

At any rate, it’s gonna be a long, long year and the majority of you, on your own, will be insolvent before 2013 is ushered in. Everything you saw today was a lie. Enjoy it while you can because it will be short lived and Italy is gonna fuck the planet soon enough.

UPDATE: This is hilarious, especially if you’re in the business.

H/t Backnfill

The eastern lunatics in Iran have helped my small cap oil stocks charge higher, thanks to their high tech weaponry and cavalier attitude towards the United Steaks. As they fire patriotic missiles into the sky, shares of GMXR, DVR and WNR spring higher. Naturally, our aircraft carriers cower in some remote corner of the Persian Gulf, afraid of the horrors that await them at the hands of Gods navy.

If Iran accomplishes the unthinkable by closing the Straights of Hormuz, I shall send their leader a box of chocolates, as a gift, to congratulate them on such an act of heroism. Then I shall hedge myself via buying LMT, NOC and ATK, just in case we accidentally drop 10,000 tonnes of explosives on Tehran.

Aside from the alarming sell-offs in both LULU and DECK, I am having a good day. It is not a 1st tier day, where my largest holdings explode, without fences, to the upside. I consider today a moderate move higher, perhaps a 3rd of 4th tier day. Many of you are having the time of you lives, locked and loaded all of the trash that was discarded towards the end of the New Year. Boastfully, you took said trash and polished it off and proudly put it on your mantle for the world to see. Just one week ago, the world would have laughed at you, calling you all sorts of derogatory names for proudly displaying such offal. But today you are an economist, a man able to see far into the future. A man of substance.

As for me, I have several more conference calls to partake in today, all to do with first class money management. Without remorse, I have disclosed on numerous occasions my desire to outstrip all of you. By design, I will accomplish this task, yet again, on the eyes of Jupiter, in grotesque fashion this year. My winship will be delivered continuously and belligerently, regardless of etiquette. After enduring the pangs of hell in 2011, “The Fly” (aka “The Fry” in China) will majestically rise to the sky, like a gallant Iranian missile in the Persian Gulf, to crush his many enemies in 2012. My only hope is that you do not get in my way, dear friends.

I doubled my WNR position.

If only for a day, today we will carelessly ballroom dance on the faces of bears. Today is just a day and means nothing as it pertains to the grand scheme of things. However, it’s always nice to see the speculators out and running, even if it equals penalty to my TZA position.

Some of you are upset over my 2012 predictions, which are decidedly dire. But who takes that sort of thing seriously? It’s a wonderful thing to sip from a mug of decadence, filled with black tea infused with bergamot oils, watching the news change the course of history. I am objectively honest enough with myself to know my limitations in making forecasts. It would be folly for me to trade off such predictions and would most likely yield woe, instead of dough, to my portfolios.

Remember that to build wealth one much keep up a fierce balance sheet, fueled by high income. Investment income is certainly one branch of the money tree and must remain profitable at all times. If you have $500,000 invested in stocks, at the very minimum, you should make 10% per annum, translating into a $50,000 income. I had a lengthly discussion on Twitter last night on this very topic. At the very heart of my question was “how much income do you consider plentiful”?

In my opinion, one needs to clear $70,000 per month in order to be in a position to build real wealth. Some of you are laughing at this idea, since $70,000 per month is either far too little or too much. But it’s a starting point and will allow you to purchase most things in life, sans high luxury islands in the middle east. One thing has become abundantly clear to me, having experienced being with and without money: the more money you make, the higher your expenses go.

At any rate, I have numerous conference calls this morning and feel antsy about getting off to a quick start this year. With 75% long and TZA only in my personal account, I stand to hit the ground running today. Good luck.

In past years, one of my favorite contrarian strategies was to buy up beaten down large caps, in anticipation the new year would bring forth better fortunes. Last year was the exception to the rule. However, taking a look over the level of carnage imposed onto large caps this year, barring a full collapse, there are some bargains to be had.

Let’s have a look, shall we (WE SHALL!)?

Here are some names that stand out to me, with 2011 percentage loss statistics.

RIMM -75%
AEM -52%
MT -51%
BTU -48%
RCL -47%
GM -45%
JNPR -45%
TCK -42%
UPL -38%
FCX -37%
AVP -37%
SPLS -37%
NTAP -34%
BRCM -31%
GLW -31%
AGU -26%
SU -24%
BHP -22%

If you noticed, I excluded financials. The industry is too opaque and toxic to mention. For the most part, all of the above companies are financially sound, blessed with good balance sheets. Hard times befell the shareholders of those names in 2011 only because they went up so much during 2009 and 2010. If 2011 was a “consolidation” or reversion to the mean year, perhaps 2012 will represent a revival to the animal spirits that made them such good stocks in previous years.

The story of 2012 will be deflation versus inflation. Should the Fed act alongside the ECB to reflate, the above names will soar. However, if my dire predictions of famine and European collapse materializes, deflation will bury the above names, allowing TLT to go up as if it was a dot com circa 1999.

Although it is hard to get the timing of this delicate trade right, as we ebb and flow between these two realities. One thing is certain: there will be no middle ground and someone is going to make a killing by making the right bet.

Flip a coin.

I find it absolutely necessary to get off to a quick and prosperous start every new year. I am ritualistic with regards to preparations for each new year. There is a saying in the market place, “as January goes, so does the year.” Believing in these sentiments, I will be very careful and steadfast in my approach to the market, during the first 3 weeks of 2012.

Firstly, I disavow any and all Chinese burritos. Without reliving my past wrecks in Chinese stocks, let’s just agree they are the lowest form of equity and possess no place in The House of Fly. Moreover, I am going to avoid small cap stocks at all costs, unless a mathematical certainty presents itself.

I intend to make upwards of 25% on my money during 2012. To do this, I will employ a variety of measures, which greatly entails relying on The PPT overbought/oversold algorithms. The homework has been done and it is time for me to put my money where my mouth is.

Speaking of PPT, we will launch PPT 2.0, with a wide array of new bells and whistles. However, before we do that, the Godly folks at iBC intend to launch a new website, all to do with procuring data for the explicit use of developing a social trading algorithm. I am convinced there are ways to trade against the whims of the “average Joe” and I intend to do so in 2012.

Lastly, I vow to be more charitable, through monetary means and mood. Although “The Fly” lives amongst the immortals and is a member of the Space Alien Magician Country Club at Planet Fuckyourself (SAMCCPF), I must dwell and dine amongst the disheveled for business purposes.

I know 2012 is going to be a fantastic year. I have a game plan ready to be enacted and the confidence of 20,000 hungry lions trapped in a room filled with low level IRS agents. To say “2012 is going to be great” is an understatement dear friends. It is going to be explosively sublime.