Japan Has Gone ‘Full Samurai’

Prime Minister Abe has the Bank of Japan in a cage, like the gimp from Pulp Fiction, forcing them to conduct perverse acts of monetary policy. He has ordered them, emperor style, to create inflation–out of thin air, mind you.

“The statement must say clearly that 2 per cent is the target. That would lead to fundamental changes” in the way it guides policy, he said.

I want you to appreciate the candor of Mr. Abe, for he is intent on making investors in Japan a great deal of money. You’re all familiar with “The Bernanke put”, correct? Well, now there is an even bigger put in Japan, in order to reverse the endless tides of recession that’s been plaguing Japan since the 1990’s.

Will it work now? Will the new mantra of “inflation by any means necessary” lead Japan to a new era of prosperity?

The answer is decidedly yes. Japanese stocks are the cheapest in the world and Abe is fixed on seeing that reverse.

Some of the internets are worried about the downward spiral in the Yen, exclaiming “OMG, it’s sooo gonna stop going down so fast, lol, LMAO, SMH.” Ignore these people are being retarded, incapable of deciphering the difference between a poached egg from one that is soft boiled.

On a much longer time horizon, the Yen has significant downside from current levels. Dare I say, it can drop another 20% and no one would think anything of it.

Hence, “The Fly” is long HMC and it is his favourite pick for 2013. He is also long SNE and would purchase “the gentleman’s ETF”, DXJ, if he was in the market for a more conservative/diversified approach to his thesis trade on Japan–which he is not at this juncture in time.

5 year chart of Volatility

We take it for granted, the seemingly endless barrage of buy orders taking the markets to new highs, compressing volatility and reducing it to a story to be woven near the fireside to the grandkids.

“Back in my days, we’d deal with this instrument called volatility. One day it really went up. Boy you had to be there.”

“Grandpa, what’s volatility?”

What is taking place in the markets is nothing short of extraordinary. The markets go up, constantly, for years and everyone doubts them. God bless the souls of Tim Knight and Zerohedge. I have no idea how they can remain on the interwebs after being treated so brambly by the markets.

Now based upon historical precedence, which doesn’t seem to mean anything these days, a $13 handle on volatility should mean we are near the highs, if not the high of the markets, and something is going to surprise us in such a way– we will regret the day our fathers decided to do without a contraceptive. Theoretically, markets are about to plunge and all of you stupid readers out there will wallow, like fat men in kiddie pools, stuck in egregious losses.

“The Fly” is immune to such occurrences, since he would be in outerspace, enjoying the view, while firing his Orbital Space Cannon (OSC) at the indigenous folks in Africa. There is nothing redeeming, whatsoever, about that God forsaken continent.

But you know it’s all poppycock. The markets will crumble no more than a person inside of the lower class will live life without bitterness, contempt and honour.

Inverse volatility has been all the rage, with XIV being the number one performer in the ETF/ETN world last year. I see no reason to believe it will stop edging higher. After all, NOTHING seems to be able to derail the markets.

Agreed?

RC

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The moment of truth awaits the shareholders of VHC. We’re coming down the stretch here, the day of reckoning for Apple approaches in the form of court ordered injunction. Court is in session starting 1/15, lasting to 1/25, to discuss the matter of settlement, because Apple infringed and a judgement of $368 million was given to the fine folks over at VHC.

Unlike Chuckard Bennitis, I do not sell when the moment of truth is upon me. I’ve been holding this stock for 6 months and have seen fortunes come and go like the seasons.

I’m all in, despite hating the way the stock trades. I won’t have it any other way.

I added to my NAV position. It’s what I do every afternoon.

As you know, I’ve been doing some traditional research over the past week, in order to expand my universe of stocks. I’m only as good as my last trade and my last few have really stunk. Thus far, only a few names strike a cord, like ELLI, BCEI, CADX, AMBA and maybe ERII. I’ve moved over to seasonal factors and was reminded how well ag names do in February, ahead of the planting season. Stocks like MOS, CF and ANDE are of interest to me.

Then I came across the best performing stock for the month of February and was awestruck by the results.

THLD

Does anyone know the name and why it tends to explode in Feb? Are there oncology conferences that I need to be made aware of? I only ask because I tend to avoid biotech names, but have recently become interested in a few–thanks to an overzealous doctor that I know.

It’s also worth mentioning that silver does phenomenal in February, with AGQ averaging +14% for the month.

A very important subject that is rarely discussed on the financial bloggery section of the internets is “what tools does one procure to help one become a successful investor?” I have very strong opinions on the matter, which are much different than most vain operators our there.

For example: having more than one screen is ridiculous, redundant and stupid. Why do I need to look at 10 different screens to buy and sell stocks? I’m not an air-traffic controller and I don’t help schmucks travel to space. If I was a market maker, then yes, I’d like to have more than one screen. But for the purposes of trading XYZ, one screen is all that I need.

For the record, I have a singular 27 inch monitor, an Apple laptop, an iPad and an iPhone, alongside two printers (color and jet) with music and CNBC running all day. I wake up at 6:48 every day and listen to Bloomberg radio, hosted by the awesome Tom Keene, from my Tunein Radio iPhone app and 1130 AM from the olde automobile radio.

At night, CNBC Europe is a must watch, truly different from the gossipy nature of CNBC America.

I  used to have a bloomberg terminal, but I didn’t find it to be worth the expense.

I have my trading platform, provided by my clearing firm, for trades.

For news, I subscribe to Briefing.com and keep my Twitter screen running through Echofone app on my iPad all day.

My favorite iPhone apps, which I find invaluable, are StockTwits and Earningscast (conference calls). The StockTwits app, in my opinion, is one of the most underrated apps out there. I never use their desktop, but find the app to be terrific in filtering out the relevant/trending stocks for me.

For CNBC, believe it or not, I use a website for the stream. Naturally, I have a big teevee with it running all day, but that website I just referenced gets their signal about 5 seconds faster than my cable provider. I don’t know why or how, but it’s something to BEHOLD.

Aside from Twitter, I don’t read many blogs, just news sites. I am always reading news and research reports, which are sent to me from a variety of gents and firms.

I could not trade without The PPT and I’m not saying that to sell memberships. I built it for me, not for retail sales. The screens and the algorithms help me immensely. There are thousands of ways to use the tool, even I haven’t cracked all of its secrets.

12631, run and managed by ChessnWine and Ragin Cajun, is awesome, not only for the sage and flash picks from Chess and RC– but for the community aspect. There are hundreds of talented traders in there sharing ideas in real time. You cannot beat that. I wish something like 12631 was available to me when I started out in the business. I would have avoided blowing up a few times, without a doubt.

When mobile, I use the CNBC app for futures quotes and portfolio updates. It’s real time, free, and stable. There isn’t a better finance app out there to serve those ends.

On the desktop, aside from my trading platform, a good site to get fair value futures is this one. By the way, I also run a variety of data, included futures, post fair value, 321 crack spreads, WTI-Brent crude spreads, sovereign bond yields, at the top of iBankCoin, which is expandable too.

Oh, I almost forgot the olde telephone. I use that a lot too, talking to friends and enemies alike. I get plenty of text messages too, men in white robes offering “The Fly” sage stock advice through mobile means.

And that’s it.

If you’re going to take this business serious, you need the hardware, software and the know-how to procure and interpret information. Twitter has become a powerhouse for finance and news; you just need to know who to follow.

Sometimes too much information hurts through over-saturation.  When there’s too many options on a food menu, I tend to get bored and order a grilled chicken gyro by default. Block out the waste and the retarded. Discard them. The Yahoo message boards can be useful, as well as Investor Village. But understand the majority of the people posting there know less about finance than a lower class gent from Chicago knows about decorum.

Invest in yourself and make sacrifices to the stock Gods, then wish for good fortune.

I had just started iBankCoin 2 months prior to the meltdown. You can say iBC was born in the fires of the country, as its financial apparatus crumbled to a cinder. My business was humming along, but I suffered egregious losses towards the end of 2007. If you recall, the market soared to new highs after the Bear Sterns scare in the summer of 2007. I remember being in Lake George, NY–watching the carnage from a low speed internet connection. I even blogged about it, something to do with Important Matters of Mountain Vacations or something.

I knew, with every fabric of my being that the market was in serious risk of going lower. For awhile, I played the game and traded the long side, just to keep my ax sharp and my knife bloody. Moreover, the general consensus of all tabbed bloggers was for a lower, much lower, stocked market. I believe I penned my first bearish piece on 8/14, following Cramer’s retard attack on CNBC.

Oct ’07-Feb ’08

So I had these big short positions in December of 2007 and I was down large. The odd part about those underwater double inverse (triple inverse wasn’t invented yet) positions was that I didn’t have a care in the world about them. I had conviction.

January of ’08 came and hit the market like a bag of rocks upon the heads of disabled old men in wheeled chairs. I cleaned house. I was on my way to making a fortune.

I’m not sure if you know it or not, but Cronkite (the news guy on iBC) and I used to work together. Despite his interests in space rockets and Kennedy conspiracy theories, he has a really good grasp on the general market trends. We’d go over the internals every morning and afternoon, almost in shock by the absoluteness of the decline. But we’re both gentlemen of the first order and always maintained a certain cool demeanor through it all–naturally. I recall the market crashing, literally, and at the same time feeling depressed about the turn of events, despite being 250% short (leverage). I was thinking ahead and felt that the money I was earning by betting against banks and everything else was going to be pointless. It was to be a giant exercise in futility if our way of life collapsed. Clients would lose their jobs and take all of their money back, providing the dollar was still relevant.

Cronkite and I would marvel at blue chip stocks trading in the low single digits, saying “this has to be a bottom or else we’re all going to die.” It felt like the end, especially at the bottom.

Food wasn’t going to be delivered because credit was on the verge of being a thing of the past–vapor lock. I showed a much more jovial face to the public, on iBankCoin, bragging about killing people on my way to work and snatching the purses from old ladies who were trying to cash their social security checks.

It was a dark time for the world and I profited from it. My book of business went to new highs. I stopped accepting new clients and told my small ones “to go play with a bag of marbles” and to leave me alone or else I’d kill them. I had work to do and it had to be done.

Then the government started to intervene, which made shorting stocks very, very dangerous. One day they banned all short selling in banks, because they could, which completely screwed over the inverse ETF racket. That same day, the market was down huge and SKF down 20% too. Go figure. There was a liquidity crunch in the ETF because it was illegal to short. People got mugged that day.

CNBC served as a propagandist network, on behalf of the federal government. They’d leak information to Charlie Gasparino, who’d time his rumor mongering at 3:30, just to cause a squeeze in the markets. It worked every single time and it was never fair.

It went something like this (no large marge).

The market once soared by over 900 points (that’s 11%!) on news that the government would bail everyone out. It was impossible to short the market, which is why the market bottomed out and went speed chopping carrots with balls on the table to the upside in 2009.

iBankCoin took off. Readers all made a King’s ransom and we all lived happily ever after–at least most of us did.

Sometimes I am grateful for the manipulation in the market (sometimes). I’d much rather stay my execution, than suffer from the firing squad now.

Long live Benjamin Bernanke.