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Dr. Fly

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.

Late Night Thoughts

Everything you think you know, you don’t.

Stocks are designed to make the corporation money, not you.

Technical analysis is the new “Zoltar the Teller”—pure rubbish.

The market is now the equivalent of the Wild West, circa 1870’s. Therefore, be sure to make your stock career short and sweet, otherwise it will destroy you. No matter how good you are, it’s only a matter of time—with exception to “The Fly” of course.

Finally, the vanity of Christmas makes me sick.

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Drunken Market

What a piece of shit. Did you see SRS go from +8 to +2 in the last 10 minutes of trade? Seriously, the end of the day spastic rallies need to stop, else I am going to inflict bodily harm on random people.

Just when it looked like a solid down day, BAM, the asshole dip buyers step in and queer up the tape.

The late day fuckery in SRS, SMN, and other idiot 200% etf’s, is why I will discard them shortly and never trade them again. EVER. They represent everything that is stupid about Wall Street: bad product with cheap leverage.

FUCK YOU PROSHARES. May Santa Claus bomb your homes with napalm laced egg nog.

At any rate, despite the late day rally, I still think we grind lower.

My top picks are short KIM, short VNO, short XOM, short RIG and short LFC.

Do yourself a favor and avoid the thin tape amateur action: go to cash.

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Fly Short: LFC

I sold short 5,000 LFC @ $45.22.

Disclaimer: If you sell short LFC because of this post, you will believe Cramer’s advice at face value. And, you may lose money.

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Don’t Expect Santa to Bail You Out

I’m not looking for any significant move, up or down, prior to the New Year. We will likely grind lower, as traders call it a year and go fuck themselves.

Thus far, the holiday shopping season can only be described as “a fucking disaster,” with retailers giving shit away—desperate for capital.

With regards to the markets:

There are many idiots tied up in low yielding t-bills, which may begin to unwind itself in 2009. However, do not expect it to happen right away. Bubbles take a long time to pop.

With gains of more than 60% booked for the year, and bus loads of freshly minted coin going into “The Fly’s” checking accounts daily, I find little need to press the envelope here. Methodically, I’ve been selling longs and covering some shorts, in order to raise cash. My goal is to have more than 50% cash by the end of this week, in order to get a ‘clean slate’ going for 2009.

I’m a huge believer in ‘clean slates.’

Also, I will make an effort to unwind most of my inverse etf’s; because they’re bitch of a whores. Again, the CEO of Proshares is a ‘corn on the cocks’ for inventing these ‘tools of terror.’

As you can see, oil is defying the laws of reason and romance, if there is such a thing, via stabbing dollars in the eyes of oil producers. Expect the oil trade to continue on the path of ‘most pain.’ For the most part, I am pleased with DUG, short XOM, short RIG positions. However, I will be selling DUG soon, due to my inverse etf protest.

The ag sector caught some downgrades today. It’s amazing how poorly the classic ‘inflation stocks’ are behaving, post Fed cut to zero. I knew the market would fuck everyone, via marking the classic plays down. Expect that trend to continue.

Finally, bullshit biotech stocks, like MAXY and ACET, have been outperforming. Stay away from that sector, for it is a ticking time bomb that will blow your arms off when you least expect it.

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The Fallacy of Mustard Seeds

If you only look at the positives, it’s easy to think the market is set to explode to the upside. After all, the Treasury is pumping billions, while the Fed is printing trillions. Rates are at all-time lows and corporate balance sheets are in good shape.

However, the same cannot be said about the balance sheets of state and local governments, as well as the individual. See, during the last boom of 2003-2006, corporations were very stingy with their balance sheets, sans the stupid banks. For the most part, they were very conservative in controlling head count and building up inventories. As a result, a lot of companies have fortress balance sheets and will be able to endure the coming downturn.

The exact opposite occurred at the state a local government level. They went balls to the wall, hiring everyone in sight. They wasted money on a variety of pet projects and now find themselves in a very bad deficit situation.

As for the consumer: she’s been fucked for years, only worse now.

So, the whole notion that low rates and free money will make everything better is somewhat idiotic, considering no one will have a job in 6 months. As a point in fact, “Cally-forn-ia” is entirely fucked.

On a worldwide scale, things appear to be getting worse.

Japanese exports declined by 27% in November. TM, for the first time in company history, will begin to bleed capital, a la GM. Russian oligarchs are requesting a 78 billion dollar bailout from their government. And, to make matters worse, their ruble is about to get devalued.

The Chinese growth engine has all but stalled, yet here were are buying stocks.

For the love of gold chains and big rims, it’s Christmas. That’s what we do. For the most part, Americans are a bullish breed, always looking for the upside in things—even in death.

With my money, I’m afraid of getting lulled into some sort of drunken holiday stupor, only to be quickly woken up to the harsh realities of a world in economic decline—come 2009.

My advice is simple.

If I had 100k to invest right now, I’d keep a 30% cash position, 50% short and 20% long. With the 30%, I’d utilize it for intra-day or swing trades, in order to react to an upside tape, effectively stemming my losses. But, the main point is to keep the downside exposure in the majority, since it has proven to be a profitable bet for more than a year.

At the moment, I like short XOM, short KIM, short VNO, short CHL, long C, long UNH and long SMN.

UPDATE: Barron’s, 9/23/1929— The commentary was very bullish, but at the same time cautious. In other words, they wanted the market to go up; but, you can tell they were somewhat apprehensive to go “all in.” Repeatedly, they discussed the peculiar nature of the markets and defaulted to weak arguments, such as “in the long run, stocks will do great.” One big laugher was a recommendation of German bonds.

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THE 2008 ASSHAT OF THE YEAR AWARD

2008 was the year of the asshat.

There were so many dicks in 2008, one would think the world was one big dick factory, incidentally, chock-ful of asshats.

There was the likes of Dick Bove, and his insane “buy of a lifetime” call on C, above $20. Let’s not forget he emphatically said LEH would “make it,” just prior to its demise. There was the CEO of Profunds, Mike Sapir, and his fucking lunatic set of 200% inverse/upside IRON LOTUS etf’s, which are kindly designed so that EVERYONE loses.

Fucking asshats!

Let’s not forget Paulson, Kass, Cramer of TSCM, Yang of YHOO, “Dr. Eli Harari” of SNDK, Feder of TTWO, Bernie Madoff, Chris Cox, Spitzer, Fuld of LEH, Ken “hands” Fisher etc. No kidding, I could go on and on.

However, in my humble, yet potent opinion, only one man deserves the Asshat of the Year Award for 2008. Without further adieu, let me introduce:

Bill Miller, Retarded Money Manager, Legg Mason

At one time Bill was a good investor. Fuck all of the accolades that erroneously labeled him a “great investor.” For the love of small microchips and green trees, the market was going up, when he was sucking its dick. However, in 2008, the stock Gods gave Bill a steel pipe to the mouth, taxing his Legg Mason flagship fund by more than 56%, according to the most recent data.

Hell, Bill’s whole family of funds is down in the deep 30-40% range, all because he (Bill) is a large sucker of bank cock, not to be confused with the cesspool in Thailand.

His portfolio is littered with all sorts of stupid shit, from AMZN to C. However, Bill nailed down the Asshat Award for one reason and one reason only: He fucking doubled down on his Freddie Mac position, just prior to it being seized by the government.

Let me clarify. If you recall, at the time Bill “averaged down” in FRE, it was almost a foregone conclusion that the Gov’t was going to takeover FNM/FRE, in order to ‘save the world’ part 20. For the love of nuclear bombs and hydrogen fuel, some of the “smart managers” stepped in on FRE bonds or preferred. But Bill, in his infinite asshattishness, stepped in and bought more lowly common stock.

Asshat!

Despite being fired by pension funds and crushing the 401k plans of millions, Legg Mason is still backing Bill. They must “enjoy” his investment performance, in some sick, distorted, mentally ill manner.

Even though Bill is an extreme asshat, with very little investment skill, CNBC was proud to announce that he called another bottom in the banks, just a few weeks ago.

Prepare for another “legg lower,” if I may be so bold. Get it? HAR-HAR-HAR.

Bottom line: If I am correct about Bill Miller, which I most certainly am, LM is in for a very arduous 2009.

Nonetheless, congrats to Bill Miller for winning the Asshat of the Year Award for 2008; he certainly earned it!

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BEHOLD: The iBC Dictionary

Danny has a perpetual work of art going on with THE DICTIONARY. Feel free to give suggestions.

NOTE: Sunday evening “Santa Fly” will announce of the winner the 2008 Asshat of the Year Award.

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