70% In

Fuck it, I am getting aggressive ahead of “The Hole”, having allocated another 20% of my cash to IPGP, VHC, DECK, WNR and CXO today. For my personal, I am all DECK calls, WNR common and CXO calls. To date, my personal/aggressive account is down 35% to mid 600’s. It was, as noted here for over a year, seeded with just 100k 1.5 years ago. At the highs, that account was north of 1.25 mill. Easy come, easy go.

Today’s rally has legs and should extend into tomorrow. In my estimation, the only thing that derails us is a BAC offering of some sort. So you know, The PPT has registered OVERSOLD signals since 8/18. That means it has, yet again, nailed the top and bottom of the ranges, over the past volatile two weeks. Very impressive, if you ask me. For those that got in, prior to today’s melt up, “The Fly” tips his top hat to you.

Everyone else can go fuck themselves.

Let’s be clear (no Obama): there was an Earthquake on the east coast today because that fucking planet, niburu (sp?) is going to smash into Earth, sending us into a fucking permanent ice age. So you know, “The Fly” has made arrangements at Puma Punku to live out the rest of his days in barbaric comfort, should celestial fuckery take hold of Earth. From there, I will conduct my daily space experiments on the humans I capture, via my space capsule BEAM-RAY gun. In case you were wondering, YES, I am the only space alien magician blogging on the internets, telling you small brained dogs how it really is. Be my guest, bet again S.A.M., with your 0% equity allocation, see where it gets you.

NOTE: Greater men than you have bet against me before. Now those men are dead.

I started a small position in CXO.

In both analog and consumer semiconductors, revenues and inventories versus average days sales are now BELOW 2008 levels. The semiconductor space is prepared for a slowdown and offer significant value here, especially if the economy isn’t diving into a fucking vortex. I like the semis here and started off by buying IPGP here. I will add to additional names, as the market improves. But my general thoughts on the sector here is exceedingly bullish.

Chips and refiners. That’s where I will put my dice, with a little side order of DECK.

I still own GSVC and BEE and will not abandon the former. I love the longer term story for GSVC; but BEE needs to get going soon, else it’s gone.

The market is firming here and most of you fuckers are pussies. How could you just sit there, watching this market tick higher and do nothing? It amazes me how people chase performance. If you miss out on the coming rally you deserve everything you get, AND MORE.

As for gold: FUCK GOLD.

I added new positions, buying both VHC and IPGP.

And, I added to DECK and WNR.

Cash is now 30%.

I am trying my best to allocate some cash here. But every time I scan the market, I don’t like what I see. Today’s warning signal is coming from none other than BAC. Apparently, Countrywide financial is sinking America’s biggest bank and there is nothing being done to give the market confidence. It’s as if “they” are doing this shit on purpose.

I do the math in my head, over and over and over again. I cannot think of a scenario where the stock market breaks out for a prolonged run higher. If the economy is really in trouble, there will be no assistance from the Federal government. It’s important to recognize the political environment, led by the Tea Party, is aggressively opposed to Fed stimulus. Mostly everyone in Congress is hating on the Federal Reserve, which leaves us with what?

NOTHING.

The free market people will have their way; and I guarantee, they’re not gonna like it. I still find it amazing that our government, in lieu of crazy unemployment, is opting for a balanced budget approach to fixing our problems. This is fucking lunacy. However, there is no point lamenting over fiscal policy.

Having said all that, a sharp reflex rally is right around the corner. Since I am already long WNR and DECK, I am looking for some exposure to tech. I have a long list and will likely take a stab at one today, despite the bad bank tape. So you know, I am not optimistic on the long term prospects for this market. But, I believe we have a 5-8% rally from these levels, going into September. On the next rally, I will reevaluate my position to conform with my longer term forecast.

What a fucking day. I woke up in Turks and Caicos, anxious to get back to NYC. Believe me, I love Turks; but it’s a fucking backward beach, where toilet paper costs $10 per roll. I am more than happy to be back, just in time for the fucking market to melt-the-fuck-down.

I leaked out another 1.3% today, despite being in a 50% cash position—thanks to WNR. People sold the refiners, en masse, because Libya was liberated?! What the fuck? Assholes, the Brent-WTI spread is still $24 or 28%. Fuck you homos who are selling down here. Fuck you.

Today’s action in the market was dreadful. Banks are going to zero. Goldman is going to jail. And commodities, sans gold/silver, is worth shit.

What’s the downside?

The median EPS drawdown during recessions is about 15%. At the current, the S&P will earn $93 this year. Okay? The average trough PE since WW2 is 13. Let’s shave 15% off $93. That gives us $79. At 13x eps, the S&P trades to 1031. However, over the past 3 recessions (1990, 2000, 2008), average eps fell by a much larger degree— falling 24%, 32% and 57% respectively. Should the average eps drop by 30% this go around, that puts the S&P at 845 at 13 times earnings, a 23% discount to current levels.

What am I going to do about it?

For the love of dirty dogs, I want to successfully trade out of my existing longs. I am underwater in all of them and feel fortunate to have limited exposure. But it’s fucking hard to watch these stocks underperform, without benefiting from the market drops. Nevertheless, I have chosen the path of long and will “stay the course” (no Bush) and trade out of these positions, through timely adds.

On a side note, I found it funny that Mrs. Fly booked first class going and ASS CLASS coming home, via Jetblue. She spent inordinate amounts of money on all sorts of Carribean shit and managed to stick me next to the fuck toilet, in last class, on the way home as a “reward” for my hard work. How quaint.

As I make final preparations for my first class flight back to America, I am pleased to see S&P futures +22. More so, I am elated to know, if only for a brief period of time, the dicksuckers who profess 0% US-European exposure and a multitude of short sales, will be catapulted into a swarm of bees today. Again, the problem with people, in general, is gluttony. If you were balls deep short, going into the weekend, you got greedy and will now pay the price.

The lessons of managing money, on a high level, continues to repeat themselves, and often. You simply need to pay attention and stop being such a fucking pig.

Finally, Ben Bernanke cordially invites you to enter “the hole” asap. He will bring his finest blunts and 40oz bottles of malt liquor to Jackson Hole this year, begging you to fuck with him.

Are you brave/man enough to get in “The Hole”? Or will you simply fade away, like a one hit wonder, vanquished yet again by THE BEARDED CLAM?

Do you want to know why I am so emphatic about NOT being a bear? Look at the people who are professing the doom and the gloom and the fucking lightening to the face trading action. They are small turtles, scared of foot steps, creeping around like zombies eating flesh. I cannot and will not keep company with your ilk. Understand something, many of these people were screaming on roof tops about inflation 2 months ago. I’ve always asserted, The Hugh Hendry, long treasuries, would be back in style one day, much to your chagrin.

How many of these little burlap’d bears were telling you to buy TBT because, for the love of haunted houses, rates just had to go up?

WHAT HAPPENED?

I will tell you what happened, AND MORE.

The Frakenstein Economy (h/t BP) lost its 10,000 gigawatts and sunk back into oblivion. We never really crawled out from the shithole of 2008. The Fed and the Treasury gave corporations time to mend their balance sheets and they did so with great vigor. At the present, corporations hold nearly $2 trillion in cash, buttressing any bullshit dip in the dollar. All of you dollar homos needs to take a look, in earnest, at the dollar and quit calling for its demise. It is the standard.

Over the past month, commodity related stocks have signaled a sharp drop in economic output. It is my belief this avalanche of negative sentiment started with the debt ceiling snowball. As a result, sentiment plummeted and corporations stopped investing.

Take a look at some of these Basic Material losers, over the past month, absolutely staggering.

No. Ticker 1-month Return Industry Market Cap Sector
1 PCX -49.71 Industrial Metals & Minerals 1,120,000,000 BASIC MATERIALS
2 HUN -41.77 Chemicals – Major Diversified 2,810,000,000 BASIC MATERIALS
3 CIE -41.46 Oil & Gas Drilling & Exploration 3,360,000,000 BASIC MATERIALS
4 WLT -40.67 Industrial Metals & Minerals 4,630,000,000 BASIC MATERIALS
5 MT -40.45 Steel & Iron 30,300,000,000 BASIC MATERIALS
6 CHMT -40.33 Specialty Chemicals 1,070,000,000 BASIC MATERIALS
7 SD -40.28 Oil & Gas Drilling & Exploration 2,680,000,000 BASIC MATERIALS
8 NBR -39.62 Oil & Gas Drilling & Exploration 4,720,000,000 BASIC MATERIALS
9 ACI -38.87 Industrial Metals & Minerals 3,710,000,000 BASIC MATERIALS
10 ANR -37.61 Industrial Metals & Minerals 6,550,000,000 BASIC MATERIALS
11 KEG -36.83 Oil & Gas Drilling & Exploration 1,790,000,000 BASIC MATERIALS
12 KRO -36.03 Specialty Chemicals 2,320,000,000 BASIC MATERIALS
13 MMR -36.00 Independent Oil & Gas 1,810,000,000 BASIC MATERIALS
14 NFX -35.83 Independent Oil & Gas 6,180,000,000 BASIC MATERIALS
15 HSC -35.66 Steel & Iron 1,630,000,000 BASIC MATERIALS
16 ATI -35.31 Industrial Metals & Minerals 4,550,000,000 BASIC MATERIALS
17 CPX -35.11 Oil & Gas Equipment & Services 1,950,000,000 BASIC MATERIALS
18 WOR -34.24 Steel & Iron 1,150,000,000 BASIC MATERIALS
19 WTI -34.12 Oil & Gas Drilling & Exploration 1,360,000,000 BASIC MATERIALS
20 SOA -33.76 Specialty Chemicals 1,830,000,000 BASIC MATERIALS
21 ALB -33.76 Synthetics 4,250,000,000 BASIC MATERIALS
22 SGY -33.69 Independent Oil & Gas 1,090,000,000 BASIC MATERIALS
23 TS -33.67 Steel & Iron 18,260,000,000 BASIC MATERIALS
24 CRZO -33.49 Independent Oil & Gas 1,070,000,000 BASIC MATERIALS

Now, this is telling us one of two things. Either we are entering some sort of fucked up vortex, where only Hugh Hendry gets to dance, while the rest of us get beaten to death with sugar canes. Or, this is nothing more than fear begetting more fear, due to negative sentiment. I’ve seen this type of carnage before and it doesn’t always precede recession. Sometimes investors just sell shit for the sake of selling it.

Of course, there is more evidence pointing to recession than boom time. And, as always, one should be diligent in picking stocks and price points. However, at some point, this all gets priced in, like it or not. When stocks start going up again, even on bad news, you will know we hit bottom. Until then, survive.

My vacation is winding down. I had a great time with my wife and kids. Life is different here. No one gives a shit about stocks or bonds. However, little do they know how much their tourism revenues depends on a healthy western economy. On my seven day hiatus from the real world, I must have spent upwards of 12k on a wide array of accouterments. Naturally, Mrs. Fly had to shop for souvenirs, like a mad woman. And I had to eat at every high end eatery within 50 miles, like a fucking glutton, because that’s what I do.

Come Monday, I hop on a plane and fly back to civilization, where fucktards are literally trying to destroy the world on a real time basis. Will the stock market crash or not? Better yet, will Ben Bernanke save the motherfucking day, or not? Will gold keep going higher? And, moreover, is John Paulson’s asshat fund closing the fuck down, taking every stock he owns with it? All of these questions, and much much more, need to be answered, and soon.

This life of a stock operator is asinine, when I think about it. It’s speculation on speculation, with a twist of gambling. There are methods to game this market; but it’s never easy. Each and every time I make a bold move, I get the distinct feeling that “this time might be different.” When it all pans out, short term memory lapses kick in and I go back to square one.

I never hate on fellow managers who lose their mojo. I can see how people can easily lose their way, cutting through all the bullshit, all the stress and the lies and the backstabbers. Take a guy like Bill Miller, asshat money manager at Legg Mason. Sure, Bill sucks moose balls now and people love to give him shit about it, myself included. However, he was a fucking stud for decades. The same with John Paulson. All of you little bastards are ripping into John, for being retarded. However, the man accomplished greatness. He lost his way and will be recycled. That’s life.

Personally, I’d rather take a stab at accomplishing greatness, even if it’s only for a short time, than live out my days like an average Joe. Anyone remember Randy Stone? Of course not. But I bet you fuckers remember Macho Man Randy Savage.

You see these people on Twitter talking shit? Several of them are documented hedge fund failures. Now they want to train you how to run money? That’s fucking hilarious. Look, I’ve been managing vast sums of money for 14 years. There is a huge difference between telling someone on a blog, or via a newsletter, to buy XYZ because it’s “awesome and amazing” than putting millions of dollars into said ideas and having to deal with real life consequences. That’s my unique, double edged sword dilemma. When you little skittles talk shit about WNR or DECK or whatever stock I am buying, there is real money at stake, not just my reputation. When people fuck with my money, I eat them whole, like a pelican at a beach. I will attach c-4 to your brains and catapult you into active helicopter blades.

Hence, I liberally ban people at will.

Coming soon, iBC is in the final stages of a complete web redesign, very drastic and groundbreaking. It will make all of the other 3rd tier blogs melt away like a snowman in Turks and Caicos.

Sometimes it’s easy to get caught up in the emotion. Geez, if you were to just spend a day on Twitter, viewing the outright panic mongering by would be gurus, you’d never buy a stock again. What we are seeing here has happened before. You just don’t remember it too well, due to all of the marijuana intake.

At the moment, the S&P is down about 12%, month to date. The last time the market melted down in August was back in 1998 when those commy pricks (Russians) had an economic collapse. As a matter of fact, it started on 8/17/98 and it spread throughout Asia. Hence the phrase was born, “The Asian Contagion.” Due to Russia’s overwhelming debt, they decided to devalue the Ruble and fuck creditors. The immediate result was a market in crisis. Commodity prices plunged and equities crashed. I remember the exact moment because I was so dead in the water, I was out interviewing for low end discount house gigs. As I was on one of these hideous interviews, the “boss” brought in his “top producer”, who boasted an annual income of 98k. Just one year prior, I made about 80k, my first year in the business. It was at the very moment, seeing these fucking pikers in front of me that I knew it was my duty to make it in the business.

I borrowed money from credit cards, skipped lunch 3 out of 5 days, worked Saturdays, and got lucky.

I put all of my money under management, and all new money, in one stock, BYND, and scored big. The market meltdown, the end of the world as we knew it, back in August of 1998, never materialized. Following a 14% drubbing, the S&P rebounded in September by 6.3% and some more in October by 8.1% and never looked back.

Aside from 1998, we dove lower in February of 2009 by 10.75%, only to rebound by 8.3% in March. In October of 2008, the market crashed by 16.5% and dipped some more by 6.9% in November. The only other occurrence of a double digit decline in a single month was September of 2002, when the S&P dropped by 10.4%. Shortly after, the market roared back in October by 8.2%.

The trillion dollar question: is this time different? Is this “the end”?

The world has been ending for as long as I can remember. However, somehow, someway, this bitch of a market always seems to come ripping back.