Analyzing Risk

Here is what I am looking at to gauge the current investment appetite.

European yields:

Italy (on the brink)
Spain
France
Germany
Czech
Finland
Austria
Poland
Hungary
Belgium

If yields rise from current levels, I am a seller. If they come in, I will hold my positions.

Euro

If the Euro goes below $1.31, I am a seller of stocks. It needs to consolidate here or trade up to $1.36 in short order to get risk appetite going.

Banks

I am watching ING, BAC, MS, JEF, GS, BCS. Some foreign banks worth monitoring: Unicredit, Intesa, BNP Paribas, SocGen, amongst other stupid European banks.

I’m watching the price of gold and silver closely as a barometer of risk. When gold and silver are up, I feel good about stocks. Silver is like a 3x gold ETF, in terms of volatility.

I’m watching “global growth” plays like JOYG, CLF, TEX, FLS, BHP and CAT. Big tech names like AAPL, GOOG, ORCL and CRM are also on the watchlist.

Commodities

I am watching Copper, Oil, Coal, Aluminum and Lithium.

Finally, I am interested in corporate. government and municipal credit. You can view this via JNK, LQD, HYG, PCK, MUB and TLT.

Before I sell some silver and allocate my cash reserves into high beta names, I need to see all of the things above move in the right direction. There are market tells everywhere. Don’t be so stubborn about the possibility of a smash your skull in rally. If there is one consistent aspect to trading this tape over the last three years it is to have faith in the central bankers to attempt to reflate. Granted, this is a very tall order. However, I don’t see how they keep their jobs in an unorganized, catastrophic default.

They will throw the kitchen sink. Bank on it.

When the ball gets rolling again, I will bulk up on names like WNR, FFIV, DECK, FLS, and a plethora of heavily shorted stocks. For now, I have 60% of my assets in precious metals and cash–with a side order of LULU, GSVC, RBCN and a few others.

Whether Europe’s problems have been resolved today or not is irrelevant. What’s important to monitor are European yields and the Euro. Frankly, today’s stock market rise is outperforming the risk off bond tells. Italian yields are hardly down the the euro is flat. Today’s melt up is not indicative of something huge. This is merely a respite, a relief rally of sorts after an abysmal sell off.

Do not misconstrue my predilections for throwing bearshitters into open fields of lit tar. I am still worried that my brain will be chewed out by zombies, fueled by European shit, encased in Chevy Volts.

I quadrupled my WNR position. I like my chances with WNR under $12.

Finally, gold and silver make the most sense to me. If the euro collapses, the dollar isn’t going to be the sole source of liquidity. I have to believe large institutions will park cash in precious metals until the smoke clears from Europe. On the other hand, if the bailouts commence, the market will view that as inflationary, lending towards the denigration of the US dollar–buoying the price of gold and silver.

At the moment, I have more than 40% of my assets in gold/silver stocks and another 20% in cash.

I’m up more than 4% today. However, I sense weakness in this tape. I was up more than 6% earlier; now things are sort of drifting lower amidst anemic volume. I’d refrain from adding to positions here, unless we regain today’s highs. Should that happen, odds are we rally again tomorrow.

Black Friday’s retail sales were the best ever. Ignore what the jackasses tell you, regarding the US economy. Let me fill you in on something: broke fuckers like you do not drive this economy. Fuckers like you do not employ people. It’s people like me who drop $10k on a pleasant afternoon at the mall. It’s distinguished top hatted gentleman like me who employ people and make sure they have food on their tables.

Having said that, rest assured, we are setting up for the biggest and baddest holiday shopping spree ever. You don’t need to believe me. All you have to do is sell short LULU against me. That’ all.

Yes Europe is a fucking mess. Yes, the market has been very difficult. I’ve wiped out my +16% returns over the past 3 weeks by believing in the old world order. Now if you are some fucktard who may or may not run a virtual hedge fund on the interwebs, declaring you are in fact “the new Wall Street,” I have a piece of advice for you: fuck off.

This is what should be bought into the squeeze: commodities.

I like silver via AG, EXK and AGQ.

I like gold via RGLD, NGD and GLD.

I like retail via LULU and the refiners CAN BE BOUGHT here, via WNR, HFC or ALJ.

My stocks may not suit your taste. Believe me, there are hundreds of solid picks right now. The PPT has a wide array of targeted screens that will help you bottom pick, if you are so inclined to do so. I invite you to give it a try.

One final word on GSVC. I know many of you hate the stock, since it has done nothing but disappoint. However, let me remind you this is a very innovative model, which inherently harbors great risk and volatility. They just announced several new deals. The major take away: they’ve upped their stakes in both Facebook and Twitter to more than 30% of the fund. This is HUGE. Anyone who is interested in getting exposure to the best private companies on the web can do so via GSVC. Hate all you want, both Facebook and Twitter are real and will only increase in value over time.

The cromagnons over at Zerohedge, collectively, are suffering from erectile dysfunction this morning, as the miniature guillotines aka “dick-choppers” roll into Wall Street to exact revenge against those who bet against the world order.

The trap was laid late last week by luring people into dynamite rigged FAZmobiles– with the hopes that yields in Europe meant the end. Ask yourself, did the European Union throw the kitchen sink at the problem? Did you really think they would elect for Woodshedder’s form of justice through ridiculously unnecessary pain and suffering via unorganized defaults? It’s fucking laughable.

Europe is rising and the bulls are firmly in control, for the time being.

This is where the weak hands, those unable to sustain volatility, get off the roller coaster and go make some pancakes for themselves. I am talking directly to many of you. The market is not for everyone. This shit practically kills me 4-5 times per year, every year, no matter how good/seasoned I am. If you are unable to deal with losses, sell today and enjoy the holidays with a little more money in your cheap ass jeans.

“The Fly” will not sell today because it is his destiny to win big and his denim is premium.

Let’s chat in a few hours and see if the bulls can hold onto this nuclear football or detonate themselves.

The hardest part about being wrong is compounding errors with more errors. For example: I’ve been long and wrong over the past two weeks, wiping out all of my YTD gains. I could very easily hit the reset button by selling it all, in an attempt to salvage my year through precision picks. However, I run the risk of missing out on the biggest and baddest rally the world has ever seen.

Like it or not, the Europeans will eventually print euros. When they announce this plan, the market will soar by at least 400 on day one, then another 600 over the next two weeks. By selling out at the lows, stopping the bleeding, I may sink my ship by missing out on the wondrous one day snap back rally for the ages. This is why we haven’t seen a 2008 flush out yet, despite the horrific news.

When we do rally, I expect everything to trade higher, especially gold and silver. Whatever QE deal is announced, it will be viewed as inflationary, which in turn will bolster the euro and sink the dollar. Gold and Silver are the best barometers of risk and currency diversification in the world. Secondly, I know commodity related stocks will rip tits and the banks will offer insufferable short squeezes for the bears.

It will be a joyous occasion, as Wall Street celebrates the splendour of equities, while drinking copious amounts of spiked eggnog.

Over the weekend, there have been encouraging tidbits of news coming out of Europe, with regards to the creation of a Euro Stability Union and Federal Reserve bailout of Europe. Remember, it is the job of the ECB to promote price stability. If prices are dropping precipitously, as the olde continent drifts into deflation, the ECB must act to bolster prices. It is not a question of if they will do this, but when.

In other news, Black Friday sales came in well ahead of estimates at +6.6%. More impressive were online sales +26%, with amazing results coming out of AMZN. 2010 online sales were +9%. In a normal environment, this sort of news would serve as a jump off point for much, much higher retail stock prices.

I was up until 5:30 in the morning reading research regarding the European Union and possible collapse of the Euro. This is not something you should be laughing about over your stupid cocktail parties. Since when have the fucking Germans been a people who know what is right for the world? It’s in their DNA to be dicks and now they sit at the head of all tables. More importantly, a disorganized collapse of the euro is likely to result in terrifying carnage the world has never seen. Is it worth it?

I am reading about 50% reductions in GDP under a worst case scenario collapse, which is what we are heading for. Did you get that? 50 fucking percent.

What would happen if EU member states saw their GDP’s drop by 50%? Well, for one, most banks and corporations dependent on short term lending would fold. Most deposits would vanish into thin air and the entire continent of Asia would melt down, as they are Europe’s #1 trading partner aka the western world’s factory. Then the ripples would reverberate worldwide and we’d get the ax too. I know you Tea Party fuckheads do not believe this, as you “feel” failures must fail no matter the scenario. You are all sick, twisted, fuckers, deserving of famine.

To this day, you believe we would have been better off letting the entire western financial system collapse in 2008. You declared “it wasn’t such a big deal” and TARP was nothing more than “liberal mumbo-jumbo.” Well, soon enough, the Grandfather of all Tea Parties, the cocksucking Germans, will teach us all a lesson in economics 101, through their sheer stupidity.

At -50% GDP all big banks/insurance outfits are gone. At -50% GDP, corporate earnings will be negative on the S&P 500, allowing for valuations to drop into a sinkhole. Without a doubt, Dow 5,000 would be too expensive under such a scenario. After all, most of the Dow 30 components will file for bankruptcy protection. Let’s just say the FAZmobile will be the Rolls Royce of investment vehicles.

Under such a scenario, underfunded pensions would either collapse municipalities/corporations, which would result in broad insolvencies, or the mass reneging on commitments would take place. Choose your poison.

Oh, I hope you have money in the safe because all of your savings will be wiped out, until the FDIC is made solvent again by the Federal government. Over in Europe, there will be revolutions to overthrow the dicksuckers who caused this crisis. German hatred will soar to wwII levels and Europe will be fractured for decades. Unemployment will likely be in the 50-70% range, leading to pain on an unimaginable scale.

But of course we must “take the hits now” because, after all, we’re capitalist and that’s what capitalism is all about, no? Has it ever dawned on you that none of this horseshit was capitalism in the first place? So now you want to cure a socialism problem by capitalistic means? Good fucking luck with that.

An unmitigated disaster looms and awaits. I’ll see you on the bread line.

NOTE: Italy needs to go to the bond market for 30 billion in late January. Should we make it until then and a resolution to print euros has not been reached, that will most certainly be the date the world stops turning.

I purposely have ignored the market today. As a matter of fact, I just turned on the God damned computer. Much to my surprise, we are not down 1,000. But we will get there. Don’t you worry about going lower. The fucking Europeans irritate me to no end. If you are European and happen to be reading iBC, close this page immediately, for you are no longer welcomed around these parts.

I want you to appreciate the ABSURDITY of this tape. Forget about fundamentals for a moment and understand reality. Should that bitch, Merkel, get off her “NEIN NEIN NEIN” plan, this market is going to fucking roar by 1,000 point inside 1-2 days. All she needs to say is “we are considering issuance of eurobonds” and the crisis will end. More than that, recession concerns in Europe will abate, yields will plummet and life as we know it will be better.

But she’s not going to do that, is she? This monster of a woman is channeling Herman Cain, only in the wrong fucking language, and is only interested in DESTROYING THE FUCKING PLANET. That’s what Germans do, no?

The alternative is a global depression. If Germany wins this war, all of Europe will be flushed, the Euro will cease to exist and the Dow Jones will consolidate around the fucking 5,000 level. At that point, I will spend the majority of my time throwing darts at a Angela Merkel picture, over and over again until I am carted off to my local mental institution.

Realistically, I am going to throw the towel in shortly. Even though we are oversold and all of the laws of mathematics points towards a short term inflection point aka a rally for the ages, this is fucking horseshit and I want no part of it.

As America sashays in and out of shopping malls on this joyous “Black Friday”, “The Fly” spits on the ground in disdain and contempt for the asshats abroad.

Let the clowns and the asshats pine for the next great depression, so they could make a few euros on their FAZ positions. When you read the frantic, fucktarded manifestos of these lemmings understand they are not leaders, but pathetic, sorry followers, who conform to “group think” because they are weak. It has never been my belief we were in some stock market utopia, where community organizers blazed a path to glory through income redistribution. But I refuse to believe the central banks of the world will sit idle while their respective countries burn to the fucking ground. It. isn’t. going. to. happen.

These scenarios have played out numerous times over the past three years. Each and every time, like clockwork, the most ardent of bears overwhelm the comments section of this glorious blog. I spit on your person. I slap the life out of your face. It always ends with one big grande “I told ya so”, followed by me bowling on your heads with cannon balls.

There is no ambiguity about the situation we find ourselves in. There is no more time for talk and half measures. The deviants in Europe must conclude their civilizations or adhere to the untenable laws of survival. Without total and complete cooperation from all powers in the EU, the stock market and banking system as we know it will be nothing more than a memory. These slow rolling black swan events, purported by governments intentionally, are extraordinarily rare. As a matter of fact, I do not believe this has ever happened.

I take no qualms with those who want no part of this tape and have elected to go to cash. However, I harbor a great deal of disdain, and frankly, deep seated murderous rage towards the fucktards who attempt to “machine gun” me through half hazard declarations of war on this web domain. I will cut your heads off and put your skulls in my backyard to be used as cigar ashtrays.

“The Fly” does not back down from low level punks, who run around with heroin needles in their necks and leave snarky comments on the internets. It is a MISTAKE to fuck with me and I will let my presence be known, over and over again, until your livers are searing on my grill.

Happy Thanksgiving!

Tomorrow is a joyous day for all Americans. Set aside the frustrations and consume 2,000 calories. Drink yourself into a coma.

The stock market should not dominate your psyche. I tell you this from the very depths of stock market hell, where I will never escape. My life revolves around this and I hate to see others get initiated into this horseshit. Save yourself before it’s too late. Consider this pearl of wisdom, from me to you, as an early X-mas (no pagan) present. Mind you, I profit from the membership of The PPT and 12631 services. So this is a completely selfless piece of advice.

Run.

Many Thanksgivings from now you will be sitting fireside with grand-kids on your lap, reminiscing over the great market crash of 2011. You will be thankful for the day you listened to Le Fly when he told you to “run.” Later on in the evening, you will log onto the internet to see if iBankCoin is still around. Much to your surprise, Le Fly will still be there, talking old man shit to all of the younger market players who read his site. He will say things like “back in my day we’d short the shit out of that prick Bill Miller until that cocksucker died.” A much older Fly will be the nastiest thing to have ever walked the face of the Earth.

Life is short and there are things worth cherishing, like loved ones and good rap music. Do not let this German-Franco drama get in the way of a good laugh. Before you know it, you will be dead with all sorts of homosexual flowers around your pineapple coffin.

Happy Thanksgiving.

In spiraling markets like this, there is always the desire to bottom pick, myself included. Without a doubt, there are absurd values out there, that will eventually end up being big money makers for those who had the stones to step up and buy. However, until stocks stop trading lower, they will be subject to forced selling. Forced selling will be done by hedge fund managers liquidating their fund due to end of year redemptions or closure of funds. And, it will be done by retail investors who are heavily leveraged via margin call selling.

This sell off is about two weeks old now, with the S&P down 6 straight days. With the high levels of margin debt out there, without a doubt, this means people will be liquidated as the market falls.

The most vulnerable stocks are ones favored by hedge funds with thin floats. And, stocks that trade less than 500k shares per day are especially prone to melt-downs during margin liquidations. More often than not, brokers ignore calls and the clerks hit bids at 3:00, at the market, not giving a fuck about executions.

If you are buying a stock because you feel the valuations are too attractive to ignore, keep in mind the shares– like Puma Punku– are trading without logic. LOGIC DOES NOT EXIST DURING MARGIN LIQUIDATIONS.

On the other hand, if you start to see stocks trading up in a down tape, after getting flushed, those stocks might be signaling bottoming out action. My favorite dip buys are stocks down more than 20% over the past two weeks, % of float sold short more than 15%, with solid fundies. The shorts will serve as a bid in a bidless tape. Often times owning stocks without big short positions can be more dangerous than heavily shorted stocks in liquidation tapes– due to lack of natural buyers. At least in heavily shorted names, profitable short sellers will close out trades, providing bids.

TLT is trading up. US treasuries are the main beneficiary of this shit fest. This is a fucking unmitigated horseshit of a mess. Stay away.