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.
Joined Nov 10, 2007
21,493 Blog Posts

Shut Up. China is NOT Bottoming

I am so tired of Cramer’s endless rants. See, what you know about Cramer is that he is a flip-flopper. What most of you cannot fathom is his ability to manage money, in a responsible manner.

But, you’re wrong.

There are two types of investors.

One: The guy, like Einhorn, Ackman or Buffett, who sticks to a thesis and doesn’t waiver, unless proven wrong.

Two: The guy, like Cramer and everyone on realmoney.com, who trades based upon the wind patterns of Wall Street.

The problem: Cramer style is terrible for the unwashed folk watching his show/reading his blog, especially those who have an investment time frame of more than 3 days. Because he is constantly changing his mind, he appears to never make any sense. When in fact, his nonsensical advice is perfectly sensible to someone who trades like a degenerate OTB guy.

I digress.

China’s stock market is down more than 50%, year to date. I am here to remind you that markets do not go straight up, after killing so many people. There is so much overhead resistance, littered with people trying to salvage their life savings, it will take years for the Shanghai to recover, sort of like Nasdaq 5,000.

On this faux hype, I want to go short China, via [[FXP]] or outright positions in China Life Insurance Company Ltd. (ADR) [[LFC]] , China Mobile Ltd. (ADR) [[CHL]] or [[CEA]] .

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Fly Buy: NOV

I bought 2,000 National-Oilwell Varco, Inc. [[NOV]] @ $72.22.

Disclaimer: If you buy NOV because of this post, your dog will relieve himself on your bed. And, you may lose money.

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Fly Sell: LM

I sold short 10,000 shares of Legg Mason, Inc. [[LM]] @ $39.85.

Disclaimer: If you sell short LM because of this post, your wife will demand that you get a vasectomy. And, you may lose money.

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Remember The Bag Holders

Aside from the bag holders of Fannie Mae [[FNM]] /Freddie Mac [[FRE]] /SLM Corporation [[SLM]] common, which I highlighted the other day, there are a ton of banks out there who are long preferred stock too, albeit on a much smaller scale than the retards at Legg Mason, Inc. [[LM]] .

Nonetheless, should FNM/FRE get taken out and shot, expect there to be lots of write downs, as erroneous banks see their investment dollars burn to a cinder. On the balance sheets, where it says “cash equivalents,” expect to see reductions in that number, across the banking spectrum.

At the present, I am trying to research who owns this stuff. However, as you can imagine, it’s rather difficult to ascertain. I know Corus Bankshares, Inc. [[CORS]] has exposure. But, the more I think about it, Pzena Investment Management, Inc. [[PZN]] keeps coming up as a “massive loser” amidst all of the noise—owning nearly 400 million dollars worth of FNM/FRE.

Unfortunately, there is never any stock to borrow.

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Hey, Where’s Oil Going?

If you would, please send the bastards working in the Bering Sea a memo stating: “CNBC said oil has topped. Please stop jacking up the prices. Thank you.” While you’re at it, be sure to “cc” Putin and our Arab colleagues too.

Oil trading higher throws a whole new kind of gorilla wrench into the mix, doesn’t it? Like I said before, just own one or two oil stocks. Quit thinking it’s going down to $80. At the very minimum, the oil racket has earned and killed its way into your wallets and culture, via nearly bankrupting century old industries (auto’s, airlines). At the very least, you can show them some respect by giving them (oil bastards) the benefit of the doubt, via buying an oil stock.


I like Ultra Petroleum Corp. [[UPL]] , National-Oilwell Varco, Inc. [[NOV]] , Transocean Inc. [[RIG]] and Flotek Industries, Inc. [[FTK]] here.

Ag stocks are running again. You might as well “milk the farmer” too. Owning Potash Corp./Saskatchewan (USA) [[POT]] , Agrium Inc. (USA) [[AGU]] or CF Industries Holdings, Inc. [[CF]] is acceptable, providing you put a 10% trailing stop underneath.

It’s worth noting, there is vast weakness in [[FXP]] , partly due to China’s 7% melt up last night. As you know, in recent days, I kicked out of half my position. I will buy it back, providing FXP trades below $85.

The banks are weak, yet again.

Finally, shares of Pzena Investment Management, Inc. [[PZN]] are gapping lower. In my humble, yet bold opinion, there is no way PZN keeps their clients, looking at thier abysmal performance.

My other shorts in Marshall & Ilsley Corporation [[Mi]] , Legg Mason, Inc. [[LM]] , Comerica Incorporated [[CMA]] , Morgan Stanley [[MS]] , Cathay General Bancorp [[CATY]] , East West Bancorp, Inc. [[EWBC]] , First Horizon National Corporation [[FHN]] and Pacific Capital Bancorp [[PCBC]] are minting coin for me. Ignore Fannie Mae [[FNM]] at your own peril.

At these levels, I really like Legg Mason, Inc. [[LM]] short.

And, don’t forget to sell the casinos and airlines. On the short side, I like Las Vegas Sands Corp. [[LVS]] , Wynn Resorts, Limited [[WYNN]] , Continental Airlines, Inc. [[CAL]] and Boyd Gaming Corporation [[BYD]] .

Finally, on the long side, Clean Energy Fuels Corp. [[CLNE]] ,Barnes & Noble, Inc. [[BKS]] , Apple Inc. [[AAPL]] , Research In Motion Limited (USA) [[RIMM]] , along with a variety of tech stocks, look decent for a trade. My gut says, the market bounces today—but the gains will not stick.

Pardon me Update: The above post was written before the COLLAPSE of crude, which has caused a tidal wave of buying into egregious, yet asinine, bank stocks.

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[youtube:http://ru.youtube.com/watch?v=8zBggu174SA 450 300]

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“The Fly” Wins Again

While “The Fly” slaves over an immaculate desk, lazy guys are golfing at Pebble Beach, missing out on all the fun.

Here is a rather quick, yet concise, recap:

Commodities were up.

Banks, Casinos, Airlines were down.

Tech was a no show, but weak.

Military stocks were solid.

“The Fly” was up another 4.5%, and he won again.

More on this later.

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Betting on a Blowup

Lehman Brothers Holdings Inc. [[LEH]] is screaming mercy. However, men who are short, like “The Fly,” will offer them no quarter.

They get the feared and unbelievably ominous black flag.

Into such weakness, it makes sense to be cautious and remember how corrupt the government is, with their egregious lending facilities. Like I said before, if you have been buried under losses, short the market while it spiked, now is the time to lower the volume and take a respite.

For me, I’m all about pressing the envelope, until it can be pressed no more.

Naturally, I have long positions to hedge against my shorts. However, I am willing to bet, with a certain amount of certitude, we go substantially lower.

Consider [[SKF]] around $133: it is cheap. I believe, under benign conditions, SKF should trade $140-145. The gains in the banks will not hold, because they cannot. Bear markets do not end quickly. And, when a sector gets blown out, it does not recovery immediately.

If you must, consider last year to be like 1989,while today is similar to 1990. We still have downside.

Right here, with new money, I would sell short Comerica Incorporated [[CMA]] , Las Vegas Sands Corp. [[LVS]] , First Horizon National Corporation [[FHN]] , Pzena Investment Management, Inc. [[PZN]] and Continental Airlines, Inc. [[CAL]] .

On the long side, I would buy National-Oilwell Varco, Inc. [[NOV]] , Barnes & Noble, Inc. [[BKS]] and Transocean Inc. [[RIG]] .

Also, for a huge dice roll, I hear decent things on [[PKT]] .

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