Where did this “election-years-are-always-bountiful” nonsense get started? I’ve seen the analyses that show outperformance during election years, but how does that translate to Bernanke making it rain dollar-dollar bills?

If anything, I’d say markets outperform in election years because the Executive Branch has an incentive to reign in the extremists and curb check their agencies.

Look at the EPA. Some twat who also happens to be the regulator of Texas gets caught making like a nutbag, trying to argue that the best way to protect the environment is to give out the Brazen Bull treatment at random to energy companies – BAM! his ass gets fired less than a week later.

You think that kind of vigilant self-governance would be present otherwise? Hah! That guy would have got invited to the White House for steak dinners if this story came out off an election cycle.

Instead, he watches as his career is set on fire right in front of his eyes. It’s entertaining, because he seems like a real piece of shit, but I don’t translate that to anything other than what it is.

Election years are impossible for politicians to make dumb in. That’s why they’re so profitable. Once every four years progress is attainable, especially right now in this jobless recovery, because every project that can be imagined is getting green lighted. But, even without all the pipelines and approvals coming from agencies, just having them out of the way is useful. They can’t afford a scandal, and the rest of us are glad to be rid of them.

But don’t go thinking that translates to a guarantee of panacea. Why would Bernanke care if Obama gets elected or not? Would he gain something from it?

You are assuming, among other things, that:
1) The next administration would somehow inhibit Bernanke’s control of policy
2) An Obama administration would be more beneficial to Bernanke’s policy
3) Loose money will foster a more positive environment for politicians
3) Bernanke even wants to print more

Why does Bernanke care if a Republican becomes president? His term isn’t even up until 2014, and there is no established practice of removing him from office. Moreover, Mitt Romney is not exactly a gold bug, and unless Bernanke starts ushering in Weimar Republicesque hyperinflation, there’s no reason to think that Mitt Romney will do anything to affect Bernanke at all.

Bernanke’s biggest critics have been coming from the House of Representatives. The House has been such a vocal opponent, Bernanke has even gone to the unprecedented lengths to send emissaries to the House to try and win support. The House is where Bernanke’s problems rest, and the House’s demographics are unlikely to dramatically change this election. If you believe printing money is good for incumbents, how exactly does printing help Bernanke get rid of his biggest adversaries?

Besides, Bernanke has been harping repeatedly on the need for government to get its affairs in order. He fears more than anyone what would happen if demand for treasuries was impaired; the man is using treasuries to try and stabilize the economy, for Christ’s sake! What happens if they become relatively illiquid next to today’s standards?

How does Obama winning reelection aid that end? The US Government would still be check mated, and any progress on balancing the budget would still be virtually impossible. An Obama victory does not somehow favor the likelihood of more stimulus or reform getting through the chambers, anymore than a Romney victory would. Bernanke would have to somehow return the house to democratic control, while also orchestrating a supermajority in the Senate. That would get him stimulus. It would also crack any faith in the US budget, as a Democratic supermajority would unquestionably spend like mad. Or he could try for the opposite, running for a Republican supermajority. That *might get him a balanced budget. But both ends are unlikely to play out well, and he doesn’t have that fine level of control.

There is no reason Bernanke should care who is President of the United States.

And how can you be so sure that cheap money is even in the best interest of Obama/Democrats/Republicans/Independents/Kittens…etc? Gas prices are near $4 a gallon as a national average. Do you think the price of goods and services somehow just get a pass in elections? Like printing money will somehow overcome the fact that it costs >$50 to fill up a midsized sedan, rather than make things worse?

My point is, the advantage of election years is political submission, not implicit guarantees of inflation. The argument that the Fed will wipe the ass of markets in an election year is a cop out. Why would you think any of the candidates even wants inflation right now? Our employment issue “looks” better than it did. I daresay, most politicians would like to see gasoline prices plummet a good 25% from here to help things along.

In fact, I know they would, because I’ve been paying attention to the calls for more regulation of “those damn oil speculators”. I think Obama would be as furious as any Republican if Bernanke started QE3, because it would probably spark a gas crisis.

And then Bernanke would have every politician in American calling for his head, not just some House Republicans.

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I’m going to get over my usual shtick for a minute, because I’m tired of preaching doom.  My sermons are out there and I haven’t changed my tune at all.

But I really have neglected my longs, over the past 6 months.  There’s no excuse for that, as I’m very happy with what I’m holding.  I will not be selling these companies, even if we should go into a total meltdown.  I would invariable buy more.

Right now, my only longs are two multifamily apartment REITs, and a uranium miner.  I guess you could say that sums up my feeling toward what’s out there to buy right now.

I’ve spoken in the past on the great investment opportunity that multifamily units represent.  But there’s more to see than just the reports.  Behind the numbers and the charts and graphs, there are companies and their actual operations.

So let me show you why companies like AEC and CLP are going to continue to outperform, for the indefinite future.  Here are some details from the company that CLP is assembling itself into:

 

Imagine yourself as a millionaire.  If housing is dead as an investment, why the hell would you subject yourself to the tedious chores of homeownership, when you can live in a place like this?

 

Or here?

 

Yes, this looks like a much worse deal than buying a five bedroom home with a leaky roof and betting on a far off housing recovery.

Here are some more:

 

Let’s be honest with ourselves; wealthy people, once they move into places like these, are not moving back out again.  These locations offer gated communities, complete with unequaled luxuries and an atmosphere built for other hard working, successful, like minded neighbors.  You might see some of the 95% occupancy drop off; I’ll concede a few percent.  After all there are some people who just like to own their own homes.

But after 2008, all the good homes are overpriced, and all the cheap homes are a serious liability, thanks to going on five years of vacancy/neglect.  With material costs making it more expensive to build than buy, and nothing to buy worth owning, there’s just no reason to even subject oneself to homeownership.

Look at CLP’s complete list of properties.  This is what a well-oiled company looks like:

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I’m running hot at work right now, as my pile of papers keeps pushing higher on my desk.  Sadly, this has relegated me to a position of inaction on this most hallow of websites.  I’ve been able to jump on for just ten or twenty minutes during office hours, which has very much limited my ability to mock Greek bailouts, Chinese accounting, and other things of that nature.

Such a pity…

But that has not been much of a problem, as for most of yesterday’s news cycle, I struggled to find anything of interest to me.  So maybe it’s good I haven’t had time on my hands, no?

The 9^th floor is quiet as I type into the hours.  Yesterday I worked about ten of them before giving in to fatigue and going home.  I’ll probably do at least that tonight.

In the markets, my opinion has not changed.  I continue to feel that this run up is unsubstantiated and will give way to collapse.  When that will occur, I cannot say.  Thus, I remain short oil and energy through SCO and ERY, which have been performing admirably of late, terribly of…any other time frame.

On the long side, I continue to hold AEC, CLP, CCJ, physical silver, and a small cash position. 

The multifamily REITs continue to perform resiliently, despite calls for them to suddenly drop utilization (which hasn’t happened).  However, they have so far struggled to really break out.  Hopefully, as housing starts to bottom, their earnings will begin to surpass all expectations to the upside.

This being said, I am wary of AEC, and perhaps CLP, and am playing very close attention to developments with Fannie Mae and Freddie Mac.  According to AEC’s own risk assessment in their SEC filings, they believe they are impacted by cheap financing that originates from the quassi-private entities.  CLP is better funded than AEC, but may have similar if lesser problems.  I don’t believe that Fannie or Freddie will actually be curtailed by the government.  But, if Republicans should begin to have a fair wind at their backs, I would perhaps rethink holding AEC definitely; CLP maybe.

Finally, I took a miniscule position in TVIX last week, which is up more than 7%.  This corresponds to gains in my portfolio of about .028% net.  Contain your applause, please…

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Excuse my lapse of content; I am home sick. It started mid yesterday with a pressure that makes me feel like that poor bloke in Alien – save it’s coming out my face and I don’t have to hang out with Sigourney Weaver.

At any rate, I might stop back in later. Or I may sleep for 8 straight hours. We will just wait and see.

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It is tempting – very tempting – for me to add to my oil and energy shorts here. I am enticed by the dancing vision of ungodly profits when the unavoidable happens and this market rally spills its innards all over longs.

However, I am very reluctant to act on these impulses – for obvious reasons.

This October, I got to watch in horror as one of my more spectacular trades to date reversed against me, and, in a merciless deal of macabre, severed my clutching hand of victory from my person – all in the short span of a few weeks.

Yet, I can see my arm lying just before my eyes. I yearn to be rejoined with it; however, to reach out is to risk losing my other.

So I must remember what is prudent. If I were to double down on my failing bet, throwing the proceeds from my BG sale and my preexisting cash position, plus margin, at these shorts, then I could very well see 2012 as my greatest year to date.

I could also end bankrupt.

But if I wait, allowing the world to reunite me with my limb at its own pace, then perhaps I can see the late hour error of 2011 reversed.

NO! Better than that; 2011 would have been very much worth my while.

I sold out of massive winning positions in January of 2011, while changing my investing strategy. I had booked very large gains from that time. I realized slightly larger losses from the October massacre. If I allow my oil and energy shorts to provide me salvation on their own time schedule, then all my gains from early last year will remain – tax free.

Not as good as having realized the gains from shorting oil and energy I had on my book as late as September. But still not bad.

So I wait, and I continue to check my impatience.

Cain Hammond Thaler will sit here in his 9th floor office, and he will bide his time.

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I took yesterday off of work and the markets because I needed a day free from the commotion. I didn’t check up on the state of the world until after the close, that night. And it was wonderful.

It gave me some room to mull things over. And I’ve reached the conclusion that most of you are not, in fact, crazed idiots. Only some of you are crazed idiots.

The problem right now is that most of the sane people are taking their chips off the board, and casually going over to the bar; leaving psychopaths, daredevils, and programs CS majors forgot to shut off to do what they will.

So the Greek bailout deal is falling apart and Portugal is next up, but the euro holds above 1.3. Will the euro be worth half that when all the bad countries are either forced from the union or bailed out by the ECB? No, but no one seems to desire to challenge that now.

Or how about gasoline? Gasoline consumption is plummeting, but that’s not stopping the market from keeping the price punitively high. For now, that gets a pass, but eventually the people going long gas are going to have to be cut down at the knees.

The current price action is very aggravating, because it is decoupled from fundamentals. There’s a lot of betting on “future fundamentals” plus a whole lot of goodwill being handed to the European continent. Will that be trust well invested? Maybe. I guess we’ll see soon enough.

Because in case you haven’t noticed, for two weeks or so now, Germany has been steadily pushing Greece towards the edge…

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