Thursday, July 15, 2010

Investing is nothing more than going to Las Vegas?

Yes, it is NOT just limited to US equity markets. I mean, what story could possibly fit in this chart? In just 3 trading sessions, investors thought an entire Japanese market was great place to park their hard earned money into. And within that timeframe itself, they decided to pull out of it???

And yes, this is NOT just one single stock with 1% move. This is an entire index we are talking about and that has risen nearly 3.5% and LOST ALL of it, within 2 trading sessions.

Welcome to the BIGGEST Ponzi scheme this world has ever seen.

How you trade in this kind of a market, go figure...

Did i mention. Nobody on this planet can trade this through any kind of study, fundamental/technical/TL's etc.

Good luck with that...


  1. There is something strange going on with currencies. may be it was just covering of long USD positions, but yen is behaving as if we are approaching something nasty. same could be said about US treasuries.... Asian stocks look seriously sick, though Shanghai is trying to find a bottom. I think I have no view on US stock market, mostly because I see possibility of real plummeting of USD...

  2. Binve and others have been stating this for a while. USD and Equities can and eventually will go down together. The correlation inversely between the two is much less than direct.

    Macro economic picture is much worse than it was in 08. BDI has been going down each day for the last 40 days. Biggest losing streak ever. ECRI indicators have already rolled over BIG time and this change has happened within a very short period. Mutual funds have had only redemptions all year long as market was holding on or going up.

    I mean, i am not even going to unemployment and other areas. Yet, i can find 100's of reasons why things are going to get much worse much faster than anyone can think of.

    We are NOT trading a sane market. Short and go into hibernation. Come back in 6 months and if you are trading inverse etf's, you'd easily double or treble your money.

    Of course there will be plenty of tradeable opportunities along the way. But we are NOT going to see 1200, 1100 ever in our lifetime... And in a few days 1000 also will be history.

  3. never say never.... Yday i have meditated over long term charts of eurusd, jpyusd and some more. What has surprised me that those charts have some mega bearish implication for USD. In other words if USD will go down anything could happen to SP.... 2000, 5000 you name it. I am not calling it yet, but I started seriously thinking about it. But that is more in tune 2-5 years out....

    short term everything looks quite ugly, and there are way too many cross currents for me to make any intelligent call. last couple days were a bit more bearish than I expected, thus opening possibility of 1000 or so on SP... if we get there I will speculate further...

    Macro picture is ugly, but not sure I agree with you that is much worse than 08. It is bad, but not much worse. At least there are some positive dynamics with jobs, some stabilization in spending. Housing is still shit, but it is more than half way to the bottom, deleveraging is ongoing etc, etc..

  4. Appreciate your comments and thoughts.

    Some follow up...

    USD going down the drain doesn't necessarily mean Equities UP. I know equities are eventually priced in USD and there is certain level of correlation. But again, it can't and won't happen just by virtue of USD going down.

    If you take a look at the previous decade, 90's, USD and Equities BOTH went up in tandem (more or less). It is this decade that the correlation has been more severe. That is NOT because of a direct correlation, but because of the various "other" aspects affecting the two.

    More money printed, more $$$ devaluation that began since early-to-mid 2000's. In fact until 2003 equities AND $$$ both went down. Since then obviously due to our printing press $$$ has been going down for ever. Economics affecting Equities rising during this time period have been completely different. Things were much more optimistic. Demand was there. Jobs were there. In summary, Velocity was there in the MV = PT equation.

    Today and going forward $$$ will probably still continue to go down. But so will equities. Reasons completely different though.

    Coming to worse than 08. Let me put it this way. 08 market crash was a "sudden" event. Nothing preceded that from an economic stand point. Housing was just rolling over, jobs were just about to tip over, we had less than 40% of Current Debt as we have it today, small biz which make up more than 80% of the workforce were still doing pretty good.

    Cut to 2010. All of the above have completely gone down and are moving pretty fast in the wrong direction. The only spending that is happening is Govt spending. Consumer is literally dead. Consumer is REALLY de-leveraging or at least being forced to do so because of the games played by banks by hiking rates from the standard 10-20% range to 30-80% range. Yes, 80% (check zh older posts).

    De-leveraging should have instead happened for all those banks/institutions that instigated this move/situation. Alas, they are given even more money and accounting rules such as "mark to moon" so that they can hide their bad debts even more.

    Banks are literally sitting on 9 years worth of shadow housing inventory. I am NOT even going near CRE. And neither am i going near the trillions of CDS that these banks will come out and blow them and the economy anytime.

    There is NO way we are economically even close to what we were in 08 or even 09. Macro picture has and is changing at a very alarming rate. Unfortunately to the downside.

    But again, none of the above translates into trading and hence i see just charts and follow them. Charts don't know all of the these "external" factors and hence we also need to behave that way if we ought to make any money in this cruel market.

    Good luck

  5. You have written a lengthy one... I will try to outline my view on it in coming days, do not feel like arguing on macro level at this point.