Early Bull?

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    Posted: 06 May 2009 06:29 PM

    I expect turn over on the result. As such I was freeing up capital to play with the cool kids. If it pops, then poor me, I didn’t make as much money and if it drops, then I can trade it.

    Plato, the entire market is still oversold. All I need is a reason to have confidence to begin firing broadsides and crush those who are unwilling to see that commerce is increasing from a demand side, not a supply side.

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    Black Swan Counter: 9 (Banks need money, Jobs needs a break, Geithner has no plan, Cuomo’s grandstanding, .Gov needs a hobby, GS works for money, flash crash, is that bubbling crude?).

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    Posted: 06 May 2009 08:06 PM #1

    Eric Landstrom - 06 May 2009 09:29 PM

    ... commerce is increasing from a demand side, not a supply side.

    Can I read it as you’re saying economy is bottoming and stock market is in an early bull?

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    Posted: 06 May 2009 11:43 PM #2

    Mace - 06 May 2009 11:06 PM
    Eric Landstrom - 06 May 2009 09:29 PM

    ... commerce is increasing from a demand side, not a supply side.

    Can I read it as you’re saying economy is bottoming and stock market is in an early bull?


    One could always wait until it’s over to know for sure.  tongue laugh

     


    :apple:

         
  • Posted: 07 May 2009 01:08 AM #3

    Eric Landstrom - 06 May 2009 09:29 PM

    I expect turn over on the result. As such I was freeing up capital to play with the cool kids. If it pops, then poor me, I didn’t make as much money and if it drops, then I can trade it.

    Plato, the entire market is still oversold. All I need is a reason to have confidence to begin firing broadsides and crush those who are unwilling to see that commerce is increasing from a demand side, not a supply side.

    It’s great to have you lending your support to some of us perma bulls.  Your bank calls have me green with envy (not $, as I don’t feel I know enough about the financials).

         
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    Posted: 07 May 2009 02:06 AM #4

    Eric Landstrom - 06 May 2009 09:29 PM

    All I need is a reason to have confidence to begin firing broadsides and crush those who are unwilling to see that commerce is increasing from a demand side, not a supply side.

    Um, what does this even mean Mr. Eric?!  Or is your name really THOR or something?

    As the resident bear (I know Booo BOOOOOOOO!!!), I just wanna say - I think things couldn’t look more bearish and pathetic.  Nonsense stress tests that cover up insolvent banks that should be out of business (http://forums.wsj.com/viewtopic.php?t=5895), zero interest rate policies that can only be taken advantage of by those with money (a decreasing % of the population as a whole) and that aren’t working anyways (http://research.stlouisfed.org/fred2/series/MULT), clueless and timid Congress peoples, distracted peoples (http://www.huffingtonpost.com/2009/05/05/rays-hell-burger-obama-bi_n_196896.html), administrations that have undermined any confidence in free markets and legality, soon to be skyrocketing tax rates that will quelch any recovery, housing free fall, soon-to-be commercial real estate/construction loan free fall, unemployment spiking (today’s ADP report notwithstanding - a potentially slowing rate of unemployment increases can be misleading as people run out of benefits and therefore do not register - you need to look at U6 not U3), an increasingly socialized system of gvmt (and reallocation of wealth), debt so huge we only get a nickel of GDP for every dollar we borrow, potential commodity spikes (oil production capacity decreasing) and China threatening to stop funding us at a time when we need their money the most.  AND social security issues, wage cuts, medicare, medicaid etc.  Whew.  I think y’all need some Kool-Aid antidote!  And that’s what I’m here for!

    Even the god of thunder himself cannot overcome such obstacles…

    [ Edited: 07 May 2009 02:14 AM by Mayor Quimby ]

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    Posted: 07 May 2009 10:10 AM #5

    Mayor Quimby - 07 May 2009 05:06 AM
    Eric Landstrom - 06 May 2009 09:29 PM

    All I need is a reason to have confidence to begin firing broadsides and crush those who are unwilling to see that commerce is increasing from a demand side, not a supply side.

    Um, what does this even mean Mr. Eric?!  Or is your name really THOR or something?

    As the resident bear (I know Booo BOOOOOOOO!!!), I just wanna say - I think things couldn’t look more bearish and pathetic.  Nonsense stress tests that cover up insolvent banks that should be out of business (http://forums.wsj.com/viewtopic.php?t=5895), zero interest rate policies that can only be taken advantage of by those with money (a decreasing % of the population as a whole) and that aren’t working anyways (http://research.stlouisfed.org/fred2/series/MULT), clueless and timid Congress peoples, distracted peoples (http://www.huffingtonpost.com/2009/05/05/rays-hell-burger-obama-bi_n_196896.html), administrations that have undermined any confidence in free markets and legality, soon to be skyrocketing tax rates that will quelch any recovery, housing free fall, soon-to-be commercial real estate/construction loan free fall, unemployment spiking (today’s ADP report notwithstanding - a potentially slowing rate of unemployment increases can be misleading as people run out of benefits and therefore do not register - you need to look at U6 not U3), an increasingly socialized system of gvmt (and reallocation of wealth), debt so huge we only get a nickel of GDP for every dollar we borrow, potential commodity spikes (oil production capacity decreasing) and China threatening to stop funding us at a time when we need their money the most.  AND social security issues, wage cuts, medicare, medicaid etc.  Whew.  I think y’all need some Kool-Aid antidote!  And that’s what I’m here for!

    Even the god of thunder himself cannot overcome such obstacles…

    Sun-tzu said, “The general who thoroughly understands the advantages that accompany variation of tactics knows how to handle his troops. The general who does not understand these may be well acquainted with the configuration of the country, yet he will not be able to turn his knowledge to practical account.”

    Which means that the wise manager changes tactics as fast as necessary in order to win. As such, what began as a counter-trend strategy has turned into a momentum strategy because the trend is our friend until it bends. Get on Skype and I’ll unpack what I believe is going on.

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    Black Swan Counter: 9 (Banks need money, Jobs needs a break, Geithner has no plan, Cuomo’s grandstanding, .Gov needs a hobby, GS works for money, flash crash, is that bubbling crude?).

    For those who look, a flash allows one to see farther.

         
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    Posted: 07 May 2009 10:42 AM #6

    Can’t you “unpack” it here?! I know I’d like to know…..
    Confusing time for us newbies.

         
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    Posted: 07 May 2009 11:30 AM #7

    Dr. Gripp - 07 May 2009 01:42 PM

    Can’t you “unpack” it here?! I know I’d like to know…..
    Confusing time for us newbies.

    I have a two Americas thesis. One America grew tired of honoring the recession and is back to spending at a 86% clip of former spending highs. The other America is poor, foreclosed, in fear of losing or has already lost their jobs. The second America will significantly hinder the recovery and every bear story surrounds issues with the second America. Meanwhile, the first America is spinning back up to business as usual.

    In the context of two Americas we have businesses. The trick is to determine where the bulk of each company’s business came from: the first or the second America. Knowing that all companies market caps have been crushed, if a company primarily services the first America, then we have a value opportunity.

    Keeping the value buying opportunity in context everybody figured that the market would sell into strength but when it didn’t, fund managers began buying more and more. This created a fundamental shift in strategy from counter-trend to momentum. Momentum buying can continue so long as a well-recognized bubble doesn’t form but eventually a bubble will form and we’ll see the pullback/retest that all the technicians have been calling for over the past two weeks. When the consolidation happens if the market sets a higher low, a major bull trend will be confirmed and everybody can dance to the Bee-Gees or celebrate in a way complimentary to their culture and upbringing.

    [ Edited: 07 May 2009 11:34 AM by Eric Landstrom ]

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    Black Swan Counter: 9 (Banks need money, Jobs needs a break, Geithner has no plan, Cuomo’s grandstanding, .Gov needs a hobby, GS works for money, flash crash, is that bubbling crude?).

    For those who look, a flash allows one to see farther.

         
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    Posted: 07 May 2009 12:30 PM #8

    Eric Landstrom - 07 May 2009 02:30 PM
    Dr. Gripp - 07 May 2009 01:42 PM

    Can’t you “unpack” it here?! I know I’d like to know…..
    Confusing time for us newbies.

    I have a two Americas thesis. One America grew tired of honoring the recession and is back to spending at a 86% clip of former spending highs. The other America is poor, foreclosed, in fear of losing or has already lost their jobs. The second America will significantly hinder the recovery and every bear story surrounds issues with the second America. Meanwhile, the first America is spinning back up to business as usual.

    In the context of two Americas we have businesses. The trick is to determine where the bulk of each company’s business came from: the first or the second America. Knowing that all companies market caps have been crushed, if a company primarily services the first America, then we have a value opportunity.

    Keeping the value buying opportunity in context everybody figured that the market would sell into strength but when it didn’t, fund managers began buying more and more. This created a fundamental shift in strategy from counter-trend to momentum. Momentum buying can continue so long as a well-recognized bubble doesn’t form but eventually a bubble will form and we’ll see the pullback/retest that all the technicians have been calling for over the past two weeks. When the consolidation happens if the market sets a higher low, a major bull trend will be confirmed and everybody can dance to the Bee-Gees or celebrate in a way complimentary to their culture and upbringing.

    Problems with this thesis IMO:

    1.  The first America gets all of its wealth from the second.  As things worsen for the second, they worsen for the first.
    2.  Markets trade as a whole unfortunately (which is why good companies sometimes get thrown under the bus with the bad).  Value opps may exist (I don’t think so but even if I’m wrong) and you may be correct but still get hammered on that trade once the markets start another leg down.
    3.  The strength of America has historically existed within the SECOND America.  Whenever this country has fared well, it has done so because your average American has worked hard and prospered.  This is not the case today.  Your average American works hard (if they have a job - and most do) to pay exorbitant taxes and inflated prices for everything due to high prices of oil and other commodities.  He/she is in massive debt they themselves didn’t incur (because they didn’t understand the system - and let the politicos spend their future labor) and is unable to ‘get ahead’.

    So yes, I think you’re correct - we do have 2 Americas - the same way France had two Frances - BEFORE the revolution.  Income gaps have gone parabolic and the ENORMOUS increases in the money supply the past 15+ years have gone almost completely to the first America.  Trickle down has failed miserably as the masses were handed (and readily accepted, due to their ignorance) CREDIT instead of CASH and are now in deep doody for a good long time.

    When Joe Doe gets an increase in wages, understands that he needs to spend cautiously WHEN he’s doing well, things will get better.  When the elitist banking cartels are no longer allowed to bid up oil futures (or even partake of that market), things will get better.  When many layers of phony paper wealth and derivative nonsense get unwound, things will get better.  When the size of the Federal gvmt starts to shrink to enable reduction in debt so we can actually put borrowed money to use, things will get better.  When the sheeple realize the government works for THEM and not the other way around, things will get better.

    But not before IMHO…

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    Posted: 07 May 2009 12:35 PM #9

    Mayor Quimby - 07 May 2009 03:30 PM
    Eric Landstrom - 07 May 2009 02:30 PM
    Dr. Gripp - 07 May 2009 01:42 PM

    Can’t you “unpack” it here?! I know I’d like to know…..
    Confusing time for us newbies.

    I have a two Americas thesis. One America grew tired of honoring the recession and is back to spending at a 86% clip of former spending highs. The other America is poor, foreclosed, in fear of losing or has already lost their jobs. The second America will significantly hinder the recovery and every bear story surrounds issues with the second America. Meanwhile, the first America is spinning back up to business as usual.

    In the context of two Americas we have businesses. The trick is to determine where the bulk of each company’s business came from: the first or the second America. Knowing that all companies market caps have been crushed, if a company primarily services the first America, then we have a value opportunity.

    Keeping the value buying opportunity in context everybody figured that the market would sell into strength but when it didn’t, fund managers began buying more and more. This created a fundamental shift in strategy from counter-trend to momentum. Momentum buying can continue so long as a well-recognized bubble doesn’t form but eventually a bubble will form and we’ll see the pullback/retest that all the technicians have been calling for over the past two weeks. When the consolidation happens if the market sets a higher low, a major bull trend will be confirmed and everybody can dance to the Bee-Gees or celebrate in a way complimentary to their culture and upbringing.

    Problems with this thesis IMO:

    1.  The first America gets all of its wealth from the second.  As things worsen for the second, they worsen for the first.
    2.  Markets trade as a whole unfortunately (which is why good companies sometimes get thrown under the bus with the bad).  Value opps may exist (I don’t think so but even if I’m wrong) and you may be correct but still get hammered on that trade once the markets start another leg down.
    3.  The strength of America has historically existed within the SECOND America.  Whenever this country has fared well, it has done so because your average American has worked hard and prospered.  This is not the case today.  Your average American works hard (if they have a job - and most do) to pay exorbitant taxes and inflated prices for everything due to high prices of oil and other commodities.  He/she is in massive debt they themselves didn’t incur (because they didn’t understand the system - and let the politicos spend their future labor) and is unable to ‘get ahead’.

    So yes, I think you’re correct - we do have 2 Americas - the same way France had two Frances - BEFORE the revolution.  Income gaps have gone parabolic and the ENORMOUS increases in the money supply the past 15+ years have gone almost completely to the first America.  Trickle down has failed miserably as the masses were handed (and readily accepted, due to their ignorance) CREDIT instead of CASH and are now in deep doody for a good long time.

    When Joe Doe gets an increase in wages, understands that he needs to spend cautiously WHEN he’s doing well, things will get better.  When the elitist banking cartels are no longer allowed to bid up oil futures (or even partake of that market), things will get better.  When many layers of phony paper wealth and derivative nonsense get unwound, things will get better.  When the size of the Federal gvmt starts to shrink to enable reduction in debt so we can actually put borrowed money to use, things will get better.  When the sheeple realize the government works for THEM and not the other way around, things will get better.

    But not before IMHO…

    I’m pretty sure that I’m not taking wealth away from the second America. Are you? At any-rate, the bears are failing to understand that with a pounded down market, that market can withstand a sustained string of bad news. Besides, not as bad as it could be has become the new good, Mike.

    Anyway, when the retest comes (and it will), if we fall below support, then we run down further and get more boring sideways action and traders continue to rule the earth. Up or down the cool kids will make money.

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    Black Swan Counter: 9 (Banks need money, Jobs needs a break, Geithner has no plan, Cuomo’s grandstanding, .Gov needs a hobby, GS works for money, flash crash, is that bubbling crude?).

    For those who look, a flash allows one to see farther.

         
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    Posted: 07 May 2009 01:25 PM #10

    Agreed!  I’m only uber-bearish here because so many are uber-bullish.  I think there’s a ton of resiliency in the economy and people in this country are more capable of rectifying a bad situation than any other people in the world IMO.  OTOH, I think all of the reforms mentioned in the last paragraph of my prior post really do need to happen.  If the sheeple run out and max out their credit cards into the next uptick, we’re going NOWHERE as a country but down.  Greed’s a funny thing - you need just enough to keep things going but too much and kaplooie!

    EDIT: As for making money - there are only 3 ways to make money - build/grow/invent something.  If you’re not doing that you’re either:

    a: Stealing or hoarding money from someone else (we have a finite money supply - the more you make in a trade, the less someone else makes - so all you’re trying to do is take as much out of the growing supply of money as is possible).
    b: Exchanging your time (which has potentially productive value) for hope (the hope that you can [see a: above])
    c: Fooling yourself!

    A is problematic because you’re never going to successfully do that over time - you may think you are, but all you’re really doing is keeping up with inflation.  To outpace inflation consistently is very, very difficult indeed.  I bet the AFB would be shocked if *everyone* posted their profit and losses over the past 18 months.

    [ Edited: 07 May 2009 01:33 PM by Mayor Quimby ]

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    Posted: 07 May 2009 01:53 PM #11

    Mayor Quimby - 07 May 2009 04:25 PM

    Agreed!  I’m only uber-bearish here because so many are uber-bullish.  I think there’s a ton of resiliency in the economy and people in this country are more capable of rectifying a bad situation than any other people in the world IMO.  OTOH, I think all of the reforms mentioned in the last paragraph of my prior post really do need to happen.  If the sheeple run out and max out their credit cards into the next uptick, we’re going NOWHERE as a country but down.  Greed’s a funny thing - you need just enough to keep things going but too much and kaplooie!

    EDIT: As for making money - there are only 3 ways to make money - build/grow/invent something.  If you’re not doing that you’re either:

    a: Stealing or hoarding money from someone else (we have a finite money supply - the more you make in a trade, the less someone else makes - so all you’re trying to do is take as much out of the growing supply of money as is possible).
    b: Exchanging your time (which has potentially productive value) for hope (the hope that you can [see a: above])
    c: Fooling yourself!

    A is problematic because you’re never going to successfully do that over time - you may think you are, but all you’re really doing is keeping up with inflation.  To outpace inflation consistently is very, very difficult indeed.  I bet the AFB would be shocked if *everyone* posted their profit and losses over the past 18 months.

    As I said, I’m pretty sure that I’m not stealing money. If anything I’m a very efficient wealth transfer mechanism which is utilized to keep markets liquid. Liquidity has value. The residual value of helping create liquid markets is then dispersed among my community bringing joy and happiness to all.

    The sheeple aren’t spending jack while the first America never carried a debt balance in the first place. Without underscoring the hard times on main street, as a market participant there are two contributions the second America has on my thesis: the first is how much their lack of commerce will effect the companies that service the first America and the second is what is the level of sustenance commerce generated by the second America? The failing of the bull case is that their story attempts to apply the particular problems of the second America universally to the first America. But in point of fact the first America money is (1) mobile (2) liquid (3) warehoused. In other words, the first America’s money works for them and after a year long rest at low interest rates, that money is becoming available for investment. Understand the symmetry: when the writing was on the wall last year that the economy was going to dive, the first America diverted an increasing portion of their funds into short-term fix income. As the economy continued to slide the first America continued diverting more and more money into wealth preservation vehicles. You should be familiar with the phenomenon since it is exactly what you did with your own funds.

    Now those short-term investments are maturing and we can see something of a glimmer of light at the end of the tunnel and so people are rolling the maturing funds out of wealth preservation/management and into equities.

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    Black Swan Counter: 9 (Banks need money, Jobs needs a break, Geithner has no plan, Cuomo’s grandstanding, .Gov needs a hobby, GS works for money, flash crash, is that bubbling crude?).

    For those who look, a flash allows one to see farther.

         
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    Posted: 07 May 2009 02:08 PM #12

    Eric Landstrom - 07 May 2009 04:53 PM
    Mayor Quimby - 07 May 2009 04:25 PM

    Agreed!  I’m only uber-bearish here because so many are uber-bullish.  I think there’s a ton of resiliency in the economy and people in this country are more capable of rectifying a bad situation than any other people in the world IMO.  OTOH, I think all of the reforms mentioned in the last paragraph of my prior post really do need to happen.  If the sheeple run out and max out their credit cards into the next uptick, we’re going NOWHERE as a country but down.  Greed’s a funny thing - you need just enough to keep things going but too much and kaplooie!

    EDIT: As for making money - there are only 3 ways to make money - build/grow/invent something.  If you’re not doing that you’re either:

    a: Stealing or hoarding money from someone else (we have a finite money supply - the more you make in a trade, the less someone else makes - so all you’re trying to do is take as much out of the growing supply of money as is possible).
    b: Exchanging your time (which has potentially productive value) for hope (the hope that you can [see a: above])
    c: Fooling yourself!

    A is problematic because you’re never going to successfully do that over time - you may think you are, but all you’re really doing is keeping up with inflation.  To outpace inflation consistently is very, very difficult indeed.  I bet the AFB would be shocked if *everyone* posted their profit and losses over the past 18 months.

    As I said, I’m pretty sure that I’m not stealing money. If anything I’m a very efficient wealth transfer mechanism which is utilized to keep markets liquid. Liquidity has value. The residual value of helping create liquid markets is then dispersed among my community bringing joy and happiness to all.

    The sheeple aren’t spending jack while the first America never carried a debt balance in the first place. Without underscoring the hard times on main street, as a market participant there are two contributions the second America has on my thesis: the first is how much their lack of commerce will effect the companies that service the first America and the second is what is the level of sustenance commerce generated by the second America? The failing of the bull case is that their story attempts to apply the particular problems of the second America universally to the first America. But in point of fact the first America money is (1) mobile (2) liquid (3) warehoused. In other words, the first America’s money works for them and after a year long rest at low interest rates, that money is becoming available for investment. Understand the symmetry: when the writing was on the wall last year that the economy was going to dive, the first America diverted an increasing portion of their funds into short-term fix income. As the economy continued to slide the first America continued diverting more and more money into wealth preservation vehicles. You should be familiar with the phenomenon since it is exactly what you did with your own funds.

    Now those short-term investments are maturing and we can see something of a glimmer of light at the end of the tunnel and so people are rolling the maturing funds out of wealth preservation/management and into equities.


    “The sheeple aren’t spending jack while the first America never carried a debt balance in the first place.”

    Not true - while many are liquid and living off fixed income in their personal lives, companies are in HEAPS of debt.  I would include corporate America as part of the First America since it is corporate America that generates real wealth in this country.

    As for liquidity, it has value but only in so far as it allows markets to function efficiently.  In the grand scheme of things however, prices will find their appropriate lever regardless of liquidity levels so it really does very little in terms of positive economic impact.

    Secondly, you’re REALLY overestimating the size of the first America.  It is TINY.  Not in terms of wealth, but in terms of GDP.  Again, if you don’t grow/build/invent something, you’re not creating GDP.  The wealthy sitting around sipping on Sidecars in their gazebos (hehe) are not doing jack for this country unless they lend their wealth out.  First America can LEND money by which GDP can be created to the Second America but if the Second America cannot afford to borrow, we go nowhere.  This is where I believe we are.  Lowering interest rates does no good whatsoever if there are few potential borrowers hence the M1 money supply figure dropping below zero.  This indicates a tremendous lack of demand for borrowed money and tremendous weakness in second America.  Throw in rising unemployment and there’s just no way we can have recovery right now.  Correct me if I’m wrong please!

    The problem with the bull case is that it fails to see the lag that exists between pain for the Second America and ensuing pain for First America.  Make no mistake though, without the worker bees, the whole system collapses into a pile of post WWII Eastern-European rubble.

    My take is that if we’re going to survive this mess and come out of it, we have a very long ways to go yet regardless of what the yokels on CNBC say!

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    Posted: 07 May 2009 02:29 PM #13

    Eric and Mayor

    Thank for the entertaining sparring.  Have no idea who is correct but I do agree that each human being should try to be productive i.e. build/grow/invent something.  Is unacceptable that bankers, brokers, traders and similar middlemen made more money than productive folks.  Eric, you’re a thief :innocent:.

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    Posted: 07 May 2009 03:03 PM #14

    http://acrossthecurve.com/?p=5179

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    Posted: 07 May 2009 03:17 PM #15

    Checked out your link Mayor Quimby….....what exactly is it saying?