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- I’m Still Going Long and Hoping the Markets Go DownYesterday
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First rule of Investing. Dont fall in love with positions or try to prove yourself right. I thought we might get a bounce. I was wrong. I covered my short puts when the market started to shed its gains. So I lucked out there.
More importantly, i wanted to clarify my bullishness. I don’t think the markets will just immediately turn around, and i dont want them to. I dont need to pick the absolute bottom of the markets to see stocks that pay good yields at these levels. More importantly, if they pay good yields at this level. They will pay better yields at lower levels.
Once I made the decision to go long, I didnt just dive in and buy everything I wanted to own. I took a bite. The market traded down. I took another bite. And will continue to do so as the market falls until Im full. The stock market is full of suckers. They bought their stocks hoping there was someone there to buy them at a higher price. When that disappears, they dont have any reason to own stocks, so they sell. Selling in this age doesn’t mean calling your broker to bail out of stocks. it means moving money aroundin your 401k , from a mutual fund to a money market. From a hedge fund to a CD.
Individuals are capitulating. They just dont know it. They are being told to not sell their stocks. Most dont own individual stocks. They own shares of funds. Which they are moving out of equity funds and into money markets or CDs. The wealthier are pulling money from Hedge
- I’m Going Long Right NowOctober 8
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I could be an idiot. But I think now is the time. I put 8 pct of my net worth in DIAmond puts at 11000, as a hedge, and just sold them at a very nice gain. Very nice. Now Im short puts that I sold in not near as big a position, but nice.
Im going long.
Im not going to give you some historical perspective. The SEC killed any historical relevance when they stopped shorts on 900 stocks. Im buying because the only real uncertainty I see remaining is from the economy. So when you hear the talking heads giving you historical facts, stand up, yell at the screen “You are full of BS”
One thing I know is that starting tomorrow the shorts can get back in the market. I love shorts. Short create a foundation of demand for their positions. If a good company gets shorted, whether as a hedge, or because someone thinks the company will underperform, that short will need to be covered at some point. If the company outperforms, or the demand for the stock exceeds the supply, the price of the stock, like any baseball card, iwll go up. Which will provide incentive for the shorts to cover sooner than later. When that happens, the stocks go up. Shorts are good for the market. They make good companies go up in price.
When I look at the credit markets. The Fed and Treasury and even international agencies are signalling that they will be the lender of the first and last resort. We see short term treasuries trading as if traders are starting to get comf
- The Only Mavericks That MatterOctober 7
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Is our Dallas Mavericks. The Preseason starts tonight. Not only can I not wait to get things rolling, but I can not wait for the election to be over. Watching Tina Fey on SNL is hysterical, but its time to return the Maverick name where it truly belongs. On our jerseys.
Any one know of any decent players named McCain and Obama that I can sign for the preseason ?
Should I just put McCain on the back of a Mavericks jersey and have someone selling them at Republican rallies and on their website ?? Now thats an idea !
Think Tina Fey of SNL might have some fun with that ?
Go Mavs !
- Brother Can You Spare A Bond ?October 7
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You would think that in 2008 that markets should be efficient. One market that certainly is not is the corporate bond market.
Any individual who has ever tried to buy a corporate bond knows how difficult it can be. There is no exchange for corporate bonds. They don’t trade like stocks, indexes, ETFs, or anything for that matter. Each purchase is more like buying a car than buying a stock. There is little liquidity for 99pct of the corporate bonds issued.
That is a huge problem on many levels. It makes it harder for corporations to issue bonds. It makes it hard for individuals and institutions to buy bonds. It makes it harder for buyers to sell bonds. There is no question that our money markets would be safer if there was a liquid market for the bonds money market and other funds hold. Trying to sell bonds in even small volumes can be an adventure, and thats not a good thing
The very worst part of all of this is that it makes it so difficult to buy and sell bonds, stocks dont have to compete with bonds for buyers. Think about it.Thats a disaster.
If stocks and bonds truly competed for buyers, buyers would benefit. You would see more stocks paying dividends. Consumers would realize that bonds are less risky than stocks. It wouldnt take losing all your stock in Wachovia to realize that Wachovia bonds were safer than Wachovia shares.
More competition between bonds and stocks would mean that consumers money wou
- When Did Rube Goldberg Take Over the Country ?October 7
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Our financial system is quickly become a Rube Goldberg contraption of quick fixes. We have yet to see any fundamental changes to how the business of business is done. There has been one theme to the financial engineering of Wall Street: Print money and give it away
Like any Rube Goldberg contraption, it seems great when you are desperate for a solution. The problem is that in hindsight its always a mess.
If the Fed is going to give money to corporations unsecured, what happens if they cant pay it back ? Yep, I dont know either. Does the Fed ?
How much are they going to loan ? Yep, I dont know either. Does the Fed ?
Which companies will get the money ? I don’t know, but I own a bunch of corporations, can I borrow some ?
Does the Fed remember that it was leverage and the ensuing deleverage that got Investment Banks into trouble. Will there be leverage limits on corporations that can borrow money ? Just because the loans are just 3 months doesnt mean they wont be a problem./ How many times will they let a company roll over the debt ?
How will the Fed’s Special Purpose Entity (which will actually lend the money) pick which companies to lend to ? Will they be Obama or McCain supported companies ? Defense contractors who need money to supply bullets for our troops ?
If the loans are unsecured, what will the Vig be ? Cash ? Stock ? Preferred ?
Where is the transparency behind all of this ?
Call me
