Monday, December 31, 2012

Alon update

I hope someone got something out of this....

Control your risks,
gh

Wednesday, December 26, 2012

NRA revised

I submitted the text of my essay on the NRA from a few days ago to a local newspaper. I got a call from the editor today asking me if I really wanted to go ahead with the article and pointing out a couple things that seemed a little too radical, for lack of a better word...

I am glad she called. In the previous post I made the comment that I believe we should ban the "private sale of firearms". That would be an inaccurate portrayal of my opinion. So I made some changes to the piece. It is below if you care to read it:


A few days ago the leader of the National Rifle Association spoke on national television. The NRA had been silent for some days in the aftermath of the recent tragedy in New England. Mr. Wayne LaPierre took the occasion to cast the blame for the recent incident in Connecticut on a wide variety of culprits in modern American society including violent video games, movies and even the president of the United States, who he accused of cutting funding for school safety. I was astounded at his hubris.
Mr Lapierre went on to state that the tragedy could have been averted if only there had been "one good guy with a gun" at the school. Perhaps it could have. Mr Lapierre lamented the fact that "monsters... walk among us" perpetrating these crimes against civil society and he wondered why we find guns good when they do good things like protecting the President or protecting the country, but bad otherwise. And then the head of the NRA went on to extol the expertise of the NRA in training the police forces of the country and to remind us of the good work they have done for many decades in providing training and education to new gun owners and juvenile hunters.
The main idea presented by Mr. Lapierre on behalf of the NRA was a proposition to provide training to armed guards who would be stationed in schools across the country to deter wouldbe assassins and mass murderers. He stated the the NRA would provide this training free of charge. I believe this is a noble effort by the National Rifle Association and it would probably work in the short term to reduce incidents like this recent one.
However, I do not think that it goes far enough to prevent and reduce the violence that is regularly visited upon innocent people in this country. In fact I think that putting armed guards in schools will only precede putting armed guards in churches and synogogues and is just another escalation of the problem with gun violence.
I am a gun owner. I own several hunting rifles. I own several handguns. I believe in the right of people to own weapons for self defense in their homes and for hunting. While semi-automatic weapons are fun to shoot I think the argument for them in home defense is mistaken. The ordinary person concerned with a weapon for home defense must keep in mind reliability and simplicity. I think of it this way. What weapon does a hunting guide in grizzly bear country use for defense against grizzly bears? The answer is nearly always a large caliber revolver.
We the people must take it upon ourselves to reduce the easy availability of weapons. This means closing the gunshow loophole that allows the transfer of guns without a background check. And then ban the sale and possession of high capacity magazines. The only purpose for high capacity magazines is to enable the killing of people in war. They were an escalation of the ability of soldiers to kill the enemy. They were made for war. The same sentiment holds true for assault weapons. They were meant to kill people in time of war. We know what they look like, now we need to come up with a legal definition that works. These are the first things that need to be done.
Then we need to figure out a way to have all new gun purchasers get screened for mental illness. And the idea that came to me was to use the expertise of the law enforcement and military in weeding out those who are not to be trusted with a weapon. The NRA has close ties to these types of organizations so they should work together to come up with a mental health screening exam that will catch the "monsters".
And finally, the National Rifle Association, after providing prospective new gun owners with training in the safe use of the weapon and after a mental health screen administered by the National Rifle Association (to keep the government out of the process!), Wayne LaPierre will sign the permit to buy the weapon. The NRA can then be responsible for the permits issued. They will actually have some "skin in the game" and will not just be another rightwing lobby in Washington, D.C. What do you think?
 
 

Taleb

And this from Mr. Taleb

http://www.nytimes.com/2012/12/24/opinion/stabilization-wont-save-us.html?_r=0

Take your medicine

First of all, I note that the stock markets do not seem overly worried about this so-called fiscal cliff.

But additionally I will propose that the tax "increase" that will occur after the start of the year means that tax rates revert to where they were before G.W. Bush lowered them to stimulate the economy after 9/11. Has it worked? It sure doesn't seem that we have benefitted from this stimulus. That is all that it is. Stimulus. Tax cuts and deficit spending are stimulus. Stimulus being an artificial attempt to cause a rise in economic activity. And the tax cuts over the last decades resulted in a surge in government debt. We have been stimulating the economy for 30 years thru tax cuts and increased government spending. The large part of these rises in asset prices over these years is due to inflation. This is not wealth we have been creating. It is debt. The only ones to profit from this inflation has been those with the financial agility to stay ahead of the "trade". The rich got richer and the poor poorer. The money from the debt has been siphoned off and is sitting in the bond markets, looking for yield. That money is set to spill into the economy. That is what we have wanted to happen for a long time. Now the push is on to avoid a tax hike. So just as the money breaks loose taxes will be kept artificially low so the rich can get even richer in the coming inflation. This is how the game is always played. The public is always behind the curve. And the government is the public. It is our debt and our representatives in government. But we can't seem to see beyond next weeks paycheck and next weeks rent. To our detriment.

On the other side of the "cliff" is the prospect of cuts to government spending. Isn't this what one half of the debate wants?  And everyone who dreads the prospect of a drastic cut in government spending and believes that those cuts will slow down the economy is admitting that govt. spending stimulates the economy.

So who loses if we go over the cliff and stay over the cliff? Everybody? Taxes go up, government jobs decline. I thought we were worried about government debt?

I think that if we were able to bring ourselves to take this bitter medicine of fiscal austerity we would find ourselves in a much stronger position a couple years down the road after we digested this change in the debt situation.

The United States of America is hooked on easy money like a heroin addict is hooked on H. The prospect of a fix not forthcoming is fraught with anxiety.

Just thinking,
gh

Saturday, December 22, 2012

No surprises from the NRA

Wayne LaPierre spoke yesterday
Watch the video if you didn't have the opportunity. Or if you can't anticipate what he said. There were no surprises. I was hoping that they had experienced some sort of epiphany and were prepared to compromise on issues of gun control. Alas, they are still politicians like we see in national government. To compromise is considered the act of a coward or sissy....

My take on the talk:

A few days ago the leader of the National Rifle Association spoke on national television. The NRA had been silent for some days in the aftermath of the recent tragedy in New England. Mr. Wayne LaPierre took the occaision to cast the blame for the recent incident in Connecticut on a wide variety of culprits in modern American society including violent video games, movies and even the president of the United States, who he accused of cutting funding for school safety. I was astounded at his hubris.

Mr Lapierre went on to state that the tragedy could have been averted if only there had been "one good guy with a gun" at the school. Perhaps it could have. Mr Lapierre lamented the fact that "monsters... walk among us" perpetrating these crimes against civil society and he wondered why we find guns good when they do good things like protecting the President or protecting the country, but bad otherwise. And then the head of the NRA went on to extol the expertise of the NRA in training the police forces of the country and to remind us of the good work they have done for many decades in providing training and education to new gun owners and juvenile hunters.

The main idea presented by Mr. Lapierre on behalf of the NRA was a proposition to provide training to armed guards who would be stationed in schools across the country to deter wouldbe assassins and mass murderers. He stated the the NRA would provide this training free of charge. I believe this is a noble effort by the National Rifle Association and it would probably work in the short term to reduce incidents like this recent one.

However, I do not think that it goes far enough to prevent and reduce the violence that is regularly visited upon innocent people in this country. In fact I think that putting armed guards in schools will only precede putting armed guards in churches and synogogues and is just another escalation of the problem with gun violence.

The American people should take it upon ourselves to ban the private sale of firearms. Close the gunshow loophole that allows the transfer of guns without a background check. And then ban the sale of high capacity magazines. The only purpose for high capacity magazines is to enable the killing of people in war. They were an escalation of the ability of soldiers to kill the enemy. They were made for war. The same sentiment holds true for assault weapons. They were meant to kill people in time of war. We know what they look like, now we need to come up with a legal definition that works. These are the first things that need to be done.

Then we need to figure out a way to have all new gun purchasers get screened for mental illness. And the idea that came to me was to use the expertise of the law enforcement and military in weeding out those who are not to be trusted with a weapon. The NRA has close ties to these types of organizations so they should work together to come up with a mental health screening exam that will catch the "monsters".

And finally, the National Rifle Association, after providing prospective new gun owners with training in the safe use of the weapon and after a mental health screen administered by the National Rifle Association (to keep the government out of the process!), Wayne LaPierre will sign the permit to buy the weapon. The NRA can then be responsible for the permits issued. They will actually have some "skin in the game" and will not just be another rightwing lobby in Washington, D.C. What do you think?
 
gh 

Thursday, December 20, 2012

The Lottery

It has been many years since I've read this short story.

From "The Buttonwood Tree".

The Lottery

Enjoy

Dr. Elder

I don't remember how it happened but I was surfing the web and ran into a link Dr. Alexander Elder's site.   http://www.elder.com/

I read a book by this man about 15 years ago when I was ravenously reading all credible books that I could find on trading and investing. Along with "Reminiscences of a Stock Operator" and a couple others, Mr. Elder's book, "Trading for a Living" had lessons that I have remembered all of these years. If there are any viewers of my blog who want to learn how to trade profitably, his book is invaluable. It has not been easy. I had to make all of the mistakes more than once. But having the correct principles in mind by way of reading a book that makes sense enables a trader to learn from the setbacks quicker than trying to figure things out from scratch.

On his site here is a video of an interview with Dr. Elder. There are some gems in it.

I have no arrangement with Dr. Elder. I have only read one of his books. He is the real deal.

gh

Bonds are in a bubble

There. I said it. It can't be said any more plainly.

Interest rates are set to rise. The economy is set to rise. Inflation is set to rise. There may be some headline risk over the next few months, but the underlying economy is going to pull out of this funk that it is in, and get going again. And interest rates are going to RISE. That means that bonds and bond funds are going to go DOWN. This means they will lose a large percentage of their value. If you are in a bond fund, get out. There may be fluctuations. You may have second thoughts next week, or next month if you take your money out of bonds, BUT, the bond market bubble WILL end. And bonds and bond funds will start down. For the long term.

The specter of interest rates rising is what started this whole debacle  5 years ago. Do you remember when there were riots over the price of rice? Do you remember when gasoline was on the way to $5 a gallon in the U.S.? That was 2006-7. Interest rates were set to go up dramatically, and that is what burst the housing bubble and almost broke the banks and led to this recession. Now, we have worked through those tactical difficulties. And the money that has been printed to paper over those things is going to work it's way into the economy of the world. Now inflation is going to get going in ernest. It won't be overnight. It will be at least a couple years. The first year or two is going to seem like we are in the late nineties again. But then the interest rates will rise with a vengeance as the trend of rising interest rates and inflation gets going. By then it will be too late. Stocks will do very well for most of an inflationary environment. At the end there will be hell to pay. But the job of every investor is to try to keep up with inflation as long as he/she can.

Gold and silver are getting hit hard right now. This is because of the strength of the stock market and the weakness in the bond market. Interest rates are starting to rise and this is threatening to gold. But it won't last. It is a "trade" that is being unwound. The bond market will not be able to keep up with inflation. The bond market will not put inflation in it's place because the government will try to keep interest rates low to preserve the growth of the economy. And by the time we get a strong hand like Mr. Volcker, who tamed inflation in the 1980's, it will be late in the game. The political system will remain behind the curve. Inflation will get out of hand before it is brought under control. This may be five to ten years from now. In the meantime it is important to keep up with inflation by investing in those things that go up with inflation. Buy gold and silver and be patient. Land should hold it's value. Buy stocks now and sell when the tide starts to turn in a couple years or so.

This is my long term outlook. In the short term we will need to manage our risk on an individual basis. This means each investor is responsible for his/her own decisions. If one is not able to go "all out" and put all of ones eggs in one basket, then at least start the shift out of bonds and into inflation hedges.

Don't wait until everyone is panicking. Look ahead and be pro-active.
This is my warning to those I care about.

Here is that chart of bond prices:

Damn that was intense....

But I mean it!
gh

No recession here

This from Joe Weisenthal at Business Insider.

One Of The Biggest Fears About The Economy Is Getting Blown Out Of The Water



Read more: http://www.businessinsider.com/philly-fed-index-blows-fears-of-business-slowdown-out-of-the-water-2012-12#ixzz2FdTUP6db
Good stuff over there!
gh

Trade update 12/20/12

I sold my position in MolyCorp today. On technical considerations. The stock is sitting too heavy on support for the size of my position. Could I sell just part of the position? Yes, I could. But I know myself. If I sell part of a position I will be itching to sell all of the position. Right now the stock appears to want to go down in the short term. I don't know who has been buying, or why, so I don't know what the extent of a decline might be if selling happens. By selling in this way I can clear my mind. If this stock goes down and then immediately goes up to the recent highs I would consider buying some again. IF. If it goes up immediately I will watch it...

I make the point that to me as a trader the price that I pay is a small consideration. What matters is the direction the price is going when I buy, and that is of quite some consideration when attempting to calculate the probability of a profit on the trade. I want my initial buy to show me a profit before I add to the position, and each addition must be to a profitable trade. I don't mind waiting for some time after the initial buy, but don't intend to let the price go very far against me in that case either.

When the buys are spread out over time in the building of a position it has the effect of giving me some measure of patience, as well as ensuring that the trend is going the way that I anticipated. And if I am lucky enough to pick a good stock and get on a full position, I hold it as long as I can stand to do so. Or until it gives me some signal that the easy money is over. (momentum) Yes, I try to just take the easy money. It is not so easy, actually. To do this successfully is the hardest thing I have ever done. It is a constant battle with my emotions as I attempt to "listen" to what the markets are trying to say.

This win (MCP) was a gift. I took a flier on what appeared to be a temporary bottom at $6 and have been pleasantly surprised. The problem with picking bottoms is that it is impossible to hold on forever. At least for me...

Here are charts of MCP, GOL, and STP with commentary on these trades....





How about that RIMM? I think I posted on it some time ago..... I got shook out due to concerns over the broader market quite awhile ago. I always keep in mind the broad market averages and sentiment to the best of my meager ability.

Controlling risk!
gh

Wednesday, December 19, 2012

Antifragile

I've been reading Nassim Taleb's "Antifragile". The book is an argument for the idea that there are some things that benefit from disorder and volatility. It seems that the author made quite a bit of money predicting and trading some of the recent "Black Swans" in the financial world. So the message of the book so far, (I am about halfway through) is a perfect fit with the general rules and philosophy of trading as I've come to know trading.

One of the key points of Taleb's philosophy is the concept of "optionality". This refers to the power of an option, which is the right, but not the obligation to make a choice. An option. And people, and systems can grow and profit from the randomness and volatility that is life and trading if they have some capability to use adverse events to their benefit. This means that when an adverse event happens the antifragile person or system is the one that can use that event to learn, and is able to let the adverse event pass without the cost becoming debilitating, and to profit in some way from the event. At the same time the antifragile system or person is able to keep the flexibility to use the rare events to their benefit precisely because they have survived and learnt from the adverse occurances. They have the option.

In trading this is the basis for the classic advice to "cut your losses short and let your profits run". Easy advice to give but sometimes difficult to practice. The antifragile trader would be the one with the system that can recognize losses and stop the losses and at the same time be able to recognize the good profitable trades and get the maximum from them that the system will allow.

System is an easy word to say. But every system has a human behind it who must make the decision to follow a system or to overrule the system. So the antifragile trader is the one who can take a loss without becoming psychologically damaged, who is robust, and yet has the psychologic steadiness to let a profitable trade run it's course and avoids and resists the urge to take a quick, small profit because it relieves the pressure of the trade and comforts the mind and the ego. If a trader can do these things consistently he/she will be antifragile. The trader will be able to profit from randomness, particularly those events that have large repercusions, those "fat tails" that cause so much misery for those of less mental flexibility.

This is the optionality. The ability to keep the trade that has the potential for a large outsize gain even when the outsize gain is in no way predictable. And to keep the losses small. In this way a trader can try on lots of trades and have many small losses while still maintaining the mental attitude to keep the good trades. And the few large wins will dwarf the small losses. Not only due to the time that the winners are allowed to develop, but by the size of the bet when they are winners. This is why it makes sense to buy higher. To add to a winner as it proves itself a winner. In that way the big winning trades are much larger by many factors.

To put it simply trading is a mind game. And the opponent is oneself. You must overcome your own doubts and fears to profit from those same emotions in the other traders.

Richard Russell put it this way: "He who loses least......Wins."

Here is the latest test of trading psychology:




See the Dec. 5th post,  "TC".
Keep your losses small.....
gh

Friday, December 14, 2012

ALON

A picture is worth a thousand words. (I wrote on the picture!)

Timing is important. Always control risk. If something is costing you, get rid of it.
gh

Thursday, December 13, 2012

Money velocity

Here are a couple of interesting charts of the decline in interest rates over the last 30years and the decline in the velocity of money over the same time frame. I was under the impression that the lack of velocity of money was a recent problem. I guess not.

I suppose that it makes sense that as inflation declines the velocity of money declines due to the lack of urgency to buy things. If you can wait there is a chance they will be cheaper.  Not that things have gotten cheaper over 30 years. In dollar terms the prices are up bigtime, we have created a lot of  money but in inflation adjusted terms things are cheap..... Hmmmm.

So would raising interest rates stimulate the velocity of money. Or does it take actual inflation to speed up the turnover? I thought that inflation was always and everywhere a monetary phenomenon? Isn't that what the free market, laisse faire guys from Chicago university say all the time?

So if we have a problem of not enough inflation at the present time what will get it going? I think one of the common trends over this timeframe has been the rise of Asia, and China in particular. And having their currencies pegged to the U.S. dollar/world reserve currency has artificially kept the US dollar elevated.

The latest and persistent US Fed effort to debase the US$ will have the continued effect of pushing inflation in the Asian and Emerging market economies. They will HAVE to eventually abandon the peg to the dollar and let it sink to it's natural level. And when that happens the velocity of money will rise.... And China will go from an exporter of deflation to an exporter of inflation.


 Look at these charts. Money velocity follows interest rates down. You would think that low interest rates would stimulate turnover.... We have been fighting a losing battle!


gh

Pass the buck

The U.S. dollar must get weak as a result of the latest stance by the US Fed.

A look at the charts of two of the other major currencys shows what looks like bullish chart patterns forming. Bullish for those currencies.  If they go up we go down.... Another currency that makes up a significant part of the basket of currencies against which the US$ is weighted is the Japanese Yen. It has been getting weaker and weaker. But the Japanese have been trying to weaken their Yen for many years with mixed results.

A look at the British Pound and the Euro shows strength for those currencies. Today the Standard and Poors rating service downgraded the Pound. Can you see that massive move?!  Look closely, it is up in the right corner.... Yes! That's it!  Not so huge, huh?

Both of these currencies are poised to go much higher at the expense of the US Dollar. Timing matters, of course, and as always. A weak dollar is usually associated with an appreciation of asset prices. Perhaps not the bonds if a weak dollar contributes to inflation. Remember, inflation is a monetary phenomenon. To quote a famous economist.  Econo Mist....  sounds kind of opaque doesn't it.



gh

Wednesday, December 12, 2012

Dollar devaluation

The chairman of the U.S. Federal Reserve bank is intent on devaluing the U.S. dollar. By tieing the interest rates to the unemployment rate he is committing to long term low rates and a lower currency value. That is how we will become an exporter again. He is playing China's game.....

From Bloomberg

gh

And now for the end of the day pictures.

Bonds reacted badly. Interest rates rose in expectation of inflation. Stocks and materials stocks in particular rose sharply and then sold off at the end of the day. Pay attention to the knee jerk reaction of the traders. The traders unwind their day trades and muddy the picture but usually the initial reaction is the correct one. We still have the "fiscal cliff" thing going on, so stocks may tread water till next year or at least till a decision on the federal budget.

But as I have said before, I watch the bond market for clues to where the money is going. If the bonds start losing value it could cause a change of trend of historic proportions. I hesitate to put it that way because it may take some time to get going but the 30 year bond market rally WILL end sometime. A bond is only good if the bond issuer stays solvent. But if you want to sell a bond before it matures, like you have in a bond fund for retirement, you have to hope there is a buyer for your bonds. As interest rates rise, your low interest bond will not hold it's value. Beware of bond funds. Bonds can be like housing. The don't go up forever. We learned that lesson the hard way. This could be the next repercussion of the housing and financial market debacle. The backlash of the remedy! As the government bonds lose their safety!  Just sayin'.

Charts of the long bond:


Trendlines in different timeframes again. Why am I seeing more of those lately?
Hmmmm.

Watch your risk.
gh

Tuesday, December 11, 2012

mcp: now the test

Molycorp announced after the close of trading today that they had let the CEO Mark Smith go. The reasons were not clear. Read some of the reporting here.

Whenever a stock makes a sharp move I assume there is some inside information causing the move. A couple weeks ago the news was that insiders were buying. There is most likely lots of short covering in this latest rally. Whatever the cause of the rise it may not become public for some time, assuming there IS another reason. I think there is. It is hard to believe that the insiders bought the stock without knowing the impending demise of the CEO.

Trading is almost harder when one listens to the news. The imagination takes hold and the decision process becomes much more complicated. But the test of a move is in the reaction that takes place after the move up. Will buying come in or not. And when.... What will the quality of that buying be? The recent consolidation around $9 was tight, like all buyers were content to sit....

This stock will open down tomorrow. Then it may take a couple days for the results.


Control your risk.
gh

Correction to previous post

I have kept thinking about the cost of Medicare. In an earlier post on Dec. 12, 2012 entitled "The cost of Healthcare in the U.S." I made a serious error. The median income figure I used is incorrect. I used the number for median household income when I should have used the number for median income. Median income in the U.S. in 2000 was $22346.
A huge difference.
I blush at my foolishness.
I know not many people read this but I fool myself with mistakes like that.

My apologies to any who read it.

gh

Hi O Silver! Away?

The debate is always about inflation versus deflation is the asset markets.

Silver and gold are proxies for these macro-economic sentiments.

To me the Silver prices look to be expecting inflation. I would suspect that the outcome of the so-called fiscal cliff negotiations in Congress will be inflationary. In other words I do not have confidence that our politicians will come to a major decision that actually raises taxes by much nor cuts government by much. Somehow they will paper over the problem. Kick the can, to use the prevalent metaphor.

As a trader I am looking for clues in the markets. Silver offers what I think are clues. I may be wrong of course. The outcome may be different. The silver market participants may be surprised. At least in the short term. Or even for the long term. Though I doubt that Congress will do anything of a long term solution.

Or maybe something else will move the market in a meaningful way. But IF the silver market starts going up and makes some new highs I would expect another meaningful and possibly explosive rally. Silver traders can get really crazy......

The charts.

And as I post this the headline is that the Democrats are saying that they will not present entitlement cuts to the Republicans. The Republicans must present the cuts.
It only sounds fair to me! If they want to cut entitlements they should specify how.
The Dems want to raise taxes and they have stated how much.

Round and round she goes......

gh

Monday, December 10, 2012

Emerging markets

Good news out on the China economy here.

A look at the charts of emerging markets show an interesting situation.

EEM looks to be breaking out of a consolidation on the daily as well as the weekly long term charts. It is a good sign when there are breakouts in multiple timeframes.

And markets are fractals. Meaning that often the same patterns are noticed in charts of different timeframes. Much as a tree is seen in a branch and a branch in a twig....

Notice the cup and handle formation in the weekly and daily charts and the breakout.

EEM:


This may be the start of another long term move in the emerging markets. And may be a harbinger of things to come worldwide.  Take another look at the small cap chart IWM....

and while we are here, an instance of support/resistance in MCP:


control risk!

gh

Saturday, December 8, 2012

Euro-crisis for dummies

So politics and economics bores you. But you always liked "Full Metal Jacket". If that is your kind of movie, and you don't mind subtitles, perhaps you can learn about the Euro-crisis1

 thanks jesse

The cost of healthcare in U.S.

I apparently have too much time on my hands. I don't know how this got started but I spent most of the day trying to figure out how much the cost was for my health insurance plan. And this was the result.

Health care costs over a lifetime

According to a study by Health Services Research (HSR) here:
http://www.ncbi.nlm.nih.gov/pmc/articles/PMC1361028/
The average cost over a lifetime for an American using year 2000 US dollars was $316,579. This includes medical, dental, and vision, as well as nursing home and hospice type care. (All health care costs)

According to the US Census bureau the median wage in year 2000 was $41994 ($42000)


I calculate a working lifetime as those years from age 18 to age 65. Total 47 years.

Dividing the total lifetime healthcare cost by the number of working years.

$316579/47years = $6735/yr.

$6735 represents 16% of the year 2000 median wage.

If individual health care costs increase at the rate of inflation and if median income increases at the rate of inflation then a person would be able to "save" enough for a lifetime of health costs by contributing 16% of his wages to a health cost pool. (insurance plan)

Some would contribute more actual dollars and some would contribute less. Just as some will use more health dollars and some will use less.

I researched what my employer and myself contribute to my present health insurance. If I add my employers contribution for health insurance to my gross wages then the cost of health insurance is 12% of total compensation. Plus the 3% we presently pay for Medicare tax equals 15%.

However, my insurance is only available up to age 65 if I continue to work. Then I go on the government plan. Medicare Part A is free at this time, Part B and C at present will have a premium of approx. $130.

The average Social Security payment is now $1230/ mo. So the above Medicare premium represents 10.5% of SS income. Almost the 11% I am paying now. (Iwillhave more than SS:)

According to the HSR study, the cost of healthcare by age per year:
The cost for a 40 y/o is $2601/yr.
The cost for a 65 y/o is $10,245.
The cost for a 85 y/o is $17,071.

As you can see and as we would expect the cost rises dramatically in our later years. Yet I am paying 12% of my potential income for private insurance now that will dump me when I get to age 65.(And this is a subsidised cost, it is paid in pretax dollars by myself and my employer) And I am paying 3% now for Medicare, the insurance that will be expected to cover the bulk of my lifetime health care cost when I am old. So the bulk of the money that I am contributing to my healthcare costs is going to private insurance that will not be around for me when I incur the vast majority of the costs of healthcare.
Currently Medicare enrollees pay about $130 a month for Parts B & D.

Medicare currently pays only about 75% of medical costs for enrollees. The HRS study is talking about all costs for everybody. The AVERAGE COST for a lifetime.

These are averages. This means that if health care costs were covered by WORKING PEOPLE ONLY it would require 16% of income going to health coverage during working years to pay for healthcare costs. No deductibles. No age limits. As it is the money paid into the private healthcare insurance scheme is paying for coverage that is, for the most part not used by the generally healthier workers. But a significant cost of health insurance is due to cost of providing care to the uninsured. And frankly I'm in favor of sin taxes going toward heath care expenses. Alcohol, tobacco and even firearms could be taxed toward the cost of healthcare. As could sugar.

The bottom line is that the cost of healthcare for a lifetime could be paid for by the equivalent of 16% of income during the working years. During that time and after in retirement there would be no additional cost. I can hear the rich complaining now about the dollar cost of the 16%. But imagine the flexibility provided to the workforce by being able to change jobs without worrying about health insurance. Or going to school and retraining. I imagine there would be upward pressure on wages due to that flexibility as people exercise their right to change jobs...

I suspect that the cost of healthcare would come down with a single payer due to billing simplification and limits to compensation. And how much of present day insurance premiums are the result of just the fear of going broke without insurance. Prices go up and people still demand the coverage. And as prices go up insurance becomes even more of a necessity. What is the price of lifesaving medicine? Isn't that duress? This is part of the self-reinforcing mechanism of increased medical costs.
I notice that on my latest pay statement that my total payroll tax comes to 18.2% of gross: Medicare is a miniscule 1.38%. Social Security is 4%. Federal tax is 7.8%. State tax 5%. Workers comp is 0.06%. (2 deductions, and as a percent of GROSS income. And I should be in the 25% bracket) Think Bush tax cuts. And then there is the 12 % for medical insurance.

I think that my place of employment is on the generous side. I suspect that they pay a larger portion of the total cost than most. They are part of the problem, after all....

Can you see the political problems with asking a minimum wage worker to pay 16%?
Or asking a multi-millionaire to pay a straight 16%?


Is it any wonder that the Federal government is going broke? Would I pay another 4% for peace of mind? And no deductibles. And vision and dental after retirement. YOU BET I WOULD!
I can't believe it actually works out this way. But I've been at this all day and that is what I keep coming up with.

And then there is this from "The Big Picture",

http://baselinescenario.com/2012/12/03/entitlements-scare-tactics/

Just thinkin',
Again...
gh
 
 
 
 

Wednesday, December 5, 2012

TC

Many of the metals stocks under pressure lately. GG, IAM, FCX, SLW, etc...

This one showing some life for some reason that I am unaware of. (and don't want to know!)

Possible trade here. If Thompson Creek Metals can get above todays high price I see it going to $4. It would stop there for an undetermined time, or decline. If it got above $4 it would be an easy leap to $6.
A lot depends on what the general market sentiment is, as always. But the idea above could be the basis for a trade. Keeping in mind that it may not do as expected and with the resolve to not hold it and hope if it strays too far from the basic expectation.
I guess that is what trading is!!
Based on technical analysis and general market sentiment right NOW.

TC:

And BAC went as expected today. Look at the intraday for what a strong breakout looks like!

gh

Tuesday, December 4, 2012

BAC

The markets still have a good tone.

Bank of America is the latest good looking chart. Feels good on an intraday basis too.
This stock trades at only a fraction of it's historic highs. Not that that is a good reason to buy. There is probably a trillion reasons for a low price on this bank. But for the time being it looks set to make another leg up.
I have not bought this one. I'm working on a couple other things.    (FSLR is one....)

Here's the chart: BAC

Control risk!
gh

Something coming?

short note. The markets starting to pick up. Good news coming?? Time 1054 PST....
gh

Countries aren't companies

As I watch the markets during the day I have CNBC on the television in my office. Not to listen for trade ideas, but to listen to the ideas traders have. CNBC is on the "solve the fiscal cliff" trade now. They continue to have business leaders on for their advice. Almost without exception these leaders of corporate business have the same advice for the U.S. govt. and the fiscal problem. That advice can be summed up as " raise revenues and control costs". This is how a company survives and it is not surprising that they believe it is the prescription this country needs to regain economic leadership in the world. However I will point out that there is a difference between a corporation or private business interest and a country of multiple and varied interests.

It is not difficult to see the neccessity of raising taxes/revenue to balance the budget, particularly after 30 years of declining tax rates and increased loopholes. But the advice on controlling costs is different for a country than for a corporation. When a corporation controls spending, they are attempting to control the flow of money OUT of the corporation. They attempt to control the costs of materials or services that they use to produce the product or services they sell. A governments expenses are different in the sense that the taxes raised are spent inside the country. The analogy would be internal spending in a corporation or company between divisions or departments in the company. There is no net loss to the company as a whole. And spending between departments is probably neccessary to the functioning of the company. Tax money is mostly spent INSIDE the country so is more analogous to internal private spending. The loss to the U.S. economy is from the money that flows out of the country balanced against the inflow of money from items sold. In other words the balance of trade/current account is the most important indicator of economic strength or weakness in the longer term.

If we want to control costs we should focus on those things that we do that send our money abroad. Military spending to protect the world comes immediately to mind. The so-called "defense" spending. We spend more than the rest of the modern world combined on our military and we spend it around the world, freeing up those countries that we "protect" to pursue more productive endeavors.

Another cause of trade deficit is the offshoring of our production and import of consumer goods, which is exacerbated by our consumer debt. We buy stuff we don't need and borrow the money to do it!

I think that if we want to get our economy strong again and gain advantage in the world economy we need to stop listening to business leaders who advocate what is good for multi-national corporations. They will find their profits where they find them around the world. And their paradigm is one of the U.S. as a continuing "piggy bank" to be raided to support corporate profits. This is not what is good for THIS country. We need to think of the total United States as a company. Internal spending may be neccessary to change our "business model" to one of increased production of goods and services for ourselves and to export to the world. And while the argument of taxes as a drag on economic activity may have some validity in the short run, in the longer term it is only good for the multinationals. Tax cuts are only another form of artificial stimulus to the consumer and they are temporary. We need to raise money to invest internally and change the rules to encourage/promote exports.

Thinking again
gh

Saturday, December 1, 2012

Social Security under attack

A group of CEO's of major corporations are trying to influence the debate over Social Security in a way that reduces benefits for retiree's. Social Security and safety nets in general are a form of national saving. Money put into these programs is used later for support of the participants. Like savings.
Corporate influence wants to put that money back in the pockets of the taxpayers today, so they can spend it on something that the corporate overlords are selling and thus keep corporate profits up. The same argument and the same motive in all of the tax cut debates. This has been the case for 30 years with the low tax argument. Put more money in the hands of the consumers so they spend it!

Yes, it is "freedom". But it is not in the interest of the nation. Some have no way to save for retirement or illness. Their wages have been reduced through inflation and the assault on labor, as well as the technologic effects of increased production, not to mention oursourcing to other countries.

We should pay for Social Security and Medicare.

From the Institute for Policy Studies.

gh

Friday, November 30, 2012

Herding cats

All of the "experts" on the financial channels insist that lowering corporate profits is the way to stimulate job growth. As if just due to the fact that someone has a few extra bucks in their pocket they will be incentivized to start a new business or hire more workers into their existing business. I don't buy it. No business hires more workers unless they have a demand for the products or services they are in business to sell.

However, business owners are keen on not paying taxes. From a personal wealth standpoint as well as just from a philisophical perspective. So it seems to me that the way to incentivize business to invest in production would be to have high taxes on corporate profits. Eliminate the safe-haven loopholes as best as possible so money can't be hidden. And of course the business deductions for capital investment/improvement and labor/pension cost stay in place. This incentivizes a business owner to put the profits back into the business instead of putting them in a US Treasury bond or in a Bahamian offshore tax shelter.

And raise the depreciation rates on capital equipment purchases that are manufactured in the U.S.
Give a little extra deduction for labor expenses. This puts more money in the hands of Mr. Ford's factory workers who can then purchase a new Model T.

And as an added incentive, and I know this is patently unfair, put in place a tax on wealth. Maybe 2% on wealth over 5 million or so. Assessed yearly. With a deduction for business expenses for investment in this country of course. Get these super rich cats to stop sitting on a pile of money and put it to good use. That is what money is for! We printed all this money over the last 30 years, we need it put to some good use now!

And finally, raise the Medicare payroll tax as well as the Social Security tax and make those programs solvent. Put some safety in the future of workers and they will go about spending the money they make instead of saving it for the calamity that they know is coming because that is all the talking financial heads are talking about! Talk about the future of all the citizens of this country. Young as well as old. If you want to rant about "uncertainty" as a reason that business is not investing, keep in mind that that same uncertainty is a sure killer of consumer demand.

Getting the most out of capitalism and capitalists is a lot like herding cats. They all have an independant streak and like to go on their own. If there is a mouse to catch they will only rarely co-operate, and the one who catches the mouse will not share willingly. This is the role of government of the people. Herding the capitalists, keeping them in mice, and making them share in the catch.

Get going. Don't just sit there!

Thursday, November 29, 2012

Livin' the dream!







I just cooked some Vietnames fish patties (Panglossia Hypothalumus) or something like that. Sounds delicious doesn't it! (they weren't) I fried them up on my Chinese-made gas range in my chinese-made frying pan and ate them in front of my Toshiba computer!
Living the American dream baby! Living the dream.

Speaking of the dream....

gh

Wednesday, November 28, 2012

The market is dead!





Stocks are dead !      (hint: follow the link)


Where have I heard that before? Seems like that was a classic headline back in the 1970's. (Right before that historic 80's and 90's rise)



And now I keep hearing that the bond market is a bubble.

These aren't the only places these sentiments have been popping up. It seems everywhere I turn the "clearminded" commentators are declaring that the stock market is going nowhere. And others of equal sincerity are declaring that the bond markets are in a bubble, in part due to their historic low yields and 30 year ascent.

If the bond market is a bubble and starts to deflate the money will flee that market. Where will it go??

And when people in the know. Especially those in mass media start declaring that the stock market is "dead", as a contrarian thinker I can't help but start looking for the long term opportunity in the same stock market.

Timing, as they say, is everything.....

gh

Friday, November 23, 2012

This is why Walmart workers are unhappy








The infatuation with Big Business must end. As voters and workers we must see that what is good for business is not necessarily good for US. Business will do what they do. They were born to do it! In the same way that an employer will get all of the work out of an employee for the least they can pay, we the voters and the citizens of the world must use the ballot box to tilt the playing field back in favor of wages and benefits. And tilt the tax situation in our favor as well. We must "use" the business owners the way they use us.


Let me be clear: Capitalism is the greatest system mankind has yet devised for the creation of wealth! It is just not a very good system for DISTRIBUTING wealth!

Read this:

http://www.project-syndicate.org/commentary/the-need-for-redistribution-of-wealth-and-income-in-order-to-save-capitalism-from-its-current-crisis-by-robert-skidelsky



My radical rant of the week.
gh

Black Friday?

Well, for a Black Friday things are looking pretty good.

Since my last post the leader of the Muslim brotherhood in Egypt brokered a cease-fire with Israel here.

His success in the international arena gives Mr. Mursi some much needed credibility abroad, although some discord remains at home. So as far as the stock markets go some of that middle east worry has been at least temporarily removed.

In this country we last saw Congress and the President making cooing noises and promising to co-operate to find a solution to the so called "fiscal cliff" that is approaching in January. The tone of the markets seem to be indicating that there is genuine optimism for some sort of solution that probably involves an inflationary solution.... Like a small tax increase and a small reduction of debt spending, or perhaps a longer term plan that phases in over years.(the best)

And finally, the Euro showed strength today. Greek yields on govt. debt continue to ease. (16%!!)

Volume was higher than I would have expected today. It being a holiday shortened day.
Some recent charts: RIMM from some time ago in a previous post

And lately:
And First Solar:
 And lately:
And maybe this is really a bottom in MolyCorp this time.... I know, it's a favorite. Bought around $6 this time. Somebody else is buying also......

They haven't all been winners. Chesapeake broke down.... And I had a pretty big position in IamGold (IAG) that hurt!
I have bought back into GASL again.....a small bottom picking postion to add to if it looks strong... Watching Anadarko Pete (APC) for clues....

Control risk.
gh

Wednesday, November 14, 2012

The election is past....

Oh, there was that Israel/Iran/Hamas thing that we presumed would happen after the election whatever the outcome.

Has it begun?

Video of the latest:

Another wildcard....

Monday, November 12, 2012

What would energy independence mean?

The news on the financial channels was this report from the Energy Information Agency that forecast the U.S. becoming energy independent within 20 years.

Here is the Bloomberg article:
http://www.bloomberg.com/news/2012-11-12/u-s-to-overtake-saudi-arabia-s-oil-production-by-2020-iea-says.html
and some excerpts:
U.S. oil output is poised to surpass Saudi Arabia’s in the next decade, making the world’s biggest fuel consumer almost self-reliant and putting it on track to become a net exporter, the International Energy Agency said.

Global demand for oil is projected to rise to 99.7 million barrels a day in 2035, up from 87.4 million last year, according to the IEA, which advises industrialized nations including the U.S.,
Germany and Japan. Today’s report projects trends to 2035.  
If such a thing came to pass, what might it mean?
Well, presumably it would be good for the trade deficit. Oil making up one of the major areas of balance of trade deficit.

Energy independence would give the U.S. a comparative advantage in the energy intensive manufacturing industry. Steel and aluminum come to mind.

Oil and Nat gas could be exported according to the report. However I don't consider it a wise move to export ones natural resources. You are selling your advantage for a small profit. Value added industries usually add more employment.

But what really is on my mind is the question of what energy independence would mean for the U.S. dollar.

When the U.S. started importing oil in earnest back in the 1960's and 1970's we made deals with Saudi Arabia in particular that they would only accept payment in U.S. dollars for their oil. From that time on the world oil price is in dollars and most oil transactions are in U.S. dollars. If we are not buying oil from them anymore what incentive will they have to sell in our dollars? And if they begin accepting other currencies, that will make the USD less in demand around the world.

In addition, as we buy middle east oil they place the excess reserves in our US Treasurys. Keeping interest rates low. China does the same with their USD reserves, as Japan. As the USD loses relative value our imports become increasingly expensive, reducing the flow of USD to China and this reduces the excess reserves that they place in US Treasurys. At present interest rates have been kept artificially low by China, Japan and the oil exporters, while the USD has been kept artificially high.

As those world dollars are freed up those dollars will make their way back to this country. We will sell more to the world, imports will be more expensive, interest rates will tend to rise as the economy picks up. But we may lose the crutch of having the worlds reserve currency! In other words I would expect US Dollar weakness.


Long term stuff.gh

Wednesday, November 7, 2012

The day after....

Don't you hate hangovers?  Yesterday we were all guessing reasons why the stock markets were up. I think it had a lot to do with the election pending. In retrospect I suspect that everyone thought their man was going to win, and as a result were optimistic. So it is possible that both sides were buying in anticipation.... Today may be a "sell the fact" situation. Yesterday was "buy the rumor"....

There is renewed talk of the European situation this morning. Something about the greeks voting on the austerity issue.... And comments by Mario Draghi about a German slowdown.

Looking at the intraday trading I see lower volume on some of the individual new low.... Not a sign of panic. This may be just the traders on the losing side of the election causing concern among all traders.
I can't imagine the really big players gambling on the outcome of a 50/50 election...

Sitting tight. For now...
gh

Tuesday, November 6, 2012

ELECTION DAY

Markets up strongly today. Everyone has their opinion of why. Most have some opinion to the effect that the markets are anticipating the candidate of their choice winning and thus the markets are forward looking.

Well First Solar is up strongly today... I would find it difficult to believe that Romney would be a solar power president......

Gold and silver also up strongly. Is the gut check in silver over. Time will tell.

control risk
gh

Friday, November 2, 2012

The Present Guilded Age

The author of "Plutocrats", Chrystia Freeland, was on CNBC today. I am always surprised when they have anyone on who talks of the "class war" thing. And Michelle didn't even shout her down! The producer may have told her to behave...

The gist of Ms. Freelands comments was similar to the points I amateurishly made in a recent op-ed piece. (See 10/17, "What this election is about".)

It is gratifying to see others coming to the same conclusion I have.

I bought her book on my Kindle after seeing this:

http://www.cnbc.com/id/15840232?video=3000125521&play=1



Enjoy
gh

The King speaks

It is wise in my experience to pay attention to what the bond markets are doing when trying to divine the future of equities and other assets. And when the king of the bond market speaks it pays to listen and try to understand.

As long as the political process is a popularity contest we can continue to get what we ask for in politics and the economy. The new normal is here, but the American people want that old normal. You know, the one where the economy grows 5% to 7% each year. The one where property values go up and prices at Walmart go down. That old normal where the stock market consistently makes 8% to 15% a year, more in the good years. That old normal where we were all young and strong and healthy and had a boundless optimism that helped that bubble to grow. DOH!

The old normal was not normal. The old normal that we wistfully long for was the result of years of declining interest rates and increased consumer consumption based on consumer debt. The stock market gains were the result of increased consumer debt combined with declining real wages for the workers and increased profit margins for corporations. The low inflation was due to the increased import of goods from the low wage parts of the world, combined with those countries loaning our money back to us and influencing currency values.

In other words, we borrowed to continue our lifestyle. And now we need to pay the money back. But so far the only debate we are having is over who is responsible for the debt and who has to pay it back. Those that advocated for low interest rates over the years are often those who have profited from the increased debt that resulted. But they say they were just good businessmen. They were smarter. Those who are left holding the bag should have known better. But the rich are few and the bagholders are many. And historically that is a situation that is ripe for tragedy.

That is why I advocate for higher taxes, balanced budgets, national health care and social security that everyone pays for. This leads to a net national savings that can be used in time of emergency. Kind of like funding FEMA.

Here is Bill Gross:



http://www.pimco.com/EN/Insights/Pages/Time-To-Vote.aspx

Thursday, November 1, 2012

RiMM update

A few days back the volume in RIMM caught my attention. Today the price broke to a new recent high. Something seems to be going on. Maybe just short covering. Maybe something else. I don't know. But the price looks set to go up from here.

Added to a position today.

RIMM

And how it looked before

The point of this is that the price has been going sideways for some time. The increases in volume on the upswings points to accumulation or short covering. If it is the shorts covering we may see an impressive rally. Or not.... control risk. Don't fall in love with any trade!
gh

IWM again

I've been noticing the good look of the small cap charts for some time. See past posts....


I happened to be looking at the "Mad Hedgefund Trader"s blog. He has a trade alert coming up for IWM.... I don't subscribe to his alerts, but I noticed before he started charging for them that my trades were a lot like his...

Here is the latest chart of the Russell smallcap stocks as represented by the ETF.
To recap, a new all time high would be a powerful buy signal...

IWM:


Control risk,
gh

Wednesday, October 31, 2012

Undecided?

Are you one of those undecided voters that I've heard about? Well if you are maybe you should watch this.

https://www.youtube.com/watch?v=6TiXUF9xbTo&feature=player_embedded

I hope this can help you decide. The future of our great country is depending on you!

GASL update

I use quite a few posts to point out what I think may be good trades or even good investments but at heart I am a trader. So I only want to be around for the profits, not the losses.

I don't talk much about when to exit a trade. This may be because it is the hardest part of trading. The entries are relatively easy to spot. The exits not so much. The main thing about exiting is to remember why the trade was put on in the first place. When those conditions change the trade is no longer valid as a trade. This rule applies to "investing" as well, defined in my mind as a longer time frame trade usually based more on fundamentals as opposed to technical indicators. Keep in mind what your "edge" is. The traders edge is the basis of his advantage in the market. My edge is an ability to see momentum in the price and volume and to curb my emotions and remember my "edge". (the second part is the hardest)

A while ago I pointed out the volume bulge in GASL and used it as an indicator of a bottom forming in this security. GASL corresponds to the gas producers Anadarko Pete (ANP) and Apache(APA).

There probably is a bottom forming in these stocks. But the move up is some time away. I had established a position in GASL and was waiting for an anticipated strong move up. There was a break to the upside and the expected pullback to a range. Then the price broke up out of the range but the volume was pathetic. This indicated to me that the enthusiasm for this security was not there. And that meant that all the "me's" out there were probably going to throw in the towel. I wanted to be the first if that started to happen. It is important to recognize when the "big money" is buying, but it is also important to recognize that there is a lot of "little" money that can stampede without continued support of the big players, whose timeframe is longer.
So I have exited this trade with a decent profit, but not the size I had expected.  Now I must look for signs of renewed momentum if I want to put on another position in this security. I don't know when that may be. The danger is that this security becomes a favorite and I let my judgement get clouded by my past hopes!
I hope the chart makes sense:

gh

Tuesday, October 30, 2012

FEMA is insurance.

A good editorial in the New York Times.

Using national resources to rescue states has always made sense. It is about spreading the risk. That is what the concept of insurance is all about. Spreading the risk over the largest population to support local populations or individuals in time of defined need.

Where is our national health care plan?

http://www.nytimes.com/2012/10/30/opinion/a-big-storm-requires-big-government.html?_r=0

See you tomorrow.
gh

Wednesday, October 24, 2012

What happens in 'Vegas?

Home sales up. Oil down. Gasoline under pressure.

DATA SNAP: U.S. New Home Sales Jump 5.7% in Sept


==========================================================
New Home Sales Sep Aug ! Consensus: !
Overall Sales: 389K 368Kr ! 386K !
Percentage Change: +5.7% -1.3%r ! Actual: !
Months' Supply: 4.5 4.7r ! 389K !
==========================================================

By Sarah Portlock and Eric Morath

WASHINGTON--Sales of newly built homes in the U.S. rose to its highest level in more than two years, continuing evidence that the housing market is picking up steam amid an otherwise slow recovery.
New single-family home sales increased by 5.7% last month from August to a seasonally adjusted annual rate of 389,000, the Commerce Department said Wednesday. It is the highest level since April 2010, when first-time home buyers were rushing to qualify for a tax credit.
New home sales were up 27.1% compared to the same month a year ago.
The September results were above expectations. Economists surveyed by Dow Jones Newswires had forecast an annual sales rate of 386,000.
The number of new homes listed for sale, seasonally adjusted, at the end of September was 145,000, a supply that would take 4.5 months to deplete at the current sales pace. That is the lowest rate since October 2005.
Low inventory and solid sales could encourage home builders to increase construction, which would be a boon to the overall economy.
The median price for a new home in September was $242,400, down from $250,400 the previous month, the Commerce Department said.
However, in a separate measure Tuesday, U.S. home prices rose for the seventh straight month in August, up 0.7% on a seasonally adjusted basis from a month earlier, according to the Federal Housing Finance Agency's monthly home-price index. That is calculated by using the prices of houses purchased with mortgages backed by government-controlled mortgage companies Fannie Mae (FNMA) and Freddie Mac (FMCC).
In another positive sign, construction of new homes jumped 15% last month to the highest level since July 2008, the Commerce Department said last week. Compared with a year earlier, new construction was up by nearly 35%.
But the housing market still has a long way to go before it fully recovers. Sales and construction levels are well below pre-bubble levels and tightened credit restrictions make it difficult to secure a mortgage. Many prospective homeowners have too little home-equity to sell their current residence and buy another home.
New-home sales peaked in July 2005, when they hit an annual pace of nearly 1.4 million, and declined sharply in the run up to the financial crisis. Last year's level of 306,000 sales was the lowest on record.
September's new-home sales rose in three out of the four U.S. regions. Sales grew 16.7% in the Northeast, 16.8% in the South and 3.9% in the West, but dropped 37.3% in the Midwest.
A copy of the full report is available at: http://www.census.gov/construction/nrs.

Write to Sarah Portlock at sarah.portlock@dowjones.com and Eric Morath at eric.morath@dowjones.com.
-
(END) Dow Jones Newswires
October 24, 2012 10:00 ET (14:00 GMT)
Copyright (c) 2012 Dow Jones & Company, Inc.- - 10 00 AM EDT 10-24-12


Let's go to Las Vegas..... Or Macau!
Watch this one:
gh

Friday, October 19, 2012

Happy Anniversary!

The talking heads are reminding the traders that today is the 25th anniversary of "Black Monday". That was the day in 1987 that the Dow sold off 20% in one day. 

There were some poor earnings out. Google's little mishap caused a large part of yesterdays weakness and it carried over to today. CMG was weak on poor earning also, I think I heard them say. I haven't followed the Chipotle story. I have never seen a Chipotle where I live. When they said today that they were a competitor of Taco Bell it made me wonder why a fast food taco joint could be held to such high value... Looking at the chart now it looks like it had quadrupled over the last couple years.. DOH!

Todays selloff is the biggest in a few weeks. Unless we get a late day rally. I am always suspect of any move that happens on an anniversary that is widely publicized. I think it will be more of the rotation out of tech and retail and into gas, metals, and real estate. Real stuff. But time will tell, of course.

A couple things have caught my eye.

One is the difference between Silver Wheaton and SLV the silver ETF... I have for quite some time considered SLW to be the "adult" in the room where silver speculation was considered.

Another thing: TBT, the short bond fund was revalued on Oct. 5. They did a reverse stock split. 4/1. The price went from $15 to $60... The volume went up however. At least looking at the chart it shows that there are more shares trading than before. To take that at face value I would consider that there is a lot more big money interested in shorting long bonds than in buying them. When comparing TLT to TBT..  And TLT looks like it is finding support on the old ceiling. It may turn up, but it looks weak to me so far. Look out if it falls through the ceiling!  We'll see.

The charts:




If anyone has info on the TBT volume thing let me know..

gh