its pretty simple folks....nobody including myself wants to hear negative news.....however if we close our eyes to what we dont want to face....when finially we must...there is nothing that can be done....preparations here began in earnest late last year into early this year.....we have a great portfolio for defensive posture....and have offsetts to most outcomes....and so....have a neutral bias now.....high cash held in foreign currencies....boxed long and shorts(commoditys/banks-housing)....gold hedging dollars..etc.....Sinclair is someone whom understands the derivative mess.....it would be wise to read this from him..Jim Sinclair(incidentally....the FED reads sinclair !!!!)...is no newbie......nor are we...soon the power of the hedged moves will show....till then....the detractors continue to have their fun........lol....notice this is not how infamous Scottlows posts !!!!we take no glee in this mess.....in fact we'd rather it didnt exist
People do not have a clue what is really happening. All the talk everywhere, even by well placed people without a bone to grind politically and economically, keep calling this a failure in sub prime loans. This is presented as if securitized bonds (with the assumption that the collateral for the bonds were mortgages themselves) has lost all its value. This is not the case. What is worthless is a the mix of credit and default derivatives that make up the vast majority of many instruments held by financial and commercial paper dealing entities, both private and public.
Even if you forget that the economic figures recently released are whoppers and take them at face value as commentators are, you still have to ask why the equities market fails to do better. The answer is simple. Rallies in the equities are presently being supplied by those that understand the grave nature of the present problem.
This is why the attitude of the Fed is not commensurate with the gravity of the global problem being caused by the meltdown in credit and default derivatives.
If it was simple mortgages it isn�t apparent because as bad as the mortgage market is they have not all failed simultaneously as if all sub prime mortgage holders have been foreclosed on at once. That alone should give you a hint that the problem is not the advertised, but much larger.
The Fed altering their banking regulations has to give you a hint that the problem is not the advertised problem, but much larger.
The financial difficulty going global has to give you a hint that the problem is not the advertised problem, but much larger.
When you see bank after bank needing liquidity in substantial amounts, this has to give you a hint that the problem is not the advertised problem, but much larger
The hope for every central bank is that the real problem can be kept from public view. The truth is the public, even professionals in Wall Street, have no clue what the problem is. They know it has something to do with derivatives, but none realize it is a more than $20 trillion dollar mountain of unfunded, unregulated paper that has just been discovered to not have a market and therefore any real value.
This is why I have suggested you plan for the worst and hope for the best. Taking cautionary action before a problem occurs only requires some of your time. If you wait and try to clean up the mess after a problem happens usually there is no action that can be taken.
When the US dollar realizes the seriousness of this situation, be that now or sometime soon, the bottom will drop out.
The dominos are falling and only a few really know why. Sometimes I wish I did not understand derivatives. I would certainly be held in better light.
<but on 4, if the dollar goes as south as the gold bugs predict, who knows how much cash you'll really need? Dollars will be worthless for those who hold them.>
Figure what it costs you per month to live (ie electricity, water, phones, payments for cars and mortage,food,internet etc) and try to keep twice that amount times 6 hidden away. It's what I do anyhow.Don't forget property taxes and vehicle registrations etc.
And dollars will never be worthless, they will be worth less.
If dollars ever become worthless, the very corporations that run things, including the fed, will be hurting along with us. And I won't be one of those losing my summer home in the Hampton's.
ah, yes but the derivative market on that money is leveraged 10 times the amount. Suddenly 50 bil becomes 500 bil. When debt is redeemed, it in effect takes money out of the system. That is what is causing the liquidity problems in addition to the discounting on those derivatives as houses and hedge funds panic to cover to pay redemptions. All of a sudden the loses start mounting.
Sold mine @ 35.33 a couple months back. Bought it in 2005 for 29.68 and watched the ups and downs for almost 2 years.
Will buy back in around 29 again, but won't miss those chances to sell and make money again.
CHK is like shooting skeet. Once you get a bead on it, you can hit pretty consistently.
Any stock can be profitable if you study it long enough. Pick out 10 stocks and study them for long enough and you can steadily increase your money (and conversely, not lose any).
As far as the market crashing, unless you own poor companies in off sectors, you don't lose your cash in the long run if you hold. And no depression is going to be allowed to last more than a few years. The big boys can't profit if we stay broke. If I remember correctly, GM, GE, Ford etc were around before and 'after' the great depression.
If your dollar is losing 4% per year, you only need 7.66% to double your money in 20 years. And at 20% your dollar would be worth %17.50. And your stock certificates will be safer than cash if the banks go down.
Because cash is not King. Kings don't depreciate over time. If you hold cash only, your dollar of today will only be worth .46 in 20 years with 4% inflation and we know some things are going to inflate more than that. At that rate, Milk will be about $9 per gallon, bread $3 a loaf, gas $6 per gallon. I don't even want to think about homes and healthcare (shudder).
I know Lobo likes gold, but it will only be worth what the government says they'll pay you when they come to get it from you (ie 1933). And I would not give you a fish for it (I live on the coast). The big boys keep their gold offshore to avoid that scenario.
Lobo, Thanks for U're insight.
Couple quick questions. I'm now 100% CASH after closing my Short positions today.
Do U think, this credit bubble will be the death blow to the economy? Would it be wise to step away from the Markets, Banks, & the Dollar? (Go 100% physical PM's or other currencies )
I'm afraid of waking up one morning with nothing like my GreatGrandparents did? FDIC=.10c on a Dollar. (If they could even pay that after a melt down)
I love the Market & the Game. I would hate to step away. I'm not scared of shorting the overall market. But what good is the gain going down, if they freeze the Market & our money!!!!
I guess, I'm starting to see the light on wealth. It is not all based on the Dollar value. My whole life (29) has been based on beliving in worthless PAPER MONEY!!!!!!!! I can see now, when U breakway from PAPER(as much as possible) they no longer control U're wealth status.
"People do not have a clue what is really happening."
Apparently you aren't a people since you seem to think you alone have such great insight.
Go find a cave in the Yukon and hide there. I promise we'll call you when it's safe to come out.
Apparently you are the one hiding in the cave. Have you never lived through a wealth transfer?
The big one was in 1929. That actually hurt too much, so they began doing smaller ones more easily explained away like the ones in 1987 and 1999-2000.
You do know the Rockefellers and Morgans were rich before the Great Depression and even richer 'after' it . They paid pennies on the dollar for whatever they desired. Oh, did I tell you, they moved to cash and gold just before it happened. THINK BOY !!!
Do some research They stack us up and clean us out. People who understand things can weather those times. People who don't, wake up broke and homeless.
Do you realize that the 69 billion dollars the fed just injected into the economy will cost 3.5 billion at 5.25% interest. That means that the guys (not the government) who own the press just made 3.5 billion while simutaneously lowering the value of each liquid dollar out there by 13.8%. Of course this only counts against the 1/2 trillion in liquid cash. Another 5.5 trillion is locked away in CD's,savings and other monetery instruments (just worthless paper). In other words, your dollar from July is now worth 86.2 cents
Will people use this money to dig their way out of the mess? NO. They'll just dig a deeper hole with it.
A couple of items you should learn about. Don't forget, they both influence your money and stock.
A recession is a prolonged period of time when a nation's economy is slowing down, or contracting. Such a slow-down is characterized by a number of different trends, including:
People buying less stuff
Decrease in factory production
Slump in personal income
An unhealthy stock market
By the conventional definition, this slow-down has to continue for at least six months to be considered a recession
Inflation is when a certain form of currency starts to have less value over time. It is caused mainly by two things: people's perception of value, and the economic principle of supply and demand.Supply problems have had far more dramatic inflationary effects. Throughout history, governments have tried to solve financial problems by simply printing more money. This can drive the value of money drastically downward, especially in modern markets where money is not backed by gold. Twice as many dollars in an economy makes those dollars worth half as much.
There is no stabile middle ground. Look at the economy like the tide, it cannot keep coming in or going out, and it only stabilizes for a short time in between. You need to know which way to swim. Swim against it and you will drown.
Lobo just uses a bigger toolbox. Borrow some of his tools. You could learn something new that could help you.
Trillions dude. That is a huge number. Armegeddon like size. Read my real estate blowup post. COnsumers will soon stop buying. Banks will get slammed from bad loans and also from lack of borrowers. Their assets will get wiped out and their core business will dry up. We need to dig up Ron to clean up the bank mess soon to be made public.
Dig up "Ron"? Which "Ron" are you talking about? Well, FYI, Ron Paul is alive, well, and running for POTUS.
Tell your Republicans friends that this might be the first "Republican" (not a neocon) in a long time.
I'm going to vote for any of these 4 candidates:
If none of them are on the final ballot, I will write one of them in.