Monday, March 2, 2009

Here We Go..

6:30 am I would like to think that today will be the bloodbath we have been looking for. The problem is that everything is still looking smooth and orderly. AIG lost more money than any company in corporate history and the government is putting in another $30 billion. The whisper numbers on Non Farm Payrolls are as high as 725,000. Many of the banks will need more capital from the government because they will not pass the stress test. The housing market has yet to see the bottom. Government is taking radical steps toward the socialization of our economic system which does nothing but set us back in terms of a recovery.

Other than that, things are great. The one issue that bothers me about the coming "recovery" is the fact that there is no exit strategy. The same people that run the post office, Amtrak, and the DMV are taking more and more control of the economy with little in terms of an end date. That should be frightening to anyone no matter how politically liberal your views are.

That said, there are still ways to make money in this market. In Warren Buffett's letter to shareholders, he talked about a bubble in treasuries. I have been talking about buying the (TBT) which gets you short treasuries since Feb 21st. I am still a buyer here. This is a longer term investment. I am not using options with this trade because I can't tell when the bubble is going to pop. With the way the futures are looking right now, the (TBT) might go lower today. This will look like a buying opportunity to me.

Just like everything else in this market, positions need to be small and bought in small chunks over time. Stay nimble and don't be afraid to take profits. And as always, stay low risk..
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3 comments:

KeithWeber said...

AIG classic example of govt. intervention. Fannie, and Freddy too. Warren Buffet is the new topic. "Buy and Hold" my opinion is its time for shorts,old fashioned or ETF's. To be long on something might be the thing of the past. Volitility is here for a while. My observation in a 200-300 swing in one day leads me to believe large holders are trying to make up better balance sheets. They too are available on the market,which I feel is wrong. This was a market created to help create capital for companies to buy tools needed for America. We are a global economy now and I am convinced that greed has got us in this financial mess. I am asked on my theories about foreign trade and the question is "Would I take advantage to buy a product for less to have a larger profit?" I am in this world to make a living but at what cost. If we have $700 billion dollar trade deficit per year, how does this give me any advantage. I am not for protectionism, however if we have inexpevsive products and no consumers where are the profits then. If people don't work they don't spend money. So this brings me to the biggest problem of all. Creating a bubble buy lending money to keep consumer spending. This was and is not a solution it makes the bubble bigger causing a larger POP!

March 2, 2009 at 9:30 AM
Chris said...

I agree that the problem we have right now is a demand problem. I also agree we can't simply flood the system with credit to create spending. We need to get back to creating real wealth in this country. Sometimes, creating true wealth takes time. We have used leverage to create wealth quickly and seen the consequences. While it isn't politically convenient to allow the economy to stall for a while, one could argue that it's what we truly need at this point. We know the general direction right now. The question is how do we make money off of it? That is what I am looking for every day...

March 2, 2009 at 10:04 AM
KeithWeber said...

In response to ctyeager97. How many "online investors are there." People like me don't trust brokerages or even T.V. I belive in the reign of terror has struck corporate blue chip companies. "Greed" has become the problem. At what extent do we fix the problems that others have created. Example I contract from a large blue chip company. When they held market share at $60 they did not extend benifits to me. Now they have tumbled down to $16 and are crying to their vendors to lower our prices. A classic example of bad bussiness practice. I in my personal bussiness revert to the law of supply. I provide a skilled craft,which is becoming a shortage. I am the only certified vinyl installer in a 80 mile radius and I know that. I am sent to fix problems that they created,very valuable. In essence my point is you have great advice through your experience in the industry. How does a guy like MAD JIM profit so well from target marketing his show to the college demographics. He uses catch phrases and gets paid. I like this idea because with such complexity in todays world people follow trends, does the market. In my opinion it does that is why it moves. Therefore, I think we have already been subjected to the woes and will follow that trend for some time. This is my opinion because it has grabbed attention from advertisers to movies. The drop will continue the "Trend" is were you can make money. Create a social network, unemployment is high, people will follow, with networking in a technological world we can create a community advertisers will pay for. "on the left side of course"lol.

March 2, 2009 at 11:17 AM

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