Jan

22

GatorToday is one of those tremendous days in the market that reminds me of the Battle of Ramree Island that took place in Burma between January and February of 1945.

I have not seen a first half of month decline in the market this severe for many years. Vic and Laurel have frequently discussed symmetry and V-shaped recoveries, and I'd add that I have never seen an earnings season beginning with a decline that has not been met with a sharp recovery.

The above picture shows what the shorts, like the fighters at Ramree Island, are going to face very soon.

Caroline Valetkevitch notices:

NEW YORK (January 23, 2007. Reuters) - The Dow and the S&P 500 rose late on Wednesday, rebounding from earlier losses of more than 2 percent each, as investors bought back shares they had bet against and the banking sector gained. "It looks like it's short-covering and also all financials are really, really running right now," said Todd Clark, managing director of stock trading at Nollenberger Capital Partners in San Francisco.


Comments

Name

Email

Website

Speak your mind

16 Comments so far

  1. Curmudgeon 3417 on January 22, 2008 4:37 pm

    Given Soros’ gloomy statement on Monday (”the worst financial crisis since world war 2″ he said in the Austrian newspaper Der Standard) I wonder if the palindrome wasn’t one of the shorts that James is referring to. But he is probably out by now, as he is far quicker than an alligator.

  2. Tom on January 22, 2008 5:16 pm

    "The above picture shows what the Shorts, like the fighters at Ramree Island, are going to face very soon."

    This site just always says buy. Conditional on the S&P dropping 7% in the prior three days, buy! Conditional on an unchanged S&P during the prior three days, buy! Conditional on a week with a Fed meeting, take out the cane and buy! Conditional on it being January, buy! Buy! Buy! Buy! Buy every dip, buy every increase, buy every sideways move.

  3. Anonymous on January 22, 2008 7:00 pm

    Eugen Rosenstock-Huessy: “History doesn’t repeat itself, but its got rhythm.”

  4. George Parkanyi on January 22, 2008 9:26 pm

    TO JAMES:

    Whoah. Makes ME want to cover my shorts - and other people’s shorts as well.

    TO CURMUDGEON:

    Alligator?! Reminds my of the Monty Python sketch of the man who applies for a job as a lion-tamer but then starts describing an ant-eater.

    (Footnote 1 - an alligator would look like a gecko compared to that thing)

    (Footnote 2 - I’ve been quoting Monty Python a lot lately. I must be under stress.)

    TO TOM:

    You sound agitated. Let’s settle this once and for all.

    OK everyone, show of hands:

    Who wants to buy? …

    Now who wants to sell?

    There you have it Tom. If ya ain’t tradin’ with us, then you’re tradin’ agin’ us. (Is that a quotation? I’m sure that’s a quotation. Margaret Thatcher? No, not Margaret Thatcher. darn …)

    Cheers, guys. Just playing. :)

  5. Justin Timberlake on January 23, 2008 6:06 am

    I agree with Tom. There are no daily speculations going on here, merely daily repeat of the same ol' mantra. I won't read it any more or send in comments.

  6. Craig Bowles on January 23, 2008 10:43 am

    Still is like the 2000-2001 decline which was similarly weak, rallied 100 points or so and then took the next leg down. Pimco’s Bill Gross is worried like Soros and the risk managers in NY…Our modern shadow banking system craftily dodges the reserve requirements of traditional institutions and promotes a chain letter, pyramid scheme of leverage, based in many cases on no reserve cushion whatsoever. Financial derivatives of all descriptions are involved but credit default swaps (CDS) are perhaps the most egregious offenders. While margin does flow periodically to balance both party’s accounts, the conduits that hold CDS contracts are in effect non-regulated banks, much like their hedge fund brethren, with no requirements to hold reserves against a significant “black swan” run that might break them. Jimmy Stewart—they hardly knew ye! According to the Bank for International Settlements (BIS), CDS totaling $43 trillion were outstanding at year end 2007, more than half the size of the entire asset base of the global banking system. Total derivatives amount to over $500 trillion, many of them finding their way onto the balance sheets of SIVs, CDOs and other conduits of their ilk comprising the Frankensteinian levered body of shadow banks.

  7. Acetrader on January 23, 2008 12:29 pm

    Of course Soros says that…the guy is so single-minded that the current U.S. administration can't do anything right, he has lost a lot of credibility in my mind! BTW…its easy to travel the world sprinkling a few million here are there as long as your billion dollar nest egg is safe and sound.

  8. George Parkanyi on January 23, 2008 1:40 pm

    Hmmm.

    10-Year 4.5% T-Note yields 3.3%, and you have to pay taxes on that.

    S&P500 earnings yield is 6% (after-tax) + 2.11% dividends (pre-tax).

    So that’s … waiter, another napkin please …

    33% tax, carry the two … bonds 2.2%; stocks 7.4%. Ooh, that’s not normal.

    So stocks then are what? insanely cheap? or discounting a 67%- 75% earnings collapse?

    Let’s say we ain’t dead yet. Now who’s got all their money tied up in bonds? And when the light-bulb goes on? …

    I don’t want be in the way when they hammer the cork off that keg. But I think I might want to be in stocks.

    Cheers

  9. GJF on January 23, 2008 2:28 pm

    Yeah, really. This site does have some cool analysis and general life thoughts, but as far as market/trading insight is concerned I think the content is weak. What would it take to say SELL?

  10. steve leslie on January 23, 2008 4:39 pm

    This is not an advice column or Dear Abby. It is meals for a lifetime, not meals for a day.

    If you don't like what you read then don't read it. As Vince McMahon says, if you don't like watching pro wrestling or having your kids watch it, then change the channel. There are plenty of other places to get daily advice.

    And it is not always rosy on this channel either. to Justin Timberlake, perhaps it was a costume malfunction. That's it, let's blame everything on the costume designer.

  11. George Parkanyi on January 23, 2008 4:40 pm

    OK GJF, sell your short ETFs.

    There, I said SELL. :)

    Cheers,
    George

  12. Anonymous on January 23, 2008 5:32 pm

    1. the 2.2% on bonds is money in the bank. the 7.4% on stocks is money in the companies' coffers to pay for the executives' lavish lifestyle. if you look at the dividends you might change your opinion.

    2. the 2.2% gives you back 100% of your principal. if you believe in uncle sam. the 7.4% not.

    3. the fed model might be just turn out to be one big ugly spurious correlation. in the past 6 months I counted at least 4-5 studies on this site that would qualify for 6-sigmas. how many universe lives is that?

  13. Alex on January 23, 2008 5:39 pm

    Although I have trouble discerning the difference between an alligator and a crocodile, I did see a local newswoman in South Carolina, doing that extended full arm flat clapping associated with the championship UFlorida Gators. To what extent exactly, the notable national rise in this awkward motion relates to the Red Sox World Series win in 2004 which seemed certain to predict a Kerry win, George Soros's myopia, the Florida debacle of 2000, Hillary's attacks on Obama in the SC debate on MLK Day of all days, and the 500 point Dow reversal on 1/23 is unclear… and yet 1…2…3 also reminds me of a great movie I rented recently, Yi Yi–roughly translated as "A One and A Two"– in which a little boy photographs the back of people's heads to remind us all we cannot know. At least half of truth. Thank you, Victor, for expressing belief in the positive long-term growth of the markets. This at the end of the fairly recent New Yorker article, and of course it could have been the journalist who placed the words there.

  14. Lon Evans on January 24, 2008 12:37 am

    Mr. Bitumen,

    In regards to what we shorts “are going to face very soon.” How have you tested your hypothesis? That is the point of Vic’s method isn’t it, “to test it.” As I’m significantly short and currently up some 120 handles, I would be interested in what evaluation, other than opinion, promotes your point of view. Come back?

    P.S. I’m looking to cover somewhere in the low 1200’s. Is that where you see your gators lurking?

    Lon

  15. Q on January 24, 2008 1:08 am

    To Anonymous:

    “Eugen Rosenstock-Huessy: “History doesn’t repeat itself, but its got rhythm.”

    Can you explain what this means? Or anyone else?

  16. Justin Timberlake on January 25, 2008 4:33 am

    Lon, you are in a significant amount of trouble. This market is seeing new highs by April

Archives

Resources & Links

Search