Click chart to enlargeLehman Bros has been on our short list for nearly a year now... going back to our days on the LDK board. At any rate, the inevitable is happening, and LEH may just be creating opportunity for the rest of us. Every tradable market bottom has a story. Anything could happen over the next day or two, but our guess is that you may just be able to get a nice trade by buying DDM (Dow Ultralong) on a serious spike down either tomorrow or Tuesday.
We're going to watch the market early this week closer than we have recently because if something cataclysmic should happen, we will buy some DDM. We have no qualms about buying the Dow at these levels. An additional spike down would just make it that much less risky.
Our take on the economy is that we're still in serious trouble, but that we'll pull out of it over the next 15 to 21 months. If asked last month when the economy would improve, we would have said it was not in the forseeable future. But now it is. The reason we can see a light at the end of the tunnel is because the government's takeover of Fannie and Freddie will force rates to stay low for a long time while the excess inventory is unloaded. This is excellent news for the real estate market, for speculation, and for the economy as a whole.
While we aren't as depressed as we were last month, we aren't throwing any parties yet, either. We cannot and will not embrace the concept of a renewed economy until we are comfortable that Obama's tax hikes are not made a reality (at least not to the extent promised). Left unchecked, Obama will destroy any possible economic recovery we may be on the brink of. Americans simply cannot afford higher taxes at this critical turning point in sentiment. It is better practice to slowly raise taxes as the economy picks up momentum.
We understand that it is not Obama's fault that Bush has put our country in one of the weakest economic positions we've been in since the Great Depression. We only hope that Obama's administration, if elected, will approach paying for this massive debt with a little finesse.
The American work ethic is extremely strong, but only when we feel that our efforts are being rewarded. As the economy starts to show signs of life, it is crucial to allow speculation and greed to take hold before thwarting the American spirit with further obstacles to success. This is solely in the hands of the new administration.
15 comments:
The rapid expansion of debt is what caused the inflation and the commodity bubble. Since these resulted from policy choices, they were a de facto tax. So whether Obama raises taxes or McCain borrows money, the result is nearly the same. But it would be healthier for the economy if taxes were raised directly. I'd like the capital gains tax to stay where it is, but I believe I could make money even if it were higher. Perhaps more. We need a stronger dollar if we're going to have a real bull market.
Yes- at some point you have to pay your bills!! Can you imagine how much the US debt would skyrocket if the Republicans were given another 8 years? 8 more years of Iraq? 8 more years of tax "cuts"? And if something happened and Palin had to take over???
I shudder to think of "The horror...the horror"
My Ameritrade account is down. Went down at 10:05. Started off laggy now cant login at all. Anyone else having trouble? Today is not the kind of day to lose access to an account...
Last I checked I was up 5% so I'm not too worried.
Snotwheel,
The statement about Obama raise taxes is misleading. He will CUT taxes for the middle class and raise taxes for the super rich (you probably fall in this category).
Just bought some DDM at the close. If you don't buy on a down 500 day, when do you buy?
If the selloff continues into tomorrow morning (Black Tuesday), perhaps with the collapse of AIG, we will back up the truck on DIA and DDM, SSO, etc for the long run. If instead the Fed does a "suprise" cut and the Dow adds 350, we'll sell.
As to that comment about Obama cutting taxes for the middle class and raising taxes for the super rich, we do not believe in the terminology that defines "class". We see the world as consisting of lazy people and ambitious people. We only feel bad for the sick, or otherwise incapable. Any healthy, ambitious person can make it big in the U.S.
Why would Obama tax the ambitious and help the lazy? Makes no sense. If instead the ambitious were rewarded and the lazy were prodded to get off their asses, maybe we would become one of the wealthy countries again. What, have a work ethic again like we had in the 50's? Snot, say it aint so!
Time to go split some firewood...
Obama says he is going to cut taxes on 90% of Americans, because that sounds good to get votes. But 90% of Americans don't pay taxes, so it is impossible for him to do that. His language is deceitful to get votes. What he is actually planning on doing, according to a panel recently on CNBC, is give tax credits to those who don't pay any taxes. It is a plan for some of the greatest wealth redistribution ever in our society. Will it help the economy? Will it spark free enterprise?
Anyone who bashes Palin before the debates is showing their susceptibility to the liberal media. From an experience level, she pretty much cancels out Obama. The last 5-6 (or more) Presidents reinforces the fact that anyone politically savvy can be President - it's the advisors that do the real heavy lifting (thank God). And if you believe what any of the candidates say before the election, you are naive or just haven't been around long enough to realize they'll say whatever it takes to win.
And the popular crock about how things will change after the elections. The economy is a much larger issue than which clown is in office and more than either of them can get their head around. In capitalism, what goes up always comes down, and whoever happens to be in office at the time gets the blame.
The reality is that since Clinton, the distance between the two parties has shortened considerably. What is real is not what is spewed before the elections, but what transpires and is acted on when the smartest people in the room voice their opinions. And these people are not usually the elected ones. The election process and this absurd two party system has devolved into entertainment for the masses.
When I said "90% of Americans don't pay taxes" that should have been "40% don't" or something like that.
Yeah, buddy, we don't need a genius for President. We need a good leader who will surround himself, or herself, with good people.
We've got several more weeks of mud slinging and misrepresentation by both parties today. Obama tried to mispresent McCain today, quoting him partially and out of context, claiming that McCain said there were no problems with the economy. Obama bore false witness against McCain, something he should have learned better about in Sunday school. Exodus 20:16.
Obama means huge government. McCain means sort of big government. I'll take the latter as the lesser of two evils.
I am really impressed with you.. all of you snots..Today you have close in my eyes 8 months of well sensing the market..I hope you will keep going fine...
Alex (griego)
I really don't want to get into a politcal discussion on a trading blog but I can not help putting my two cents in here. I would never have voted for McCain to begin with because of his stand on many issues but his choice of Palin is frightening. What we do not need ever again are people who believe that "God" somehow dictates a great plan or moral truth that they must fullfill based on thier own beliefs. Last June speaking to a group she was qouted as saying that the "Iraq war's a task that is from God" Scary, Scary stuff. All we have to do is look at the boob in office to understand how twisted this kind of stuff can become. Mccain is about 2 years from reaching the average life expectency for a US male. He is regularly getting small chunks cut off him in an effort to keep the cancer at bay. In case you were not aware his face is all screwed up because he had his lymph nodes removed. So I would argue there is a very good possability that Palin would become President. The very last thing I want is that woman foisting her right wing religous views on me and the rest of the world.
And Snot...as far as your comment "Any healthy, ambitious person can make it big in the U.S.
Why would Obama tax the ambitious and help the lazy?"... pure crap my friend, smacks of an elitist and privileged thought process. You should really give some deep thought how you arrived at this philosophy. Now I live in a very working class neighbor hood. The people here are plumbers, loggers, and farmers, they fix cars, and work at the nursing home wiping asses. I am willing to bet everyone of those people works a lot harder then you. They have families to support and small homes which require a great deal of work for modest wages. While there are many examples of people like Oprah. The fact is that if you are born into a poor home in someplace like rural Vermont and raised in a fashion that does not promote education and wealth accumulation the cards are stacked against you. The playing field is not level. When I was a young man I worked in Florida loading trucks. I was the only white guy out of about 30. The black guys that worked there sweating and stacking that stuff with me were really the nicest and hardest working guys you could want to meet, but you know they were really trapped. They couldn't speak white english, had little education, no family support group and little hope of making it "big" We can't all make it big. It is unreasonable and unfair to say so. What we should ask is that everyone work and contribute to the best of their abilities. There is nothing wrong with asking those that our society has given so much to. More then the many below them. To give back some of that....and Sara, if there were a God that would be his real plan.
Snot, I gave you credit for elaborating your view on middle vs super rich to be lazy vs ambitious. And thanks to Squarpeg for putting it so well.
It is really not the question of lazy vs ambitious, but rather a question of resources distribution. Most middle class people have limited resources that makes it much harder for them to become successful. Think of a race with unequal starting point. Are the runners in the back really loosing because they are lazy? If any of them can have the stock market knowledge as you do, wouldn't they work extra hard too? Yes yes, maybe you Snot, did not grew up in an environment with all the resources for you already and you made it well on your own (no doubt you're an genius). However, I'm pretty sure you're also not a minority in this country. The wealth distribution is quite lob sided. You should check out a Native American reservation, the resources there is even more limited. How you define "lazy" is really lack of hope due to lack of available resources in this very competitive capitalist society. It is our responsibility to give them a chance, even if it means making a few hundred thousand dollars less in your lifetime because the rich will still do fine. If your concern is having America stay competitive in the global economy, that I think should be secondary.
All very legitimate commentary, thanks for the insights. We started out as a dishwasher at a local restaurant, then struck it big as a busboy:)
It isn't about how much you make, it's about how you manage it. Starting your own business is the only way to change the numbers dramatically. And it doesn't have to be a large or complex business. You can open a lemonade stand and make a killing if you do it well... seriously. Ask Tom and Tom of Nantucket Nectars.
Getting ahead doesn't take money, it takes attitude. Granted many people do not have the wherewithall, but let's face it, many of them drink their paychecks. Nothing wrong with differing lifestyles and life views, it's what makes it all interesting. It just gets hard sometimes to continually pick up the tab for other people's bad decisions. The credit crises is the culmination of millions of small bad decisions.
At any rate, looking at the chart of OIL and USO, we can definitively say that the drop is over. The S-curve that you see going back to early July is usually balanced... same percentage on either side of the midpoint. There may be a little further to fall, but that's pretty much it. We're going to bounce very, very soon, and continue bouncing around in a sideways range for a very long time. The "crash" in oil prices is over. Now why haven't we had any relief at the pumps after oil has fallen almost 40%? Doesn't add up seeing as how each time it ticked higher, the upticks were reflected within a couple of days.
"Now why haven't we had any relief at the pumps after oil has fallen almost 40%?"
Believe it or not, we didn't feel the effects of the rise in oil as badly as it could have been if it was exactly proportional. It has to do with the way the downstream (refiners and marketers) works. Their margins get squeezed when oil prices go up - they can't pass it on to the consumer too quickly. They make it up when oil prices go down - by letting the already raised prices linger a little longer. That's where they make their money.
I have a tough time believing that the crash in oil is over. It is true that we've formed an S-curve, but what I'm looking for is a sine curve. That would mean oil prices are going to go down much further, before stabilizing.
I think average income is going to be falling precipitously. I dont see how it couldnt with a 25% y/y loss in the automotive sector. That will take oil down. I dont know how much, but I do agree that right here is probably a good equilibrium point. I just think there's going to be quite a bit of downward overshoot before we can stabilize here. I would bet on $50 oil in the next 6 months. $20 if there is a 1987 style crash.
Hmmm....$20 a barrel? Even $50 sounds far fetched to me. Haven't the Saudis basically drawn a line in the sand at $80. Below that they said they will start cutting production. Also below around $70 you start losing some of the more expensive oil to pump. I think your price targets would only hold true if we had a massive world wide slow down. Asia would have to go back in time 10 years. Which of coarse might be plausible however if that occurs few of us will be worried about which stocks we should be buying. I would put the pricing somewhere between $75-$90
Post a Comment