We live in confusing times. Information is supposed to bring power, but what happens if there is to much information?
Obviously noise.
Filtering becomes important and eventually a hugely profitaable business and as I try and preach here with respect to the markets (I don’t always practice) you should follow…PRICE!
We have definitely become fat and lazy, not just with our diets, but with our money. The Moody’s (MCO) debacle is all about conflicts of interest and greed. The story is old and repeats itself in the financial industry. The price action since peaking many moons ago dictates that it’s just another chart. All the news does today is cripple mood.
Oil is another story. The oil executives are being scrutinized for profiteering while the financial executives are sneaking away for UNprofiteering. It’s upside down. Oil is a freight train, that I have been long, yet traded against the trend yesterday and this morning….based on feel and hedging. That’s amateur hour and goes against everything I work hard NOT to do. My time would be better spent elsewhere.
The Chairman has a chart of the freight train I stood in front of (click to enlarge):
This weekend, Eric from Blackstar sent me an email that he was getting scale out trades in oil and basic materials. The last time their fund (I have an allocation), had a scale out trade on the long side from profits was in October of last year. IT WAS CHINA . Here is the post I wrote:
Parabolic rises can be fun if you are aboard, but it does not generally end well.
China has gone parabolic. Check out the FXI today, which I should be long. It was up NINE (9) percent TODAY. This is after being up 100 percent just this year. This is a country index, not just one business. LFC (China Life Insurance) was up 11 percent today.
Don’t think China is immune from a crash. With oil now at $86, the Saudi Arabian stock market has still managed to crash over 70 percent.
Tonight I got the most telling evidence of all about the parabolic move that’s underway in China…an email from my pal Eric at Blackstar:
Getting scale out trades in many China related stocks. The party is getting old, but still could go more parabolic, of course.
Even trend following systems are ‘locking in’ gains. That does not happen too often.
Don’t be a hog!
He qualified this email with a second one saying that although he was getting some basic material and oil scale out trades, he was getting new entries as well. That made it different than the China scale out trades. Of course, I globbed onto what I wanted to read and shorted USO.
I don’t do that here. I take my small lumps as reminders of how hard making money in the markets can be and how standing in front of trends makes it harder, more time consuming and more stressful day to day.
All that said, this parabolic oil move will not end well .
PS – Thank-you Aaron Task (Yahoo TechTicker) took me to town on an email this morning after I took the loss (he follows my twitterings). He was not rubbing it in, just reminding me how I make money.
My post yesterday with links to Mike and Fly was right on, but one bad day and all the doom and gloomers are back.
I think this market will just do the opposite of what everybody wants right now.
I am back in rhythm and printed some good money today. Staying light and looking for extremes will continue to pay off for now.
Oil is the wildcard here, but it’s been like that for a while. Water is way more expensive and we have lived with that forever.
I love this technology, although it looks too good to be true. I trust mankind’s will to survive and remain as optimistic, don’t confuse with bullishness, as ever. You tell me:
I was watching a Dodge Commercial today (owned by Daimler/Chrysler) and my jaw dropped:
“We are guaranteeing $2.99 gas for three years with every Dodge purchase’
Sure cars are leveraged to oil, but basically Dodge (Daimler) has decided it would be o.k. to further gamble on the future by placing a bet on oil. It’s all fun and games when you are so removed from the common shareholder.
Flash forward 2.5 years and you could mumble the same question(s). The fact that management at Dodge is telegraphing their hand is just one of 100 reasons that oil continues to spikes. Traders lick their chops as every government, airline and now auto manufacturer hedge and gamble on oil. Probably the greatest and now longest lasting ‘front running’ trade of all time. Pity I am too smart to be 100 percent leveraged to it .
The longs are euphoric and the shorts are now depressed. Betting on when both the moods flip is something I try hard not to do. I myself have blogged and been long OIH and other oil stocks for some time, but even I shorted oil Friday (using DUG), for a trade (even if I am right, it’s dumb).
Eric Sprott’s bets on gold and oil pushed his Toronto-based flagship fund to an average return of 27 percent a year since 1998, more than three times the gain of Canada’s Standard & Poor’s/TSX Composite Index. The fund bought mining stock Thompson Creek Metals Co. in 2006 prior to a rally that lifted it tenfold.
Sprott is cashing out eight years after forming the company that made him one of Canada’s best-known speculators. The C$230 million ($226 million) IPO is reminiscent of last June’s share sale of U.S. private-equity firm Blackstone Group LP, said Stephen Jarislowsky, chief executive officer of Jarislowsky Fraser Ltd. in Montreal. That IPO preceded a 56 percent decline in monthly takeover volume in the U.S.
“When the LBO firms went public, the next day, the game was up,” said Jarislowsky, whose firm manages about $56 billion. “Why is he going public? If it’s going that well, why would you let anybody in on it? Why doesn’t he just sell to his partners?”
Insiders led by Sprott filed last month to sell as much as 15 percent of the company, which manages C$6.9 billion in mutual funds and hedge funds. Sprott Asset plans to sell as many as 23 million shares, according to the sale documents. The founder’s 78 percent stake would be worth about C$1.17 billion at C$10 a share, the mid-range of the estimated offering price. The shares are expected to be sold on May 7.
Don’t be a hog. These trends are not early and the big insiders in the trend are cashing out big time. Not all signs (few actually) flash right in front of you on CNBC or The Wall Street Journal.
Here is Brian’s technical take on oil as well:
Posted on May 6th, 2008 | Category: Commodities, Oil | Comments Off
None of these areas are sexy, easy to understand, or fun to own (even though they are since they go up every day), but the trends show no signs of impending doom, other than the fact that they have just kept going up. That’s always the worst reason to short.
We are all guilty of this inclsuing me so if you want to countertrend trade and invest, you must stay extra disciplined.
I continue to do less. The market is getting MORE, not less tricky
India, China, Brazil, Mexico and Russia and Malaysia. They all have this in common…massive 5-year runs. Will they continue though?
Wealth makes even hardened ruler freaks do the right thing in favor of further wealth.
Sure the criminals are raging too, but the little people have a taste of money and they like it. ALWAYS. The rich powerful dudes know this and only the sickest leadership f#*s deny citizens their fair share. Bush Jr. may suck balls, but he has become the crazy white dude that walks into post offices shooting. Iraq is just a bigger post office. Psycho leaders are on notice.
The Arabs may even be starting to get supply and demand. Saudi Arabia just had a market crash and so they are being forced to learn as well. About time, but you get the point.
It’s not just Chipotle’s that can glean info from hardened international McDonald’s execs on how to grow faster and smarter…countries can do it too.
We live in a time where information and technology is flowing so freely and cheaply that maybe we are getting smarter on a global basis and maybe things may just be good (save the war and human atrocities – that shit never changes).
The glass is always half-full in my house. You need to look at it that way too to make the easy money. The market has been handing it out the last few years. Don’t overthink it.
Disclosure – Long EWM, oil, gold, SINA and a dumb bull.
Fred is wondering about Peak Oil this morning – fishing for comments . I am with him…who the f$%ck knows. It’s not a waste of time, but I mean with the KINDLE on backorder, Fred needs to get his priorities straight .
You see, I can’t stop thinking about our continued biggest asset with the highest margins…Culture and Creativity. With respect to energy, 80 percent of our population is fat so it’s likely we will solve our own problems by selling our fat dead bodies as a source of blubber and oil overseas to feed our kids and our kids kids, but I digress.
This post is about culture and creativity. You see “Peak My Nose” or “Pick my Nose” is still money. It’s about picking your nose and getting it virally distributed and than selling yourself for $1,000,000. Well, kind of…
The great charts and links from Fred’s post have already set the wheels in motion with respect to alternative energy. Have you seen a solar stock chart recently. There will be 100 public companies in the next 5 years riding that PR and economic gravy train. Let Brazil and Mexico muck up their shorelines in the meantime. That’s not what we should be doing anymore…we did that. We should and ARE selling them the tools to muck up their shorelines…faster…cleaner…cheaper.
I will keep my eyes on the new high list, which is non-existent these days, for the real important stuff. The good news is lots of smart money will find these new trends for you and they will start showing up soon enough. Oil won’t go up and the dollar go down without showing the hand of the next big winners. It’s happening right now.
In the meantime, if you live in the US, focus on the internet and creativity and exporting our culture, the good and bad. That’s where the real margins are. And you won’t get filthy doing it.
Furthermore, we should really hope that our leadership understands this and as I said in the May 2006 post:
Message to the government – stop dropping bombs from planes. DROP BROADBAND! and also Kindle’s.
Disclosure – Long Amazona few oil stocks and FSLR, Nintendo and Apple
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