| dgryder00 |
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Gold User, Member, TeleChart
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| Saturday, November 3, 2007 |
| Thursday, January 15, 2009 7:09:10 AM |
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We are pleased to announce that we will be interviewing Kevin Kerr on Monday January 5th. We will be incorporating viewer questions into the show--so if you have a question for Kevin please email it to webmaster@stockshotz.tv
www.stockshotz.blogspot.com
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Will this be another down year? Will we rally as credit improves? Will Americans increasing their savings rate substantially? I wish I could answer all of those questions. I think this will be a year where being quick will be much better than being patient. I believe that the unemployment numbers (bad, but not as bad as expected) point to a more inflationary scenario than to a deflationary one. Why? Because the current theory for deflation is basically hinged on employment--or lack thereof. Why is it hinged on unemployment? Because better employment will have higher bearing on the velocity of money than most have forecast. We know that the money supply has increased (I disagree that it has decreased due to wealth destruction) and if the velocity of money increases---we will be headed to a much improved economy--perhaps even an inflationary one.
I wrote earlier in the week a little about p/e and how difficult is was to truly assess the p/e of a company as it has been difficult to ascertain what the earnings of companies will be in this environment. Dare I say it, but this year could well hinge on the effectiveness of the upcoming stimulus plan(s). I have been on the side of free markets and letting them work and have not changed my position. I believe that the best thing for the market would be to go through a protracted recession and as Jim Rogers would say "Start over from a sound base. Since we know that we are not going to let the market work with no bailouts/handouts etc we will not discuss that scenario any further. We know we ARE going to get some form of stimulus and for this year the question will be whether or not it is effective in returning people to their jobs. Many would argue that this crisis began with housing and will not end until housing stabilizes. While I would not argue that point--I believe that employment is a huge component of whether we see housing begin to stabilize. If employment stabilizes our consumer will very soon try to return to the model of its former self.
Many people are saying that we have all learned our lesson and are going to start saving like we just avoided bankruptcy. This is simply not the case. Many of the individuals that were the highest in credit card debt will get relief through the stimulus--either in the form of a rebate check or reduced principle etc. They will still be out purchasing things every chance they get. Yes some of us will save---but the ones with the propensity to save were not the ones that started this credit crisis in the first place. I have drawn criticism for making this point but it will ring true. Yes there were some people that were just unfortunate and lost their jobs. But most of this crisis was caused by those that just took all of the credit they could possibly get---and my friends they will do it again if given the chance.
My point is that if unemployment starts to decline and the economy begins to "perk up" then we are going to see the banks resume lending (perhaps have some assets that need to be written up on their balance sheets). And at that point we will be in jeopardy of the velocity of money rapidly growing.
Now if the government bailouts do not kick start the economy we could head into a deflationary cycle. No doubt that if we throw a huge stimulus at this economy and it does not work---we will throw more. That is an absolute guarantee. I am either clear as mud or I sound like I am trying to hedge my bets. I am not trying to hedge---my point is that at some point we are going to have enough stimulus to get things going again. And when it does, we will see inflation.
Let me ask this question. Were many hedge funds allocating money to the commodities markets back in the summer when oil prices were high? You bet they were. Will they do it again? You bet. I believe that we will see more institutions than ever before allocate dollars to commodities as we begin this leg of the economic cycle.
I like SWS here. I like this company and in all fairness they have made a huge run lately--I bought them in this area and held them through the recent declines. My target on this one is $24.50.
ICOC had a nice run yesterday and sadly enough is still way below my entry point. I still like the company and think that they will benefit from the weaker dollar. It may take some time, but I think this one will double. It is not for the faint of heart though. Should Europe stay in a recession for a long time---it could hurt the stock.
I had liked Seagate STX and in all honesty was dumb enough to ride this stock all the way down from 25. This was my absolute failure at money management for the year. I really liked the company and thought I could fight the market and was SO WRONG. I talk often about tuition to the game of trading and I paid my tuition to learn a money management lesson that I vow never to repeat. This one I think I can master in the future because it hurt bad and I felt SO STUPID and asleep at the wheel when the stock landed at 4.
Personally I am taking 2 approaches for this year. One approach is to invest my inflation thesis. I have taken small percentages already in some select positions and will increase those positions as I see my thesis begin to unfold in my direction.
I am allocating 25% of my available funds to this part of my trading.
The second approach will be to take advantage of volatility and trade. I will be looking at taking advantage of some of the "double direction" ETFs. I have refined my plan with respect to short term trading (as I lost money last year) and until the markets stabilize will define "short-term trades" as a much shorter time horizon than I did last year. I had taken the mentality during the volatility that I would have my stops be "close" in other words if my stop was $25 I would not sell if it hit $24 during the day---I would wait and sell the next day if it closed below $25. It started out as a decent idea, but rapidly cost me much more than I was willing to lose on trades.
I could not end the year without thanking all of our visitors (whether you agree with our views or not--we know we were wrong at points last year and have sense enough to know that we will make mistakes in the coming year). We just hope to learn from our mistakes and get better each time.
I also wanted to take time to list each of the individuals that appeared on our show last year. We were so fortunate last year as we interviewed Jim Rogers, Peter Schiff, Charles Payne, Walter "John" Williams, Jill Schlesinger, Pat Dorsey, Ryan Krueger, Dr. Danielle Babb, Price Headley, Kevin Kerr, Jerry Bowyer, Dianne Swonk, Donald Luskin, Tracey Byrnes, Kendra Todd, Dr. Thomas Barnett, Dr. Reed Holden, Timothy Sykes, Hitha Prabhakar, Dr. Jim Mirabella, Dr. Alex Lazo, Carley Garner, Michael Panzner, Jerry Taylor, Dr. Christian Weller, MeMe Roth, David Duval, Anya Kamenetz, Toni Hansen, Wes Ball, Margaret Heffernen, Dr. Richard Murphy, Laura Ries, and Denise Shull. I wanted to list each by name as they were all gracious to take time out of their busy schedules to speak with us.
I made many new friends during this process and hope to do the same again in 2009. It was truly an honor for this "country boy" to have the opportunity to speak with and try to learn from these individuals. To every one I offer my humble and sincere THANK YOU for taking time to visit with us.
MAY GOD BLESS YOU AND YOUR FAMILIES IN 2009.
www.stockshotz.blogspot.com
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Is Buy and Hold Really Dead??
If buy and hold isn't dead, it is certainly hibernating with very low respirations. My grandfather was on of the best investors that I have ever seen and these markets would be driving him absolutely crazy if he were still alive. He made a lot of money by finding brand name companies paying good dividends and loading up on them. I have done a study on expanding and contracting multiples---historical multiples for certain industries etc and have found the results of my work to be useless BECAUSE IN THIS MARKET WE CAN'T DEFINE THE E. Earnings are very difficult to predict in this market and that has many investors at a loss as to how to act on a daily basis. No doubt I have lost more money on the positions that I considered to be "investments" than I ever have on those I classified as "trades". In this market, it is tough to find dividends in which you can have confidence. If I heard him say it once, I heard my grandfather say a thousand times "You own good stocks and they are paying dividends---just forget about their closing price--it'll come back" He WAS RIGHT. But he would NOT BE RIGHT in this environment. Even in today's action, while the market was going up---so were the treasuries. That tells me that this rally is fishy as investors are still seeking the safety of the treasuries.
We have been preparing for our upcoming interview with Walter "John" Williams of shadowstats.com For those of you that don't know of John, he is an economist that has predicted an upcoming period of hyperinflation and has even talked of a hyperinflationary depression. John's views are seen as radical, but he makes excellent points and always has statistics to support his forecasts. While we are not calling for a hyperinflationary depression, we respect John's views and he has been a very good friend of our show. At the end of this blog, we will post our last interview with John and you can listen and submit questions for the upcoming show. Of course we want John to answer the question as to whether he feels that the government injections are going to rebuild the balance sheets of the banks and if so why does he still see inflation. We will also want him to tell us what factors have held inflation at bay since our last visit with him--as he was forecasting hyperinflation last April.
While I am not personally looking for a hyperinflationary depression, I am looking for inflation. I am looking for a weaker dollar in 2009. I also look for gold to push higher in 2009. I want to be able to identify the catalysts that will start the inflation fire---as I am convinced that once the inflationary period begins---it will be difficult for the government to act to curb inflation once it is out of the gate.
I am hearing more and more "pundits" with sentiment for the weak dollar. On CNBC tonight even Donald Luskin was calling for a much weaker dollar. I was shocked that Luskin was taking that position. I still like a short UUP position---will be a slow mover but should produce some gains.
For those morons that have made comments and sent us emails telling us that we were wrong on some of our calls---Of course we were you mental midgets. Who in this game has not made mistakes---especially since last fall. We have been very clear as to who we are and what we are trying to accomplish. We are not registered investment advisors---we are just individual investors risking our own money trying to learn this game. And yes we have made mistakes---traders call it tuition and we have payed plenty of it this year. But every time we are wrong, we analyze it and try to make it a learning experience. We have learned over the last six months that in this environment that buy-and-hold is a dangerous game and the best way to play is to be nimble and willing to admit your mistakes and take small losses.
I am considering adding to my SRS especially if we get a move up in the morning. I believe that the current rally is very weak and I am convinced that we have more pain to be felt in the real estate arena. Our TBT call took a hit today, but I think the treasuries are the next bubble and I still like the play. Again, you have to use smart position sizing to make sure that you can stay solvent longer than the market can remain irrational.
The Fed is planning to buy $500 Billion in mortgage securities to boost the housing market. To those that are making the argument that we are just rebuilding the banks balance sheets---this could really be an effective move that begins to get some money flowing through the system again. I keep maintaining that once money begins to flow---you are going to need to open the floodgates. I have been wrong to this point, but still stand firm in my belief that we are going to see inflation by the end of this year.
We will continue to bring you as many different perspectives as we can. The last John Williams interview is posted below. Send us your questions--we are looking forward to hearing John's ideas.
I found a video that presents the exact opposite case from John Williams. This guy was on CNBC and is saying that China was the biggest beneficiary of the excess credit and is headed for a very hard landing. We will be contacting him to see if he will be willing to appear on our show. We want to get as many facts from all sides and will do our best to bring this interview to you as well.
The video can be viewed at www.stockshotz.blogspot.com
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Stock Shotz is pleased to announce that we will be bringing you an interview with Walter "John" Williams of shadowstats.com on the week of January the 12th. John makes a compelling case for hyperinflation and always produces a very interesting and informative interview. Email questions that you would like us to ask Mr. Williams to webmaster@stockshotz.tv
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NO YOU CAN'T FIGHT THE FED!!!!
The old saying "You can't fight the Fed" has never been more true than it is today. It may have just taken on a little different meaning. You can't fight the Fed in this environment because their relentless printing of money will cause the value of the dollar to decline. Maybe it really had to be done to save the banking system (but right or wrong printing money will have the same effect--it will decrease the value of the dollar). I hate to continually make the weak dollar argument as it almost seems unpatriotic, but you cannot deny the effects of the Fed's recent actions. I have gotten many responses arguing that the dollar is still the world's reserve currency and will remain so as we pull out of this crisis. But is this time different? I would argue that it is. Let me say one more time that China is still growing (growth is declining, but growth is still growth). Is China poised to gain some of the market share of the "reserve currency"? They are positioning themselves to do just that. Read the remainder of the article at www.stockshotz.blogspot.com
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We all know that the money supply has been increasing, and many have been surprised at the decline in prices that has accompanied the recent "growth" of the money supply. We all know that inflation is a monetary phenomenon, Right? Yes that is right, but lets take a closer look at what is happening with the money supply and the velocity of money. If inflation is a monetary phenomenon and money supply is increasing, why aren't we already seeing inflation? During the time that the money supply has been growing the velocity of money has been declining---at an alarming rate. Why has the velocity declined. Financial innovations---such as those nasty Collateralized Debt Obligations (CDO's) increased the velocity of money. These innovations were "productively" increasing the velocity of money when they were created and when all was well with their value. As the credit crisis evolved--we had to unwind all of the "productivity" that was gained through the use of these "darling turned ugly duckling instruments". This unwind took its toll on the velocity of money and the real damage will be the unseen damage that is yet to come. What unseen damage? The damage that will be done as the velocity of money declines as these instruments are "cleaned up". The decline in velocity caused by the unwind of these instruments has contributed to the false sense of "deflation" that has gotten so much attention from many "talking heads" lately. We know, through both common sense and historical numbers that the velocity of money declines during recessions---sometimes sharply. During a NORMAL economic cycle, the decrease in velocity would be normal as central banks would increase the money supply, get the economy going again and then the velocity would again rise.
Read the remainder of the article at www.stockshotz.blogspot.com
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Friday's Trade
Certainly we can expect light trade tomorrow. I will be looking to take advantage of anything the market gives. I think the after-hours trade in the USO on Wednesday was laughable. Sometimes the herd mentality is so hilarious. Back in the summer--everyone was calling for $200 barrel oil. Now that the tide has turned, many want to talk about $20 oil. It has overshot to the downside, but I have been very clear--that does not mean that it can't go lower in the short run.
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Deflation, Reflation, Inflation, OR ALL THREE is the title of the new post at (url removed by moderator)
Check out the article as these guys outline why they think inflation is on the way and how the deflation in prices that we have seen lately is going to actually contribute to inflation in the near future. This post is not what I wanted to hear, but it made me think.
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Deflation, Reflation, Inflation, OR ALL THREE is the title of the new post at (url removed by moderator).
Check out the article as these guys outline why they think inflation is on the way and how the deflation in prices that we have seen lately is going to actually contribute to inflation in the near future. This post is not what I wanted to hear, but it made me think.
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I have heard many argue that the dollar is not in trouble simply because other countries were late to the rate cutting party and still have lower to go with their central bank rates. I don't disagree, but my inflation thesis is a long term perspective, so I ask is the fact that we are currently positioned to possible do better in the short run (as compared to the Euro) is that good enough or will it last? We are the country that is using DEBT to finance the party, more than any of our counterparts. Have you seen the Peter Schiff was right video? Schiff was calling for the housing bubble to burst before it did, just as he has been predicting a falling dollar for quite some time. The dollar will fall over the long run and commodities are the play. I am doubling my natural gas position here because I think we are going to see a run. People out of work might not be driving as much, but they are still going to heat their homes and the prices of natural gas have been overdone---even given some of the decreased demand as of late.
I have said several times that I think we have a bubble in treasuries--hence my position in TBT, and I think the other bubble that we have going right now is a CASH BUBBLE. Is there such a thing? You bet there is. Many people have put money in the bank to avoid the risk of equities. As we see signs of stabilization, we are going to see the cash bubble burst and money will pour into equities and commodities. I think the cash bubble has given the DEFLATIONERS a sense of security---which I might add has been valid in the short run---BUT IT IS GETTING OVERDONE. No doubt we have seen demand destruction, but as these government programs begin to work, we will see a resurgence of demand.
I heard a prediction of $600 gold for 2009 made today. Back in late 2007 many of the pundits were calling the bottom in the financials and make predictions to buy the investment banks based on their "valuation". See talking head Ben Stein talk about how cheap Merrill Lynch was at $76. I will embed the youtube video at the end of this post. I have tried many times to have Mr. Stein on our show, but he will not respond. Of course if I were him I probably wouldn't respond either. The fact is many people are refusing to face the realities of what have happened this year and what is going to happen. We keep attaching to theories such as "we are still the world's reserve currency" and others. Things are changing and like it or not, the dollar is going to fall and commodities are going to rise.
I have asked before "What happens if China rebounds first?" I believe that they will and I think it will have a devastating effect on our economy? They will rebound first for a couple of reasons. First, they have less banking problems than we do. They are also using a very smart plan to improve their infrastructure and best of all--THEY ARE PAYING FOR IT WITH A SURPLUS. Don't forget that growth is just slowing in China--domestically we are declining. So as they rebound and cause price pressures, we are going to still be slowing and faced with rising prices. The Chinese are going to continue to consume oil and natural gas---more and more every year. This demand will get inflation going again soon--whether we are ready or not.
Do I think gold can fall in the short run? Yes, I think we are so scared of deflation that anything is possible in the short run. These markets are definitely not rational and I am trying to position size to make sure that I can stay solvent until they return to a rational state. Over the long haul--and I don't know exactly when--Schiff will be right about the price of gold and the dollar.
I am not a gloom and doomer, but I think we are talking reality here. Again, I had many comments to yesterday's post saying that being early is equivalent to being wrong. Not when investing. Schiff was early---BUT WAS HE WRONG??? WATCH THE VIDEO AND DECIDE.
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