I'm capitulating

I short-term trade, but with a bias. Right now it looks like the best risk/reward scenario is to have a bullish bias ("buy when there is blood in the streets"). In January the most lucrative thing one could've done was short tech, the IPPs, and telecom. Cut losses and ride the winners.

Right now, I think the best thing is to find stocks with no debt, lots of cash, lots of cash flow, low P/Es, earnings growth, dividends, good management, and, ideally, a military connection. In this environment anything you want can be found.
 
Originally posted by Vishnu
- the FDIC stuff was interesting. I didn't know that the FDIC itself lacks money.

- its true that unemployment was 28% a full four years after the crash of '29. However, Hoover also raised taxes a lot during that period, dampening both business and consumer spending. There was zero fiscal stimulus after the 1929 crash which is very different from the current Fed policy.

- there is a simple reason P/E is important. Eventually, if P/Es remain low and interest rates remain low then nobody is incentified to remain public. Companies will do MBOs and LBOs because the money will be cheap. This assumes some economic growth but in the long-run the economy has never not grown. All arguments assume some resilience in the economy, no matter how many "dips" we do.

- the Smoot Hawley tariff act preceded the crash but did not take full effect until later but the expectation of higher tariffs had a chilling effect. Smoot-Hawley was an across the board tariff which resulted in mass shrinkage of global trade. There is no comparison to a few steel and textile tariff increases right now.

- economic policy is completely different now than in 1929. Although Greenspan and crew are far from perfect its like comparing a brain surgeon with someone who cures people with leeches.
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It's true that there are differences in regards to the taxes and
money supply. The money supply (M1, M2, M3) today is currently
increasing as per government policy; during the Great Depression
the money supply shrunk which was one of the key causes of
the depression. The government under Hoover also had a
policy of "hands-off" and let the economy perform necessary
"liquidation". Also the taxes greatly increased during the
depression which put a further damper on business and
recovery.

Smoot-Hawley was not signed into law until June 17, 1930
by President Hoover. While the current tariffs do not match
the level of the 1930 tariffs; the trend is towards greater
& increased tariffs which will generally put pressure on
world-wide business & trade.


- Greg
 
Originally posted by thetraderprofit
OK. So, the FDIC only has $20 billion or so. So what?

The idea the US government wouldn't step due to some "inability" just ain't so. Remember who controls the printing presses at the US mints.
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People throw around "but the government can always print more money" as if the process is like baking a cake. You can always print more money but that doesn't solve the problem because money obeys the laws of supply and demand just like everything else.

Printing more money might settle some fears for oh about a week, but when you get violent and quick currency devaluation, then the real fun starts.

Ik
 
Historically we are still over valued, and the VIX is reaching relative lows, but look at it on a very long term chart (years). It's mean reverting and should continue lower over time. Also, the economy and the stock market are not the same thing, which is probably the most important thing to remember that no one is telling you. But if you are trading, dont pay attention to this, I know you have to for your IRA and what not if you have one, but as a trader don't concern yourself with it, when you have long signals buy em, when you have short signals short them.

Brandon
 
this is one of the few threads I've actually read from start to current finish. A very interesting read.

About derivatives...we talk about JPM's 'exposure.' Does anyone know what their cost basis is on the instruments in question? Did they take on LTCM's positions at discounts?
 
There are 5 Billiond Dollar managers long this market, graduate of Wharton, Harvard, Princeton and Oxford. There are smaller investors long this market.

Someone will alwys be right.

Follow the charts thats all you need to do. It keeps you in the present unlike everyone who tries endlessly to explain the past and predict the future.

Who the hell knows. I don't and never will.
 
"I'm capitulating. I can't take it anymore despite the mountain of evidence that one should be long this market."



Vishnu,

No offense -- BUT how can somebody take on the handle of Vishnu and then allow his intellectual attachment to what should or could be cause such suffering??? Wouldn't the wise and illumined man get out of his own way and allow his Self to get into harmony with what is...

PEACE and goodtrading Vishnu,
Publias
 
Yep, we need more traders thinking this way......more to throw in the towel.....more funds, more mom and pops to throw in the towel.


More post like the intro to this and maby i will try to rationalize a reason to go long.


Oh yea, i forgot, we are "technically" oversold


er
 
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