"I think he's been calling "all-in" short for a long while."
Since Dow 14,100 to be exact. But with triumphant gains come opportunities to lever it up or be patient. If you are late to the party, you have to respect the coiled spring at this juncture.
Be smart (100% cash) or be patient, as I've been saying in commentary, there is always an infinite distance to 0. Our deeply corrupt government corporatocracy will use all of it.
But let's be clear, I have said loudly, since October 2007, that all people with brains should move to cash and Treasuries. The bulk of my cash is in the U.S. Treasury. If you wait for the other $15T in bank deposits to panic, you might have to pay A LOT to convince someone to open the shelter door.
Systemic risk is high. It is very high. Not to mention we are in a market where the government changes the rules daily, pumps the news, pumps futures, pumps indexes, and are generally desperate to save themselves. In this environment, only gamblers dwell. In this context, "all-in" means all you can afford to lose and not notice. Otherwise, take my advice and protect your capital in cash.
If you want to lay down a life-changing bet, ever, then you have no confidence in your own ability. There will be endless opportunities to put it to the man in a market like this one.
Wednesday, March 25, 2009
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I don't want to be disrespectful in any way.
ReplyDeleteHowever, I think this means that it is time to face reality and GET OVER all of the talk concerning an infamous wave 5 that just never happened to show up.
It appears that this rally really has some legs. I had some shorts at Dow 7200. I guess it is time to eat those losses and move on. I guess the market can't just fall continously.
Do you mean cash as in brokerage account cash, FDIC insured bank deposit cash or buried in the back yard in a coffee can cash?
ReplyDeleteFDR recently there has been a lot of talk about the dollar being replaced by a new currency.Both china and russia as well as top investors have called for it.If that happens dont you think Dollar will suffer a massive fall before it is replaced and other emerging market countries currencies will appreciate? Looking forward to your thoughts on this as it has global ramifications and key to understanding where the dollar might be down the line.
ReplyDelete"Do you mean cash as in brokerage account cash, FDIC insured bank deposit cash or buried in the back yard in a coffee can cash?"
ReplyDeleteI mean a year's cash in hand, the rest in the Treasury. Any large bank failure, which will happen--Citi and BoA are basket cases--will suck all the physical cash out of the system quickly. We do know that when we know it will be too late.
"If that happens dont you think Dollar will suffer a massive fall"
ReplyDeleteNo, because fewer dollars increases each remaining dollar's value. That is why the dollar is on the march higher - no borrowing demand.
FDR i agree that with fewer dollars in the system, dollars will remain strong .But any estimate as to how many dollars are floating around in the world and how much have been destroyed and how much will be left say one year down the line? Maybe this would help us better understand the dollars inherent strength and help us in storing cash.I would also request you to add a USD index so as to track the dollars movements.
ReplyDelete"But any estimate as to how many dollars are floating around in the world and how much have been destroyed and how much will be left say one year down the line?"
ReplyDeleteIt's impossible to say how much currency banks counterfieted at the height of the subprime insanity and how much of that cash has not already been tucked away or burned in the bonfire, but as I've said before, real estate prices are one of the best high volume gauges of dollars left circulating to affect prices.
Anonymous said...
ReplyDelete"However, I think this means that it is time to face reality and GET OVER all of the talk concerning an infamous wave 5 that just never happened to show up."
Here's a different interpretation of what is happening. The action from last Oct to the Mar lows could be considered a primary wave 1 down, with where we have been since being primary wave 2 up. This would imply that this leg up will get to around Dow 9800-10000 before a primary wave 3 begins that takes us on a long ride down to new lows. This action would not be unusual, and it fits well with what has happened thus far.
Of course none of this happens in a vacuum. Dear Leader is going to the G20 next week, and emotion-driven volitility seems to be a likely situation next week.
Hi FDR,
ReplyDeleteMiss your posts!