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Latest Comments43 Comments
John Hussman: The Market Is Not in Uncharted Territory
Listen, I'm having trouble with a math problem. Can you help me prove this: "Every even integer greater than 2 can be written as the sum of two primes."
Thanks
Four Commonsense Clues to a Genuine Market Bottom
Take a look at Jeff Rubin's (CIBC World Markets) report that attempts to provide hard evidence that each major economic downturn this century was immediately preceded by a spike in oil prices. Note that I'm not saying that *I* believe that this is the case, I'm just pointing out a potential body of evidence that argues the point counter to yours. Make up your own mind. Here's the link to the report:
research.cibcwm.com/ec...
The chart/data that I'm citing is found at the bottom of page 4.
John Hussman: The Market Is Not in Uncharted Territory
It's difficult to respond to your post as your initial comments are "I don't know what your exact method is, but..." then the remainder of your diatribe goes on to challenge what you imagine my method to be.
What shall I comment on--the actual methods that I use or the words that you've put in my mouth?
When you elect to pelt me with comments like: "You seem to believe that making these kinds of returns is easy" and "Do you believe that you can establish cause and effect based on 8 trades?" and "I guess it must be easy for you but impossible for the rest", it suggests to me that you're having a conversation with yourself, not me.
Here's the spill:
1. The eight trades that I listed weren't the only trades that I've made this year, there were many more trades, and many, many were losers. Each losing trade, however, incurred a maximum loss of 6% on only a partial initial position size. In other words, if I intend to commit a total of $100,000 to a position, I will never lose more than $1800 plus commissions. No exceptions. I add to all successful positions using very strict guidelines and I'm not afraid of taking partial profits.
2. Yes, I do this full-time. I lost $30M earlier this year when the financing for my software company fell through (investment bank went tits up due to subprime exposure, among other things). The capital that I use to trade is all that I have left in this world--so I take trading very, very seriously.
3. I don't care about profits. All I care about is managing risk.
4. I have patience. More than 70% of my gains are realized in the last 20% of the time that I hold my positions. I'm still working at mastering the skill of sitting still; this is really, really hard. That said, I've been taking profits much more quickly during October and November. I'm sitting in a relatively high % cash right now.
5. Yes, I'm still in the market. Of the eight trades that I've mentioned, I'm still holding the BRK/B short, still holding USD against CAD, and I'm still short crude oil... there are a few others.
In your comments, you used the word "believe" several times. I don't trade what I believe. Frankly, the market doesn't give a shit what I think. I only trade what's right there in front of me, what I'm seeing occur. If a trade isn't going my way and I'm stopped out (100% of my trades have stops in place, no exceptions), all it means is that I was wrong. That's it, I was wrong. So what? I try to let it go like a bad first serve in tennis, my second serve doesn't have to be affected by my poor first serve--unless I choose to let it adversely affect me. Hopefully you get the idea.
I'm not going to comment on technical analysis here because my description of it won't make you understand it any more than you think you do now. As for being special, believe me, I'm not. I'm just interested in making some money and repaying my investors so that I can get back to my research in number theory.
Best of luck in your future trades.
On Nov 17 08:30 PM Vladimir Senkov wrote:
> Jase,
>
> Congrats on your 8 good trades and your high YTD return.
> Why do you think that any of this has something to do with TA?<br/>I
> don't know what your exact method is, but most TA methods I'm familiar
> with are an attempt at pattern recognition. Human brain is very good
> at confirmation bias. If you already believed that gold was "expensive"
> your TA would always confirm it.
> Do you believe that you can establish cause and effect based on 8
> trades? Have you closed all of them yet? My guess is no, since you
> are still in the market.
> You seem to believe that making these kinds of returns is easy.<br/>I
> guess if it's so easy you have probably already quit your day job.
>
> I guess it must be easy for you but impossible for the rest. What
> makes you so special? I know we are all special, but seriously?<br/>
>
> Good luck climbing the easy money mountain!
>
> On Nov 17 07:26 PM Jase wrote:
John Hussman: The Market Is Not in Uncharted Territory
Your comments regarding the futility of TA are amusing. "And did any squiggle-people predict the current bear market?" Yes, many did. But most of them wouldn't bother telling you about it. Unfortunately, you still think you understand what technical analysis is by reading about it from a Wikipedia page while eating a sandwich. It takes time to learn the art behind the science; in time you'll see the charts in a completely different way. This is about as kind a message as I can proffer considering that I gain nothing by telling you this. If you must know, this year I "used the squiggles" to:
- short gold (DZZ) at $970/ounce;
- short Encana (ECA) at $92/share;
- buy SKF at $89/share (more than once);
- short Goldman (GS) at $137/share;
- short crude oil (HOD.TO) at $119/barrel;
- sell CAD against USD at parity;
- short SPY at 130.00/share (via SDS); and last but not least
- short BRK/B at $4390/share.
The list goes on. How many long-side trades do you see? I've only been doing this for 18 months and my measly initial couple of hundred grand bankroll isn't big enough to crack the billion mark yet; this and this alone is the reason that I'm writing you--I'm still in the market. My 135% year to date return, however, suits me just fine. Doubt me? Send me your postal address and I'll fedex you my trade tickets. Take this advice: keep your toilet shut before discounting a method you know absolutely nothing about.
UltraShort ETFs: At a Tipping Point?
Ban on Short Sale Ends - Hold Your Breath
I'm fully aware that SKF tracks the Dow Jones Financial Index. I'm also fully aware that ProShares calculates the NAV based on pricing of the underlying at 4PM EST. My point was simply that the closing price of the underlying (DJUSFN) at market close yesterday was still below the closing price back on July 14th (approx. 270 vs. 287, respectively).
IBM: Reassurance from Big Blue
IBM is clueless. Do you really think that beyond their 1-year outlook that revenue will remain steady? Way too much exposure to emerging markets, way too optimistic an outlook. IBM should be trading below $40 if we're going to price in what's in store for them in this economy. Take a look at SAP. It's tanking. IBM is extremely overvalued. I wouldn't pay more than 5x forward for this bloated thing. Want to change my mind? Do two things for me: tell IBM to triple their dividend; and show me some earnings that don't rely so heavily on luck in the currency markets.
Ban on Short Sale Ends - Hold Your Breath
3 Stocks That Are Begging To Be Bought
36 Opportunities for the Beginning of the Bull
European Banks To Consider - Barron's
Five Energy Companies That Spell Opportunity
Total Returns %, 2003, 2004, 2005, 2006, 2007, YTD
Stock, 205.8, -1.4, 60.9 ,79.1, 29.2, -43.0
+/- Industry, 171.3, -21.5, 36.0, 58.6, 2.2, -11.0
+/- S&P 500, 179.4, -10.4, 57.9, 65.4, 25.7, -17.8
They are down over 60% from their 52-week and 5-year highs. Global recession, mild correction, major correction, upcoming depression--whatever your viewpoint is, China isn't going to stop growing. It may slow somewhat, but it will not stop. McKinsey's findings:
"By 2025, an additional 5 million buildings — including up to 50,000 skyscrapers, or the equivalent of 10 New York Cities — could be built in China, the McKinsey Global Institute, a U.S. consulting firm, predicted in a March report.
China could end up with as many as 221 cities that each have a population above 1 million, as a result of hundreds of millions of farmers moving to urban areas."
Add to this fact that a few hundred new vehicles (300M+) will be added to Chinese roads by 2015--this growth story may slow, but it WILL NOT stop. We are looking at the world's new super power jockeying for position.
Disclosure: I'm long platinum (ELR.TO, the commodity itself, and a few ETF's; catalytic converters will still be in heavy demand going forward), I'm long Petrochina for the reasons stated above, and I'm long steel and infrastructure (MT is strategically positioned to service China's growing demand).
In my view, this global market meltdown--though seemingly severe right now--will look like a hiccup when viewed in context in five years from now.
The world is not ending. We are just about to commence the biggest bull market in the history of civilization.
Bottoms are violent.
Batteries Drive Buffett Back to China
On WaMu's Birthday, JPMorgan Takes the Cake
I applaud JP Morgan's patience and opportunistic (if not predatory) actions. Clever bastards. Good for them. And I won't shed a tear for WaMu's shareholders (don't talk to me about post-bankruptcy pain, I was a shareholder of BRLC and IMBD; both went tits up earlier this year but I was absolutely aware of the risks involved).
I'm certain of one thing, when all this nonsense settles down (weeks, months, years from now), those that are left standing will be stronger. While it may not be apparent now, I'm of the opinion that that benefits us all.
If you think my comments are crass, I recommend that you skip work tomorrow, arm yourself with a bowl of ice cream, and sit down cross-legged in front of your TV and take in a few hours of old-school nature shows. Kenya, lions, impalas, African plains, all that.
Pay close attention: weak things die.
Happy Birthday WaMu.
Oppose the Treasury's Bailout Plan
Despite his uncle-that-never-seems... appearances, Ben Bernanke is brilliant. Really. I got fantastically liquored up once and elected to read:
"Long-Term Commitments, Dynamic Optimization, and the Business Cycle by Beb Shalom Bernanke, MIT 1979"
This is Ben's doctoral thesis. I kid you not--he's a smart, smart lad. But alas, Mighty Ben of the Academic Jungle, there are grander rules at play at all times--rules that, in time, will make a violent mockery of your bailout efforts. Long term stochastic processes get very, very angry if they are tampered with.
I'm not American...I'm Canadian. I beg of you, for your sake, for my sake, for the sake of the world: do not, under any circumstances, allow this bill to pass in Congress. You're about to distribute into public coffers the assets that the private sector itself was unwilling to buy.
This should frighten you to your core.