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LOL!

You know you should PM Doc about fixing it so you can carry your membership date and posts if it matters to you. I believe he did it for "Mr. Hanky" when he changed handles.

BTW, It is a clever handle! :lol:

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First, the only positions I have right now are shorts. To me shorting is much less risk considering valuations, the economy, market direction, February, etc. But looking at a graph of the VIX since 1998 I was struck by one thing. I had started thinking that Adam Hamilton's method of staying short until the VIX hit 50 seemed like the style most fit for the likes of me. But looking back I noticed that since 1998 the VIX had hit 50 or above only 4 times, two of those being in July and October of last year. I'm starting to think that 50 is more the exception than the rule, and except for those 10 sigma events like 9/11 that maybe VIX 40 or even 35 might be safer covering points. This current rally seems pathetic so far, but if it were to get some legs to it....for myself I know I've gotten way too complacent about my positions. Another point worth mentioning is that the VIX has usually gotten at least to 20 over the last 5 years on the rallies, whereas this time it only made it down to 25. Have things changed so much over the last year?

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Sorry for the spam tonight. But, I feel it is time for another review of how we got here. Just a reminder of a post I put on the old board.

 

90's in a nutshell...

 

In December of 1992, NAFTA was signed in to law by George Bush senior. Good bye jobs. Literally thousands of companies have moved to Mexico. So much for production.

 

1994. Joseph Lieberman (D-Conn) introduces a bill to the Senate floor to stop the FASB from accounting for stock options appropriately. The vote is 88-9 against the FASB.

(Senator Carl Levin D-Mich was against the bill and is even currently against abuse of options).

 

The market goes in to full swing. Many CEO's become just like movie stars. In actuality, all they really did was go on a debt/M&A binge.

 

December 1996, Greenspan's irrational exuberance speech. Dow-6300, Nasdaq 1300. Market anal cysts and economists get angry at Greenspan.

 

Greenspan does NOTHING except raise interest rates 3 months later 1 time. He does not raise the margin requirements like he threatened to.

 

Many companies start using Pro-forma earnings. Due to the 1994 Senate vote, the abuse of options by CEO's starts.

 

CEO's and boards decide to start purchasing other companies and adding the other companies to their own. They borrow money and exchange stock most of the time.

anal cysts and brokerage houses recommend stocks just to get the underwriting on the companies bond debt (investment banking). They also hope to get in on the M and A deals (mergers and acquisitions) and why not? The company will need to beat earnings again next quarter, and the only way to do it is to buy XYZ company and add their earnings in.

 

Companies like Cisco, stock pool to high heaven. They purchase every company that might be a competitor. As a result, they are able to charge more for their routers and telecom equipment, further exacerbating debt levels by telecom companies.

 

Companies completely abondon dividends. 80% no longer pay dividends at all. They split their stock constantly. See Intel, Cisco, etc.

 

During an old aged pipe dream, Greenspan decides that the US is in a "New Era:New Economy" and valuations do no matter, niether do dividends.

 

Greenspan starts lowering interest rates to prop up the stock market and creates an enormous housing and consumer debt bubble. His rate cuts only create fantastic bear market rallies. Many companies have enormous debt. Ford, GM, GE, Verizon, Daimler Chrysler, Enron, Tyco, JP Morgan, Bank of America, Citibank.

 

The market is still over valued. Greenspan should have let the excesses of the 90's wring out. Now, he has created a stock market bubble, consumer debt bubble, corporate debt bubble and a housing bubble. IMHO, even if he had made a mistake, he could have stopped the housing and consumer debt bubble in its tracks. He failed to do so.

 

One more thing to add for all the bulls out there that are truly "Bullish" on the US economy and stock market.

 

We have become an economy that sells services and debt to each other. We sell some products to each other as well.

 

1. We buy and sell cars, jewelry, houses, furniture, mortgage loans, credit cards, boats, RV's, dirt bikes and jet skis to each other. We buy and sell vacations to each other as well. In fact, we are starting to look like the economy of a tropical island.

 

2. We produce almost nothing. One of the few industries doing well is the pharmaceutical sector where drugs are prescribed to millions of stressed out sheeple.

 

3. Many parts of the country produce nothing except housing inflation.

 

4. Lawyers are sueing as much as possible to pump every last cent out of the economy including asbestos claims and medical malpractice suits.

 

Lastly, I am not sure I need to remind everyone, but the P to E on the S&P is still sky high.

 

See for yourself SP P to E and earnings.

 

With a historic P to E of around 15.8-16, the S&P is still grossly over valued.

When stock options are included, BS pension gains are removed, the core earnings of the S&P probably drop to $20-$25 a share. Last count was around $18.47 a share. So, that puts us at a P to E of 34-47. No one really knows because of all of the BS surrounding earnings.

 

The Dow P to E is supposedly 20.8 with a 2.2% dividend yield.

I cannot find the dividend yield on the S&P right now but suspect it to be around 2.0%.

 

Historically, a stock was not highly favored if it did not have a dividend yield of at least 3.0% and a P to E of 16 or less.

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Hey Guys,

To some of you who are concerned about one aspect of what Midnite is refering to check this out:http://www.stockwerld.com/marketeye.htm

Add this to what MK has already noted regarding the Hulburt bearish sentiment readings, in addition to the overwhelming glee I'm noting from you stoolies, and wouldn't it just be like Mr Market to go up a few hundred points from here!

But I do not know shit!

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So now PM Mr. Hanky and find out what you are really supposed to do.

 

It really doesn't matter much to me- I was never a prolific poster here anyway. I'm more inclined to Piledriver's style of investing- short and hold. I've been riding BRKS now since 13.50. I almost covered it until he said it was in his POS portfolio. He's right about shorting the ones that never reached the glamour status such as some of the superstars of yesterday. And I do play a little QQQ's daily for my adrenaline rush.

 

S0- THANX, PILES!! and THANX, SG!

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Welcome everyone to the time window for Geo Political Sigma 10 full on Market Menstruation. We have simply not had a surprise event descend on the paper scheme for sometime now. We are in fact overdue. I would suggest it is right in there in the chart, sitting like "Waiting for Godot" right on the neckline jugular. PigMen are so confident that a bloodthirsty move on a ransacked third world country will solve all their problems that I think something,somewhere is being missed. Remember last year and the year before when you couldn't look up without seeing flying squadrons of Elephants on XLax buzz bombing us every 2 months or so with shocker revelations? It was like living in freakin London circa 42 when Adolph was sending over V1s every other morning. We are overdue our next batch. I can't say from where or exactly when but we are overdue. The sheer arrogance of denial and moronic expansionism that gets trumpeted daily in Washington is enough to beg a sudden reversal of fortune. buddha

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