Weekend Happy Print

[beardrech]

Over and Over and over again like a mantra the anecdotes of Baruch Kennedy and others answering the proverbial question:What did you do that made yu so rich??

===I always sold too soon

 

beardrech Selling too soon doesn't necesssarily make you an immediate winner but it ceratainly gives you enough chips to eat after the casino closes--

Its time gentlemen;its time

 

pps Thanx Dmm for reminding of those days

 

pps Forget about the big killing;Think Survival,Survibal ,Survival repeat to yourself on a daily bassis---

 

Another semiotic excrescence--nothing i achieve lately gives me more than a minimum amount of happiness--its as if I hear a Greek Chorus continuously singing louud and clear; and i cant help it

[Henny Penny]

Interesting discussion this weekend.

 

As I see it , the real issue is does economics trump politics ? what I mean is this:

The markets are used for political purposes - this is no secret. example - homeownership/mortgages lead to incredible political stability. It keeps folks happy on the one hand ( pride of owning a real tangible and universally valued asset) , and enslaved on the other hand. The purpose of life is no longer in question - why its obvious , the purpose in life is to do whatever it takes to meet your mortgage obligations.

 

The level of hubris and optimism currently present in both stocks and real estate - from a purely markets perspective says , the end in near. What I am unsure about is this:

Did things change in some fundamental way round about 2001? Did the govt decide that stocks/bonds have reached a level of importance in maintaining political stability - that extraordinary measures have been/will be taken to preserve the illusion of ever increasing "wealth""? If so , betting against stocks /bonds will continue to be an uphill battle. It is usually much easier to make money doing what the govt is encouraging.

Or - are things really out of the hands of the govt - because they are now international in scope? Does this make the govt even more aggresive in maintaining the status quo?

 

Ultimately, my personal bias is that economics will win. You can manipulate public sentiment and short rates only so long - ultimately economic reality will prevail. If I did'nt believe this i would stop playing the markets = period.

[Metamucil]

Interesting macro string this weekend, as per usual.

 

Just thought I'd throw my two cents in.

 

I've long been an informal student of semiotics---the study of cultural signs and symbols and how they predict or confirm political and economic trends or reversals of trend. A good example would be the proverbial cab driver giving out stock tips. A less good example would be the length of hemlines and stock market direction.

 

Sometimes cultural signs simply confirm the obvious. I lived and worked in SF during the dotcom daze. I knew instinctively that it would end badly. All the signs were there. I remember well going to my 60ish Korean barber in 1999 and listening to her feverishly trade tech stocks while she cut my hair. She would cradle a phone in her neck and yell to her broker "Buy Cisco! Buy Cisco!"---in order to be heard above the blow dryer---while she snipped away. As that blue-collar comedian says, "There's your sign."

 

But signs of this nature are very poor timing devices. For example, in the immediate term, my Korean barber's actions were simply saying that rampant financial risk-taking had essentially reached every echelon of American society. And that's essentially bullish...until it isn't. But placed in a broader historical context, it was also a sign that the party was reaching its apogee...or nadir, if you prefer. In short, the fat lady hadn't yet sung, but she was warming up in the wings.

 

Yet as we know, the time between when the fat lady is warming up and when she actually sings often proves to be the most frenzied of all, and can prove devastating for those who make their move too soon (i.e., selling short tech stocks in mid-1999.)

 

Over the past six months here in California, I've had a few dozen "Korean barber" moments in regards to real estate. That picture Windy posted of the IndyMac branch next door to the scrapbooking storefront was just the latest in a long line of cultural symbols that are warning of a coming RE downturn, IMO. I am more agnostic regarding equities, though I believe they will provide little safe harbor in the intermediate term as well. But who knows.

 

My semiotical concerns, though, extend more to the longer-term, macro-environment here in the U.S., rather than to specific, perhaps overextended assets classes.

 

I had the opportunity recently to spend some time with a few kids just out of college. They graduated in 2004. I was interested in how they viewed the world, what opportunities they saw for themselves, their level of optimism or pessimism, etc. All three were graduates of the UC system, still a quality degree. Smart kids with good prospects. Two had business-related degrees. One had a degree which she hopes will lead to some kind of special education or teaching position, maybe grad school.

 

All three are working, but not exactly at their dream jobs. One is a waitress. One temps for HRBlock. One works for a retailer and is thinking of getting into sales. But they are young, so it is natural to not know exactly what to "do" with your life at this age. None of them were terribly optimistic about their job prospects, but not particularly pessimistic either.

 

It lead me to reflect about when I first got out of college. I'm nearly 50. I left UC Berkeley in 1977. Things were very different then...or were they? Jobs were nearly impossible to find. My first job was one of those SETA positions---government-sponsored. We were just emerging from Watergate, Vietnam and the oil crisis. Cynicism was epidemic. Carter was in the White House and was telling us to lower our expectations. Jerry Brown was the Zen governor of California who lived in a one-bedroom apartment and drove a used Plymouth. One of the most popular books among my peers was "Small is Beautiful."

 

The stock market had fallen 50 percent in 1973-1974. Inflation was soaring: 8.7% in  1973, 12.3% in 1974, 7% in 1975. My father was a real estate investor and had a good deal of money in the stock market. By mid-1974, the financial pressures were taking their toll. He had a heart attack and died in July of that year, three months before the nominal bottom.

 

So as you can see, sentiment was terribly pessimistic. People were hurting. Some, like my father, didn't make it through. And yet...by 1980, California RE values had doubled as had stocks. My father was worth three times as much five years after his death than on the day he died.

 

And as we all know, that was just the beginning. Stocks took off in earnest in 1982. It was "morning again" in America. And the pessimism and cynicism of the 1970s was just a sour memory.

 

Fast forward to today. As in 1973-1974, the SPX declined 50% from 2000-2002. But it hasn't led to a period of cynicism and despair. Just the opposite. The job market is more or less moribund, not entirely dissimilar to my experience after leaving college in 1977. The kids I spoke with are having the same kind of difficulty finding decent jobs as I did. Yet no pessimism.

 

Where we had political leaders in the 1970s telling us to lower our expectations and that 'small is beautiful', today our leaders are telling us to consume more and that 'bigger is better.' The governor of California doesn't live in a one-bedroom apartment and drive a used Plymouth. He's an ultra-rich movie star, and former world champion body builder, who lives in a mega-mansion in Beverly Hills and drives a tricked-out Hummer. Our president isn't a mild-mannered peanut farmer but instead the scion of one of the world's wealthiest and most powerful families.

 

So while the economic backdrop today---recent stock market activity and employment landscape---is not wholly dissimilar to the mid-1970s, the cultural and political mood is 180 degrees apart. The economic and political dislocation of the 1970s led to a period of retrenchment, reflection and pessimism...which ultimately resulted in a 20-year economic boom the likes of which the nation had never seen. The economic and political dislocation of the early 2000s has led to a period of even greater risk-taking and expansion...which will ultimately lead to....what?

 

The three college grads are playing their part in this.

 

One just teamed up with a college buddy to buy an $800K home in the Bay Area. The down payment came via his buddy's inheritance. Neither works full-time or has any assets. Yet they were unsurprised they were able to get a $700K loan. They see this as an investment and the best way to make a "few hundred thou" in the near-term.

 

Another is trying to get a position with a start-up in the Bay Area. He is optimistic that the company could go IPO and he wants to get in early to benefit from an options windfall. In the meantime, he is playing online poker and plays no-limit holdem' often with a group of friends. He says that poker was very popular in college and he dreams of entering and winning the World Series of Poker someday.

 

The third is having a tougher go. She broke up with her wealthy San Diego boyfriend---sailboat, RE, BMW---and found herself wallowing in credit card debt. She is moving back in with her parents next week. Her parents aren't baking her a cake in celebration.

 

So in the immediate term, all is well. Risk-taking and consumption is alive and thriving, extending from the highest offices in the land down to those just graduating from college. That's bullish, until it isn't.

 

But if we do have a reversal of fortune, it could be said that the signs were there.

<{POST_SNAPBACK}>

 

The poker scene should not be overlooked as an indicator of excessive speculation.

 

I like relatively early exits from manias.....and then just wait for the flip side....which is also a mania to exploit.

 

Some stox have gone up several hundred % each and every month.........those were manias, too. Similarly, others have collapsed and if short, the players were manic (if they covered with discipline). More will begin tomorrow....and Tuesday

 

There is always an emerging mania for you to exploit. Acres of diamonds everywhere.....but the search is lonely and daunting......as it should be, if early entry is desired, imo.

[Jimi]

Great weekend thread.

 

[capitall]

....

 

Mark, what did your nephew think when he visited you in LA a month or so ago? Did he leave wanting to go back to begin training to become a computer programmer, teacher, nurse, etc.

 

What surprises me is how there is no discussion of any of the above on any of the 1,000,000 frilly news programs that exist today.

 

I have not seen nor heard discussions on the affects of Allen Greenspan Inflato-Rama economy and how it has changed our world from one where people once pursued goals and careers in life based upon their own interests and beliefs to one where people now pursue careers and goals in accordance with where Greenie and Group has steered the economy. In this sense, we really no longer have a free society.

 

Where are all the journalists that were moving from cardboard box to cardboard box interviewing the homeless back in the Reagan years?

<{POST_SNAPBACK}>

 

what a great post!

 

but what i ask myself: Is this beaviour really something new? Isnt the US the country on earth where it is all about "making bucks"? At least it is a bit more important than in western europe i would say. Teachers dont get paid well since decades in the US, dont know if it was better decades ago. In germany a teacher gets paid well, maybe to well.

 

...........

<{POST_SNAPBACK}>

 

Well, yes, the U.S. IS the country in the world where at least the mainstream of things is all about "making bucks" although there are small segments of society focused on spirituality or other matters. But almost the whole world wants to pour into our borders as immigrants here. Most everyone in the world wants economic opportunity if they do not have it where they grew up. If the U.S. did not already exist, it would have to be created for this reason. In fact, it WAS created by the world's desires for such a place. And being a mixture of people from every country in the world and every ethnic and religious background, in a sense the U.S. IS the world. It is the world on the drugs of credit and speculation. And this has leaked back to other countries in the world too, that copy our ways and now have their own excess credit and speculation.

 

Economic opportunity is a great thing. But I think we went overboard in the U.S. You see that all the time. A person or a society gets a great thing going, but they go too far with it. Far too many folks here have forgotten about the real economy-- the creation and exchange of useful goods and services. When that happens, it does not end well. Reality eventually bursts into the Fantasy Island of the Bubbles, and the longer reality has been ignored, the more problematic it will be by the time it is faced.

[zman]

this really has been an educational weekend here and really appreciate all these excellent posts. I have the same feelings as all of you and when I look out into the near term future is scares the daylights out of me. I personally do not purchase stocks as I trade the futures markets but my wife has mutual funds and her 401k at work. Just keep up the great posts

[capitall]

from www.dowtheoryletters.com

from a recent Crapvision interview of Julian Robertson by Ron Insana.

 

Legendary Funds Manager Predicts Utter Global Collapse Stemming From Bursting of Property Bubble

 

Blames Bush-Cheney "regime"

 

In a recent interview on Crapvision with Ron Insana, one of the "old-timer" funds manager, Julian Robertson, predicted "utter global collapse" as a consequence of the bursting of the world-wide property bubble.

 

Often called "Never Been Wrong Robertson", the former head of Tiger Management (once the largest hedge fund in the world), is extremely worried about the speculative bubble in real estate.

 

Specifically, he is very worried about a world that is sustained by American consumer spending which is in turn 1/4 sustained by a property bubble. He predicts that 20 million people could lose their homes once the property bubble bursts.

 

Even more worrisome, he thinks central banks around the globe out of desperation will try to re-inflate the world economy with more liquidity that will create an inflationary spiral unseen in the economic history of mankind.

 

"Where does it end?", Insana asked Robertson. "Utter global collapse," he answered. But not just economic collapse ... collapse of epic proportions. Collapse and disintegration of all infrastructure, including government. Inflation will run into the double and triple digits. "Food production will fall. People will be carrying around U.S. dollars in wheelbarrows like Germany," he said.

 

There will be "total collapse of public infrastructure. Total collapse of medical care systems. All public pension plans, Social Security will collapse. All corporate pension plans will collapse."

 

"The American consumer is effectively now supporting the rest of the planet," he continued. "Consumption rates in all other nations are falling, have fallen to the point that the tax revenues to governments, that the business and industries those nation states are providing is now a net negative number relative to total debt service and public cost, that this exists in virtually every nation state on the planet now."

 

And for much of this "doom", interestingly, he blames the Bush-Cheney "regime".

 

"They have now consolidated power and money on the planet to the maximum extent possible. The planet's net liquidity, that is its, net free cash flow. Is now a negative number. The planet is not simply sinking into a sea of red ink; it is already sunk. The people just don't realize it yet," he said.

 

According to Robertson, "the Bush-Cheney regime is preparing the nation for transition from democracy into dictatorship because a dictatorship will be necessary to control, in 5 years time, food and water riots." He said "the federal government, that part of Patriot II Act, the internal exile, that the government is going to have to build now huge detention compounds on federal lands, probably in the West where the land is available, to potentially house 50 million or more citizens that will be in financial ruin."

 

In 10 years time, whoever is left will be effectively starting again, he said.

 

"More importantly, and I'm trying to think how we imply this or how we express this to the people, what extraordinary times we are living in and how the destruction of the planet has been engineered by the Bushonian Cabal from 1980 to 1992, and then from 2001 to present, which has effectively destroyed the economic liquidity of the planet," he said.

 

Robertson ended the interview by saying that he hopes he is not alive to see this.

 

"The lucky ones are the ones who are my age now," he said.

[DrStool]

There is no way that interview could have aired on Crapvision. I just find that incredible.

 

Did you actually see this in Dow Theory Letters?

[capitall]

There is no way that interview could have aired on Crapvision. I just find that incredible. 

 

Did you actually see this in Dow Theory Letters?

<{POST_SNAPBACK}>

 

Yes, it is in Friday's issue. At the very end. Ask anyone who has a subscription.

[capitall]

I sure hope this Robertson guy is wrong and just is suffering from depression or something that is clouding his vision. Talk about "ending badly." This is definitely the most pessimistic prediction I have read.

[termin-Al]

... In the meantime, he is playing online poker and plays no-limit holdem' often with a group of friends. He says that poker was very popular in college and he dreams of entering and winning the World Series of Poker someday.

 

Today while walking into my local Albertson's to pick up some Sunday morning doughnuts for my kids, there was a sign advertising an event at which Chris Moneymaker would be on hand to sign some worthless poker chip.

 

This I don't get. I wouldn't step out of an unserviced port-a-john in the 110 degree Phoenix heat to get some stinking, worthless poker chip signed by Chris Moneymaker!

 

I simply do not understand this obsession and fascination with celebrities. It is a full time job keeping my kids from becoming involved in it.

[zman]

from www.dowtheoryletters.com

from a recent Crapvision interview of Julian Robertson by Ron Insana.

 

 

Gosh, this is really making feel depressed even more than I had already felt about the future..

[capitall]

... In the meantime, he is playing online poker and plays no-limit holdem' often with a group of friends. He says that poker was very popular in college and he dreams of entering and winning the World Series of Poker someday.

 

Today while walking into my local Albertson's to pick up some Sunday morning doughnuts for my kids, there was a sign advertising an event at which Chris Moneymaker would be on hand to sign some worthless poker chip.

 

This I don't get. I wouldn't step out of an unserviced port-a-john in the 110 degree Phoenix heat to get some stinking, worthless poker chip signed by Chris Moneymaker!

 

I simply do not understand this obsession and fascination with celebrities. It is a full time job keeping my kids from becoming involved in it.

<{POST_SNAPBACK}>

 

I think it is part of our American fascination with economic opportunity and money. Those who make a lot of money in sports, acting, or poker are thought to be superior to other people, even if they contribute nothing of value to the world. If you teach your kids to do useful things and to have fun, and to pay attention to "celebrities" who actually make a contribution to humanity, they might possibley see that these other people who are worshipped, for doing nothing of value to anyone, are not such hot stuff.

 

However, one can't force one's children's to like different things and people than they like. So if they do decide they love empty-headed actors, actresses, poker players etc., because their peer group does, then maybe there is a lesson they will have to learn in the future about how empty such an obsession is. We can't protect our kids from everything.

 

It would be great if humans could learn from others' wisdom or experience. And some do. But most of us have to pee on the electric fence ourselves before we learn, and that is just part of being human I guess. It is hard to watch our children do this for sure. But once they have done it, they often learn a valuable and useful lesson that lasts them a long time.

[Pigeon Drop]

Hypertiger must have escaped Canada and is running amok impersonating Julian Robertson! I too find it unbelievable that such an interview would have been aired on any NBC controlled station, or any other network for that matter. We do not yet have the Armageddon Network to watch.

[termin-Al]

Hypertiger must have escaped Canada and is running amok impersonating Julian Robertson!  I too find it unbelievable that such an interview would have been aired on any NBC controlled station, or any other network for that matter.  We do not yet have the Armageddon Network to watch.

<{POST_SNAPBACK}>

 

 

If they did in fact air that interview, they did so to portray him (or her, I don't really know who Julian Robertson is) and all others that question the viability of our current system as quacks.