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128 replies to this topic
Posted 27 February 2003 - 08:12 AM
JIMBO's TECH GAMING THEORY
Tech is going to be gamed all the way to the bottom.
Why - becasue it was the most overvalued sector and thus had/still has the MOST DUMB money in it.
The smart money always takes the opposite side of the trade to the dumb money.
Tech is still full of hopers and dumb money.
The smart money knows this. They know that every tech jam job will be followed by an avalanch of dumb money hoping not to miss the magic bottom and to ride the new tech boom and recover their losses - which will never happen.
The smart money NEEDS the dumb money - but this rule does not operate in reverse. The smart money must go to where the DUMB money is.
Posted 27 February 2003 - 09:10 AM
I would guess the dumbest money is just dollar cost averaging into the S&P 500.
The index now has a 7.6 trillion total market cap and dividend yield of 2%. Who really wants to buy a diversified junk bond yielding 2%?
Posted 27 February 2003 - 09:44 AM
And I'll say that I think there's some very, extremely, outrageously, enormously, dumb money in bonds right now.
Guaranteed destruction of value up to 5 year TBill maturity via the miracle of negative real rates of return and a shocking 4.73 yield on the 30 year (!). Oh yeah, there's no risk that somewhere between here and 30 years the freaking rates are going to go up. Nope, nothing to see here, keep moving.
I would LOVE to get back in front of my econ professor and have him try to explain how you can have an increasing PPI and a falling bond yield. The hemming and hawing would be priceless.
Man oh man, there's going to be some unhappy campers when the bond market lets go!
Posted 27 February 2003 - 02:21 PM
low volume=no buyers. Once the shorts stop covering, the no bids scenario unfolds and .... CRASH!!!Uhm, Pile, the text actually says quite the opposite:
Maybe I'm just a wishful thinking bear.
Posted 27 February 2003 - 03:32 PM
Many (if not most) prognosticators, newsletter authors, etc. make their money NOT from following their own advice ... but by selling their advice to people who desperately want a mechanical system that works more often than not. Sure, there are a few exceptions (e.g. Stan Weinstein, who sold a book on his methodoloy in the 1980s and then proceeded to fade away from the retail scene in order to make a living by using his methodology in his own account).
With self-interest driving most activity today, does anyone honestly believe that there would be so many prognosticators willing to spread the wealth far and wide by revealing their secrets for making money in the stock market?
I know this sounds horribly cynical, but it comes from several years of paying for (and following) the advice of these "prognosticators." The reality is that there is no consistently reliable mechanical system for making money in the stock market. If you think there is, you probably haven't been in the market very long ... or you rode the last great bull and mistaked it for your own savvy trading ability.
BTW, I don't consider Doc's cycle analysis to be a mechanical system for making money. I look at it as a tool to limit risk. Essentially, I don't enter a position when the cycle of the timeframe I'm trading in is going in the direction opposite my position. Basically, I want to ride the wave - go with the flow, as it were.
Posted 27 February 2003 - 03:46 PM
Smart prognosticators make lots of predictions (read: make lots of bets) and then milk their "hits" for all their worth. It's all about statistics. For example, Prechter has been milking his "correct" late-1970s call all the way into the 21st century. You won't hear much from the thousands of his followers who sat on the sideline and watched the bull market of the 1990s pass them by. Like a broken record, he kept repeating the same mantra of a soon-to-come secular bear. Of course, he eventually proved to be "right" ... not because he figured out the system ... but because he held on and repeated his prognostication for so long that he would eventually be right. After all, nothing goes up forever. Hell, I could start making predictions for the next great bull market. And, guess what, I'll eventually be right because the market can't go down forever. If I live long enough, I might even be able to profit from such a brilliant call.
Posted 27 February 2003 - 03:56 PM
The chart you posted is only for the NYSE. My understanding is that it is the NASDAQ that has record high short interest. Of course, that could be a lie. But, I wouldn't assume it's a lie just because the NYSE short interest is not at record highs.
Posted 27 February 2003 - 04:09 PM
Yeah, but once the crisis is over, they always relinquish the additional powers they assumed. They are, after all, public servants. They never would do anything to permanently empower themselves at the expense of the citizens.
BTW, BARE, I don't understand the observation. Not long ago, you suggested that the American people might actually learn to enjoy and appreciate an intrusive government that makes them (feel) more safe and secure.
Posted 27 February 2003 - 04:50 PM
The Deficit Gamble
"We are completely dependant on the commercial banks. Someone has to borrow every dollar we have in circulation, cash or credit. If the banks create ample synthetic money (at the request of the consumer) we are prosperous; if not, we starve. We are absolutely without a permanent money system.... It is the most important subject intelligent persons can investigate and reflect upon. It is so important that our present civilization may collapse unless it becomes widely understood and the defects remedied very soon." --Robert H. Hemphill, Atlanta Federal Reserve Bank,1938...
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