Quantitative Easing for Children

Quantitative easing from Marketplace on Vimeo.

more reasons not to fuck with TBT

AFAIK the gov't isn't buying treasuries at this point, though they've said they could. they buy agencies (GSEs).

via
http://www.stereohell.com/door/

also check this wonderful artwork:
http://www.stereohell.com/door/strip/

leveraged ETFs are for gambling

Now I'm just a little blog over here, but I've said several times in the past that ETFs are very wonky in how they work. They don't buy stocks they do things with warrants, futures and options and force other people to go buy or sell. Its stripped the PURPOSE OF INFORMATION out of the market.

The purpose of trading is to determine the correct pricing for an equity. Traders buy and sell the thing and keep the price accurate and realistic (theoretically) or at least go probe the depths and heights of prices to see where people are going to freak out.

Think about the tape during the day. Those aren't all individuals making decisions. Most of those trades are machine driven, and most of THOSE aren't related to the immediately occurring price "discussion". They are to cover options, or as part of pair trades and vastly more exotic trading strategies. They are to cover warrants, to refill market makers' inventories, and in some cases to just swoop up a bunch of shares and hide them until later. Shares trade in dark pools of liquidity (cue eerie black metal soundtrack here — I suggest Burzum)

This is why the stock market is broken. Its not investing, its gambling, and the derivatives have selfishly removed the information component from the main market. Of course right now the information is this: we're fucked, its all over valued, sell sell sell !! Which is correct and as it should be. Would've been better if it had started a few years ago.

The Fly (as much he wouldn't admit it) has morals too:

While it’s true, being long 10,000 SRS on a 9 point day can be fun; it also can twist your stomach into knots when the opposite occurs, going up. For the love of large intestines and sanity, in 2009, “The Fly” will “go old school” and start short selling individual names directly, rather than through proxies.

http://www.ibankcoin.com/flyblog/index.php/2008/12/19/no-more-volatility/

Of course I made loot off SKF 3 times this week, so ...

if treasuries and USD sell off, what gets bought ?

if everybody decided to sell all of those treasuries and dollars ... what would or COULD they buy ?

the yuan can't handle it and wouldn't want to be pushed up that high. no currency buy itself can handle it. no equity market or sovereign bond market can handle it.

nobody wants the responsibility of all that investment. the problem in the world right now is too much "wealth" and no safe place to put it. (which reminds us how sad it is that poverty and resource-wars still plague the planet)

so reasons the sell off hasn't started:

1. if anybody flinches the game of confidence collapses and an amazing amount of "wealth" is destroyed in a sell off. nobody can step away from the table (except us little guys). any move has to be done very slowly and gradually.

2. there's nothing to sell this stuff off into

3. the big holders (esp. china, japan) benefit from a higher dollar for their export economies and the negative effect it has on commodities. they don't want the dollar to collapse. its in their best interests to keep loading up on this fictitious and nonredeemable wealth. everybody seems to think that the US is a real country with "balances" and obligations. its more like the bank in Monopoly.


disclosure: I gave up on TBT (short treasuries) with a small loss. the bubble gets bigger for now. it will move, the chart looks like it would move, but only as a trade. this is the age of VIX + 60. TBT is a long term move at some point. could be years.

and what a wicked world if everybody jumps on this one and bangs it into the ground. what would happen if the hedge funds put their momentum machines on treasuries and caused it all to squeeze out into some other unstable market ? greed is systematically destroying the financial world.

the world economy is electronically wired to fear and greed

hey earth, this is a bad idea: let's take the entire economy of the world and hook it up to real time electronic casino and unleash fear and greed upon it.

yeah, that's it. I'm sure that with only fear and greed to act as inspiration, the men of earth will surely do the right thing with all of that human potential.

in the future we will see companies finding ways to avoid putting themselves public. like Porsche quietly buying up most of Volkswagen.

screw the gamblers, they have no sense of the history.

long: TBT, GLD

QLD QID quivering oddly

I had this vision that it would be possible to toast all small time traders by making the bid/ask vibrate so horribly that nobody could scalp it. Longer term traders or those with bigger tolerance for risk (wider stops) could still trade.

I used to scalp QLD/QID. Don't ask why, it just seemed like the thing to do. Now (Oct 2008) the bid ask is vibrating all over the place like water on a hot skillet. The only thing you can do is place a target in the range of quivering and hope it gets hit. The QQQQ is much more sensible and liquid and tradeable. I am always very curious what the software looks like that drives these things. What inputs are they keyed off of ?

I have learned that QLD etc. do not buy the actual underlying components of the index. Rather they have warrants with other parties who deliver the components to them with a certain amount of time displacement (possibly hours or days ?). Either that or they never own the underlying and have some queer deal with these warrant people.

In any case, you don't express yourself in the marketplace by buying ETFs. You might as well just do spread betting (very popular in the UK so I hear) or just go down t' pub and wager with your mates. Its certainly not investing. Your capital was never used for anything legitimate like paying wages or buying raw supplies. Your profits are only non-sensical gambling in the sphere of derivitaves of fake value.

saw it coming... and yet ...

I do feel bad that even though I've seen all this shit coming since the March and August crashes of 2007, but I didn't profit off it, and I didn't even avoid all of the damage.

I bought Euros dammit. Amazing (to even the experts) that it would take my head off like this. Nobody saw this massive dislocation coming, and when it came I thought I shouldn't over react, hold on, it won't last forever. and it won't. but....

and now ... to sell (ok, I did a bit) would be crazy because it will snap at any second.

or at least the dollar may snap, that doesn't mean the euro will surge.

what to buy ? honestly, I think about what physical objects have high resale value. Do you think my vinyl 12" collection is going up in value ? ah ... no.

the yen, dammit, I was just about to buy and got all scared (having lost all of my other bets) and now I feel its popped too much. the G7 state that they are worried, its shafting the Japanese who have already been shafted in their stock market and personal pensions.

I am tired of hearing the US citizens whining about their market. The rest of the world has suffered far worst. Actually it was all fake money, so its nice to see those annoying super-Russians cut down to size.

And, as through much of 2008, I feel like I should go short-and-hold because ... those valuations are so cheap now and greed will overwhelm fear any moment.

Not that we aren't fucked, mind. Earnings down the road, consumption and all of that.

Personally I am an immaterial girl (poetic license, I'm a dude of course). And I don't like money really. I think we will eventually evolve past money, but not in this lifetime.

I think we will defintely evolve past this casino-for-a-stock market mentality. Maybe THAT's the capitulation we are waiting for. When the whole generation of gamblers are put out to pasture (self included) and we go back to producing and getting paid for production.

The next time you are thinking "well things seem ok, maybe we'll get out of this alive. thank god I didn't panic and sell back there when fear was pandemic" .... on that day .... sell something.

Me, I'm all "money" (whatever that is):

%40 euros (grrrrrrr)
%50 $ (the dollar will survive for a while longer. it has to)
%10 gold (who knows)

Wishing I had followed my impulse to buy JPY last week. I'm trying not to trade currencies. I don't really understand them enough.

I've enjoyed being all cash for a while now. but the demon of financial armageddon doesn't like cash either, and he will hunt me down and destroy that too.

How's this for scary: CPB Cambell Soup is holding up quite well today (with major world wide crashes going on). Now what could could savvy investors be thinking ?




Seriously folks, if you haven't thought about the consequences of a complete dislocation in the way that food and retail happens in the western economies ... and how you are going to cope with that dislocation, then do so now.

Have a month worth of food on hand just in case there are interruptions to banking or food. Better safe than sorry.