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goldminingXpert (29.76)

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June 02, 2009 – Comments (10)

First off... exciting news. GMXFuzzyKittens is born. This new profile will be a yesman picking only green thumbs for maximum, um, greenness. In this way, you can see my constructive bullish views for those of you who argue I'm too bearish.

A new profile will also be created tomorrow  that is a pure bear fund...nary a green thumb to be seen. It will avoid .obs and .pks and show you just the trashy stocks and companies that are heading for the dumps in honour of my heritage in finding stocks that blow up like Repros Therapeutics.

Thus, the full menu of GMX:

GoldminingXpert: This, of course, is my flagship profile. It is created and managed with the goal of WINNING THIS CAPS GAME. It does not necessarily reflect the investing style which I practice in either my own accounts nor the accounts of others I manage. It picks .OBs, .PKS and ultras because they are part of the game. Not all the picks in this portfolio have necessarily been heavily researched by me in advance of me picking them.

gmxMkttiming: A profile set up to try to capture the swings in the pendulum that we call the stock market. It bases most of its picks off of directional bets on the S&P/Dow/XLF and other such indices though it also will, from time to time, make sector calls such as the unsuccesful "short gold" call of earlier this year.

GMXFuzzyKittens: Described above. A pure green thumb portfolio.

GMX[insertnamehere]: A pure red thumb portfolio for finding garbage stocks and companies.

---------------------------------------COMMENTS------------------------------------------------------------------

 First of all, in response to several commentors, the "The Market Is About To Plunge" series has not been abandoned. This post, along with yesterday's two posts, are part of the ongoing series. The continuing weakening of bonds is a timer that will bring the end of the bear market rally one of these weeks.

Comment (from Zloj's latest blog post--I quote it here because it sums up sentiment posted on my blog.)

Title: Easiest Market Ever

"You don't need any investment thesises. This market wants to go up. Period. Don't waste points arguing with the market. It won't always be that way, so don't get carried away and don't use margin. Don't worry trying to call the top, though, it won't be any easier than calling the bottom, and most people calling the top will get burned. When the market decides to correct, you will see some very clear indication."

This logic, honestly, is (f)oolish. Whenever it feels easy, that's when disaster strikes. When the animal spirits start running, that's when you start selling. The market wants nothing, it has no emotion. The actors within the marketare for some reason buying.Do you know why? I certainly don't. Buying merely because the crowd is buying is a bizarre practice that just won't end well.

 


The supposed 20,000 character limit appears to be far less than that. Continue on to the comments section for the rest of this post...

 

10 Comments – Post Your Own

#1) On June 02, 2009 at 4:59 PM, goldminingXpert (29.76) wrote:

The rest of the comments are off of my blogs:

***On June 01, 2009 at 6:51 PM, AdirondackFund (< 20) wrote:***

Lots of short covering at Caps today, including Gmx.  All I could think to do today was to find anything and everything to short....and not just at Caps.

One must cover when the market breaks resistance levels. As a note for all the people who will continue trolling should we go higher, I told you that if 930 broke, you should abandon short positions. Thus, as 930 broke, I no longer advise remaining short until a new signal arrives to short. That's why we cover. Once 930 broke, going much higher was likely and honestly 1,000 is clearly within reach. However my trading advice within this blog series was given at 915 and said that if the market cleared 930 to get out. Thus, my trading advice cost one 15 S&P handles, not whatever the trolls claim.

***On June 01, 2009 at 7:52 PM, willmaster01 (99.17) wrote:***

I do think that inflation is starting to become the big player here.

I think the government and banks definitely screwed the investors here but... They we're taking quite a big risk investing in these co's. I mean they did get some serious 200-400% returns over the last little bit. I was quite the sneaky move but why don't speculating investors deserve to get what is owed. You know it, I know it. These banks should be lower. 

 As for the rest of the market, inflation will start to prop up the other sectors as quarterly results start to look better. It’s the only way the government will be able to even consider paying back this enormous debt. But using inflated dollars...

 -W

One must ask what is inflating. All I see inflating are things that are trading on exchanges. The prices of stuff that I buy lots of--like milk, eggs, bread, produce, services, clothing, rent and so on is falling. There is certainly commodity price increases in certain areas but as of now it is not factoring down to the grocery store level. Whether this changes remains to be seen, but for now, the average American is seeing their costs DEflate. Once again, it is unclear where we go from here, but I feel the reflation trade is a cannard until wages start rising again. Classical economics suggests that without a wage increases, you don't get the viscious spiral of rapid inflation. This could occur but is unlikely in the near future (next 2-3 years.) Hyperinflation, on the other hand, is virtually impossible at this juncture as the government cannot create money as quickly as credit is disappearing.

***On June 01, 2009 at 10:48 PM, EV38 (99.96) wrote:***

The logic just does not add up. If there are people who are going to be bagholders on the bank stocks it'll be the big boys more than it'll be John and Jane Nojob.

No no no. The bagholders are those buying the bank stocks now. Who would that be--ma and pa 401k investor who sees the market recovery and doesn't want to miss it. The banks aren't buying bank stocks en masse as they are too busy diluting themselves to be buying themselves. Banks are net unloading bank shares (their own) rather than buying them.

***On June 02, 2009 at 11:23 AM, TigerPack (99.96) wrote:***

Next puzzle piece to fall into place...

The powers that be are going to drive gold prices back below $700US an ounce, if not $600US, over the next 6-12 months.

After successfully recapitalizing the banks (which will largely be complete in another month or two), the illusion of prosperity will require that gold bulls be crushed into submission, and with it the prospects for hyperinflation.

I wouldn't bet on this either. While there is not going to be a return of 70s era inflationary spirals in the next two or three years, I highly doubt you're going to see a complete abandonment of commodities as well. The global financial system is losing its lustre and I expect that skittish investors across the world will provide a bid on the metals as they fear the collapse of their home currencies (keep in mind that the USD is among the strongest of the world's currencies--if you were getting paid in Zlotys, would you be saving those under your mattress or converting them to gold first in this unusual time?)

***On June 02, 2009 at 1:41 PM, TMFSinchiruna (95.93) wrote:***

"EV38

Perhaps you'll consider Meredith Whitney a fairly credible course on the topic:

http://www.examiner.com/x-1760-Baltimore-Investing-Examiner~y2009m5d18-Why-It-Pays-to-Listen-to-Meredith-Whitney

"They were overdone all the way into this rally. What happened was the government - I call this the great government momentum trade - the government enabled the banks to have better than expected, better than even the banks could organically deliver, first-quarter earnings. That looks like it could continue into the second-quarter and the third-quarter. The banks rallied from well below tangible book multiples to almost two times tangible book multiples [...] the underlying core earnings power of these banks is negligible," she says."

GMX agrees with this quote and feels it should be read and contemplated by all.

***On June 02, 2009 at 2:11 PM, TMFSinchiruna (95.93) wrote:***

EV38

I am squarely in the stagflation camp as well. But I still see no floor beneath this rally that can keep it propped up. The market MUST absorb the latest indications of just how badly the economy is deteriorating. Stagflation will cause nominal increases in share prices eventually, but not yet, IMO... they first have to overcome the selling pressure from declining income and renewed fear.

I am agreed that stagflation will eventually come. I believe the ongoing effects of the 2nd wave of housing market failure and the continuing unabated rise in unemployment will prevent stagflation setting in for a few years. I don't see how one could get a strongly inflationary scenario as wages fall. That's great that gas is $10 bucks a gallon but no one can afford it. Result--demand collapse drives price right back down. Keep in mind that despite inflationary efforts by the gov in the 1930s there was massive deflation for the ENTIRE DECADE. In 1939, prices were roughly ~20% lower than they were in 1929.

***On June 02, 2009 at 2:48 PM, automaticaev (94.12) wrote:***

Libetarian??  Shouldnt you be yelling into a megaphone then? "9-11 was an inside job, 9-11 was an inside job."

I am a libertarian. I am not a deranged person. Please think before you reply to a blog post of mine (or anyone in fact) lest you look like a mis-informed idiot.

--------------------------------------Comments on Accuracy-----------------------------------------

On June 02, 2009 at 3:15 PM, portefeuille (99.98) wrote:

Could you please stop doing this re-starting of calls thing.

There is no need to end your "underperform" call for EDVP.OB and to re-start it the same day, is there.

This artificial "accuracy" is absolutely worthless ...

Report this comment #45) On June 02, 2009 at 3:29 PM, goldminingXpert (99.99) wrote:

Portefeuille:

The main reason I re-do picks is to gain additional points. If a stock goes to zero and I only red thumb once, I get 100 points, If a stock goes from 3 to 1.50 I close my pick, I'm +50. Then I start a new pick at 1.50 and get 100 points when it goes to zero. Total +150! This is the way bears can compare with bulls on here. If you pick a stock to outperform at 5 and it goes to 15, you get 200 points, but you only get 66 points if it goes from 15 to 5 and you don't re-call the pick. Thus, reloading on red thumbs is an essential from a scoring perspective. [. . .]

[it] Takes a lot more guts to repick something after it has already sharply fallen. My rethumbing of BAC in the single digits, for instance , took far more guts (and has been inaccurate) than if I just left my red thumb from the 30s open. We all knew BAC was going down, but my red thumb reiterates my claim that its final destination is zero whereas if I left my thumb open from the 30s, you wouldn't know what my intentions were.

 --------------

Finally, I apologize for leaving comments regarding China's economy hanging. I just don't have time to get to them now as I have a lot of research on my plate and as I have no interest in either buying or shorting Chinese equities at this time, I can't justify spending my time researching this topic in further detail at this juncture.

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#2) On June 02, 2009 at 5:05 PM, outoffocus (23.59) wrote:

This logic, honestly, is (f)oolish. Whenever it feels easy, that's when disaster strikes. When the animal spirits start running, that's when you start selling.

That sounds stunningly close to my blog post. Think its time to start them redthumbs?

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#3) On June 02, 2009 at 5:12 PM, goldminingXpert (29.76) wrote:

I started my red thumbs (and the series) the same day as your highly-recced blog post appeared. From that juncture on, there has been far more downside available to the market than upside in the intermediate-term (next year). The S&P, at the outer edges of plausability could reach maybe 1125 to the upside and maybe 500 to the downside in the next 12 months. It is far more likely to be at 840 than 1040 in twelve months as well. Thus, red thumbs make sense as the probabilities say we go lower, not higher from here.

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#4) On June 02, 2009 at 6:22 PM, TigerPack1 (99.02) wrote:

Is anyone else on CAPS shorting (red-thumbing) gold stocks like I am the last few weeks?

I am approaching 50 red-thumbed golds at the close today.  That would be a truly contrarian move (gold collapsing soon), that few investors would dare think possible, much less be properly positioned for.  Let's see how many CAPS points come my way for sticking the old neck out of the window, when "everyone" else refuses to do so!

For the TMF writer that is a major bull on gold right now (like EVERYONE ELSE), Jimmy Rogers has been bullish on commodities for some 40 years now, and has outperformed the S&P 500 something like 15 of them.  He is very good at letting his winners run, and hedging his exposure at times of froth.  Anyone who invests would be wise to do the same no matter what sector you invest capital in.  He has been flaming wrong for years at a time (including most of the late-1980s and 1990s), and CNBC let him go as a once-a-week morning anchor/commentator because he was so incredibly off the mark for years running.  Don't take his "opinion" as gospel truth, as his view is not necessarily any better or worse than your outlook or mine.

I could throw out a whole bunch of charts and ideas for people to munch on, explaining why gold has overheated and is due for a decent drop right now, but it wouldn't sway anyone's position as the herd is quite comfortable where it is sitting (gold price rises day after day).

Consider the fact that when adjusted for inflation gold has only been valued at a higher number 5% of the time than today the last 30 years (specifically 1979-81), or 2% of the time the last 100 years (same period).  The numbers improve for bulls when adjusting for currency in circulation but not by much.  Today's market capitalization of all gold miners vs. the overall stock market is quite high also.  When comparing gold valuations as a class to other investments, and reviewing relative prices and weightings, real estate makes a considerably smarter long-term case to keep up with expanding inflation rates in the future than gold currently.  This why I have been focused heavily on owning REITs lately, also a very contrarian position to take.

-Tiger's Two Cents

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#5) On June 02, 2009 at 6:26 PM, goldminingXpert (29.76) wrote:

You'll make some money if you time it right, but why bother? It's a difficult trade and could spectacularly blow up if gold exceeds its alltime high a mere 50 bucks an ounce away from here. Meanwhile, we can short vastly overpriced banks that have to dilute themselves to high heaven. The whole stock market is wildly overpriced and you want to short companies that have legitamate earnings growth prospects? In all honesty, I was doing it as well last year, but I didn't succeed--the valuation of NEM, GG and others continues to be unrelated to any sort of normal metric system that investors use and I don't see the point in trying when I can short GS at 140 and WFC at 24.

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#6) On June 02, 2009 at 6:58 PM, binve (< 20) wrote:

GMX. Hey man, good luck on all your portfolios! I am rooting for you. :)

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#7) On June 02, 2009 at 6:59 PM, portefeuille (99.56) wrote:

--------------------------------------Comments on Accuracy-----------------------------------------

On June 02, 2009 at 3:15 PM, portefeuille (99.98) wrote:

Could you please stop doing this re-starting of calls thing.

There is no need to end your "underperform" call for EDVP.OB and to re-start it the same day, is there.

This artificial "accuracy" is absolutely worthless ...

Report this comment #45) On June 02, 2009 at 3:29 PM, goldminingXpert (99.99) wrote:

Portefeuille:

The main reason I re-do picks is to gain additional points. If a stock goes to zero and I only red thumb once, I get 100 points, If a stock goes from 3 to 1.50 I close my pick, I'm +50. Then I start a new pick at 1.50 and get 100 points when it goes to zero. Total +150! This is the way bears can compare with bulls on here. If you pick a stock to outperform at 5 and it goes to 15, you get 200 points, but you only get 66 points if it goes from 15 to 5 and you don't re-call the pick. Thus, reloading on red thumbs is an essential from a scoring perspective. [. . .]

[it] Takes a lot more guts to repick something after it has already sharply fallen. My rethumbing of BAC in the single digits, for instance , took far more guts (and has been inaccurate) than if I just left my red thumb from the 30s open. We all knew BAC was going down, but my red thumb reiterates my claim that its final destination is zero whereas if I left my thumb open from the 30s, you wouldn't know what my intentions were.

 --------------

 

read comments #44-65 here (especially the brand new research by bigpeach in comments #57,64!!!) and this post!

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#8) On June 02, 2009 at 7:03 PM, goldminingXpert (29.76) wrote:

and portefeuille continues to beat the dead dog for reasons unknown. I'm playing to win. Winning involves high accuracy and high score. Reloading red thumbs is a risky method that increases score and accuracy, thus it is a must if one wants to "win". I set up two new profiles today because I'm tired of trying to "win" and I want to show off my stockpicking skills on a non-competitive basis.

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#9) On June 02, 2009 at 7:37 PM, portefeuille (99.56) wrote:

I want to show off my stockpicking skills on a non-competitive basis.

(no comment)

------------------------------

On May 15, 2009 at 3:26 PM, camistocks (89.98) wrote:

So this is it... We worship the top tens and feel good... Americans love top tens...

Nobody cares about interesting blogs. 

But hey we've got this nice guy called gmx... He continues to separate you from your money since early April... but still everybody loves him... ah well

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#10) On June 02, 2009 at 7:39 PM, goldminingXpert (29.76) wrote:

portefeuille--you'd sink so low as to repost a blatant lie? My series started on April 30th. my post in early april told people NOT TO SHORT THE MARKET! I said that in the effing title of that post. Maybe your English isn't as strong as I previously thought as your reading comprehension seems to be lacking today.

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