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The long view again, and some reflections

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March 09, 2011 – Comments (11)

It is march 8th.  Well, very soon it will be march 9th.  2 years ago, on (and around) the 8th, I called and texted numerous friends and family, and I begged them to buy stocks.  I offered many a guarantee of their money if they'd buy.  If I was wrong and they failed, I'd give them their principle back.  How many people did I get talked into doing it?  2.  I failed.  I failed my family and friends, I could not summon enough charm to talk them all into it.  Who did I not fail?  My great friend Tom, my longtime business partner (who, in all fairness, did not require my coaxing to put it all in at that point, he wuld have done it himself, even if i'd have gotten hit by a train), and my parents.  Thats it.

My friend who had 15k of savings?  refsued.  I begged, just put it in ASH, its the best bet on the market today, no risk.  refused, blew it on his honeymoon.  WHICH WAS IN THE SUMMER OF 2010.  He could have had the honeymoon, the house, and then some.  

My numerous other friends?  naw, its too risky.  Tom? Got a new Corvette and threatened, last time I saw him, after hugging me and saying I made his dreams come true, and threatened to put my name on the license plates...  My parents?  lifetime of poverty and retiring next year on six figures a year of investment income.  Employee?  He always was a gambler.  5x his money (on 3 grand) and then asked me what my #1 favorite pick was, I said RJET, he's now 4x his money as he got in at 7.xx  oops.  

How many of my friends and family have aske dme about gold in the last 12 months?  Fkn 50, minimum.  Its ridiculous.  You can't get people to buy ASH for $5.80, butthey line themselves up to buy gold for $1430.  Maniacs.  If I had 100 bucks for every hour I spent trying to walk people through teh history of markets to give them the best answre I can, only to have them say "well I heard on TV that gold is going up", I could buy a Las Angeles nightclub tab.  And get really, really drunk.  Oh well. 

March 8th, 2009, I put my son to bed, after a pretty normal night.  And then, for the first time since late February, I looked at teh balance in my various accounts, added it up.  It hurt, right on my chest and stomach, to see the balances.  And I had a long talk with myself, I just said "ok, you lost a crapload of money, you need to quit thinking about Lambos and Corvettes and just get serious, there is still enough money to live on here".  Then I sat down and read Dreman, again, and I felt a bit better.  And then I listened to conference calls and read 10Qs all night, for ACAS, for MCGC, for XL, and more.  Eventually, after probably 20 cups of coffee and no sleep, I became satisfied that I wasn't wrong.  The next day I bet, literally, the farm on the theroy that mark to market accounting would at some point reverse its wrongly-levied pains, and when it did, the results would be dramatic for BDCs and insurers.  Tuesday, ... Vikram Pandit wrote the memo that started this all, and that was the swan song of the bears for that big crash.  By Friday of that week I was up huge.  I dumped my girlfriend at the pub that night when she complained at me for gloating that I'd won.  She, like most GFs I have ever had, never gave a crap about what I was working on.  So she had to go.  And I fairly well sensed that I'd won...  Pandits memo was a game changer, an absolute game changer.  Nobody ever mentions that, when they talk about this big rally.  But that changed the color of the world.  It was hard to say, after that, that C and BAC should be nationlized.  if C is profitable, ...  see what I mean?  It was so obvious, that day, that the game was anew.  We partied so hard that week, it was such a great feeling.  I never felt that feeling again until August of 2009.  

Anyway, for all of the 100% rally off the bottoms, and all of the literally 10x your money if you wer esmart (I have not been smart over teh course of this, rather I have made myriad mistakes) ...  for all of history just repeating itself yet again...

I still bet on history.  Which suggests we are not out of a long, miserable, perhaps even usually ugly secular bear market.  And I've thought alot about what would happen if we were about to embark on a secular bull...  I have basically just two ideas:

1.  commodoties and stocks would decouple, with stocks moving to the upside.  This hasn't happened at all, and in fact commodities may ahve actually outperformed since the March 09 bottoms.  This clearly, to me, suggests we are still in a secular bear.  See my blog from a week ago for the most gorgeous chart showing why

2.  look at teh secular bear from teh 70s.  Small caps (nasdaq) took off from the march 1974 bottom and never really looked back.  The DJIA stayed mired in a miserable slump for nearly another decade, before finally reaching liftoff in the early 80s.  HUGE outperformance from small caps over the last part of the 70s.  

I honestly think that we won't see significant multiple expansion in the "high quality" big cap stocks taht all of the panties-in-a-bundle gurus (who are all about 80 years old) want to outperform (because their funds are too big to buy anything else) ...  

...  risky call here...  until the next secular bull begins...

... and then we will see multiple expansion in those greatest of companies.  

Commodity decoupling and multiple expansion in the greatest of cmpanies, we have not seen either yet, and BOTH of those will, in my guesstimation, mark the onset of the next secular bull.  

Do we make new highs on the S&P before the next secular bull?  yep.  

Do we go meaningfully lower than today before the next secular bull?  yep.

Therefore I honestly think that caution is the best stance right now.  FOCUS ON THINGS YOU KNOW, KNOW, will make money.  Don't make me point htem out.  ...  I'd hate to help the thousand pukes who I don't particularly care for, and who occasionally put my blogs on lame brained websites advertising lame brained services, I really would.  

Buy the BIG dips, that will define returns for most investors ove rthe next 5 yeras.

All of the above is in my opinion only, and I am clearly extremely dumb, and possessing of an extremely poor singing voice.

happy anniversary people.  2 years ago it was a very, very scary evening, in which I had to summon every last bit of self confidence to do what needed to be done.  Today, ... a very different day, and, frankly, I have no great confidence in any direction.  

I cashed out most of my hedges (except VXZ) last Friday, I bougth more today.  I just don't love the market here one bit.  

11 Comments – Post Your Own

#1) On March 09, 2011 at 2:38 AM, checklist34 (99.72) wrote:

I have had one week off of the markets, at the behest of a combination fo myself and this girl I sort of let hang out with me sort of most of the time, who I sort of like, who will sort of read all of this tomorrow.  lol

I will tell you exactly why she gets to hang with me sort of most of the time.  Because she asked me once, the sweetest question, "how", and when I answered she said "cool, thats pretty ballsy".  No "did you see, on >some reality show I will obviously never watch because it is extremely lame< how >some idiot with no job< did >someting 10x more lame than what happens at any college party anywhere<". She is the sweetest thing.  Don't get cocky, lady, hehe.

In my week off the market I downloaded a couple hundred songs on Amazons MP3 download dealie.  Music, people, is perhaps mankinds greatest non-functional accmplishment.  Paintings are basically lame, poetry is basically - unless put to song - lame, philosophy is for the most part so misguided and braindead that it should be shot... 

but put to chord, basic boring everyday feelings become complex, become brilliant, become the greatest art form in human history.  Ever, now or ever.  

Here are 5 of my favorite songs of all time.  In fact, each of these is among my top 10 or 20 songs ever.  

One...  i'm sure you've heard in these blogs before, but this time I posted the video, and not the brilliance of Danny Macaskill.  Danny is better, lets face it.  

Anyway, its an anniversary, so we should look back.  These songs punctuated some of my lifes greatest moments, and friends.

I recommend downloading something tonight.  I really do.

The Cure are best listened to and not looked at.  Their fantastic talent never really made it to video.  Best alternative rock song ever, besides "mayonaisse" by teh Smashing Pumpkins.

speaking of "Mayo", its author explains the greatest guitar effect ever.  $65 guitar.  Here's teh tune:

Greatest rock song of all time, and the high water mark for human art.  "AND I'LL FAIL!  But when I can....   I will".  If you can't feel your greatest victory while listening to that song, I recommend going out, at once, at failing at many things, but trying again, until you win.  You will understand.  

Paiges song.  No other song could be.  From 3:15 or so, on, this is my favorite instrumental in pop history.  New Order is one of the very few bands that could have been radical and new in the 70s...  and again today.  They would still sound fresh, 40 yeras after writing many of these songs, if they showed up for the first time in 10 years.  One of the all time great bands, imo.  The "substance" version is better... except for the last minute or less of this version, which is the shyte.  A boy, a girl, and the boys ego, in song.

"I'll break them all, no mercy shown, heaven knows its got to be this time".  

With apologies to a hundred songs that didn't make the list, including "louisiana rain", "amerasian" (by thermadore, Michelles song), a dozen by PJ, and many more.  The last one i'm putting up is another by the Smashing Pumpkins.  A song about being a kid who doesn't know where he'll ever wind up.  Here you be:

http://www.youtube.com/watch?v=wrivjzw0RlI

please click it and watch, for the sake of your soul.  It changed my life.

 

 

 

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#2) On March 09, 2011 at 2:52 AM, checklist34 (99.72) wrote:

I know what you're thinking, you're thinking "dang, check, quit taking weeks off, because then you make lists of your old favorite songs and post links"

And I know it probably hurts, but i'll just do it anyway, because I am disturbed:

"oh wear your pink glove babe, you put it on the wrong way!"....   "so!"

Of all the albums few have ever herad of, "His n Hers" by Pulp is one of the ten best ever, by any band.  Epic.  At least 5 songs of that one record would make my top 50 or 100 of all time list.  Razzamataz, pink glove, do you remember the first time,happy endings, have you seen her lately.  Epic. 

Another album few have ever herad of, which woul dland literally 5 in my top 50 of all time, is "La@d" by the band James.  The title track is the only one even somewhat famous, but soooo many are great.  

(you'll suffer an ad, sucks).  "awww, you think you're so pretty...".  

 

(best song on the album, if you can listen to this and hate life you should consider just buying a boat and sailing.  maybe the water would bring you back to life)

Also see THE WHOLE REST OF THE ALBUM, including 1, 5, and 12

That one is for you babe, you asked, dont' complain.  

"I said I wanna shine in the eye of orion, but i've drove my soul inot a black hole"

"she said, what a wonderful way to wake me"

"but you weren't so nice, last night, you're such an a-hole when you're drunk"

I said "at least i'm ok in the mornings"

but hey...  i'll shine.  

Music, people, for ten years I don't think I hardly listened to any, besides "Siamese Dream", which got stuck in the CD player of my decrepit old car, for 5 years straight.  I was busy then.  

For the last week, it finally occured to me, that I have all the time in the world.  I thin I need to get a vacuum tube amp and spend some time jamming.  

Its our one truly great art form.  For realsies.  :)

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#3) On March 09, 2011 at 3:45 AM, checklist34 (99.72) wrote:

BTW, "Rocky Took a Lover" is one of the greatest songs of all time.  It has as many quotes as a memorable comedy movie. 

And I just dunno what else to say after last Thursday...  :)

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#4) On March 09, 2011 at 4:25 AM, binve (< 20) wrote:

Awesome, awesome post.

I let my ideological bearishness stop me from making a good decision. I went long at the bottom (actualy quite near the very bottom) but I played it only as a short term bounce. You definitely called the value argument and oversold argument and sentiment argument for a bottom correctly, and I have nothing but props for you. We both think that we have a secular bear to contend with and Caps is exceptionally fortunate to have your thoughts as we navigate it.

Seriously man, you are a tremendous asset to this community.

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#5) On March 09, 2011 at 7:07 AM, dbjella (< 20) wrote:

You crack me up.  Your brain must start firing early morning and I guess you are off to bed?  Me, on the other hand, I get up at 4am and my brain is on fire until the afternoon, then.....I am useless.

So your macro call in 2009 went against the grain and worked greatly.  As for gold, why not take that same conviction and short it?  Maybe you already have and diabolically blog about the euphoria for gold...hmm.  Very clever ;) 

I agree on your take on music.  However, I disagree on your view of painting.  The most useless art of all?  Mime 

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#6) On March 09, 2011 at 2:01 PM, Option1307 (29.76) wrote:

Hope you enjoyed your time off from the markets, we all need a break from time to time.

I know you've recently talked a lot about "the long view" and specifically swtiching between commodites/equitites etc. There is a fantastic (well, intersting nonetheless) SA article that is floating around and really think you might enjoy it as it shares quite a few similar views as you do.

The author definitely dives into a lot of TA etc. and I don't think that is really your thing, but he has some great long term observations.

Check it out when you have time: http://seekingalpha.com/article/256849-end-of-the-secular-commodities-bull-market

Binve, this is definitely right up your ally as well.

 

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#7) On March 09, 2011 at 3:31 PM, miteycasey (31.39) wrote:

I will tell you exactly why she gets to hang with me sort of most of the time.  Because she asked me once, the sweetest question, "how", and when I answered she said "cool, thats pretty ballsy".  No "did you see, on >some reality show I will obviously never watch because it is extremely lame< how >some idiot with no job< did >someting 10x more lame than what happens at any college party anywhere<". She is the sweetest thing.  Don't get cocky, lady, hehe.

 

That type of conversation is the reason that I married my wife. :)

 

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#8) On March 09, 2011 at 3:33 PM, RonChapmanJr (94.88) wrote:

Holy cow, we got it already!  You made a ton of money in the market after making the best investment call in the history of the world.  How many times are you going to mention this?

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#9) On March 09, 2011 at 5:37 PM, monksnake (38.72) wrote:

I have to agree with RonChapmanJr, we get it, you called the bottom correctly. 

I'm not saying this to be rude, but you gotta keep your ego in check. 

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#10) On March 09, 2011 at 8:07 PM, dbjella (< 20) wrote:

Don't let others dissuade you from blogging.  In my opinion, you have written some of the best life blogs I have ever read.  I have saved them for when my kids get older.

Seriously though, short gold :) 

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#11) On March 09, 2011 at 10:45 PM, russiangambit (29.30) wrote:

>   Music, people, is perhaps mankinds greatest non-functional accmplishment.  Paintings are basically lame, poetry is basically - unless put to song - lame, philosophy is for the most part so misguided and braindead that it should be shot... 

Nothing against the music. But in my ( not so humble) opinion people who speak only english don't even know what poetry is. Writing poetry in english is like making music with your nails on a chalkboard - impossible. English language lacks the inner rythm, musicality and flexibility. Russian, french, german poetry requires no music because the language is the music. I feel sorry for Sheakspeare.

I love philosophy because I am so logical, I enjoy having my brains twisted in a pretzel for a change -)) You read Kant and you think, wow, this is so deep. And then you read Nietzshe and he says Kant has it all wrong, and you are like - yeah, that sounds right. So, who is right at the end? It is a good excercise to understand that you are not smart enough to actually know the truth of all things or that there could  be multiple truths.

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