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Why haven't I closed my shorts?



September 22, 2009 – Comments (7) | RELATED TICKERS: SPY

The higher we go the closer I feel we are to setting up big let down.

I still believe that 1030 was a "perfect" price for 2010 earnings and that this market is now way ahead of the coming fundamentals... a typical top overshoots by a decent percentage so I'm prepared to see us breach 1100 and even run at 1200 (after a mid fall dip) but then what - will the economy be right back into the bubble mode of 2007  - I think not - it took years to build up those excesses and we'll not be back to that sort of economy for some time. The USA has implemented many Japanese style policies and I suspect we'll get the same results and politicians will be begging for a 2nd stimulus package next year. 

Right now it appears the market is discounting a full recovery and flat or negative inflation OR a double dip recession with mild inflation.

I think neither are likely and the disappointment will be evident in asset prices.

Another issue that continues to haunt me is the simple fact that the large ponzi scheme that the banks and the U.S. government created with low interest rates and infinite debt creation still seems a bit unstable.

Few seem to understand that the US economy MUST grow at about 3-4% a year or else the entire financial system will fail... you can never have a multi-year period of negative or flat "nominal growth" (which includes central bank created inflation).

ONE BIG PROBLEM - it has been taking $6-$7 of debt creation to produce $1 of GDP growth. So since new loans aren't exactly flowing I think we have a BIG PROBLEM.... its a HUGE PROBLEM ACTUALLY. You see the economy and the money supply are exponential systems.


There is no other possible outcome but faiure if the economy doesn't grow or if inflation isn't manufactured. 

IF YOU REALLY WANT TO SCARE YOURSELF - READ THIS and then ask yourself how ae we going to create enough new debt to keep this ball rolling. The only answer I see is that the US government will need to keep on borrowing money (which is very possible since the Fed basically prints debt and then buys back whatever debt foreign holders won't accept)... but this continued gov't borrowing will DEFINITELY destroy this countr as our creditors will actually control policy.


So in closing I repeat - I will not close any of my red thumbs because I truly believe "something wicked will come this way".


That said I regret placing so many green thumbs on these toxic 2X shorts... I'll probably never win with those picks because 2x ETFs will all go to zero over-time... I should have covered and taken small losses.




7 Comments – Post Your Own

#1) On September 23, 2009 at 12:46 AM, ChrisGraley (28.54) wrote:

You could catch a draft and a nasty cold!

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#2) On September 23, 2009 at 1:18 PM, Tastylunch (28.58) wrote:

I feel your pain

the casinos are killin me score!

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#3) On September 23, 2009 at 1:30 PM, automaticaev (< 20) wrote:

dow 15000 before 2012

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#4) On September 24, 2009 at 12:12 AM, Tastylunch (28.58) wrote:

Hah just noticed our potfolio performance is nearly perfectly identical, that's not a good thing. :)

Seriously look at it, our scores zig and zag together

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#5) On September 24, 2009 at 12:20 AM, portefeuille (98.90) wrote:

Seriously look at it, our scores zig and zag together

Could you post the picture?


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#6) On September 24, 2009 at 12:22 AM, portefeuille (98.90) wrote:

we need longer time frames! what was your score 12 months ago, tastylunch?

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#7) On September 24, 2009 at 1:42 PM, Tastylunch (28.58) wrote:


haha not you man, you make me look pretty bad :) I'm far too reckless in CAPS

I'm also too stubborn for my own good.
I keep refusing to close 10-20 very poorly timed redthumbs that have really gone against me since march.

LVS, PALM and MGM among others are just killing me.

Let's see if I remember my score history it roughly went like this

tastylunch start 11/07 

+300 ish points feb 2008 54% accuracy

-200 ish points may 2008 52% accuracy

+1200 August 2008  59% accuracy  

+3000 November 2008 65% accuracy

+3500 jan 2009 72% accuracy

since then it topped out twice in the low 4200's in March and July of 2009 before just getting clobbered in september while edging up in a accuracy a little.

right now I went to about 1000 a couple days ago but have recently rebounded to 1500+

 I'm not sure an outside observer can figure anything definitive out from my tastylunch profile since i mainly use it as an experimental watchlist of a variety of different strategies. My watchlist is just less good than yours porte. :)



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