I am not just amazed but absolutely stupefied at the Doomsday Atmosphere on the threads that I have been reading not to mention the PM's I have received.
I am writing this post because there is something that needs to be said. As most of you know that follow my posts, I have made certain assertions pertaining to the Large Brokerage Houses that many individuals on SI disagree with. A lot of people have asked me why I do not defend my positions more vehemently. There is a good reason, I learned a long time ago the following:
NEVER HAVE DIALOG - when you have to fire someone - they are not listening to your dialog about WHY.
NEVER HAVE DIALOG - when you owe someone money they desperately need and you can't pay, no dialog, they are not listening.
NEVER HAVE DIALOG - when you have to tell someone they have a terminal illness and will die in three months, trust me, they are not listening to your reasons why.
Well I have now added one more to that list: Don't have dialog when your critic's agenda is not substantiation but one of self-serving repudiation. I think it was Swift who said " Argument is the worst sort of conversation.
With the above in mind, I am writing this post because there is something that needs to be said. If I am wrong in my assertions that everything being equal, the large brokerage HOUSES control the markets descension and ascension, then it needs to be demonstrated once and for all and conversely if I am wrong then the fallacy of my thinking needs to reveal itself as well. There is no room on the S.I. boards or any board for shallow unsubstantiated theory on what the markets may or might not do.
If I am wrong about my assertions as stated above I will not only never post again on this thread but I will never post on S.I. as well. Now don't get me wrong, I am not crying, anyone that mouths off as much as I do is subject to any amount of criticism that comes their way. There is one thing I love about S.I., it will flat hold you accountable. I accept that and always have. Unlike a lot of my critics, I have always put my money where my mouth was and delineated such to the thread. If I did not have faith in what I preach, I would not have purchased another 500 shares of QCOM on Friday while playing golf, knowing that the markets would be in turmoil and I was investing in the dark so to speak. I do find my critics fall down in this area. Not once have the bears told us they were going to sell short and then let us adjudicate their judgement. Oh well, like I have said, no dialog please.
The one beautiful thing that has manifested itself as a result of what has transpired in the markets over the last week is that now the STAGE has been set for Voltaire to stay or go.
Now let's review what I have been saying and what has actually transpired.
In essence my view is simply that there are only three things that an investor should concern himself with, The FED, the HOUSES and the agenda of each. All of this crap about PPI, CPI, TRADE DEFICIT, BOND YIELD, CRB INDEX, GOLD etc. etc. etc. is nothing more than minute to minute, hour to hour, day to day peanuts for the ignorant monkeys that live on such inconsequential dribble. These numbers mean nothing to anyone but the exacerbating carnival road-shows like CNBC and CNNfn. Ex.- Last week we had horrible employment numbers and what happened? THE DAMN MARKET WAS UP OVER a 100 pts. Friday the PEE PEE numbers were bad because of the fear of inflation and what, yep market was down but interest rates actually fell. See, it means nothing until the FED or HOUSES decide what they want to do. So what does one do, SIMPLY READ THE AGENDA OF EITHER THE FED. OR HOUSES.
So what happened -
Thursday night at some dinner, one that many of the Bears or Shorts would have you believe was " The Last Supper " decided what - he decided he would begin to implement the FED's what - you got it, their AGENDA. Yes, they have an agenda and it is not what a lot of the desperate Bears and Shorts would have you believe, it is not and I repeat, is not an attempt to severely correct this market. Anyone that believes this has absolutely no concept of what this markets Wealth Effect and Purchasing Power mean to not only our economy but the World economy as well. You talk about a problem! Greenspan has not seen problems, if it is problems he wants, let him do something profoundly deleterious to the two essential and most powerful dynamics I just spoke about and he'll have more problems than he can handle. So what is his agenda? Very simple, the FED knows that there is no way that they can drastically raise interest rates so the Chairman simply mouths off a bit and everyone in the Bond pit runs for their life. Mission accomplished, than you very much! The Chairman smiles a bit then goes home for a few sets of Tennis.
So what did our friends, the Houses do? They here about the speech and it's contents and say to themselves, well if the FEDS are going to give us this UNEXPECTED gift ( a chance to aggrandize our stock inventories at extremely affordable prices ) be damned if we are going to turn it into a Charity Ball!
Finally, after what was for most people, " the long and terrifying night spent under the bed " Friday morning arrived along with all it's terrifying prospects. What happened, well for each individual I don't pretend to know, but down at the Stock Exchanges it was quite axiomatic. The MM's walked in, looked up at the Stop Board and wrung their hands with glee at what they saw and probably thought, gee, Christmas sure has come early. They then proceed to take out all of the Stop Loss orders that had been placed by all of the idiots that possess that injurious propensity to participate in the Running of the Masses. This is always evident by the exaggerated rapidity of a falling market on the open, notice the degree of downward accelleration in the first few hours.
Next came the fence sitters who the night before had sat down with their really savvy investment wise spouses and read and looked at video clips and highlights of the 87 CRASH and decided should the market begin to fall, lets say 80 pts or so, by-god we will get the hell out, we are no fools, right? No, wrong! The Houses look at this and say: damn, we did not cause this but we might as well take advantage. See how the FED's agenda comes first and then and only then do the Houses react. In other words, nothing transpired Thursday and Friday that has not happened before, remember the word EXUBERANCE. It is AGENDA folks, nothing more and nothing less.
One of the tenets of my theory is that TIME not timing is the key to reading the markets direction of movement. TIME of the day, TIME of the week, TIME of the month, and especially TIME of the year. So what does that mean. Take a look at this past week, TIME of the day, morning after Mr. G spoke, TIME of the week, Friday, going into a weekend after a seemingly death blow by the FED, TIME of the month, options expiration, TIME of the Year, OCTOBER! OCTOBER! Nothing has happened that has not occurred before and that won't occur again.
Monday look for the following -
1. A fairly mild opening and then a gradual last gasp attempt by the MM's to scare and try and create more Stop Loss orders which will take the DOW down slowly throughout most of the day and THEN WHAT I HAVE BEEN PREACHING will take place if the DOW is down around two hundred pts. THE HOUSES WILL begin to rescue the markets. They will not do this unless they feel their inventories are in danger. Just because they allow the markets to fall some and not proceed upward does not mean they are going to sit by and see what they have built be destroyed and everything I have expoused on is false, geez! I disagree with some of the people I respect the most, that we must see a 500 pt. or so washout before we begin to move upward. Nothing ever HAS TO HAPPEN in the markets. I personally do not feel the Houses will let the market go much below 9,700. BTW - I do not feel this is the worst time of the quarter anyway, I still say that the first week of Nov. is more apt to see a HOUSE induced retracement similar to this one and maybe a little stronger.
Remember, it is TIME, so we must get to at least Thanksgiving in order to look totally forward.
You should also hear this week from the spokeswoman of the HOUSES, our friend ABBY.
Now to be more specific, there are certain reasons I feel that the Houses have an Agenda for the upside as opposed to the downside.
Graybeards of the street do not want to admit it, but THERE IS A NEW PARADIGM!
There are several things about this new Paradigm that give me psychological insulation.
1. The Internet has basically been confirmed by the influential on Wall St. In other words, we don't hear the proverbial, All Internet Stocks will collaspe scenario that we heard last year. Too many Internets stocks today are not only considered viable but actually center-pieces that will provide the strength and leadership for this fantastic economy.
2. Demands for wages from not only the lower paid but even the middle class workers has been replaced by a fear of losing more important items not subject to those pay-check demons, FICA,FUTA, and SUTA and to a large degree, Fed and State taxes, - PERKS, especially good Medical coverage.
3.Labor Union effect or lack thereof - when was the last time we really had a strike that could strike fear in the heart of the businesses of this country. Rmember when we use to have Coal strikes ( that would only be solved after deer Hunting Season, geez,) Truckers strikes, Rail Strikes. Why, PRODUCTIVITY, there is always a robot or a piece of machinery in this new paradigm economy that the owners of these businesses will be glad to replace you with. Those that don't believe in productivity and that live in a developing community, step outside and with all that building listen for a hammer, you generally won't hear one but you might hear a Nail Gun. remember White-Out in the offices of about 15 years ago. Hell, ask your local plumber about the new paradigm of productivity, he will probably bemoan one of the greatest providers of productivity in this country and soon to be in the world, HOME DEPOT, when was the last time any of you called a plumber to help you with that little plumbing problem, you didn't. Just a quick trip to old Home Depot for that little ingenious item that you never knew existed and in a few minutes that 10 hour plumbing job is completed. Most CEO's could not type a letter if they tried but today they do not have to, hit a button and its done.
Robots work 24 hours a day. One day I feel you will actually have portable plants because competition will force all large assembly companies to move further and further toward the impoverished and availble work force.
Looking forward effect - the Houses and almost all investment entities are lookng forward, to what? The year 2000, markets do not go down when they are lookng forward.
Fool me once shame on you, fool me twice shame on me effect - as bad as the Crash of 87 was, it rectified itself in about three months- investors as a whole will not fall for the same RUSE again.
Global economy effect - this is demonstrated by the extreme verbal scares that the FED is forced to use. If this was not the case, just raise interest rates and forget it. Sorry folks, they can't do it, the new paradigm will not allow it.
Peace dividend - used for much more constructive psychological purposes, reducing the deficit etc. etc. I realize it is primarily psychological but beneficial never the less.
Earnings effect - earnings are running about 33% ahead of last year, why is this not mentioned with more vigor?
New controls put into place in the markets to prevent an unintentional 87 type debacle
The probability of a crash and just general instability of a market is inversely proportional to it's size. It is the small and thinly traded markets that are more susceptible to crashes the Bears and Shorts speak of. Wishful thinking on their part.
I would just like to say in closing that should I be wrong about the market NOT CRASHING but actually recovering in the next few weeks, I will miss all of those individuals that have made my stay here such a joy. I have always tried to avoid the caustic and vitriolic type of duels that some poster seem to relish on almost all threads. I had rather spend my time on my porch overlooking one of the most beautiful vistas you can imagine and give thanks for everything my Angels have given me. As I always remind people, we are so fortunate that it is not us that is standing on that garbage dump just outside of Mexico City looking for that three day old Orange to eat. Compared to that prospect the weekly coming and goings of material markets don't account for a lot,
hopefully I'll be seeing ya,
from the porch on a beautiful fall morning,
Voltaire |
