<I am not sure you respect mine at all>
I think you are highly intelligent (and stubborn)like me, a high octane mix. And it's obvious the "epic bubble" is your topic (like mine). The debate we have is 75% useful to me, and is in fact stimulating. It helped gear me for my new ED trade, for example (although my conclusion is different). I have no problem with being challenged (as my motivation is truely about trading success, much more so than ego), and you bring a lot of real goods to the table in that regard.
The problem with the other 25% is that you sometimes don't appear to be very clear on my position(s). For instance, suggesting that I haven't advanced points about the inflationary/bottleneck scenario, when I've taken the time to put up at least a hundred (if not several hundred) posts on it, does annoy me. I would rather that you address specifics of those actual posts and refute them, rather than deny their existence. Do that and I think we will get this discussion more on track. I think I'm clear on what your position is.
<but unfortunately at the wrong time.>
Easy to do, with wild men at the helm. I've taken short selling losses (fortunately more than offset by reflation themes) doing same. For instance, I was hit yesterday in the MTG/MBI/RDN junk credit insurance rally. Obviously there is no fear of credit risk (for now) when you have Bernanke tossing out his moral hazard nonsense on a regular basis. That's a tough thing to fight I must admit. But, there will be huge payoff when that moral hazard psychology breaks, and I'm willing to take the risk. The timing of the Fed (or foreigner, or just the markets realizing how off-side they are ) penalty flag throw (if any) will be the dominant theme of 2004 in terms of speculative returns, no question.
<I want to know what you are doing with commodities and why.>
I've been very active in gold and PMs from 2001, (the ground floor), have come out of it since Sept, sold more yesterday. I think commodities are a high risk trade right now, mostly because the big hedge funds are piling in (and taking money out of the US to do it). But if you're right about the Fed just going down this no penalty throw path, most "things" will continue to spike higher IMO. If they succeed in talking or manipulating it down without real action( higher rates), it will be a buy again, especially after the specs I've alluded to get cleared out of their long positions.
On other commodites like corn and energy, I keep a close eye on commercial activity. That clued me on the NG and corn rally (two great timed trades in both, actually since summer). I see no commercial "get long" signals in any commodity right now, although in the present hyper-loose environment I see powerful bullish forces at work. Right now specs have just piled into everything in a free for all.
I would say this is because the Fed has failed to throw penalty flags for years. That just encourages rampant speculation in "things". Obviously, given my views, I feel that could come to an abrupt end should a monetary reversal occur. I'm not willing at this point to keep risking capital on speculative "things" and securities that are in late stage blowoffs (?) and that are highly dependent on the Wizards of Oz fiddling while Rome burns. I've been selling my large energy stocks holdings (bought mostly in Nov.02- March, 03, see posts at Big Dog Boom Room during that period) off for the last week or so. I have more to go, and may use today's $35 oil to get rid of most of the rest this week. Unfortunately, a lot of my exit strategy nowadays ends up being tied to one year holds for LT cap gains. I'm always sitting on some large gain (*)that goes long term next month, it's tiresome, but mostly it's just gotten me higher prices on stuff I probably would have sold early. I have a huge position in WTZ (silver, copper, zinc), that goes LT at the end of Jan, and that I'm also restricted on. I do have a good size short position that has cut into what would have otherwise be incredible gains in all this. Still 2003 was a spectacular year, and in hindsight due to the Great Reflation.
I guess the question I'd ask you is: assuming the Fed fails to throw a penalty flag this year, what would that look like in the markets? Apparently you see economic weakness reemerging as the overlay to your scenario? What happens with all these bubbles (do you see these as speculative bubbles?) and bottlenecks (are you seeing bottlenecks)? How long is all that sustainable in the no penalty flag scenario?
(*) One characteristic about me that people who are tracking should realize is that on my big winners like corn, energy, PMs, I'm not over on prior threads cheerleading, or hyping stuff. Most of my focus here is on setting up "the next trades". The old trades for me are like good sex, enjoyable but I avoid the locker room talk. |
