..........................SOROS, re: "bubbles"
To clarify a bit:
The word "bubble" means different things to different people...at different times.
With the benefit of a retrospective post-mortem analysis of the Internet & Tech Bubble -- where did the NASDAQ enter a "bubble" ?
Was it at 3,000, at 3,500, at 4,000, at 4,500, or at 5,000?
Taking it a bit futher...if the NASDAQ would have went on to 10,000 before crashing sub 2,000 -- would it have still been in a bubble at Nasdaq 5,000 -- even if it had ultimately doubled from there ?
Where does the line of "speculation" end...and that of a "bubble" begin ?
...semantics by any other name are still just that... semantics.
Was Gold in a bubble back in 1980 at $850+ -- given the near 25 year bear market that followed ?
It doesn't really matter what "label" we choose put on these moves...the key concept remains this:
*** All Speculations end the same... always have, always will. ***
The late 1990's brought the birth of online trading to the masses...we've gone from Louis Rukeyser's classic market analysis on Friday nights on Public TV... to the advent of 24 x 7 Cheerleading Business Channels and the likes of James Cramer's "Mad Money" blurring the lines between Bozo's Circus, and an infomerical verus financial news and commentary...
We've just witnessed the greatest Fiat Pump in history since the Wiemar Republic...resulting in massive misallocations of capital and a historic transfer of wealth via plundering America and mortgaging it's future (both figuratively and literally).
Again I'll cite the quote from the Godfather III relative the "legitimacy" of the Financial Markets...from the egregious CEO pay packages making headlines of late, to the never ending stream of avarice, greed and arrogance from crooked executives from the likes of World Comm, Tyco and Enron...
"All my life I kept trying to move up in society where people higher up were legitimate, but the higher I go the crookeder it becomes. Where the hell does it end?"
-- Michael Corleone in the Godfather III
Here's another question:
Where is the Big Money really made in commodity cycles ?
The HUI exploded from it's low of 35 in November 2000 to 250 by November 2003...a "7 bagger" return in 3 years.
From that level it's went up just +50% over the last 3 years.
If you had presciently entered Gold and goldstocks in late 2000 at it's cyclical bottom -- when Gold was reviled and couldn't even raise a pulse with the media, you would have been ridiculed, laughed at and had your sanity doubted....but, you also would have outperformed those who entered Gold in late 2003 after it appeard on the radar by a 14:1 return.
14 x the return...by "missing the entire gold story."
No different in Oil...
If you bought the Oil Service & Drillers Index the OSX back in August 1998 at 45... you got a quick "Triple" in it's resulting run.
If you jumped on the "Peak Oil" bandwagon over the last couple of years the OSX has returned +60% from it's former 1997-98 cycle highs to the present OSX 230 level.
The early entry and pre-Peak Oil exit resulted in a 6 x outperformace of those who entered on the Peak Oil Bandwagon. Which would you rather have a + 300% return, or + 60% ?
My point is twofold:
One: Where is the money "really" made in speculative cycles ?
And more importantly -- two: What trading & investing style, or exit strategy "retains" the most money ?
Because making money has never been the problem in commodities, or cyclicals... keeping it has been the problem !
Maybe people actually need to be reminded of how the story ended the last time Gold dominated the headlines:
kitco.com
And it's not just gold...here's a quick back of the napkin review of recent commodity volatility:
Our friends from the old Strictly Drilling thread will remember these:
For the OSX:
OSX 135 to 45 -- May thru August 1998
A collapse of 90 index points for a - 67% loss in 3 months:
stockcharts.com[l,a]dbclynay[d19980512,19980902][pf][iut]&pr...
OSX 135 to 58 -- June thru Sept 2001 – the now infamous “June Swoon” of 2001: A collapse of 77 index points for a loss of -57% with the majority of it in less than 30 days:
stockcharts.com[l,a]dbclynay[d20010520,20010927][pf][iut]&pr...
OSX 115 to 78 -- May thru July 2002
A collapse of 37 points for a 33% loss in 9 weeks:
stockcharts.com[l,a]dbclynay[d20020514,20020715][pf][iut]&pr...
For the XNG – Natural Gas E&P Index:
XNG 260 to 160 – May thru Sept 2001
A collapse in the Natural Gas E&P stock index of 100 points for a -40% loss:
stockcharts.com[l,a]dbclynay[d20010515,20010926][pf][iut]&pr...
…but, that was just the first wave in the Nat Gas collapse --- here was the 2nd wave:
XNG 205 to 105 -- May thru July 2002
A collapse of another 100 index points for a 50% loss in 7-8 weeks:
stockcharts.com[l,a]dbclynay[d20020419,20020725][pf][iut]&pr...
Even the newest generation of goldbugs who weren't in the market during the 1980 Gold & Silver "bubble" have selective memories too:
This recent rollercoaster ride of death, destruction and despair...culminated with a near 100 point HUI death march resulting in an alltime low sentiment reading amongst goldbugs as recorded by Hulberts digest and the final goldbug capitulation in May 2005:
stockcharts.com[d,a]daclynay[d20030919,20050919][pf][iut]&style=
In both 2004 and 2005 the HUI Goldbugs Index brought brutal, near 100 point index shakeouts...here's the first. about a 40% collapse from the HUI 240's to the 160's in only 20-some odd trading days:
stockcharts.com
...and we know the story of the bone-laden HUI deathmarch of 2005 as well:
stockcharts.com
And once again vis a vis the question as to whether commodities have entered a speculative phase, an acutal bubble, or are merely being repriced in a new paradigm multi-year cycle based upon the emergence of China.
Was this representative of a new paradigm multi-year upcycle, or a speculative bubble ?
stockcharts.com[l,a]dbclynay[d20051211,20060211][pf][iut][J69380818,Y]&listnum=2
Are 50% corrections in mere days, or weeks in major commodities reflective of stability and sanity; or speculative bubbles?
Soros...re: your question of:
["Why do the gold/silver bulls get "greedy" so fast and deserve to be labeled "pigs", yet the real estate investors can go on forever and not be labeled or get their deserved "reward?" How about the Google investors? How about the Greenspan worshippers?"]
You've never heard me defend the housing bubble, or call it anything other than that... a credit & debt created orgy that is the only reason the US economy, the market and commodities are where they are today.
The Fed created credit and debt orgy fueled China's boom... China has a trade deficit with virtually everyone except the USA !
The US Dollar had a 40% collapse -- why shouldn't, or wouldn't -- commodities reprice by at least 40%+ in US Dollar terms ?
Speculators took the commodity repricing momenteum ball and ran with it... they always have...and always will.
As far as your comment of:
["By your theory, I'd say we should be right on the precipice of the end of the US dollar and civilization -- has it not about run its course in terms of empires?"]
Have you noticed that America is being "conditioned" for the H5N1 Bird Flu pandemic?
What did our President just say ?
Did you see Newt Gingrich on the Fox special on the coming Bird Flu Pandemic last night?
Look in today's USA Today Magazine in your morning newspaper... there's a Full Page Color Ad for the coming movie release of yeat another Bird Flu Armageddeon Movie...
How many soundbytes have you heard over the last few months to the effect of:
"America is not prepared..."
Let me ask you a question:
Do the Chinese have a history of openess, honesty, or cooperation vis a vis reporting pandemic outbreaks -- re: SARS etc ?
The Spanish Flu of 1918 basically ended World War I.
More Soldiers died from the Spanish Flu during 1918 & 1919 than died on the battle field.
Today's world of International Travel and a Global Economy adds an entirely new dimension to a major pandemic.
Goldbugs point to the Bird Flu as yet another reason to run to Gold.
... I don't think so.
China's economy took a major hit from SARS.
If the US gets hit hard with a Bird Flu pandemic... relative the recent warnings of up to 40% of the U.S. Workforce being taken out of action within the first 6 weeks of the outbreak... both the US Economy and China's will derail... as will the financial markets -- especially commodities... gold included.
This may shock you...but, the most brilliant and successful strategists among the major hedge funds who were positioned for this commodity bull...and who now know it for what it is... are now positioning themselves for a when, not if... major bull run in (get ready for this)...
The U.S. Dollar...and Bonds.
a.k.a. the theory of:
"Trillions trump Billions"
Now read this twice...and I'll even "underline" it for emphasis so people won't just read and hear what they want to hear:
This is not somehting that is going to happen overnight...but, the script is being written as we speak...
The Bond Market is hated and Cash (USD) is Trash...
And I love it.
*{But, cash isn't trash to Exxon now is it ? -- why is XOM sitting on over $30B+ in Cash as analysts hammer it for doing so... as other Oil companies are drilling for Oil on Wall St...and playing the acquisition game ?.... what does XOM and Lee Raymond et al know... that you don't ?!?! ...remember the most powerfull man in the Oil market is -- James Baker...personal council to the Bush Family, the Saudi Royal Family and XOM...whodathunkit?)*
The US Dollar and Bonds...
Kinda sounds like a contrarian play now doesn't it?
But, are there any real contrarians left ?
...or, have they all turned into momentum players ?
Food for thought...
In today's market you can't afford to merely "think outside the box"...sometimes, you have to pick the box up, turn it upside down and shake the living hell out of it."
-- SOTB
Food for thought...
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