WARNING: You need to get real focused here...
Even though it's a matter of "when, not if" global central
banks pump a trillion dollars into the system, we may
literally be witnessing the collapse of the global
financial system.
$300 billion was pumped into the financial system last week
alone, and it didn't stop credit spreads from widening,
or banks from failing.
And even though it appears this TARP bailout plan will be
approved, it may be too late. There has never been a debt
bubble collapse that has been solved with more debt.
European banks are now collapsing (Fortis, B&B), and banks
like Deutsche Bank which was levered 50:1, represent grave
systemic risk to their home economies and markets.
Both Goldman and Morgan can not survive as "banking entities"
without merging into a large deposit base. They are both
living on borrowed time.
You MUST be NET SHORT this market. And you MUST insure your
gold stock and paper gold/ETF positions as well.
We are seeing virtually the entire commodity complex implode
with everything from oil & gas to the industrial metals, to
the agricultural ETF's all down sharply.
Much of this selloff is from the expected fund redemptions
at end of quarter/end of month. But, much of it is from the
fear of a systemic meltdown in global markets.
There was a reason that members of Congress and the Senate
were barred from these recent negotiations.
Many of us laughed at Bill Gross and his DOW 5,000
pronouncement a few years ago... but, now the once
unthinkable, has become very thinkable.
This is a time to be concentrated in only your core
positions, to be hedged and insured with short positions.
We got a nice trading pop off of this bottom. Got some doubles
in the small caps, and a nice pop from the HUI 250's to
the 350's. But, we must let our stops do the job they
were designed to do -- prohibit us from giving it back.
Physical gold has had much less volatility on the downside
than gold stocks. So keep that as your core hold. And if
you haven't been rasing stops up tight behind this move,
don't be afraid to trim holdings, or add short etfs as
insurance.
Fwiw: I'm 45% cash, 40% short, 15% gold/pm stocks here.
We got a nice trade. The HUI gave us a 100 point pop off
the 250 bottom, and we got some doubles, and quick 40-50%
pops in the juniors.
Don't give it all back.
In baseball, as a hitter if you're 0 for 3, and you come up
to bat for the 4th time, you just choke up and try to make
some contact.
But when you're 3 for 3, if you get a pitch to hit, you turn
on it and try to drive it.
When you're in the zone... you take your cuts.
We've had a nice run on timing this market and could afford
to take our cuts here. There was no reason to bunt, not with
$750 billion coming down the pike.
But, now we're starting to give back some gains, and the
entire commodity complex is melting down around us.
And it's like they've just brought Randy Johnson in out of the
pen, and he's throwing 99 mph...and just threw the last two
fastballs right by you.
So what do you do?
You step out of the box.
You take a couple of deep breaths.
You think about the last few pitches.
And you get a bit more defensive...
You give yourself another 6" and dig in at the back
of the box (preferably 6" outside it(vbg).
And now, you do choke up.
And you fight off anything that's not in the wheelhouse.
You just try to keep getting a piece of the ball, until
he makes a mistake and either hangs a curveball, or gives
you a fastball waist high, and on the inside half of the
plate -- one you can turn on.
And when he does, then you drop your hips and you drive
the SOB.
But until then... you choke up, you get defensive, and
you just keep fightin' 'em off.
Stay on your toes. Give this some time. Deleveraging is
like making sausage, it ain't pretty to watch.
Be careful out there...
S.O.T.B. |
