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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: kailuabruddah who wrote (48111)	12/24/2005 1:36:35 PM
From: russwinter	Read Replies (4) \| Respond to of 110194

To prepare for the unwinding of Humpty Dumpty, I have pretty much ratcheted down my commodity trading of the last several years. I'm almost entirely out of gold (except a modest amount in coins), energy and juniors plays having distributed them over the last couple months into spikes. I have a long small corn futures trade going, and have small longs in SF and JY March futures. I have a decent sized speculation in place using long puts and bear spreads on low implied volatility indexes like SPY, IWM, XLF, XLY, QQQQ, and various stocks I've been posting on here. Subject 55631 Other than that most of my assets are laddered in Treasury bills purchased through Treasury Direct that are maturing nearly every week, or rolled over subject to timing (which I've also discussed). I leave only minimum amounts in bank or broker money market accounts. The idea of buying a 5 or 10 year T-note for the same yield as a 6 month, makes zero sense to me, way too much a bet on the kindness and stupidity of foreigners to keep buying Old Maid Cards. I own zero real estate, I rent a $600k urban loft for $1900 a month, pay only heat and electricity. I rarely use a car anymore as this neighborhood is pedestrian friendly and connected by train, trolley, and "Max train", minutes away. Like a good boy scout, I feel I'm well prepared.

To: kailuabruddah who wrote (48111)	12/24/2005 1:37:22 PM
From: UncleBigs	Respond to of 110194

Where does the money coming out of Humpty trades go? I think this is a common way of thinking for most people right now. Everyone is still trying to get ahead of the next money flow...the next bubble. The thinking is still "what else can I be long to enjoy the bubble ride up"? This is the thinking that I believe is and will continue to shift. Money doesn't come out of Humpty trades or anything else. For every dollar going out of real estate or stocks or gold, another person decided to put a dollar into these assets. In the aggregate, I think the liquidity pool begins to drain. The money goes towards paying interest, repaying debt, and cash. When the aggregate liquidity pool is draining while demand for safety increases, there is large impact on price for risk assets. It's too many fat people running for the exits. They aren't all getting out. We've seen the opposite of this for the last 5 years. Real estate has been the biggest beneficiary. We've seen a stampede out of cash and into an asset with a restricted supply that cannot quickly adjust to demand. The bubble gets out of hand because people then chase the momentum hoping for quick speculative profits and the "last chance to get in" mentality sets in for the most coveted asset on earth....one's home. Today, the public is all-in on housing. Anyone with the slightest inclination has bought a home if not a second or third home plus investment rentals. This is occuring just as the large homebuilders have huge product in the pipeline and are chock full of inventory. We'll soon have an unbelievable glut of housing. I think 2006 marks the beginning for a multi-year psychological cycle where thinking changes from "what can I buy now" to "what can I sell to raise some cash". I expect real estate, classic cars, art, stocks, risky bonds, big ticket consumer discretionary such as RV's, atv's, etc. to take a big hit.

To: kailuabruddah who wrote (48111)	12/24/2005 2:12:55 PM
From: kris b	Respond to of 110194

Hmmm... but then what should one "go long" in? US $ Yen Swiss Franc Hong Kong Dollar HOW ABOUT GOING SHORT EVERYTHING IN US $ ??? Where does the money coming out of Humpty trades go? THERE WILL NOT BE ANY MONEY COMING OUT OF HUMPTY TRADES. IN DEFLATIONARY CONTRACTION SPECULATIVE CREDIT CREATED OUT OF THIN AIR (AGAINST APPRECIATING ASSETS) WILL VANISH INTO THIN AIR AND GET CANCELLED WHEN COLLATERAL VALUES COLLAPSE. ONLY CREDIT BASED ON ONES EARNINGS/SAVINGS STAYS IN THE SYSTEM AND DOESN'T GET EXTINGUISHED. NO SAVINGS NO CREDIT. BASTA. KRIS