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Strategies & Market Trends : 2026 TeoTwawKi ... 2032 Darkest Interregnum -- Ignore unavailable to you. Want to Upgrade?

To: carranza2 who wrote (27796)	1/14/2008 4:58:46 PM
From: Maurice Winn	Read Replies (1) \| Respond to of 217680

C2, good points. Decades before I even bought QCOM, I knew very well the processes of mob hysteria. I recall a post I wrote in the mid 1990s which said that when, as you described, the voices were loud, numerous, all-wise and the price was high I would slip quietly out the back door from QCOM, ignored and irrelevant. As it happened, because of tax laws here and one thing and another, I decided to stay at the party, accept the crunch and wait for the return to glory after the pummeling had taken place and sense returned. Unfortunately, I made the biggest financial blunder of my life by buying Globalstar shares at the market high, because the share price had crashed from $53 to $13 and I didn't want to be too greedy, hoping for a coincident GSTRF and stock market crash before buying. Unfortunately, my big misjudgment about management behaviour took me to the cleaners so I not only lost all that money on GSTRF, but had to sell out some QCOM on the way down to ensure that when the bottom was in, I was well-positioned still for a reasonable life. Fortunately, I was circumspect enough with GSTRF to buy just a tranche rather than a wallop or whole hog. As I explained to the broker, I had to be ready for GSTRF to go to zero and QCOM to go to $50 [from $180]. He thought I was nuts and such couldn't happen. Not only did such happen, but QCOM carried on down to $23. But back to the TA and Head and Shoulders. Okay, I admit I had my tongue in cheek somewhat as those simple ideas of formations are irrelevant in the age of PhD mathematicians conducting cyberwars with other PhD mathematicians modeling markets and what each others' models are doing. They must be making chess look simple. I have no information on how much of the market those people own but recall that some of them have a fair sway in the markets, controlling $billions. For example D E Shaw a few years ago was a big deal in such markets. I chose Head and Shoulders as my favourite formation because in 1986 my BP Oil colleague Charles Willoughby and I went to his Technical Analysts Association meeting once together, and they discussed various technical analysis, and Head and Shoulders was memorable. It was a serious group of big deal investors meeting in the City of London, just up the road from Bank, not just hobbyists playing games. I nicknamed it "The Head and Shoulders Club". It is of course true that herd behaviour defines the prices of things and knowing what herds will do is crucial to timing buying and selling. However, the herd includes those doing the modeling and we get into second, third, fourth, fifth ... n guessing of each other. So simplistic ideas like Head and Shoulders are NOT a good bet. A good mathematician and market modeling share trading business would deliberately form head and shoulders shapes by buying judiciously to lull the gullible into thinking such a formation was forming and thereby inducing them to buy and sell at the wrong time, after which the top model would spring the trap and fleece the ignorant and unwary believing the simple theories on technical analysis. The more a theory is believed, the easier it would be to fleece the believers. Nevertheless, there are so many opportunities in the markets that it seems to me [without a lot of evidence] that those models are not very good even if they are better enough on average to make their owners a lot of money. HOV for example remained suspended like Wile E Coyote for a year or two after me, and TJ [in rare agreement] were both in short mode. He did it too soon and had to bail out at a loss, and I decided at the last moment not to do it at $55, just after the all-time top, as I wanted to avoid getting into leverage mode again after my thrashing in the GSTRF debacle. It took all the way until October for the grim realization to really set in and the move to near-zero to get under way. Same with FNM, and FMC. Right now, the whole New Zealand economy looks to me like Wile E Coyote with vast debts to Japan built up over 8 years so that NZers could reprice their houses sky high while their incomes and rents barely moved. The NZ$ is at world record highs against the US$ and yen [slightly off, but pretty solidly up there]. Here is an article today in The New Zealand Herald describing the situation: nzherald.co.nz It is crazy! People are buying houses at 100% mortgage and pay in interest [no principal repayments] three times what it would cost them to rent the same house. They are hoping for capital gains to save them. In Japan, houses are 20% of their value nearly 20 years ago. Capital gains do NOT save people if prices are going down. Those people in the newspaper article are in big trouble yet they don't know they are. I admit that I haven't checked the graph to see how well gold follows the classic head and shoulders formation, but it does look like something similar. Since everyone seems to know that the US$ is doomed, gold is great and huge financial disaster is coming, it has no doubt been discounted quite a lot. In NZ$, gold is not actually up much at all. In NZ house price terms, gold is a loser since I checked gold in Johnson Matthey's Grafton Road bunker at US$323 per ounce. I don't think I'll bet against gold in that circumstance. I'd rather sell houses and buy gold. Come to think of it, I have a house which I could turn to gold. Which would be annoying to do as I'd have to move. Though maybe somebody would buy it and rent it to me. I could lend them the money on mortgage to buy the house. Hmmmm..... I could pay the mortgage from the income from the mortgage. Mqurice