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      07-07-2011, 12:09 PM   #35
mact3333
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wanna know what I thought about the economy and the mkts over 3 yrs ago before the implosion, here is my post from March 2008 on another MB.




Msg 185238 of 407554 at 3/3/2008 11:08:28 PM by

mact3333


Since Were Talking Economy Here:
First of all, I have no long positions except the gold etf GLD. I have been short housing, financials, nasdaq, sp500, china for the past 4 months and my previous posts will reflect this...I have no hidden agenda so I really dont care if you buy or sell this mkt.

What I am commenting on is this...I totally disagree with anyone that thinks this is your run of the mill mild recession...ultimately this might turn out to be the case since I dont have a crystal ball(a reliable one anyway) but odds are favoring something that we wont recover from in a quarter or two...here is my reasoning....ok, if youre looking beyond 2 yrs Im sure we will recover at some point but I think the mkt will be in general be very choppy but down for rest of the yr

Why has the mkt gone up the past 5-10 yrs???...to me the overwhelming evidence points to the american consumer taking on debt and removing money from a grossly inflated housing mkt...money they didnt have...the numbers show credit card debt at historic highs...people took billions of dollars out of their homes with refi's, helocs and etc...this is a fact that cannot be denied...are we really making any more money?...dont think so...so where is all the money coming from?...think about it.

So where is credit right now???...credit is tighter than ever!..while the Feds bring down rates it isnt being translated to the avg american...the banks are keeping the spread...banks are lowering credit card limits and raising rates even for people who pay on time and have excellent credit scores.

I hear pretty much everyday now how professional traders and finance people saying "in the past 30 yrs I have never seen anything like it"...ARS auctions are failing...ARS's have been sold as money mkts...many people cant get their money out of ARS's because the investment banks wont support them...this is very significant....did you know muni's are paying 5.5%??...since there isnt tax implications with munis its like handing out 8-9%!...why would anyone invest in the stock mkt when safe munis are paying this much...even Bill Gross of PIMCO buying up munis right now...cities and states paying huge rates to get money right now..

And I dont have to go into the bond insurers because everyone should know this story...yes if they get downgraded all the munis they have underwritten in the past get downgraded too...what does this do to the cities and states that have to pay more to refinance?...and you really think with the exposure ambac and mbia has with CDO's that they are deserving of a AAA rating that S/P and Moodys just handed out???...that is a joke...what other company whose stock price goes down by 90% in 6 months can you keep a AAA rating?...the govt and financial institutions are artifically elevating these ratings because if they dont, they will take another 50-100B in more writedowns.

And what about the FED...since they dropped .75 and .5 in Jan the mkt is down...the FED is printing fictitious money for wall street and not for you and me...they will do anything to maintain the charade(ie-false growth)...printing more money WILL bring on inflation as we have seen...CPI and PPI are rising very quickly...even Larry Kudlow the Bush cronie is concerned and thats saying something!...how can wheat be up 170% and oil 65% in the past yr without inflation?...((roughly)) in the past 4 yrs, copper up 400%, gold, 300%, corn 300%, soy 300%,,...get the picture???...only thing thats down is products from China ...the govt is printing money and weakening the dollar so fortune 500 and global co's can make more profits due to the weakening dollar from overseas sales...I dont think lowering interest rates will help the avg person...why is it that big successful co's are sitting on billions is cash right now???..they are only buying back their stock, thats saying something...are they developing plants in the US???...nope, they are pouring money into foreign mkts...they are taking jobs out of the US...we are eliminating the middle class in the US and this will ultimately hurt us because imho in order to have sustainable growth in the US we need more and better paying jobs...our fortune 500 co's are taking mid paying jobs away from us...the ones making 150K plus and 30K and less not affected as much...its the 40-80K people getting hurt...why pay a US steel worker 20-30 dollars/hr when someone in china or mexico will do it for 2.00???...look at Ohio as an example...thats why Hillary and Obama want to take another look at NAFTA.

Anyone see the equity of top financial institutions in relation to their exposure to complex derivitives and etc??...they tried to hedge but when the co's that they hedged with have imploded their hedge no longer exists...why else would they sell out to foreigners at such a furious pace?...they are desperate...we are coupled to a housing mkt way beyond we can imagine imho...and people saying that prices havent gone down in my neighborhood are kidding themselves...I live in an area that is 1 of only 4 cities where prices have supposedly have not gone down yet...but there are houses(20 in my neighborhood) that havent sold in 1-2 yrs ..they are marked down 20-25% from the high now...thats reality....the NAR numbers put out by realtors.

But bottom line is this, over past decade, where did the money come from to fuel our economy?..and does this money still exist?...I say no...I think we will have new standards with respect to lending/borrowing, how we handle accounting and risk...I dont think the fincial system will ever be the same imho.

Its funny because from what I remember, fordwill and I were the only ones touting "doom and gloom" 4-5 months ago...we were laughed at at the time...btw, back to DNDN...I was golfing this weekend oh I mean at a prostate meeting .......spoke to DNDN reps for an hr...entertaining...spoke to Petrylak(spelling???) for abit too...more to come when I have time....urologists are funny people thats for sure....





Quote:
Originally Posted by scorcherjf View Post
Large banks and hedge funds have rules and regulations to abide by and of course they'll do anything within their power to maximize wealth to shareholders and/or profits while still conforming to their set of "constraints." If anything, the ones to blame are the government policies, lack of regulation and oversight, and out-dated rules and regulations which are often way too slow at keeping up with current market trends and technologies. It often takes a meltdown or a crisis for them to wake up and finally act and by then it's already too late (i.e. LTCM, tech bubble, quant crisis 07, CDS/MBS crash 08, junk rally 09, and now the EU/PIIGS and China). And yes, individual investors will often bear the brunt of the damage since they're typically slower at acting (they have other jobs usually), don't have as much information (asymmetry), and lack the tools necessary to be as liquid - three things that are required for arbitrage-free and efficient markets.

True, the probability of guessing correctly during bull markets is higher but that's obvious. What separates amateur traders and experienced ones is often their risk management. Sure their success rate is probably similar, but the one who correctly sizes his/her trades will ultimately yield superior performance.

Your views of our government and financial markets really sounds niave... I actually had similar thoughts years ago when I was still a student testing different strategies. Once you actually do some digging and learn how a lot of the financial systems work like the federal reserve's role, the house banking committee, etc. and how they interact with each other you'll probably realize that everyone's not out to "get you" and big brother isn't there just to squash down the little guy. Perhaps one day you'll realize that the other players aren't "cheaters" but merely acting within their capacity - you would probably do the same if you were in their position so try and see things from other perspectives.

About the CPA... that's accounting which isn't exactly finance. Why would you expect them to teach CPA's how the whole banking and financial system works when it's something that's barely even taught in business schools or finance degrees? Do some research and look at what those degrees actually say they attempt to teach you and you'll see that it's mostly quantitative tools which are necessary in the field. It's up to the person to use those tools to learn about what they want after with a more disciplined and objective viewpoint. Their understanding of the banking system may not be any better than yours, and if it is, it's not because of their fancy degree but because they've sat down and reasoned through it rather than dismissing the whole system as a scam.

Anyway, with your charts, "mini cup handles", triangle breakouts, etc. you make pretty common mean reversion predictions. My amateur advice to you would be to scrap those etch-a-sketch drawings on charts and use more solid indicators (credit spread and vol swap rates perhaps) and build a model that you can backtest and verify. My amateur economic advice would be to keep an eye on China. Sure they may have increasing inflation and some local debt issues recently but their growth is insane and it seems to be hard for capitalist americans to comprehend how a controlled government could actually be successful. The U.S. is in a terrible position right now with their public debt, labor unions, and possibly declining into stagnancy. It's a lot easier to fight inflation than deflation... look at Japan's history.
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