Chairman MaoXian

had an interesting link to a Richard Russell comment. Russell was lamenting the disappearance of the old line newletter publishers, other than himself. He's pretty much got it right--the Internet and proliferation of "free" data and opinion. Russell's an interesting character--I subscribed to him for a while. He is a good writer, but for me, in the end, it was just more of the same "the sky is falling, the dollar is going to hell, gold is the only real money, the trade deficit will kill us, the US is the new Rome, Bush is an idiot" stuff that you can get for free (or at least cheaper) in a lot of other places on the net (like the Mishedlo board at the Fool). Some of that stuff may be true, but in all honesty I thought he was just regurgitating a lot of the groupthink from the New York Times, LA Times, Financial Times, etc, that he makes no secret of reading and liking. So while he's made some great calls over the years, in an ironic way he's kind of an exception to his observation--he's still around, even though you can basically get elsewhere for free what he offers for 300 bucks a year or whatever.

Random Roger

Once again, a nice little tidbit from Random Roger, a blogging money manager. I always find something from him that you don't hear elsewhere, and that's valuable, both on the net and in the investing world. There's a lot of people repeating the same stuff, but Roger has given me both different ideas (like his thoughts on money managing philosopy) and specific ideas (the covered call funds) that I haven't seen elsewhere.
New's Year Hat Tip, Roger.

Conserving

that wasting asset, time. Anything that saves time is worthwhile, so check out newsreaders and RSS feeds, if you haven't already. A good intro is here.

End of year

Time to combine end of year tax manuevers with good works by contributing to tsunami relief. A number of options are here.

Habit

will be another focus for me in 2005. Much of what we do everyday is habit. Once established, its just as easy to have beneficial habits, as deleterious ones.

I resolve to examine my daily behavior for habits, and to work on replacing the deleterious ones, with more beneficial ones.
(Like blogging every day.)

Resolutions continued

Next resolution is to blog at least once a day, no matter how short or trivial . . .

Losses

should be cut quickly, and ruthlessly. This has been a building block of my trading plan. I've done a good job of cutting losses early and quickly--except when I haven't. A couple large losses in 2004 have seriously affected my results.

In 2005, stop losses will be set before every trade, and adhered to ruthlessly. No exceptions.

Ironic

that the previous post was entitled "Time", since one of my resolutions involves time, the only truly wasting and utterly non-replenishable asset. Every day, we use time we can never get back. I look back at the year and see time that I did nothing productive, nothing educational, and nothing even enjoyable with.

It's irrational to expect that no time will be wasted, but I resolve to "waste" less time this coming year, and use more of this wasting asset to produce, to learn, to better myself, and simply to enjoy. I'll try to make a habit of asking myself--is this the best use I could make of this time?

Time

to think about what's gone right and wrong in the year past, and set plans for the year to come.
That'll be the theme for today--New Year's Resolutions.

Google

GOOG is still strong, breaking thru a downtrend line. Obviously, I've been wrong on my puts. Still time for that to change, of course, but in the short term, I've been wrong. Based on a simple inspection of the chart, and on plotting price by volume, I think there is a lot of support in the 165-170 area. Above that, I wouldn't fight it. Below that, its look out below.

Xmas week . . .

. . . and many people have other things to do. I'm finding it hard to say much of anything even marginally worthwhile, unlike Random Roger, TraderMike, MaoXian, et al. I thought Roger's post about not having the exact same personal portfolio as his client's was thought-provoking.

thoughts

Gold has support at its old high of 433--but it arguably has resistance, based on the chart of GLD, at the bottom of the gap at 440.

USD has resistance at its old low of 84.5--I'm thinking we may see a rally to that area.

Random thoughts on a Friday. . .

google still drifts--it will be interesting again at about 163-165--that's not only the top of the gap, its a fibonacci retracement of 61.8% (or 38.2%, depending on your point of view)

Gold bullion has been down the past couple days more than gold shares--which leads me to wonder (this is somewhat of a leap): is the new gold ETF (GLD, in case you've been in a cave) making gold more volatile?

Insurance stocks like AOC, MMC, AFL that have been "spitzered" lately all gapped up this AM, only to drop back, but then mostly move upward again. I'm not smart enough to know what, if anything, this means.

My biggest winner lately has been NFI, which I bought, almost sold a couple of times, but have managed to sit tight for a nice gain so far. Which makes me think of the Jesse Livermore line, to the effect of, it was never my thinking that made me money, its was my sitting there (in a stock on an uptrend, obviously)

Google . . .

just keeps tracing out a series of lower highs, and generally drifting lower, even as the Nasdaq moves higher. Perhaps Trader Wizard's thesis about the avalanche of GOOG shares being released from lockup is starting to play out. I hope so, since I have GOOG puts . . .

Naz reversal

Well, the reversal in the COMPQ came a little after 10 Eastern, confirming the wisdom of Trader Mike's rule. We're down below the open, not quite to yesterday's close but almost.

note to self . . .

Futures have been rockin since Intel announcement. Remember what TraderMike said, wait till after the 10 AM EST high, and buy above it.
I lost enough money yesterday, I don't want to get suckered in a reversal today.
Also noted, the dollar, gold, and oil are basically flat.

trades

My trades are smellin', but I'm still gellin'.

Caught up on reading Jonathan Hoenig--I always get good insights from him, as well as picks you won't get anywhere else.

SIRI

Chairman MaoXian has a beautiful chart of the coil, ascending triangle, range contraction, whatever you want to call it in SIRI. I guess a pop out of this is coming, just don't know which way and when!

Xie Xie nin, Mao xian sheng!

Gold ETF hurting gold shares?

Random Roger makes the intriguing suggestion that since the introduction of the Gold bullion ETF GLD, money has moved out of gold mining shares, and into GLD. Presumably, those who couldn't/wouldn't buy bullion, were buying miners, but now can/will buy bullion in the form of GLD. Something to keep an eye on.

hothothot--notnotnot

Yesterday I posted my "hothothot" list . Interestingly, on a day when the indices are flying, and most of what I own is up, and the market haiku reflects a lot of upside enthusiasm, almost nothing on the hothothot momo list has broken out--only WEB . Go figure.

Today's market haiku

Santa rally comes
Ev'rybody wants to buy
No one wants to sell

HOTHOTHOT

I'm putting together a little list of "HOT-HOT" "mo-mo" type of charts. Many of today's list comes from uglychart.com.

ABXA, BPA, CKCM, CRNT, HRVE, HURC, KCI, OSTK, SIRI, WEB, XMSR -

Though they are nice up-trending up-volume charts, many are just shy of their highs, without clean breakouts, (except for OSTK, which is arguably a breakout) but not real pullbacks either.

In other words, I'm waiting on these till either a clean breakout above resistance, or a nice pullback to support.

the dollar

If everybody says the dollar will continue to slide, can they all be right?
Isn't the crowd always wrong?
Check that--the crowd is always wrong at the extremes, the turning points.
When the trend is in place (e.g. Nasdaq 1999) the crowd is right.

UPDATE I guess if I were really good at this, I'd have made the above a haiku.

All say dollar fall
Can the whole mob be correct
Yes until they're not

Or something like that

BPA

a pharma, was on the RevShark's buy list today, based ( I guess) on a high volume breakout of a previous high at 10.50. I thought about it at 10.70, but then saw it slide before my eyes. Its now at 10.30--looks like a failed breakout, for now, at least.
I didn't swing, but if it comes by again, I may take a cut at it.

"gap up"

Though I guess this AM was not really a gap-up, Trader Mike makes a good point about buying AM strength. The bottom line is, buy above the 10 or 10:30 AM EST high, as the big boys often use this pop to sell to the saps.

UPDATE and CORRECTION: Michael is of course correct, it was a gap up. I was sloppy and in a hurry, looking at daily charts after the pull back, and I blew it. My overall point, that buying AM strength can be a sucker's game, is still correct. However, Trader Mike was kind enough now to teach me two more lessons.

1. In the blogsphere, somebody is always watching.
2. If I am going to play this game (games, actually, both trading and blogging), I need to be more precise and accurate.

Thanks Mike.

Interest Rates

The Fed is raising rates--I thought stocks were supposed to fall!
Seriously, I can't remember how many times I heard, as the rates were lowered, that we'd get a rally. We heard this all the way to the bottom (both of them). Eventually, we got our rally.
I have heard much lately about how raising rates will choke off a rally. Well, you're hearing it now.
Eventually, we'll get another bottom.

KO

Trader Wizard lays out the case for KO as a long term buy. Among other things, financial postion is strong, its lower priced, both absolutely and relatively, than it has been in years, further weakness in the dollar should help, and there is intriguing word of the new CEO buying $8million of stock at 40.50 on the open market.
I'm interested at 40 or below; below 38.5 I'm backing up the truck.

Google . . .

. . . just keeps finding support in that 165-166 range. So, the more times support holds, is it more or less likely to hold the next time? I guess its a indication of demand at that level, so its more likely to hold . . .until the demand is satisfied, in which case it will then be more likely to not hold.

Or something like that . . .

Suck Inc.

So Kmart is to buy Sears. . . despite the snarky title above, there is something of a fit there, something very red state about the whole thing. (And I mean that as a positive--I've bought plenty of $2/12-pack Coke at Kmart). But what does this mean for Lampert's plan for Kmart as a vehicle for world domination a la Warren Buffett?

Monday morn

More GOOG lock-up released tomorrow, that will almost double the float. I'm still looking for some nice downside on this.
Possible AIG settlement this AM--reported in the WSJ and also mentioned here .
Maybe a pop in some of these insurers today--although I guess the potential settlement is with the DOJ and not Eliot Spitzer.

the year

Both INDU and COMPQ have traded in relatively narrow ranges since hitting highs at the start of the year . . .
Narrow ranges at some point give way to trending . . .

Google, FOMC

Keep a watch on Google--lock-ups are starting to expire, thus increasing the available float, and the stock is at the top of a big gap, that's either begging to be filled (bear case) or will provide support (bull case). I've got puts.
FOMC interest rate day--there has been some back and forth on these days in recent memory, so it might be a good day to place some limit orders above or below--you might buy a nice pullback or short a spike.

My Principles of Money Management

1.-I don't know what's going to happen next.
2.-When I think I know something, I can always be wrong.
3.-What matters is not how right I am, or how good my BS sounds, but ONLY what I take home in the end. (Its all about the Benjamins.)
4.-The market nearly always proves the majority of participants to be wrong.
5.-It may be "different this time" but not necessarily in the way you think it is.
6.-Trends remain in place until they reverse.
7.-Buy when support is held, sell when support is broken.
8.-Keep track of the timeframe.
9.-I won't use that "we" or "us" crap; *I* am responsible for *me*.

The Long Term

THE LONG TERM VIEW
My long term view is
1) equities will go down
2) the US dollar will go down
3) commodities and other hard assets (e.g. precious metals, real estate, timber, oil, gas, potash, etc) will go up.

Why?
1)In the end, people buy stocks for their earnings. Bull markets start from undervaluation, and end at overvaluation. Bear markets, then, start at overvaluation and end at undervaluation. The equity market now (11/04) is by no stretch of any historical imagination (price to earnings, price to sales, price to book, dividend yield) anything other than overvalued. The only question is how overvalued. Thus, we are either at the end of a long bull market or the beginnings of a bear market. Over the long term (several years), it is hard for me to see equities in general going up. Certainly, however, the long term is made up of many instances of the short term.

2) Nixon took us off the last vestige of the gold standard in 1971. The smart old guys say that fiat currencies always get inflated away to nothing. We've done okay for 30+ years, but the last 3-4 years the Fed has increased the money supply at a historic clip. Use any measure you want--monetary base, M1-2-3 whatever, they're printing it like crazy. (parenthetically, I sometimes wonder why they bother with anti-counterfiting measures--seems like the criminals are doing the Fed's work for them). This, along with the low short term rates the Fed seems committed to can only mean the dollar continues to go down.

3) Stocks go down, dollar goes down, short term rates are low, what can people buy? Stuff--real estate, gold, silver, oil, gas, timber, copper. It doesn't hurt that China is awakening from a slumber of several hundred years, and needs all this stuff.

What It Is . . .

. . . is a forum to share my thoughts about money and markets. I'll be introducing my thoughts and views in the next few posts.

Just what the net needs . . .

Another blog.