Tuesday, September 30, 2008

Controlling Destiny

If I were to give advice tonight for anyone on anything it would be to concentrate on controlling your destiny. We, the people today, sent a clear message to Congress with such a force that it could not be denied. A collective thought, an outcry from the population could be felt even if not heard, as Congress deliberated behind closed doors trying to decide for us our destiny; and that's where they made a mistake. Underestimating the desire of a people to do none other than to control itself rather than be controlled. We actually experienced an anti-socialist movement.

But the job's not done. Even as we rest, the planners are continuing to re-create the same unpalatable offering with perhaps sweeter words, but be warned it will be equally poisonous if not more so. What the writers of such wide sweeping documents tend to do is that if at first it doesn't work to convince, they'll make it more convoluted with more inclusions for a popular sell. That easy sell, remember they are creating it and they won't give up. This new proposition to control is far too tempting for them; much like a newly fed vampire they can feel the power pulsating through their veins. You can almost see them smack their lips with satisfaction of the kill and that's why they were so angry when victory was snatched from their jaws.

What we saw, post it's demise, was a predictable reaction of the market: sell off. The reason why is not necessarily what the government pundits were trying and could not sell. Let's consider that the companies, fund managers, and the population etc. collectively realised that this will not be an easy fix. In other words, the rescue squad did not arrive, therefore self preservation sets in and running to safety is the motto. But that's presuming we need a rescue. What's happening is no less than what should have happened several years ago if interest rates were not continually decreased, in other words the fed overdid it again. Had they not, we'd more likely be over the correction by now because, reported or not, the economy was good and we could have bore it much easier then. This experience reminds us yet again, that meddling and rescuing seldom teaches new behaviour it only makes the learning harder later.

So here we are; if we succeed in convincing Congress to do nothing, we have to bear the hardships to come, but if they do come to the rescue, we may only succeed in leaving hardships for our children.

So it's not over and it will not be pleasant. These coming days will be full of uncertainty, calamity, catastrophe for many if not all; yet it's in hard times that we rise to do our best and if we keep focusing on our best, we can again rebuild. Trading will be choppy at best and dangerous at worst. It time to take out the lessons learned in 2000:
  • don't panic
  • don't bet on the bottom,
  • falling knives cut deeply,
  • don't get caught in the avalanche,
  • cash out every night,
  • swings are a higher risk now,
  • know and trust your experience.
Take deep breath, the world will continue to spin, focus on the now, put on music and remember that trading adds liquidity so we are doing good. Take charge of yourself and yours, keep controlling your destiny and never give away that power to anyone. So smile, say hi, be kind and be optimistic.. the collective thought is a powerful force!

Friday, September 26, 2008

Russia's Color is Red (again)

Another little hint dropped from the thick fur of the Bear proving yet again that the fang, claws, or whatever the Bear uses don't really change. Consider this story from WSJ: "Russia, Venezuela Sign Deals. Russian and Venezuelan officials agreed to bolster cooperation in the oil and gas industry, the latest sign of strengthening ties between two nations trying to decrease U.S. influence around the world. " Oh what surprise!! (tic) It only shows that like minds stick together and old enemies never really become friends in under a century. So is Venezuela the new Cuba crisis? I wonder how far off that thought is, yet despite all evidence is the world listening? When the stranglehold around USA's throat becomes tighter with oil extortion who will they blame? Bush? Oh yes.. let's not drill on our territories, let's just become more dependent. Strength in weakness is the motto of Congress, while our "friends" build forces much more threatening; and some think $700 billion is too high a cost!

I'll be watching the energy stocks in response to this news. Oh, I know that Congress allowed the expiration of the drilling embargo bill, but what will replace it; or what won't? I think they are playing Russian roulette (pun intended) with our economy on just this alone: No oil, more cost for oil, more cost for energy; because, like it or not, our need of oil or gas won't go away for a looooong time.

Those insisting that we can solve this with alternate energy sources quickly in the near future are not thinking, whether due to youthful optimism or downright ignorance. Their solution and philosophy, like the philosophy for better education, is to throw money at it and it will happen. The truth is we are growing, the world is growing and we need more energy for airplanes, trains, ships, trucks (unless you know of a fuel cell prototype on the drawing board for those) that wind power won't solve. Russia knows it, China knows it, all the other oil producing nations know it; that's why they have not stopped exploring nor drilling on their own soil and using our off shore resources (just outside the borders) for their own gain. So let's elect those that will give strength to our enemies and extol a huge price for our future needs; $700 billion won't be so much once we compare the costs.

This is my take: I seriously doubt that Congress will vote on an energy bill prior to election day therefore oil will stay low until the election results are sealed. A democratic majority in Congress will ensure higher oil prices unless they vote to allow drilling (forever hopeful, I am) coupled with Obama as President, we may not be able to gauge the top; of course too fast a rise may force the hand of Congress to allow drilling, so they will take it slow.

OK, so there it is in black and white.. you may call me on it, but wait until the 5 year plan expires. (If you don't know what that means, you're too young; and I'm glad you're reading this blog!)

Sunday, September 21, 2008

A Hard Sell

If I were to offer you a choice between two items which would both serve your needs well, but one you need to learn, study and work to adapt to your life while the other is plug and play taking little of your effort to maintain, which would you choose?

We all know that FRE and FNM did not happen overnight and that CFC,LEH, BSC, and the rest of the banks, mortgage brokers, financials were not totally blind as to what was happening in the credit markets. Enough has been said about them over the the past couple of years to alert most even if most did not wish to acknowledge the coming failures. It has been coming down the pike for longer than most of us realized, looking back it was brewing even while we were enjoying the .com boom and lamenting the .com bust. But like a dormant volcano, it was slowly percolating below ground and slowly growing a dome and most were enjoying riding the wave rather than acknowledging the possibility of its eminent eruption and consequent destruction of anything in its way. We as the consumers of its products were very happy to partake in its generosity while the growth took place and most did not question the the cost it will eventually demand of us; after all, that was someone else's problem. But what seemed to good was again proven to be so.. too good.. and now that we need to pay for it, most of us wish someone else to do it as we claim no responsibility of its creation. Sound like: Congress, the banks, the brokers, the investors, the borrowers??

Truth being said, those who could not otherwise afford loans for homes they otherwise would not have even looked at, were now being sold the idea that they could with certain "breaks" afford them. Truth is that those borrowers knew that they could not afford them, yet they were easy to sell the idea that their time has come to finally partake in what was "promised" to them under the American dream: home ownership. Truth is, that all that cash sitting on the sidelines since the late 1990's early 2000's needed to be invested somewhere and that they were clamoring for a good return on their dollars, and bundled loans seemed a good way in a rising real estate market which they helped fuel. Truth is, that the ever increasing demand of government to do something for low income families demanded the discard of common sense; but hey, they were buying votes; and it was an easy sell.

Now, let me add to my first paragraph that the items you need to choose from one would need your diligence to maintain, and work on possibly increasing it's value but also if it breaks you need to replace it out of pocket; while the other will be maintained and will be upgraded as needed for a fee, if it breaks well, too bad for you we will charge you a replacement fee, but you'll never have to worry, we'll take care of it for you. Now which one would you choose?

We all wish, from time to time, to be bailed out of our problems; most of us would like to disavow any help in creating them, for we've been told for a long time that our problems stem from some lack in our society and that is the root of all of our personal failures, therefore, society should take care of our problems as well as us. We practice blame for our problems every day .. we hear it from our politicians in every sentence. It's an easy sell.

We also hear promises regularly from all advertising, from all politicians, from all market gurus and analysts, with which we'll be saved, helped, given what is our due. Yes, everyone with something to sell. We just have to follow their advice to make us feel good and be alright. We would all like to think that others have our best interest at heart; that those we entrust with our money and lives will look out for us as our parents would. It's an easy sell and enough have bought and are buying.

The forefathers of this nation did not believe in regular taxation for a very good reason: Power coupled with money corrupt. Once the income tax was approved, the idea of "great society" was not far behind, after all, those that we pay "owe" us. Not enough were considering the true cost: an ever enlarging governmental body, a hungry monster forever needing to be fed for taking care of us. Too many generations have passed; who's to remember what it was like without all that dependence. Isn't it just easier to succumb and let them take care of us; to join the global community and be as one?

We have taken a huge step toward that end this past two weeks. Government not admitting it's own helplessness and its own role in the creation of this drama, it still is pretending to be able to take care of something it has no business in. Most have accepted that it needs to "do something", and forgetting about the "strapping of debt" to future generations, it becomes even a bigger monster; and it's an easy sell.

So back to the items that you need. Have you thought about the cost? If I were to tell you that one you'll pay for dearly with blood, sweat, tears, frustration at first, then a feeling of achievement, triumph, self contentment and success later, but without a guarantee. The other you'll pay for dearly with your joy, freedom, self will, to later achieve some comfort in mediocrity, complacency, frustration and hopelessness. Which one would you choose?

Like in day trading, or anything you do, taking total responsibility for yourself and your actions, is a hard sell.