"Sell in May, and Sail Away"

There is an old stock market saying... "Sell in May, and Sail Away.  Come back in October."

Folks investing in the markets always hate October.  I LOVE Octobers.  I LOVE Septembers even more (historically, Septembers have been worse than Octobers).

Now, repeat after me:  "Buy LOW, sell HIGH".  What part of "LOW" do most investors not get?  

My crystal ball is in the shop.  That does not stop me from trying to see just a little of what MIGHT happen and how I MIGHT benefit.  I want to own stocks of companies in the energy complex at some point.  My bet is that after a couple of s**ty earnings seasons the market might have gotten softened up enough to make it safe for me to get back in the ring.  That, and a tough analyst confession season (September/October) that the year is not going to come out quite like they said it would.

I firmly believe that the American Energy Crisis is still very much in the offing - this is only a time out on the field.  The stock market will bid these companies up in anticipation of the supply crunch that I envision.  My bet is that in mid to late Q3 and the beginning of Q4 is going to be a good time to be buying these companies.  As always, I reserve the trader's right to change my mind on a dime.  I don't stand on ceremony.

This is not to say that the market could not get "there" sooner.  (I can't define "there", but I know it when I see it.)  Some good signs that "there" is here would be nationalization of the banks, local fuel shortages at the end of pipelines, Dow 5,000, etc... or any other Armageddonish event that makes people sell stuff indiscriminately.  We were close to that indiscriminate selling 3 weeks ago.  Close, but no cigar.  

In addition to energy equities, I am looking to buy Gold on ANY dips, and I have taken positions in Silver recently.  (I speak freely about commodities, as I am not a commodities broker, and so am not regulated, and it is impossible to "talk one's book" in the commodity markets to any effect.)   I am doing this even though I think the US$ is the best looking of the ugly currencies because at any time between right now and 5 or 10 years a currency crisis of BIBLICAL proportion is extremely likely.

Patience.  (I will be buying energy stocks if they break below their lows of 3 weeks ago.)  The Fat Lady ain't even got out of her chair yet (IMHO).

Mentatt (at) yahoo (d0t) com

Now That's More Like It

President Obama!!!

I gotta give credit where credit is do! I have been shouting into the wind on a pre pack bankruptcy for the Auto makers... and now, a DEMOCRAT President is taking on the job of telling it like it is and doing the right thing - stripping away all of the legacy issues KILLING the industry in a pre pack bankruptcy.

I am stunned and pleasantly surprised. I thought for sure that the administration would waste a great deal more time and effort trying to right these sinking ships.

Now, let us do what needs to be done with the Banks... and yes, I know that that is FAR more complicated and dangerous than pre paking the Auto makers. I wish them luck...


Mentatt (at) yahoo (d0t) com

The Political Chess Match

Heaven forbid anyone should gore someone's political "sacred cow"!

Have we forgotten the simple skills involved in using a calculator?  Why is it so offensive to so many Americans to lay out some simple arithmetic?

Most of Obama's plan fails under any rational examination (irrespective of how his auto plan comes in) with a $6 calculator. However, if someone says so they are a racist, a Republican, an idiot, a religious right moron, a Libertarian, (pick your boogey man) etc... Examining the numbers is not a personal attack!

We have taken our political freedoms to the extreme if we believe that we have a political RIGHT to blow up the system with ill conceived budgets, programs, and policy if the majority wishes to do so.  You can't tax and confiscate money that is not there for very long.  You CAN print it in the short term, but that ALWAYS leads to ruin.

The Left and the Right both got what they wanted, obviating the need for the continued presence of either going forward.  The Left wanted wealth redistribution to make things fair - well, the markets are doing that quite well, thank you.  Soon no one will have anything.  The Right wanted personal responsibility - I hope they REALLY wanted it, because here it comes - the pension system is going to blow up, and the true thing that people counted on - the continued extraction of pension benefits from new member's of the ultimate ponzi scheme - will no longer be possible. 

Careful what you ask for, you may just get it.

So now these groups are in shock.  They sort of get it that they don't matter in the way that they used to, but they are having a great deal of angst about it and their anger is palpable.  This goes for GM and Government workers, Feminists, Racial Leaders, Religious Leaders... sort of a "Trail Mix" bundle of political interests that had been fighting over the spoils of the status quo - but the status quo just stepped on a land mind.

If you enjoy arguing over yesteryear's issues, by all means, have at it. 

We are at the beginning of the end game in this political chess match.

I grew up in a G.M. factory town 10 miles north of the New York City border.  (Actually, it was half gritty, blue collar, factory town... and half high earning professionals commuting into the city from their beautiful suburban homes - I was from the blue collar side of town.)  I know a great many people whose lives are going through the meat grinder at the moment.  UAW as well as management.  They had lost their G.M. stock investment some time ago, and now the pension and other retirement benefits they were "counting on" appears to be at risk.  "Counting on" anything in the financial system for the long run is, I think, very poor planning.  

This story will be repeated over and over across many companies, industries, and even governments over the next decade.

Mentatt (at) yahoo (d0t) com

New York's Massive Tax Increase

New York State has just implemented the dumbest idea since the Lead Balloon.  Rather than address the massive size of the State's services, employees, and pensions the State took the easy way out - they raised income taxes on the "Rich" - those earning $300k per year or more.

(Here's a fun fact to know:  I moved from New York to Florida primarily because of New York's onerous tax policy - that was the end of their revenues from me.  I made less money in Florida, but after taxes and other "New York" expenses, I was better off financially.  People vote with their feet.  They can move, or worse, NOT MOVE (and shake), being disincentivized from killing themselves to pay more taxes.)

People, ALL people, have an intense sense of fairness.  ALL people includes people who work VERY hard and make over $300k per year (defined as rich in New York).  No one, and I mean NO ONE, thinks that a tax bill of 50% of one's income is acceptable - while nearly EVERYONE seems to think 33% is perfectly reasonable, and this ratio seems to hold the world over.  For earners in the high tax states, the new Obama tax rates, along with state income taxes and FICA, total taxes on income will be roughly 50%.  Why is it so HARD for the liberal establishment to accept this simple metric?  Look, if you are worried about concentration of wealth... why not some confiscatory provision for net worth in excess of some ridiculous number - say $100 million?  I will tell you why:  Firstly, it won't raise enough money; and secondly it would destroy incentive to build the very corporations that are the backbone of the current confiscatory tax and destroy system now in place.  Liberals HATE business... but where, exactly, do they believe the revenues come from to fund all of their silly programs?

New York, California, Mass., and the rest of the Communist Manifesto states will be forced to renegotiate the sweetheart pension deals they gave their government workers, and renegotiate the compensation of the current government workers.  If they do not, they risk a political crisis that might well end up with serious civil unrest - and depending on the use of ORGANIZED VIOLENCE (Law Enforcement) to stop CIVIL VIOLENCE sort of defeats the purpose, no?

Earth to Governor Paterson and the rest of the Albany contingency:  This brain dead move will bring New York to default on their municipal bonds (absent a Federal Bailout) within the decade, and maybe much sooner.  

You heard it here first.

Mentatt (at) yahoo (d0t) com

The U.S. Equity Market

The market has had one hell of a rally off the bottom, even after yesterday's stumble.  

It is hard not to look at the rally with envy.  That's OK.  I am going to continue to look at the equity market with suspicion.  On any given day I am prone to trade - short or long - but to put money to work for the medium term (I don't EVER consider the long term... too many things change), I need more time.  I don't have to get the exact bottom.  It is OK with me if I am on the right side of the market's "U" or "W" because I don't believe for a moment that we are going to have a "V" recovery in the market OR the economy.  

I like this excellent article as it pretty much sums up my view.  

I'm optimistic, but I'd sure like to see the Best Buy results for next quarter before I do much more than watch this market or go fishing. Three months to go.

Now me, well I am not as optimistic... but I AM looking for an entry point on certain energy and commodity companies.  I was tempted a couple weeks ago, but not after a 20% rally.

That does not mean that the market won't trade up to its 200 day moving average - it could.  It is just that I have my doubts.  The banks are not out of the woods, housing has not shaken itself out just yet, unemployment in the U.S. continues to rise, and Asian exports are crashing. Some might argue that this is a bad as it gets, and that stock prices already reflect all of the above.  Maybe.  Maybe not.

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The collapse in E & P budgets for the energy sector is going to lead to serious supply shortages in oil, and eventually natural gas ("NG").  I have long viewed NG as a career killer, but the price decline is going to leave a fantastic number of rigs rusting up in debris fields the continent over. At some point the snap back in NG price is going to be a career maker - like you read about.

Mentatt (at) yahoo (dot) com

"America Hates Wall Street"

"Memo to Wall Street:  America Hates You".

Now there's a stunner...

The REAL problem with this is that America's NUMBER ONE export is financial services - not autos, or DVD players, or IPods, etc... The Goose that Laid the Golden Egg just Laid a Turd instead... and in a few short years there will be FAR FEWER folks to hate in the financial services game.

America will just have to go back to hating lawyers.

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Speaking of Lawyers...

Our nation's top export is finance and the US$.  Yet, instead of electing financiers, economists, and business people, we hired another Lawyer to oversee the greatest economic crisis the world has ever seen. (Think the 1930's deserves that title?  Consider that economic crisis frequently leads to conflict... and that in the 1930's the world was devoid of nuclear weapons... now we are SWIMMING in nuclear weapons, with nutty folks that are quite sure of circumstances in the "afterlife" now in possession.)  We did not hire him for his economic training or his business experience... WE hired him because he is good looking, well spoken, pro-choice, and black. 

Now I appreciate good looking people as much as the next guy (I think Michelle Obama provides an excellent example to American women as to what one's physique should look like in your forties after 2 kids.  Keep the sleeveless look coming, Michelle)...  After GWB, anybody that could string a couple of sentences together would be appealing...  The fact that the Choice issue dominates our politics at a time like this speaks volumes I won't even address... and being an ethnic mutt from the working class, I enjoy watching a fellow mutt make good....

What does any of that have to do with the the skill set needed to guide us through the credit/economic unwind and the shift in energy?  Not a bloody thing.  But it scripts well in our infotainment culture.  Just think, our very own "White House Reality Show".

Unfortunately, the reality of actually governing is proving a bit more difficult than campaigning and organizing in the era of youtube speeches and Yes We Can('t) rhetoric.

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Save this link.  

Ever wonder what the heck the talking heads are talking about...??  Leading economic indicators, etc... It is worth clicking the link and reading the report.

You will find the report at that link, updated in the third weak of each month.

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Here's a thought for any and all "confiscate and give away" Liberals out there:

If you raise taxes, tax payers will simply resort to criminal tax avoidance.  Now, you will have to hire lots of (very conservative) Law Enforcement types to point deadly weapons at these "criminals", lawyers to defend and prosecute them, judges to judge them, and guards to guard them, etc... (I could go on forever here, right down to the children of the "criminals" that will lose a parents financial support once the system reduces their parent to penury, and all of the cycles derived therefrom).  I have not researched the number of violent conflicts arising out of poor taxing policy, but if memory serves that number is not insignificant.

The Law of Unintended Consequences applies in all things, everywhere... but especially in policy.  Just look at what the politicos from the 1970's San Francisco City Hall have done to California's economy... and now they have their sights set on the rest of us.

Mentatt (at) yahoo 

  

Markets

We have had one heck of a run in the equity markets.  Lots of optimism.  Bear Market rallies are like that.

I was talking to the Mad Scientist this morning... he thinks the rally has more legs.  Maybe so.  Just keep in mind earnings season is just around the corner, and confession season is right on top of us.  The data might be telling someone that the market should go higher, and the market is always right (if you disagree with the market that is OK, just get out of its way - don't fight it, you can't win)... but if you missed the wedding don't go to the funeral.  

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We are losing our freedoms at a hundred miles per hour.  Our country used to be a nation of laws (at least in concept).  Now it is a nation of REGULATIONS.  

We don't vote for Regulator.  We can't appeal a Regulator's decision easily.  Our educational system has indoctrinated the masses to accept this - and here we are.  

Mentatt (at) yahoo