Time to short Stocks!

[KissMy]

Its going to be an interesting day. Risk assets spiked on the release of Bernanke's text at 8.15am but have sold off since, or at least they have during the past half hour.

It's called Buy on the Rumor & Sell on the News or Profit Taking or Getting out on Top.

 

[william the wie]

The banksters are in trouble again.

REad this AM in the NY times that thanks to the foreclosure moritoriums, the big banks can expect to lose 1.5 Billion per quarter and they think that this moritorium could drag out for the next 5 YEARS!

I cannot believe that the moritoriums will last that long, but that's what some mavens are predicting

If they do a lot of these banks are toast

That's the good news.

 

[KissMy]

The banksters are in trouble again.

REad this AM in the NY times that thanks to the foreclosure moritoriums, the big banks can expect to lose 1.5 Billion per quarter and they think that this moritorium could drag out for the next 5 YEARS!

I cannot believe that the moritoriums will last that long, but that's what some mavens are predicting

If they do a lot of these banks are toast

That's the good news.

This is chock-full of moral hazards but I think this is good news for consumer stocks & bad for banks & the dollar. This will lead to a lot of people getting free homes or their mortgage wiped out. This will decrease foreclosures & increase housing prices. There are going to be lot of discretionary dollars to spend by the people who's mortgages get wiped out. Inflation is going to hit because of this alone not to mention QE2.

Government has propped up Fannie / Freddie & Banks just long enough for the rich & powerful to get their money out. Who knows what BS will happen next. I believe we have been & are under the control of a fascist oligarchy. The economy is fucked except for those in power at the top. The game is rigged & the bankers who packaged the CDO's know which CDO's contain all the undocumented bad mortgages. It is a minefield & they have the map.

 

[KissMy]

Some Central Bank or Country is dumping Gold when the price gets to $1380 per ozt. It bumps up to $1386 but heavy trading & serious headwinds at the $1380 level over the past 3 days.

Fed Chairman Bernanke did not help things this morning with his pitch for further action by the US central bank. Bernanke's tone was a bit on the ‘fuzzy’ side as markets were concerned. Market expectations have gone into totally ‘extreme’ mode and any (even slightest) disappointment from the Fed could spell disaster. The one-way betting street funds cannot stomach anything but that which has already been baked into the fruitcake. Unconditional surrender by the Fed is the only thing rising markets will accept.

That vagueness in language, even the slightest change from ‘aggressive’ towards ‘cautious’ in Fed-speak could pull the speculative rug out from under this smug, one-way betting market. A couple of improved sets of economic statistics (consumer prices up 0.1% and Empire State manufacturing showing a notable 15.7% amelioration in October) were enough to ignite a small round of profit-taking in precious metals soon after Bernanke's comments.

 

[topspin]

Zanders ass should be puckering about the wrong short just about now.

 

[Paulie]

Zander you still in that position?

 

[Toro]

I covered my euro short this afternoon. That probably means the dollar is about to bottom.

 

[Zander]

Zander you still in that position?

Yeah, I am still holding it. I've lost about a 60 cents per share...but I have lots of patience...so far!

 

[Old Rocks]

I have been in cash for the last year with no regrets. Now I think the topping process is done and we are set for a major decline in stock prices.

Today I bought shares of ProShares UltraShort S&P 500 ETF at $28.08.

Best of luck!

Dang, if I had listened to all of your yap, I would be broke by now.

 

[CrusaderFrank]

Faz

 

[Zander]

I have been in cash for the last year with no regrets. Now I think the topping process is done and we are set for a major decline in stock prices.

Today I bought shares of ProShares UltraShort S&P 500 ETF at $28.08.

Best of luck!

Dang, if I had listened to all of your yap, I would be broke by now.

Huh?? I have been earning a risk free return in cash and t-bills. Just recently I took a very small portion of my money and invested it in an inverse ETF that goes up when stocks go down and vice versa. I think stocks are heading lower and am betting on it. So far I have lost about 60 cents per share on paper. Maybe that would make you go broke?? It certainly won't effect my lifestyle.......

 

[topspin]

Yeah, I had you pegged wrong Zander. I thought you were old and all about safety. Buying shorts is about as risky a WAGER you can make in the market.
Personally I'm much more conservative, nothing but blue chips for me.

 

[Paulie]

Yeah, I had you pegged wrong Zander. I thought you were old and all about safety. Buying shorts is about as risky a WAGER you can make in the market.
Personally I'm much more conservative, nothing but blue chips for me.

He bought a short ETF, much different from an actual short sell.

 

[editec]

What isn't?

EDIT: just because it is a bubble doesn't mean you can't make a profit from it. It might go to $3000 an ounce.... Too much risk for me...maybe not for you.

I'm asking you...what specifically is irrational about the rise in the price of gold right now?

First let me tell you, I am not invested in gold. I could not care less about it, or the price that people are willing to pay for it. As far as I am concerned, it is little more than a shiny metal with scant few uses beyond jewelry or as as store of "perceived" value for fearful investors. Some people think it is wise to have a portion of your assets in gold - good for them. Personally, I don't own any except for a few pieces of jewelry. And I have no intentions of buying any, now or in the future.

That being said.... When I see the "investor" demand exceed "jewelry" and industry demand for the first time n history - I view that as "irrational". When there are advertisements on every available media touting the "safety" and "security" of GOLD!!! as an investment - I see that as irrational. When I view the actual 30 year return on gold as investment - I see it as a lousy, irrational investment. When I see the current deflationary cycle devastating the prices of every other commodity asset class across the board except precious metals - I see that as irrational. Could I be wrong? Maybe. But since I have ZERO vested interest, I simply do not care.

So now I am asking you...what specifically is "rational" about the rise in price of gold right now?

You know, I agree with that analysis a lot.

But here's the thing...markets aren't entirely moving based on fundamentals. They're also moving (and moving big time... sometimes) based on perception.

And the perception is that there is great risk of hyperinflation.

Yeah, I know, that doesn't make sense given that deflation is the current state of affairs.

But the people buying gold think that the deflation isn't going to last.

They believe that governments spending will initiate hyper inflation and sense that if they're in the right investment (gold and precious metals) they stand to make a lot of money when that hyper-inflation kicks in.

Which then begs the question, if we go into a period of hyperinflation will they then SELL their gold to get those then even more worthless dollars?

I cannot entirely understand why they would, but let's assume that they believe that during a period of hyper-inflation, they think they can TIME their sales of gold so that they sell it at the top of the inflationary cycle, and then enjoy the benefit of having DOLLARS as the specie DEFLATES.

That what they think they're going to do, I suppose.

That or they believe that the dollar is just going to lose all value in which case they'd have better taken POSSESSION of that gold, because, right now, I have absolute confidence that the gold dealers are selling GOLD they don't really have.

 

[Paulie]

I'm asking you...what specifically is irrational about the rise in the price of gold right now?

First let me tell you, I am not invested in gold. I could not care less about it, or the price that people are willing to pay for it. As far as I am concerned, it is little more than a shiny metal with scant few uses beyond jewelry or as as store of "perceived" value for fearful investors. Some people think it is wise to have a portion of your assets in gold - good for them. Personally, I don't own any except for a few pieces of jewelry. And I have no intentions of buying any, now or in the future.

That being said.... When I see the "investor" demand exceed "jewelry" and industry demand for the first time n history - I view that as "irrational". When there are advertisements on every available media touting the "safety" and "security" of GOLD!!! as an investment - I see that as irrational. When I view the actual 30 year return on gold as investment - I see it as a lousy, irrational investment. When I see the current deflationary cycle devastating the prices of every other commodity asset class across the board except precious metals - I see that as irrational. Could I be wrong? Maybe. But since I have ZERO vested interest, I simply do not care.

So now I am asking you...what specifically is "rational" about the rise in price of gold right now?

You know, I agree with that analysis a lot.

But here's the thing...markets aren't entirely moving based on fundamentals. They're also moving (and moving big time... sometimes) based on perception.

And the perception is that there is great risk of hyperinflation.

Yeah, I know, that doesn't make sense given that deflation is the current state of affairs.

But the people buying gold think that the deflation isn't going to last.

They believe that governments spending will initiate hyper inflation and sense that if they're in the right investment (gold and precious metals) they stand to make a lot of money when that hyper-inflation kicks in.

Which then begs the question, if we go into a period of hyperinflation will they then SELL their gold to get those then even more worthless dollars?

I cannot entirely understand why they would, but let's assume that they believe that during a period of hyper-inflation, they think they can TIME their sales of gold so that they sell it at the top of the inflationary cycle, and then enjoy the benefit of having DOLLARS as the specie DEFLATES.

That what they think they're going to do, I suppose.

That or they believe that the dollar is just going to lose all value in which case they'd have better taken POSSESSION of that gold, because, right now, I have absolute confidence that the gold dealers are selling GOLD they don't really have.

You have a misunderstanding of what hyperinflation is.

 

[topspin]

he shorted the market, I'm fully aware of what he bought. That is a wager and a risky wager at that.

 

[Paulie]

he shorted the market, I'm fully aware of what he bought. That is a wager and a risky wager at that.

A short ETF doesn't carry the same risk that an actual short position does. It's no different than going long on a stock, it just correlates with a drop rather than a gain.

An actual short position IS one of the biggest risks because of the potential for unlimited loss. You mentioned that his move was one of the riskiest, and it seemed pretty clear that's what you were getting at.

The market can go up or down on any given day. All else being equal, a long ETF and a short ETF carry pretty much the same risk on a given day.

 

[topspin]

he shorted the market, I'm fully aware of what he bought. That is a wager and a risky wager at that.

A short ETF doesn't carry the same risk that an actual short position does. It's no different than going long on a stock, it just correlates with a drop rather than a gain.

An actual short position IS one of the biggest risks because of the potential for unlimited loss. You mentioned that his move was one of the riskiest, and it seemed pretty clear that's what you were getting at.

The market can go up or down on any given day. All else being equal, a long ETF and a short ETF carry pretty much the same risk on a given day.

I still don't dissagree, and I'm still correct it's a risky wager.

 

[Toro]

Zander may have gotten this one correct. Based on the premarket action, apparently it's risk-off time.

 

[Zander]

The ProShares UltraShort S&P 500 ETF closed out the day at 28.20 - so I am up (on paper) by 12 cents a share.