Market Musings, What next?

Looking at all things objectively, its hard to get optimistic on the markets.
However, we have had weeks of market movements that has been sideways action.
The US Dollar rose quite a bit, but now shows signs of weakening.

Once again, it isn't a bad time to buy a LITTLE more gold miners.  (GDX and GDXJ) The last two times I said this, we are lower than when purchased.

What is at stake here is global currency pressures, global economic pressures, and gold pricing.
To the charts!

Public Posting Opinion, is it worth it

Earlier this year I posted Giving Opinion, is it worth it .
In that post, I stated I need to roll back my posting on potentially harmful posts on my future self, or my family.  Specifically reducing or eliminating posts on Corruption, among other things.

Today I get a link the solidifies what I already knew.  The patriot act opened pandoras box to marry technology with government desire to control with unprecedented invasion of privacy.
Back when the Patriot Act was created, I discussed this with some coworkers.  Their view was we need to be kept safe, so its ok to erode civil rights in the name of saftey.

The logic being, its a large herd of people, and in the crowd it won't affect me.  The net should make it safer for me, with occasional unwarranted casualty.  The problem with this logic is what is 'reasonably' ok today can quickly turn on a dime to be not ok.  But once the tools are in place, curbing mis-use of tools will take a force GREATER than those using the tools.

So while all is well, and I do not believe I, or anyone is under immense threat to free speech, the groundwork is in fact, operational.

William Binney is 2012 Callaway award winner for civic courage.  An award given to a US citizen for take a public stance at some personal risk to advance truth and justice.

You can read his interview by clicking here, or watch video below.
With the view I have, the question is, is any public posting opinion post with any political implications worth it? In light 99% of Americans (including myself) will not be mobilized at all with this news available to change it.

Market Levitation

I am quite impressed how the market has held up.  Europe is in near daily crisis.  Recession is basically recognized by most to be in the cards, but not yet official.

Manufacturing down, profit crappy.

Through all this the market levitates.  It's hard to imagine, but the correction may be over?
I remain cautious into February.  I think by then we will have our answer for 2013.  By then, the US fiscal cliff buzz will be resolved, and the markets levitation resuming.

Chart for perspective, with the long term weekly below.

I am removing my bear on my blog, and refer back to my October 1st post 'Getting out of the Market'.

Free Speech

Free Speech takes many forms, not always written and oral speaking.
The ability to wear what you want, do what you want, use money the way you want, and yes, say what you want.  As long as those activities do not directly invade someone else's rights to pursue happiness. (murder, theft, bullying, etc)

The internet is the biggest leveler of the playing field in the history of mankind from the top percent to the masses. Anyone can speak, participate, contribute to the social order.

To keep the internet vibrant and growing is GOOD for investing.  It enables new opportunities as I posted in my Manufacturing Revolution posts.
Allow the tiny few to control the construct, the internet, is doomed to limit everyone's freedom.

I urge to to simply sign this petition and pay attention.  Support free speech and don't allow it to be taken in the dark.

Googles' Free and Open Speech campaign

Keep the power with the people.

Manufacturing Revolution, early examples

I posted about the American Manufacturing Revolution that is underway, and gets very little press.  I am not sure what it will take for the press to take hold of this story.     Probably will require a significant success story, a company going public on the stock market, or if enough commerce starts flowing through this area to be material.

To track this on my blog, I'll  label as Manufacturing 2.0

Below is one of many examples on Kickstarter of new tech being created, by the people.  Collaborating not with just US citizens, but world wide.
America is on the bleeding edge, but not alone.  With the web the rest of the world is joining America.

Watch this video, and ask without the internet and web sites like Kickstarter, how much harder, longer, or even impossible it would be for YOU to get this product TODAY? One of the first in the world ever made?

Amazing stuff.









All of the projects above may not succeed, but that isnt the point.  The possibility is there, when it wasnt before.

Shopping, Getting the Best Price Possible

If your looking for deals, I always recommend checking out Dealnews.com (click).  Its a news feed of best deals on the net.
The site also lists all black friday deals.  However, many of these deals are impossible to get.  I sometimes try for online sites, since there are no lines, just good timing.

Amazon has Lightning deals, the good stuff usually sells out in 60 seconds, so you have to be at your PC when it goes on sale. Good news is they tell you what goes on sale when, just not how much ahead if time.

For electronics, I alway check out Newegg.com, be sure to always look at reviews of the product before purchase.

If you go shopping, be sure to check out Wow-Coupons, and PRINT your coupon before you shop. Save!
For online coupons (Codes), I  use DealNews Coupons.

Even with all the tricks above to save, use a credit card with cash back, and save even more.
Well thats it, happy hunting for the best deals for stuff you need!  Save more by not buying it ;)

Already time to buy miners?

The market and news continues to look weak, if not near future, but the year ahead.

It is perfectly sane to stay in cash at this point.

However, looking at the Gold miners, from a historical perspective, we are hitting levels where the risk is now reduced compared to the reward.

I believe GDX will hit easily above twice the current price by 2016.  Of course, I have been wrong before.

But looking historically, entry into GDX has significantly less down risk than two weeks ago.

GDX is now at 46.47, GDXJ at 21.51.

I am adding shares here.  good luck.

Hostess Bankrupt, who to blame?

I have not done my typical 2 hour scan and seek 'the truth' on the Hostess bankruptcy.
What does amaze me is how the public unions is publicly persecuted and we, the people buy it completely.
It should go to show how amazingly powerful the media is, and how it is not a LEFTIE establishment as popular myth says it is.

Reporting should provide full analysis on topics, so I the reader can get the short summary.

Take a look at fox news coverage here titled "Hostess to close, lay off 18,500 after 'crippling' union fight".
Notice how the final straw gets all the blame.  Its like blaming the doctor when a 500 lb fat man dies of a heart attack on the operating table.

Now, back to how i started this post.  I did NOT seek the truth on this topic, to spin to what I believe reality is.   But I do notice the news is not impartial, it is framed in a very specific way, to place 100% blame on the strike at the very end.  The news reads to blame greed of unions for the company failure.

Now, lets look at an alternative view.... What Killed Hostess?
For a more radical view.... Blaming it on Venture Capitalists.

What we are seeing frequently as baby boomers retire is massive improper funding of a pension.
Pensions, should have never been allowed to exist.  They are a future promise, to be paid by magic in the future.    Yes some pensions are well funded and self-sustaining, but many many more are not.

Under funding a pension, lack of re-investment, innovation, food attitude changes, greed resulting in debt piled upon debt, and bad management. If you are a manager, and a victim, then you should not be a manager.  Own up and take responsibility, or join the blue collar workforce.

Blame the union? I am sure they are not innocent.  But lets be more objective than blame the final act, that 500lb man dead on the hospital table, it's not the doctors fault, its the shape the man/company was in at the time after years of abuse.

Don't take public spin, its almost always wrong.

Power Back and Internet Restored!

I got power back a week ago.
As of about 3pm today, my internet has been restored.
That was 19 days of NO INTERNET!  I haven't gone that long without the net since it was first made public available in early 90s.
I may go a little overboard posting :)

Market Musings, Part 2

So the SPX is broken below 1395.   I am very bearish on the overall market. (reconsider SPX 1316)  Gary of Smart Money Tracker expects gold and gold miners to buck the rest of the market.  Having some of this sector to build on is always a good idea in my book.

We are ENTERING another recessions, globally.  Such a recession I doubt will resolve quickly.  A good turn around would be spring or summer of next year.  Turn around right now seems hard to imagine.

The republicans lost the presidential race, and the fiscal cliff in January 2013 approaches.
If the republicans can maneuver to force the fiscal cliff to occur, thereby injuring US economy significantly, they will have setup Obama to have another hard four years to try to stabilize the economy.

The more the Republicans can injure the US economy, the more they can make Obama look like the problem, with the solution being a Republican president in 2016 elected.

I am no fan of Obama. If the republicans played nice and worked with Obama, I do not believe his medicine will fix it.   The most likely outcome is if both sides fight, and fail to unite to compromise, we all lose.  That is the likely path I see.  Republicans do not believe in compromise, and Democrats seemingly cannot grasp fiscal and government discipline.  This is not a political blog, but politics do affect your investments, so it must be kept in the spotlight.


With a backdrop of Christmas upon us, election over, North East impaired and deficit spending to restore normalcy, Europe in perpetual crisis, and the fiscal cliff ahead, I see no reason to run to stocks.

If you have a burning desire to buy stocks and not fixed income, as always for the loooong haul I like Oil, gold, food, and alternate energy.   Some of these sectors have been BRUTALIZED in the last year.   Stocks  that have been gaining in this market decline recently are:
NAK - 4.19 , HTM - 0.33 , AUQ - 8.46 , AUY - 20.36, UNG - 21.19
EFT's for miners holding their own
GDX - 51.41, GDXJ - 23.92,
And metals
GLD 168, & SLV 31.38
Alternate Energy and Oil are getting punished with the dowturn.
TAN -14.55 (solar) is at a low, and OIH 37.19 (oil companies) is getting punished.
DBA - 28.78 (food) also getting mildly punished

Market Musings

I am without internet access for foreseeable future at home.  This will severely impact my postings.
I'll try to post, but likely not in earnest until my access is restored.

Gary of the Smart Money tracker likes gold right here.  And GDX & GDXJ are holding up since my post "Decent Spot for Market Entry".  If the market can't make significant decline a week after the presidential election, my market optimism for gold miners will increase.

For now, if you wish to buy on the low, now is good, with eye on SPX 1395 as a mark to reconsider investments.
The S &P 500 has has a floor above 1400 since a week ago, October 23rd.

In a nutshell, nothing decisive yet.  Some minor technical breaks to indicate gold higher, but not impressive yet.  For actual real analysis, click on Gary's link, 10 buck special to try his service.

Rare Earths

I posted before about my enthusiasm for Rare earth metals.  Since then, much has changed in market prices, collapsing with the economic downturn.

That is a huge issue with natural resources, when economy is picking up, even moderately, resource stocks are fan-tastic.  The moment stocks lose momentum, stock prices can easily be cut by 50% in months.

I am still bullish on Rare earth metals long term for a few reasons.
1) The materials cannot be fabricated by alternate methods.  Companies may say they can, but at what cost of R&D?  Too much compared to just using whats available.
2) China produces 90% of rare earth supply to the world, but has 30% of the rare earth resources
    That gives too much power to China over such a key resources, I expect China to abuse this position.
    The net result of abuse will be at some point, higher prices and competitors entering market.
    It is the competitors I have interest in.
3) New tech, new materials will likely come from exotic materials.   These materials have not been used in earnest until recently.  

As for item 2, ran across article of China tightening rare earth production, and a desire to make production tightly government controlled.  Production has been cut this week to force prices higher.  While I don't expect a price jump immediately, this bolsters for item 2.

Decent spot for market entry

While I remain very concerned of a longer term market decline, I'll be first to admit that anything could happen.

On the PLUS side for market advance, the market knows corporate profits are missing and getting pinched. But yet, the stock prices had not moved down severely.
There is the thought that all financial institutions, governments, and corporations all want stocks to go up.   Financial institutions are employing sophisticated trading platforms to 'manage' the market, such as High Frequency Trading.  The government changes laws to make corporations look better, such as changing accounting rules in place since the great depression.  Corporations continue to innovate to move liabilities to off-book accounting mechanisms.


So while I am skeptical of the market making new highs, doesn't mean it wont.  Today is a good entry point if your mildly optimistic, with a stop-loss if the market closes below SPX 1395.
Futures are pointing up.  US presidential election home stretch is upon us.  The USD may resume it's decline, bolstering stocks until the effects take another bite out of companies.

Image below.  I will buy some GDX, GDXJ today on advice of Gary of the Smart money tracker, but not to the same degree as he may.  Also lighten on HDGE. Good luck.

Paul Volcker Interview

The last Federal Reserve Chairman I have great respect for is Paul Volcker, from back in 1980.  I have posted post from him before.  Recently, did an internet search, put recent interviews of him.

In the third video, Volcker quotes as his hero is John Bogle, I mentioned him post Worst Market in 60 years.

USD time for a break, revisited

On September 24th, posted blog entry USD fell quickly, time for a break?.  In that post I called for USD to trade in a range, and stop the freefall the USD was experiencing at that time.

Four weeks later, this view has proven to be correct, the USD has traded sideways.  However, I believe that this will soon break, probably as the presidential election approaches.

The only question is, which way does it break.   Gary of the Smart money tracker is calling for USD decline.  While I agree the USD will decline, and make spectacular new lows, we may get some surprises in the near term.  But I do agree that it is more likely that it will follow Gary's prediction.

The reason for my restraint on calling for USD decline resuming in earnest is Europe and other countries are struggling.  USD currency valuation is a relative measuring to other fiat currencies.  In a relative world, I call into question the USD will move significantly lower in the next 6 months.  As an example, Japan which has lead the west in debt to GDP ratio, has recently called on printing more, to keep up with other countries in fiat currency creation.  In such a world that countries race to the bottom, its hard to call out USD as leader to the bottom.

I fully expect USD to take the lead after markets depreciate enough to justify the Fed to up the ante beyond QE3 and break the USD as a currency. I expect the USD to begin a lifetime of decline decline.

Right now its watch and see.  USD recovers and rises in the months ahead, expect stock prices to continue to decline.  If USD declines, expect a more choppy market.  Natural Resource costs are already eating away corporate profits.  A lower USD will accelerate that trend, and hardly can stimulate significant market valuation gains.

Stock Tend Lines

Did some quick analysis of the trend lines since 2008.
Food for thought below.

Stephen Diggle a billionaire trader speaks

Stephen Diggle made over 2.5 Billion dollars in collapse of 2008.  As a hedge fund manager, he was calling for an enconomic collapse years before others, and was ridiculed.

He has given a speech of his view then, now, and the future

The Next Apple Stock

Smartphones are now mainstream, and so are tablets.  The competition for consumers are now from many manufacturers.   I expect this market to continue to be fractional-ized, akin to the car manufacturing market.  In the phone & Tablet markets it will settle into bands like the car market, BMW (Apple?) and Toyota (Samsung?), etc.

So while investing in this market can still be very profitable, the form factor is defined. Sure Android has the cool feature to touch phones shoot over data to another phone, unlike iphone, but all of this is incremental.  A new design like Google Glass will eventually take those form factors on.

Quite amazing when you think about it, the iphone was introduced in June 2007, and here we are in 2012 and the form factor is reasonably defined with tons of competitors.   

I can't but help compare this to the Ford Model T, released in 1908, and mass produced in force by 1914.   Competitors took years to take on Ford en mass.  The model T was so successful, the first model car to surpass Model T production run was the Volkswagen beetle in 1972!  Samsung has already outsold the iphone in recent quarters, although not nearly as profitable as Apple.

We have witnessed the smart phone market to be born in it's full glory and in 5 short years highly competitive sales.

For investing, the future holds the greatest gains.  Biotech, nanotech, alternative energy, and the maker community all offer opportunities for companies to be born to mirror Apple's success.   I think the nature of cell phones, tablets, and PC's cannot easily duplicate the same level of success of Apple in other fields.  But even 1/10th the success of Apple is huge for any company.

I continue to be fascinated by the Maker community, and one of the forces 3d printing.  I am watching carefully which company first makes a break to advertise end consumer 3d printer, which I fully expect in the next 5 years to be announced.   Once Pandora's box is open expect innovation in 3d printers to accelerate and consumer pricing to improve dramatically.

Already companies like Airbus and Boeing are embracing 3d printing as part of their design process.

On kickstarter today, I ran across a 3d printer that you can buy, today, for 580 bucks.  It requires your own assembly and paint.   I am amazed that for the price of a hotel stay in NYC, you can print almost any plastic object you desire.  Granted, the resolution isn't what I'd like to see, for that you need MakerBot for 2K dollars.  I can't wait to see the mass production for general public entrant to this market.

Consider selling stock in any company that makes it's living on cheap plastic parts. ;)
First two videos are summary of advantages of 3d printers, and below that, 3d metal printing, below that 3d printing of human organs! (maybe someday food?)

ETF Proxy Shorting the Market

I can safely say that shorting at the right time, right place, can yield huge gains.  However, math isn't on your side.  In post "this time its different", when the market falls, valuations drop around 50%, but gains are over 100%.   To properly short and gain valuations requires a commitment of time and careful positioning.

I do not have the time, nor the desire to embrace shorting the market as I did in 2006-November 2008. (I couldn't short Dec 2008 to march 2009, I didn't have the guts)

Aside from simply buying fixed income, which by the is the safest play normally, there is an alternative.
There is an ETF called HDGE that manages active shorting.  Meaning, they change their composition and try to remain nimble.  The fund was made public in 2011, and has wiggled around since then.  It's valuation isn't impressive.  Then again, the SPX has moved from 1300 to 1450 in the same time period, (up 11%).

So purchasing HDGE is pretty risky.  But I wanted to share with readers as I am buying some shares the last two weeks, and I'll follow up with some posts as the market develops.

HDGE is available recently around $20.50, I can reference this post in the future.

To find out more about HDGE, here are some handy links.

HDGE fact sheet, video, and current shorting macro allocation.

This time, it's different

I am growing in concern once again about market valuations to the extreme, my position changed on October 1st of this month in post titled "Getting out of the Market".

I wanted to take a step back and look at the market long term from two different angles.  First from 1995 to present, the more recent history of market valuations.  Using this history as an example, looks pretty compelling that we are in for a market correction.

The market hasn't seen below SPX 700 (except briefly in 2009) since 1996.  Assuming SPX 700 is the new bottom, then the rise in 1996-2000 was about 115%, in line with the last two bull markets.

However, if we look back to 1995-6, the market moved from a norm range of 400 to 700 and has never looked back.  That rise was in fact "this time its different".
The market moved from a whole new level.  So using the logic back in 1997 as market went from 400 to 800, you would have been sorely mistaken.

Wanted to give some perspective of market view, from the last 18 years, and from before.   I for one think 1996 was the realization of technology, and the last two bubbles have been  ponzi-scheme-like driven. However, Nano-tech, makers, biotech, alternate energy could be poised to bring us to the new level.

The market may recover and hit a new all time high, but I can't get on board with SPX 1400 moving to 2000 or 2800 in the next 3 years.  A MAJOR random element of course is USD currency valuations.  I simply cannot see a major USD decline until 2016-17.

Pictures for thought.  Fixed income, some core precious metals (small) and possibly short fund. (I'll do post on ETF short fund HDGE).  To the charts!