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it's an "easy out" to always have AG to blame for your trades going against you
during the last week i bought and sold intel every day. i made money on it every day. there was no skill involved. how does this make sense? i dunno. i'm not complaining. if there's an insatiable hunger for intel, i'll respect that. well, respect it in the sense that i'll jump on, place a stop, and then jump off before the close.
a market like this doesn't make sense to me, because its too easy. true, the market gaps and i don't get the advantage of those gaps. in fact, early in this rally, that's all we had, gaps every day, which made the most profitable strategy one of holding overnight, which i won't do.
come to think of it, the market gaps up at the open practically every day now. in a non-trivial way. oh well.
now of course you could say, "yes, bull market! buy all dips!" perhaps. but you didn't really need to play dips all that much on intc. just play it where it lays.
(and, by the way, the choice of intc comes from my folder of "pumped" stocks that mlsoft has pointed out. so its not a random thing here. and perhaps some sort of validation for what he's generally talking about.)
Amazing, this PPT conspiracy theory has filtered down to the rank amateurs.
not very amazing really. if you're an amateur and trying to understand why the nasdaq is worth 1100 and 6 months later worth 1800, its probably the most understandable theory. that is, if you're amateur enough to believe that price reflects value, and omit factors like supply/demand, forced selling by mutual funds, yadda yadda yadda.
Very, very few "pedestrian" investors can time the market successfully - IMO.
nevertheless, if you look at trimtabs flows on sector funds, it really does look like people are doing this. or perhaps the sectors are just reactive to the flows. or, another possibility (which trimtabs folks suggest) is that institutions that have disbanded their own sector funds are using them to play individual sectors.
Wonder how long it would take to get back to 2001 revenue levels with a consistent btob of say 1.1 or 1.2?
this is why i have real trouble understanding what's happening in the semi equip stocks. as i understand it, roughly, we need to see semi demand increase so that existing capacity is used up. or at least, until it becomes obsolete. but then, as semi companies upgrade facilities, they're also boosting capacity faster than in the past (because new processes mean bigger wafers, smaller die size, etc). demand would have to explode and grow fast. but it all seems like a losing game against moore's law ... or whatever the appropriate comparision is.
anyway, i suppose part of my problem here is that i just don't understand how folks "play" cyclical stocks. revenues in these companies don't stabilize, and the stock price doesn't seem to want to "average out" the longer-term performance of the company. instead its just 'anticipate the rise, jump in, anticipate the decline, jump out'. which makes it all seem more like they're just 'inherent trading vehicles' than investments anyway. though i suppose, over time, this all evens out. but in the semi equip companies, its hard for me to believe that anyone really wants to hold through the troughs.
VOTE: 5
caveat. with respect to the actual ppt, i'd think 3 is more likely - at least for this past year. but i think that the belief that the fed, or - at this point, someone - would intervene has removed risk from the betting folks are doing. anyway, at this point, its hard to ascribe the actions to anyone specific. might as well be the fed, but could be anyone, or just the herd.
i mean: folks rush in to buy nvls after it sells off after spitting up a hairball. how many times does that have to happen (and its been often since october) until the herd has learned that that behavior is profitable? the rules have been changed, and i think the fed is responsible for that. but lately, direct intervention probably is the less likely explanation; but still, just looking at what's happening in the market, its still a consistent interpretation of it. to me, anyway.
The economy is showing signs of recovery. Semi btob trend is up, .97
hrm. with respect to revenues, semi book-to-bill is already like a 1st derivative quantity (roughly, in the calculus sense of 'derivative', not the jpmorgan sense), predicting how revenues should increase over time. but betting on changes in the book-to-bill is now looking at 2nd derivatives. i.e. saying the b2b is increasing is still only saying that projected billings (revenues) are decreasing less slowly, since the 1st derivative quantity (the b2b) is below 1.
anyway, i guess this is more of a question than anything else but: in looking at b2b #'s, i would generally think that the important factors (in some simple model of demand etc.) is to focus on where it is with respect to 1, and what the magnitude of the changes are. but until it gets to 1, the trend still hasn't even stabilized at its lower levels ....
This is my fear in this contrived rally where the likes of cymi and others like it that deliver nothing but red ink are hitting multiple highs. This is what I find insanely unsustainable. It is plain crazy. good day!
again, in reference to that kudlow/cramer episode (a.k.a. 'dumb and dumber') on friday featuring fleck and 'the guy who sold paypal to ebay' (minus kudlow):
as they were talking about 'what to buy now', cramer made a reference to 'the playbook' - what fund managers are thinking with respect to historical trends. here they said that rising interest rates means you buy semi's. now that observation, if true, goes further to explain what's happening with the semis than anything else i've read. that, and fleck's observation that using opm (other people's money) fund managers are even more likely now than during the late 90's to chase any trend.
if cymi makes you cringe, consider brks or klic. brks is up almost 300% from its trough values and has a recent upgrade with target that would more than double that.
re fleck: After all these years of bashing valuations, now its him rationalizing his valuations...
hmm. you mean with respect to gold and silver? he did come out and say that something to the effect, 'although it might sound crazy, i honestly believe we'll see $800 gold prices'.
is that what you're referring to?
It's always after the fact rationalizing, never before the fact prognostication.
this is completely false. in fact, its the reason that i actually give some credence to mlsoft's theories. and, even though he argued with me on 'scientific theory' last weekend, his theory stands up: he's given precise information on when you should see intervention (to stem a selloff that could cascade) and where to look (intc and other stocks that get jammed by buying that appear intent not on buying for a good price, but buying to raise the price). that's predictive enought for me. in fact, up until march, there were other verifiable criteria as well: after the nikkei closed they'd jam up the dollar, push down gold and jam the futures; that would be followed by a gap up day that continued to trend up.
anyway, the question really gets turned around, i think. the market does believe in a 'greenspan put'. at this point in time, how else could he implement it? he can't really credibly do it through lowering rates or otherwise through the bond market, since he has no credibility there. and the market behavior that we're seeing is consistent with believing that there is such a put: buy an sufficiently broad basket of crap at any price, because there's a floor there.
to me,though: if there were large scale manipulation, i'd think it more likely that it was hatched out of the white house. the fed would be helpless to do anything but support it (that put again) since the alternative would be disasterous.
> However the concept of some clandestine group lead by AG pumpin
> up the market on a daily basis is very high on my ludicrous
> scale and seems to be mainly supported by bears who I suspect
> are looking for a rational explanation as to why the market,
> after losing 50% of its value in 3 years, is actually bouncing.
hmm. i think you exaggerate here. "everyone knows" the market is bouncing because of enormous excess liquidity that has to go somewhere. that's a rational explanation, and i'm sure many have recognized that for months.
what leads to talk of clandestine groups are things like big jams on the futures, or sells that turn out to be "mere accidents", or the massive pump on stocks like intc, or the rush to buy any selloff in stocks like nvls, even after coughing up the biggest of hairballs. when the market doesn't behave rationally (i.e. as it has in the past), of course one looks for rationalizations. but its not quite the overall tone or the incessant rally. we've had that before. its specific actions which seem to short circuit any significant retrenchment or profit taking.
What about the 5 straight months of strong equity mutual fund inflows? Or is that too obvious an explanation for the rally.
yes, that does not explain the rally. here's the data (from amgdata.com):
July Equity Fund Inflows $17.4 Bil
June Equity Fund Inflows $19.9 Bil
May Equity Fund Inflows at $13.1 Bil
2nd Qtr-Equity Fund Inflows $46.0 Bil (includes may and june above)
1st Qtr-Equity Fund Outflows ($5.9 Bil)
but in comparision, peak quarters for the last two years (from trimtabs.com):
2nd quarter of 2001 was 47900
1st quarter of 2002 was 45779
in brief, fund inflows alone don't account for the magnitude of the rise we've seen.
but then, money alone isn't sufficient. after all, mufu's (mutual fund managers) could sit on cash. its their willingness to chase stocks at any price that has this effect. and likely, it will last as long as they have money coming in and are chasing performance. lets see what happens if we have a month of negative flows.
russell errs!
(1) As they say in SoCal, have a fab weekend.
as a born-and-bred angeleno (but now in bezerkeley), i must correct this. i don't think they've said this in SoCal since the brady bunch was on in prime time.
(2) gold in a "primary bear market": i hope that's a typo and he meant 'bull'.
(3) about confiscation of gold: okay, i like to explore all options. if i were to let my paranoia run free, i'd say that they've already laid the groundwork for the possible confiscation of gold through the links they've already made between gold and terrorists. more precious freedoms are being threatened already in the name of fighting terrorism than just ownership of gold.
amusing statistic. only in america ...
http://www.nytimes.com/2003/08/30/business/30TRAF.html
The average household now has 1.75 drivers but 1.90 "personal vehicles."
conversely i'd say: when the bulls are running, listen to the bulls. just don't trust them. opinions on this board provide that good grain of salt.
and i think that you'll find that most folks here, even if they express bearish opinions, are playing the trend. even if its only in precious metals. (and again i'll point out that the hui has outperformed the sox since march
re copper
lost track of the message, but someone here last night was wondering aloud about shorting copper. doug noland's credit bubble bulletin this weekend has some stats on why that might not be a good idea, at least until the chinese bubble deflates:
Two Runaway Bubbles and Global Reflation
http://www.prudentbear.com/archive_comm_article.asp?category=Credit+Bubble+Bulletin&content_idx=...
Flecks last paragraph tonite
actually, fleck was on the kudlow/cramer circus yesterday (friday). kudlow absent, so it was cramer, fleck and the founder of paypal, now a hedge fund manager. all with some pretty nice ideas, i'd say. (both of the fund managers like gold; oil services and natural gas, but fleck says oil only if you believe the economic turnaround; fleck is also looking at a correction in wireless after current channel stuffing, txn etc ... although not yet.)
cramer can be much less obnoxious when in the company of his peers. maybe kudlow is a bad influence on him.
We are at the begining of a huge technology cycle with more inventiveness being released in the next five eyars than in the previous hundred years.
can you be more specific?
shush!
oops. i sympathize, though. back in those days, i did my first short ever - right over xmas break. idc (now idcc), then also known as "baby qualcomm", which was getting much hype and pump and dump at the time for the very reason that it (more legimately) took off recently (that ericcson case). december 2000, a vertical spike from 10 to 75, which is just about where i shorted. and had some sleepless nights until it quickly drifted back down. covered for a nice profit, though would have been better if i had waited longer. but back then .... well, every story moved a stock. sorta like now.
<waxing nostalgiac>
ah, those days when i was a boolish believer. it was more innocent. i actually bought and held corl back then, from about $2 in early 2000 because i believed that their linux sidewinder boxes would take off, and got to sell it for $20 (would have been $40 if i had been a TRUE believer). and rhat, which i bought on the open market on the morning of its ipo at ~45; hit 90 (was it the same day? if not, soon thereafter), and all my friends said "sell! sell!" but i stupidly held on and utimately got stopped out at 275.
i wish i could be like that now, but ... oh well. i can with gold miners, though.
It is worth remembering this one because I think it will be one of the best shorts somewhere down the road.
you read my mind :)
EWJ ... someone just mentioned this which reminded me: does anyone here know the ticker for the fund that tracks the german market (DAX)?
even qualcomm in bubble days didnt act like this
well, there was that day when qualcomm doubled ...
cool.
well, at least we agreee, i guess, that there's no rush getting in on the short side here.
now if only i knew what don sew was saying at this point
you can't possibly expect the big boys to come back from vacation and pay 10% more for stocks than they did in June.
hmm. but that's expecting that they want to buy. if you think that they want to sell, they'd probably want to churn it around a bit more at these levels.
anyway, i have no idea. i was seriously debating (with myself) opening a uspix position at the close today. but that seems like a gamble to me. i'll have more info when i see the market on tuesday ...
The bullion banks, JPM, GS, BAC, MS and C, just to name some biggies, are reputed to be h e a v i l y short both gold futures and options and supposedly are very vulnerable to any tremors that may occur in the Au based derivatives if the PoG should break sharplly above current levels.
although i've heard this often, there are things that happen that make me question that sometimes. e.g. just recently a note from MS (i think) which advised clients to have a 5% position in gold in their portfolios. that could, of course, be a case of "the left hand not knowing what the right hand is doing". but still, its the nature of derivatives players to offload all the risk to someone else. isn't it at least plausible that they've done this? (heck, even a sizeable hedge in the HUI could do that, one would think; and those guys are masterful at manipulating stock prices).
well that narrow range on pmcs revealed itself to be accumulation (mlco at 14), so it looks that that wants to squirt up, at least to a double top, if not another leg up. (i think 16 is a target there?)
very odd stock. last month, there was a huge outsized position in 15 aug puts of 300k contracts. bought/sold in the money, and the stock promptly tanked for expiration to bring them more in-the-money ...
but i get the impression that the traders on this one are just along for the ride and that bigger money is moving it at will. (which might mean that, strategically, you want to follow those 100sh bids on island tagged with the extra 0.001 ... just thinking out loud here. but certainly, this week thatwould have worked ...)
Whether they were making so much money on hedges to begin with, I simply don't know (not privy to that world).
actually, dan posted an article here recently that quoted someone from a bullion bank saying exactly this (that they could no longer make any money from hedges). that's what brought the question to mind ...
This morning's Journal ran an article stating that investors were piling back into stock mutual funds, which is truly scary considering PEs, etc. But I guess some things never change. As more sheeple jump into the market at these levels, I think the chances for a market "incident" increase dramatically.
indeed. well, maybe we get george's blowoff this way.
on the positive side, enough folks pouring into gold sector funds could launch the hui into low orbit ...
"The big move in gold the other day was orchestrated by bullion banks."
so, in your opinion, does this imply, then, that they've come around to the notion that they're not going to be making money off hedges anymore and, to make a buck, they're going to be actively supporting higher prices? or was this all just related to this month's expiration? ...
okay. well, you're quicker with your fingers than i am. i prefer to marry my stocks.
j/k
nvec. hmm. pretty lethargic and illiquid, no? up up and away!
the difference on pmcs is that there seem to be these continual bids coming in on island, 100sh at X+.001 or X-.001 that shepherd the price back into a narrow range. a while ago, just an 0.008 range above 14.
on second thought though, it does remind me of the activity around 11, which could mean consolidation. i have to remember not to let my inherent bearishness influence me sometimes
to my eyes, looks like distribution continues on pmcs here in tight range just above 14 .... fwiw.
or it could be consolidation, i suppose ...
and he will do everything in his power to get those jobs created
'trickle down' (massive fiscal stimulus on the investment side) isn't known for fast or direct job creation (say, reagan until mid 90's?), and its not even clear that it would or should work after a busted investment bubble. a more direct 'guns and butter' policy (e.g. one where, on the butter side, you actually go out and buy cows and then hire folks to milk and churn would have been more direct, if less ideologically pure.
"historical info can be found on the front page of Standard and Poors website"
i believe you'll also find a footnote somewhere explaining how they changed the meaning of "E" in "P/E"'s a year or so ago (to "operating earnings" i believe).
Carl, maybe there is a relation between the London and NY blackouts.
it was also noted elsewhere (prudentbear.com) that both took place 10 minutes after market close (local time) on a thursday. oddly, i can't verify this since none of the stories i read about this blackout mention the time. in fact, its actually pretty conspicuous by its absence. (every journalist know's to include the 5 w's, which includes "when".)
e.g. washington post
http://www.washingtonpost.com/wp-dyn/articles/A59800-2003Aug28.html
financial times
http://news.ft.com/servlet/ContentServer?pagename=FT.com/StoryFT/FullStory&c=StoryFT&cid=105....
> Zeev, "fear of missing it" is very strong right now precisely
> because investors minds have been conditioned over many decades
> that markets always go up.
we were talking about mutual fund flows the other day, and i pulled up the historical data from trimtabs (through 2002).
http://www.trimtabs.com/charts/spreadsheets/us_equity_funds_flow.xls
however, one thing that struck me - and even struck me more strongly now that i took another look to confirm - is that the move in and out of funds over the last two years has been pretty negligible. in fact, pretty much net 0 in or out over the last two years, while 2000 saw nearly 250B flow in.
anyway, the striking observation is that, in aggregate, all that money that came in during the 90's is still there, since net flows over the last two years are almost 0. so, yes, the conditioning worked well: on the average, they're waiting it out.
so then the question becomes: is the typical investor really waiting to take all of the money in his money markets or bond funds and plunge them into the stock market? or is he/she just waiting for everything that's still sitting there to be worth something again?
[in edit]
hmmm. looking at the most recent daily report and comparing it to the s&p or nazdaq
http://www.trimtabs.com/pdf_files/daily_mutual.pdf
i have to say, i don't think i believe that individuals are "chasing" the market. at least not during late july and early august. looking at the daily flows, it clearly seems (to me) like these guys are trying to time the market (on average). although maybe its just because i focused on the nazdog and the tech sector funds, which probably do attract more timers than an index fund.
TJ, why leave LA?
school.
I see it everywhere here in Los Angeles where I live. [...] drivers with new Lexus, Beamers and Benzies everywhere on the streets.
its LA, dood, the city where folks don't mind paying more on a monthly car lease for a boxster than they're paying for the rent on their studio apartment.
(i think you mean "bimmers". "beamers" are motorcycles.)
Expensive foreign restaurants at night are packed, we have to wait half an hour to be seated and that is WITH a reservation.
well, i'm out of LA now, but when i was there - and living not far from restaurant row on la cienega - i'd have to say that the crowds around there were still pretty thin. not compared to february, but still not like last summer.
i'll tell you.this feels just like the last week of august 2000.
i remember that so clearly nasdaq over 4000, sox over 1000 after a nice summer rally, and pmcs hitting 220 that very day. and brian finnerty interviewed on tv, saying kopn was no longer his favorite stock (down from 40 to mid teens, "closer to the bottom than the top"); he liked glw: "fiber: its only the 2nd inning of a 9 inning game!").
and i remember all that because i stoopidly didn't sell my pmcs or glw that day. although pmcs did hit 220 again, and that's when i dumped it ...
In error, I had read you as a fast gunslinger. It is difficult to stick with pm.
well, i do have a trading portfolio that turns over much more quickly; usually higher risk stuff, short positions. during this latest rally, though, when my old shorting strategies stopped working, i did trade miners a bit. just not comfortable carrying techs.
but the forturne could have been better; that portfolio has only a selection of mutual funds to choose from, and the gold fund available to me, unfortunately, underperformed the hui
now in 20/20 hindsight ...
The agonies of the shorts and the missed out are getting more desperate on the thread today. Depseration is near.
do we need to hear this every day? hey, i'm bearish, okay. but the hui is up 74% since march. the sox is up 75.5% since february. you didn't need to be a believer in the bull theory to have profited from this rally ...
Gold bugs keep talking about this burdgeoning demand, but it is just not happening.
of course, that was 2002. but you're right, those long term trends and year over year comparisons an important part of valuation. would that someone would do the same sort of analysis for nvls or intc.