Replies to post #48452 on Mohacsy's Safe Portfolio Member Forum

[Dimension]

There is an old saying among traders: "Don't fight the FED".

For the most part, the saying is true..you do not want to go into a fight on the opposite side of the FED. It does not mean that you believe the FED is doing the right thing...in fact, in most cases, many traders count on the FED manipulating and 'fabricating' market movements.

The point is, we are in an environment where we can all agree that things being done are probably not the best course of action. Had we let real estate market collapse or let banks failed, it would have been quick, PAINFUL, but likely the worst would have been behind us already.
We did not...but what we do have now is a government, a treasury, a WORLD in fight for their very lives....as a trader, you need to pick YOUR battles wisely in these times i think.

this is my opinion ofcourse..

To go up against all these people is dangerous.
To bet that these people can defeat the natural market forces and tendencies to 'cleanse' itself is also dangerous.
Best approach then? Quick, nimble, and do not be stubborn about position..in fact, DO NOT PICK A SIDE, let the government and market fight it out...you just trade the volatility and hedge appropriately! Be a market brown-noser and swap sides often...nothing wrong with that.

[RichardTC]

There's an argument to be made for the market leading the economy by 6-8 months, but that's not what I see happening. The classic example is economic data showing signs of an upturn and then the market rallying subtantially. What you're seeing now is people cherry picking data for anything that shows decreased rates of decline in isolated regions and then proclaiming that the economy has bottomed. 1) Decreasing rates of decline are not the same thing as growth. 2) You can't basis analysis on outlier data. Yes, it bears monitoring but that doesn't mean you go contrarian (long) based on it. Beyond that, I am very suspicious of any data showing increased consumer spending when that completely contradicts what I am seeing/hearing from friends in KS, NY and TX.

[n4807g]

Mike I just looked at the news and it doesn't look particularly promising. Tax receipts "collapsing", Bernanke trying to push mortgage rates to 4% because the house market is still failing. Loss reserves at banks growing. Commercial RE on the brink and layoff announcements accelerating. The FED desire to push rates lower is a dead giveaway to me; they see mucho trouble.

Now just how are they going to place the now estimated 2.4 trillion in new Treasuries?

Yes I'm pessimistic, and I think for a very good reason. I have never seen a business environment like this in the 33 years I've been running my company. As I've mentioned, cash issues are beginning to show up in the wholesale distribution channel...ie customers aren't paying my customers and my customers are beginning to extend their payment time frames....I'm sure I'm not alone.

For me it's simple; watch Bernanke and the prevailing mortgage rate. If he tries to drive it lower, we're in a worsening position.