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Random Thoughts


The zillion dollar zinger for the psychological metric is whether the perception of the liquidity faucet is at risk.

  • I am being deluged with emails from all sides as traders dig deep for a catalyst for the action in gold. And I'm not talking about retail investors--I'm talking about folks who run billions of dollars and are considered to be the most plugged in players on the Street.

  • Lemme say this--I don't know why gold all-of-a-sudden ripped $25 but I most certainly respect the fact that it has. And, while I hate assigning reason to the rhyme, I'll again say that my gut is that something geopolticial is afoot. I see the story on Reuters about Iran "reducing its dollar reserves to bare minimums" but there's more meat to this bone.

  • It would be irresponsible for me to offer opinions on the unknown but IF there is something out there behind this move--and there likely is--there is a fair chance that that very same catalyst isn't good for equities. Again, I don't know but with vols this cheap, I scooped some puts in the financials (against my earlier gold purchases) until I have some clarity.

  • We now return to the Fire on the Mountain.

  • Perception is reality, Minyans, and if the perception is that the faucet of free money (aka Japan) is tightening the screws, it could reverberate globally. This isn't to say that it will happen--I'll simply ask you to appreciate the potential, and factor in the possibility, that it might.

  • I'm a buyer of dips in the metal arena but I am conscious if the above mentioned caveat permeates, asset classes will deflate in kind. And they likely won't discriminate.

  • In that vein, I did add some more Goldenstar (GSS) this morning, as I said I would after the recent 12% shave, and conscious that the "textbook" levels to add are $3.30 and $3, in that order. I didn't go Daisy Duke hog wild, I'm just scaling gently and carrying a thick stick.

  • Hey, do you remember the axiom about the three phases of every market movement? There's denial, migration and panic. I'm unsure if a steady grind higher qualifies as a panic phase but there IS a chance that we're in the early innings of denial.

  • I don't wanna make a mountain out of the Japanese molehill--from an absolute, historical perspective, rates are still quite low. The zillion dollar zinger for the psychological metric is whether the perception of the liquidity faucet is at risk. The market is a forward looking mechanism, so by the time the faucet does in fact close, it'll already be baked into the cake.

  • For my part and with my money, I continue to keep my cards close to my vest as I chew through my portfolio and ask myself some hard questions. I really like what I own and, perhaps more importantly, I'm willing to buy 'em cheaper. And against that exposure, I've got some cheap and cheaper puts in the financials (yes, they've hurt) just in case.

  • If you missed Professor Fil's Bandwidth Band Camp, you're missing one of the finer scribes I've read in a while. Nice work, young man.

  • My brother Jeff Saut of Raymond James forwarded me this editorial on the 21st Century Gold Rush Revisited. And when Jeff sends me a "must read" article, I feel compelled to share it with thy faithful. I paid particular attention to the second to last paragraph as it resonated on several levels (despite my "cores" on the investment side of my pad).

  • I don't know about you but there sure seem to be alotta "LBO lists" floating around the sell-side. I'm sure we'll see a slew more but typically, by the time a theme like this gets as loud as this is, it's closer to the end than the beginning.

  • The green on my screens? Energy and metals. We flagged the drillers as potential "dry eyes" yesterday and they were trading with some early morning moxie.

  • I finally watched the NBA all-star game in the wee hours of this morning (no, I couldn't sleep). Man, that Western Conference squad could be the best stable of athletes ever assembled on a hard wood floor.

  • I bought some more SunMicro, which is meandering towards my sexy six level. Not advice, natch, just sharing the process and putting it out there. Some of this is core, some trading.

  • You know, core. As in Yoga. Did I ever tell you the story about how I was attending a spiritual retreat in Miraval and asked the spa director for a yoga schedule? "What type of yoga do you like?" She asked. "Nothing crazy," I answered, "just some plain vanilla yoga."

  • After 17 hours of work, I fell into bed last night and finally watched The Secret, which has been recommended to me many times by various Minyans. I now understand why--it essentially combines years of Rubyisms (think positive) and Succoisms (the quantum physics of the universe) into one cohesive, mind-bending experience. Yes, I wholeheartedly recommend it to ye faithful. In fact, I just bought it for everyone at MVHQ. (Thank you C-Poe)

  • And, not to be forgotten, a lil' Minyan Mailbag for ya'll…

    Toddo: Regarding the "bovine backstops" SPX 1450 and BKX 119, there will be a day and time when we reach them again and will either bounce or fail. With psychology conditioned to buy the dips, odds are that we will bounce. However, some day they will fail and it'll catch the masses offsides. Any thoughts as to what the underlying conditions will be for failure?

    As always, thanks.
    Minyan Agneta


    To understand why we could fail, it would prolly serve us in good stead to remember why we have rallied and, ergo, why perception is as 'conditioned' as it is. In a word, liquidity. That's been the rising tide and it's benefited all boats and is the reason that the dollar is down 30% since 2002.

    So, why might the bounce fail? If the seeds of psychology begin to shift. And why might that happen? A Japanese rate hike would be a convenient culprit, I suppose, but only with the benefit of hindsight.

    The key here is to remain intellectually agile with steadfast discipline. You don't wanna trade scared--that's the quickest way to get roasted--but you certainly wanna remain aware. Those are intuitive backstops for the broader picture but a technical context is applicable in any particular sector or security.



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Positions in gss, sunw, financials, metals, gold
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