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It's in the Way That You Use It

By

Bennie and the Jets are in a Ghost Busters sequel "" fighting slime.

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It's in the way that you use it, it comes and it goes.
It's in the way that you use it, boy don't you know.
And if you lie you will lose it, feelings will show.
So don't you ever abuse it, don't let it go.

--Eric Clapton


  • If mania, by definition, must precede panic, has there been excess speculation? Has there been participation? Well, margin debt is higher then it was at the 2000 peak in absolute terms. In relative terms, I understand that the value of margin debt as a percentage of the stock market is at an all-time high.

  • Wasn't ten percent margin considered one of the culprits in 1929?

  • Is the notion that there are assets being carried well above their true value at more than just a few firms gaining popularity?

  • When does worthlessness become an asset?

  • Did Ace ever consider calling his firm Bull Stearns (BSC)?

  • Does every new Fed chief have to have a baptism by fire? Volker conquered inflation. Greenspan conquered the crash and bred the Greenspan put. Bennie and the Jets are in a Ghost Busters sequel – fighting slime.

  • Aren't leverage and liquidity the other side of the sword of excess speculation and excess risk?

  • Would Camus call the chasm between a global CDO market of 2.5 trln dollars while borrowing against this pool of 15 trln an existential conundrum or poppycock?

  • We've all heard the story about the final piece to Joe Kennedy's bearishness before the crash in 1929 coming on the heels of a shoeshine boy trying to give him a stock tip. I understand Goldman brought shoeshine boys into some of their offices in 2000 because their traders were too busy. I got an email last week from a Goldman Minyan saying yes, you guessed it – the shoeshine boys are back. Shall we call this the Wing Tip Indicator?

  • Has Crocs (CROX) considered a wing tip version for the investment bankers who stroll out onto the Hampton beaches?

  • Is CROX considering an Apple (AAPL) iPhone shoe to be called the Maxwell Smarty Phone?

  • When is the last time the market was making all new time highs with less than fifty percent of stocks above their key 200 day moving average? According to a well-known technician friend of mine, you have to go back to 1929, but hey, who's counting?

  • Is technical analysis voodoo? The S&P, in fact, undercut its June high at 1540 but found support in the low 1530s, as anticipated in my column yesterday. The bulls knew they had to defend the 1540 level on a closing basis and they did. The index closed handily above it at 1546 on Wednesday. Does this mean a run for the roses to 1576 is just ahead? The behavior at 1555 S&P after expiration will tell that tale.

  • Is there anyone out there, bull or bear, who didn't think a down open on Wednesday was a buy and that someone would come along who they could sell whatever they scooped up at higher prices later in the day? Has the air of invincibility exuded by the market yet once again become even more dense?

  • Is complacency like fog on a freeway when you're going over the speed limit?

  • A wise trader once said to me that "crashes don't come from too much bullishness. They come from too much complacency."

  • Was anyone absolutely, positively surprised at the "news" that came out of Bear Stearns on its Tuesday conference call? The conference call was slated to be on the calendar which leads me to the question – was last Thursday a Buy 'em to Bang 'em and was Wednesday a Bang'em to Buy 'em? They sure look like bookends around option expiration. A good old-fashioned Squeeze and Flush fashioned around the Bear Stearns "news". A classic Rinse and Wash at the Wall Street Milk Farm. Take a bow, Daisy.
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No positions in stocks mentioned.

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