Friday, February 6, 2009

Bull Orgy!

Good Afternoon Folks

Man, what a rally. I guess the bond market has it right. Rick Santelli said the new saying in the trading pits is "Trade the Tarp!".

I held short into the weekend. I guess I am a glutton for punishment!

Turbo Timmy is up on Monday. There were no real leaks on his speech today which I found very interesting. Real estate stocks soared on the hopes that further intervention will help shore up their sagging industry. This was the only rumor that I read about Geithner's plan. It's reported that up to half of the remaining Tarp funds may be used for mortgages:

"NY Post reports A cornerstone of the economic recovery plan that President Barack Obama is expected to unveil Monday will be modifying problem mortgages, The Post has learned. In a nod to Main Street over Wall Street, sources familiar with the plan say Treasury Secretary Tim Geithner plans to allocate almost half of the remaining $350 billion in funds from the Trouble Asset Relief Program to the so-called "Mo Mod," or mortgage modification, platform. "Mo Mod" is an algorithmic mortgage processing program that can rewrite up to 500,000 loans a month, and will be a major part of Treasury's plan to help repair tattered bank balance sheets."

Quick Take:

All of this intervention will one day come home to roost. I'll let Marc Faber explain why this is such a bad idea. Here is a great interview with Marc from Bloomberg this morning that focused on our government interventions and why they will ultimately fail. I couldn't agree with him more:




Thank god its Friday. What a wild ride!

3 comments:

ZMonet said...

I thought it would be interesting to hear everyone's saving/investing/trading plans as it gives some context to posts. I'll start and if anyone else is interested, feel free to share.

My wife and I still invest fully in our work retirement plans, currently in the 2030 fund (we don't have many options). Our prior years of retirement, pulled about 8 months ago, is largely in government bonds. We currently rent and have saved away in CDs (and continue to add about 20% of our take home pay) enough money to put a 1/3 down payment (under current prices) on the type of house we want (probably sometime in 2010 regardless). I currently have a trading account where I scalp trade using about 7.5% of a year's take home pay (with leverage though, this increases).

Short term trading-wise I plan on just scalp trading, both long and short, the market. I haven't for a few weeks and don't plan on holding past close because I think the market is still too volatile. My trading plan may change if we get even a little bit of stability.

Long term (the 35-50+ years I still expect to have on this planet) I'm optimistic about this country. Irregardless, if that optimism is misplaced, I don't have much hope that if this country can't rebound that moves I make now will bring me any financial security in the future.

Anyone else care to share?

John Maynes said...

Zmonet

can I call you an idiot? No offence. There is no reason for optimism in America. US was once a great nation believing in democracy, believing everybody could make his own luck, believing in capitalism, believing in itself!!! These days only the well-connected can make their own luck and prosper on the backs of the not well-connected. China will take the first opportunity to destroy America. And they will. The US gave them the power to squeeze your American balls. One bail-out after the other. The candidate and now president of change does the same ol'. Why is there nobody anymore believing in the healing forces of capitalism? Just let Citi and BofA go under. They don't deserve any better. New and stronger banks would pop up. The financial system would recover in a very short time. But instead the president of change chose to collect $3000 from every American to give the tax payers a tax relief of $500 and the renovation of the Mall of America. What a joke. America will never be able to pay back all of their debts. The only way they can do it is by devaluing the Dollar. Watching history evolving in real-time is interesting but also very frustrating.

Enough ranting. Tradewise I sold all my SRSes on Friday. Right now in 100% cash. Also for technical reason I can't explain in detail here. Have to transfer my money to a different broker. Have a good weekend.

Jeff said...

ZMon

Sure. I have a similiar plan.

I have about 45% of my portfolio in treasuries and government bonds.

10% in bond funds. Mainly PIMCO.
10% in equities.
10% in a short mutual fund(BEARX) Which holds a lot of gold.(my semi hyperinflation hedge)
15% in CD's
10% in cash in a trading account. I usually only have about half of this account in trades at any one time.

I am stashing cash and pulling back on a lot of spending.

I am optimistic about the future as well. I have no desire to buy a house until rates are much higher. I figure inflation kicks in about 3-5 years from now..

After rates rise, most nice houses that sold for 500-700k at the peak in the bubble areas will be selling in the 100-300k area depending on the location.

Any wealth that you can hold onto when this is all said and done will become much more valuable. Being millionaire will once again put you near the top of the food chain.

I also agree that no investment portfolio will matter if the banking system fails.