Monday, December 8, 2008

Rally Mode

I had a pretty successful Christmas shopping weekend. I did about 30% at a mall and 70% online. I still have a few items still to procure, but there is plenty of time. Wild weather swings this week. Today was 10 degrees and very windy, but Wednesday is supposed to be in the low 60's! Crazy stuff.

Silver Update
The first batch of my silver orders started to arrive today. I am looking to get about 70 ounces, mostly in 1 ounce sizes. It feels good to hold that metal in your hand and feel the weight. Why 1 ounce size? Well really I am buying this as a hedge for an outright calamity, and I think the small bars would be easily portable and tradable for items. A huge 100oz bar does not lend itself to those applications.

I am about half way to my goal as of tonight, so I could have done without the silver price ratcheting up today. I read the story posted by Watchtower on the "backwardation of Gold" and it was very appealing:

Still, my mind is leaning towards a two market solution where the paper gold/silver does one thing but the physical world does another. I base this on the observation that the price difference has existed for some time now and nothing has happened yet! I would love to be wrong.

Car Czar A Wonderful Idea
Word on the news is that some kind of bailout is on the table for the US automakers. I am done writing about all the reasons why this should not be done, and like all the other bailouts there will be no debate about "if" only "how big".

As an added attraction there seems to be a push to appoint a "Car Czar" to oversee the auto forms restructuring. Just what we need, another Washington appointed genius to reform a failed business! Makes sense to me!

Rally Mode
It has been a long time since I saw such unbridled optimism in the markets and the press. All the top stories were about how things are going to get better and the worst is behind us. What data is there to back this up? None whatsoever. You do know that with a newly elected Democrat president the press will go all out to craft better sounding stories though!

Mish sees a rally into years end, and a pretty significant one. Barry Ritholtz says about the same and the many folks over at Minyanville are in the same boat. Now how far and how long seems to be in flux, but rally mode is in full effect. What do I say?

I say why the hell not? The markets have long divorced from any fundamental reckoning. The holiday season will be light volume and quiet news wise. What better time to try and make the yearly returns for funds and investment houses look a little less terrible? Why not indeed?

I have long discussed how the US economy is one built on perception and belief rather than a tangible foundation. If people want a rally, have it. I can easily see a run to DOW 10K again before years end as long as the auto bailout goes through and we hear more details on Obama's plan to put 2.5 million people to work on projects the states cannot afford to do themselves.

The problem with things financial is the glacial pace at which things progress. The current bullish sentiment is self reinforcing. It will now take about 2 more months of terrible numbers to scare anyone. It took over a year of terrible data to finally dent the skulls of the bulls the last time.

So this juncture affords one of sufficient fortitude an opportunity. A solid move up into January to around DOW 10K, S&P 1000, and Nasdaq 1800 will present a choice for the new year:
-Unemployment is bottoming
-Earnings are bottoming
-Home prices are stabilising
-Credit is fixed
None of the above as all get worse.

If you say none of the above you have a pretty simple investment strategy. That's why they call it a horse race! We will further discuss this as we get deeper into December.

Have a good night.


Anonymous said...

I just can't help but shake the feeling that we may have one more weekend surprise before year end. I'll be looking for clues in the rumors and the news this weekend as to whom the TBTF victim will be.
I'm adding to my shorts fund on the way up. 971 for the s&p still on target.


Anonymous said...

Are you getting your silver from a local dealer, or through a national dealer? Just curious.