The Winter River

Not much to add to last nights post. Today's S&P 500 print is quite similar to the back to back prints on October 27 and 28th 2011. I missed my entries this week and will wait for resolution by weeks end of this move up one way or the other. My one major difference from the October set up is that back then everyone was really on board the bullish train where this time it's much more subdued. Maybe this will be "the" move up that finally breaks the old range. If it is, no need to be in a hurry.

On tap tonight is the story that explains why I hate the cold so much. Very fitting as we are having our first blast of cold temperatures right now.

The Winter River
I grew up in South Lowell. In Lowell there are two major rivers; the Merrimack and the Concord. The "Mighty" Merrimack is a large, swift river that is home to some of the best smallmouth fishing I know. It's great water and over the years has been cleaned up to an amazing degree.

I lived two blocks from the Concord. This is a medium river in size, and it moves very slow. Highly polluted and with heavy algae this river is home to monster carp and catfish.

In Junior High me and 3 other friends would always go out on weekend nights and find "stuff" to do. My Mom worked nights and I slept over a friend's house whose parents went away almost every weekend anyway. It used to be much colder when I was a kid, or at least I think so, because the Concord river would freeze up in deep winter quite a ways out from the banks. The middle usually stayed unfrozen. A visual, best I could find:

At that age you are getting to the point where you both want to impress girls and be more "ballsy" than your friends. It's not a good mix and I imagine safer now that the number of Facebook friends or Twitter followers for kids is social leverage and money, not actions.

So what we would do is walk out as far as possible to the center of the frozen river to see who would push it the furthest.

Writing that I can feel the set up but I can tell you at the time it was perfectly normal.

We had done it for years. The worst thing that ever happened was some loud cracking and some fast moving feet back to the bank. Until the last night I ever did it.

My friend J was always the most daring. No one really ever tried to beat him, he was nuts. That night he went out a ways and we all followed. He kept going and I followed for a bit. When I looked back my other two friends were a bit further back than made me comfortable so I stopped. J kept easing out and I turned around to go back to the bank. That's when the cracking started.

Multiple cracks and moving fast. Friend J started back fast towards us and I was about to take off when I had a thought. A cowardly thought and not some hero idea for the ages. I thought if something happened to J I would be in the kind of trouble you just don't get out of. Noble I know, but the truth. So I waited for him to get about to me before starting off for the bank. The fissures were faster. We went in the river.

I can't explain the cold. Maybe some of you crazies that do those winter swims know what it's like. If this happened now I am sure I would have a heart attack. It was shocking and terrifying. And I wanted OUT.

The edge of the bank ice was pretty close and I could just touch the river bottom with my feet so I made my way over. I got my arms up on the ice but I was very heavy with the winter coat, gloves, etc. I could not lift myself up onto the ice shelf. Friend J had made his way behind me but could do no better. We both tried again and the ice broke again. And this was the life saver.

Maybe enough distance had been gained, maybe there was a rock under the surface, but now I could get enough of a push with my legs to get up onto the ice shelf. And it held. J followed in the same spot and we were back on the ice closer to the bank. I was exhausted and the smoke that was my breathe pouring out into the night air looked like a chimney. The other two friends had grabbed branches (thanks guys!!!) but we trudged our way back to shore.

I lived maybe two short blocks away, but there was NO way I was going home like this. Brother and sisters would see and tell on me for sure. So we all walked the mile and a half to the friends house that we were staying at. It was most difficult. I cannot really describe it. Just wanted to get inside and get the crusting clothes off.

At the house neither of us could get the wet clothes off, it had frozen up in place and was too hard to pull off. Someone grabbed some kitchen shears and we cut off our pants (which could stand on their own!) and sweaters and T-shirts. The coats we were able to salvage. I remember thinking the skin over my knees was going to split it was so cold and tight. It took about 5 hours under blankets to finally feel normal again.

I never did that activity again, and to be honest I never really did much in the winter time ever again. I have hated the winter and the cold ever since. This is not all that helpful living here, but what can you do. Retire early in the Bahamas! That will work.

Have a good night.

Crazy Times

Home a bit late tonight so a quick post.

BTFD?
If readers are unaware what BTFD means it stands for 'Buy-The-F$cking-Dip'. It was featured in a hilarious Xtranormal video and has served as a bull rallying cry and just a bear crying shame.

Reader Anon asked me in the last post comments:

GYSC - you going to BTFD??? Many bears, when the "D" comes, do not have the stomach to "B". Instead, their fear escalates as the market continues to go down (and subsides as it goes up).
It is very tough to go against your nature and buy when the dip comes. Can ya do it, or are you going to retrench?

Fair enough.

My answer is, I will be buying stocks that are attractive to me on a technical basis. Right now in my trading account I am working short term trades (a week to 10 days tops) and so if something look good to me I will be a buyer. I am right now in six open positions (no stops hit today) which is high for me. That's the short answer.

The long answer is no, I would not be putting large amounts of my net worth to work on this dip or any other in a broad sense in the markets. I don't trust them and I do not believe in them. Not anymore. This last 'dip' has erased weeks to even months of gains in many names, that's how fast it can change. I sit in cash and physical metals gold and silver for almost my whole capital position. That's what works for me and has been working well for a long time. I think it depends on the type of bear, but some bears are not afraid to buy on dips, they will not buy no matter what. Others are like you describe, looking for that 10% drop and when it comes saying "well it could drop some more so I'll wait...".

I will put out an ultra bearish type of scare paragraph as we head into the weekend:
I was a little 'scared' at the March lows in 2009, but the world as it sits right now does in fact give me real pause.

Have a good night.

Bernanke Says Banks Must Foresee the Risk the FED Ignored

I swear that I think the days are getting shorter or something. Maybe traffic is worse or I am moving slower, but it always seems I am running out of time. Reader Gawain had suggested Omaha Steaks in response to last nights inquiry. They are headquartered in Nebraska, which made me think of the film "Unforgiven" quote by little Bill Dagget: "Hell, I even thought I was dead 'til I found out it was just that I was in Nebraska." It was not clear if and how long they dry age their beef. I am ordering on Saturday, so I have to decide soon.

Loyal reader Watchtower says he has a Jon boat, and so I would like to know Watchtower if that boat is pretty stable on a river? I am of course in the market for a boat, and I plan on fishing a medium size river quite a bit. Let me know! And where is loyal reader G? I hope he is not working too hard.

Bernanke Says Banks Must Foresee the Risk the FED Ignored
Today was a good day. I love it when everyone, even the guys in the cheap seats, get an up close view of how clueless and broken the system is. Today Ben Bernanke, the FED Chief, gave a speech at a conference of reserve bankers (must be a wild crowd!) in Chicago. In the speech Mr. Boom Boom Bernanke tries to layoff the total failure of the FED to regulate banks in any way as it relates to mortgage issuance on those banks because they did not foresee the risks that the FED is tasked with regulating. Got all that? That is the translation in real terms. Bernanke's actual wording was a bit different:
AP
Bernanke: Banks must get better at foreseeing risk
Thursday May 15, 11:36 am ET By Jeannine Aversa, AP Economics Writer
Bernanke: Banks need to beef up their ability to foresee risks like credit, mortgage troubles
WASHINGTON (AP) -- Commercial banks and other financial institutions need to beef up their ability to detect and protect themselves against risks like the credit and mortgage debacles, Federal Reserve Chairman Ben Bernanke said Thursday.
The trio of crises -- housing, credit and financial -- have exposed weaknesses in financial firms' so-called risk-management practices. That is their ability to sufficiently detect and hedge against risks. Banks and other financial players have racked up multibillion-dollar losses when investments in complex mortgage-backed securities soured with the collapse of the housing market. Credit problems in housing quickly spread to other areas, intensifying the turmoil.
"Improvements in banks' risk management will provide a more-stable financial system by making firms more resilient to shocks," Bernanke said in a speech to a Federal Reserve banking conference in Chicago.
"It is clear that supervisors must redouble their efforts to help organizations improve their risk-management practices," Bernanke said. "We have focused on the institutions in most need of improvement, but we will continue to remind the stronger institutions of the need to remain vigilant, particularly in light of the ongoing fragility of market conditions," he added.

OK. Basically Mr. Bernanke is saying that the "supervisors" must get better at risk assessment? What supervisors are these? Who is responsible for the banking system through money creation, bank overnight lending, interest rate setting and other tools? Is that not the FED itself?

Bernanke is pointing the finger at the banks here, and surely the banks are fully to blame for chasing risky investment ideas and flooding the markets with cheap credit. Guilty as charged. But where in the F#ING WORLD does Mr. Bernanke think this easy money came from? The tooth fairy? A pot of gold at the end of a rainbow? A scratch ticket?

No, the easy money from an ultra accommodating FED was the flood source. With interest rates so low for so long, money was forced to chase any return and thus here we are. The FED is trying to point a finger, but when you point a finger at someone, there are 4 fingers pointing back at yourself. The tone of the speech made me think that Bernanke thinks that worse things are down the road and he is trying lay blame off early. What a tool.

Leave Friday Night Rock Blogging suggestions in the comments!

Have a good night.