>

“But financial meltdowns don’t offer villains, for the simple reason that no one person or even one group is powerful enough to take down a whole system.”

-Megan McArdle

>

I don’t really get Megan McArdle when she makes a statement such as the one above. It was in an article critiquing Matt Taibbi and defending Goldman Sachs.

Um, Megan, I am going to have to beg to differ with you. There were many, many identifiable villains who through their own action and inaction, helped create the crisis. There were people who remained slavishly  devoted to an outmoded and disproven ideology, which led them to decisions that were indefendable. Some people engaged in utter recklessness when it came to risk management, or such gross irresponsibility that they are not merely morally culpable, but legally also. Then there are those regulators who gave the corporate interests they supervised pretty much everything they asked for.  And of course, the people simply trying to grab a free lunch contributed mightily to the collapse.

I have 322 well researched pages that shows as much.

Goldman Sachs was but one of the 5 biggest investment banks that requested from the SEC, and received, an exemption from the net cap rules. This allowed their leverage to balloon from 12-to-1 to as much as 40-to-1.

As a nation, we need to stop pretending this is “too complicated” and start holding the responsible parties accountable . . .

>

Previously:
Who is to Blame, 1-25 (June 29th, 2009)

http://www.ritholtz.com/blog/2009/06/who-is-to-blame-1-25/

Stop the “Blame Game” ? (June 15th, 2009)

http://www.ritholtz.com/blog/2009/06/stop-the-blame-game/

Source:
Matt Taibbi Gets His Sarah Palin On
Megan McArdle
The Atlantic, Jul 10 2009

http://business.theatlantic.com/2009/07/matt_taibbi_gets_his_sarah_palin_on.php

Category: Bailouts

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

183 Responses to “No Financial Villains . . . ?”

  1. cvienne says:

    @SB

    And while America has it’s pea sized brains so narrowly focused on Goldman Sachs & MW…

    Meanwhile, outside the borders…

    http://www.bloomberg.com/apps/news?pid=newsarchive&sid=a7qU7lfSEq7I

    Emerging Markets Priciest Since 2007 When Shares Fell (Update2) … Emerging Markets Priciest Since 2007 When Shares Fell (Update2) July 13 (Bloomberg) –

    The last time stocks in developing countries got this expensive was in …
    - 2009-07-13

  2. uno says:

    Fractal analysis said “buy” right at the bottom this a.m.

    The ‘reason’ always seems to appear not long thereafter. Like Taleb says, the rational mind is always and after-the-fact brilliant about the obvious.

  3. I-Man says:

    It’s just a complex H&S carving out the second right shoulder… like some people thought it would. I personally didnt think we’d get the second shoulder… but we will.

    Just because alot of people recognize a pattern doesnt mean H&S patterns are bunk or that it has no validity.

    Sure, I buy a little of that “over seen” argument, but these things have been playing out for way longer than any of us have been alive… not because of the patterns but because of whats underneath… they are manifestations of basic human psychology, ie greed and fear, which just doesnt change that much.

  4. Andy T says:

    Seems like CL stopped going down….at least for now. Continuation held up at the 38.2% retracement of entire move and out month contracts stopped at 50% retraces of individual contract moves….if you’re short energy still, may not be a bad idea to trim or get out….or if you’re a daredevil “go git yu sum…” The move down was so sharp and swift I don’t think this is the “the” low, but this isn’t a bad place for oil to stage some kind of rebound….. Would not want to see $59 taken out the Sep contract if you’re a short term bull.

  5. ben22 says:

    Steve,

    I totally agree. I really thought a 62% decline from the peak would have scared more people out of stocks for longer but I underestimated what kind of emotions these primary countertrend rallies can bring about, even in a bear market. Regarding penny stocks, I get calls from clients now more than ever before about a penny stock that is about to go up, always a tip from a buddy that “knows about this stuff”. I got one from a client this morning: SPNG.

    On another note, you are brave for hanging on to QID, even though I think we will go a lot lower eventually than the March lows, I would never do that. I’m sure you’ll do fine in the end.

    You don’t have to answer if you don’t want to. I’m curious, what do you do for a living? If you are still working that is, I take it from your posts you are not retired yet.

  6. ben22 says:

    @uno,

    what analysis is that you are using with the fractals? Just curious.

    @cvienne,

    I mentioned a frontier markets etf here a few weeks back, when we resume the decline I’d like to short them instead of the emerging markets. Lately I have heard more and more people pushing the frontier markets on shows like Bloomberg Asia. I think they will eventually be a great short again.

  7. Andy T says:

    I-Man. Agreed in re: H&S. I think that H&S patterns that are “overexposed” will probably just become a bit mutated. The neckline will be fuzzier and probably violated a little…that’s why I referenced the “spirit of head and shoulders pattern.” There’s definitely a reason they exist….the right shoulder is typically a b-wave and the drop down is a powerful c-wave (in EW parlance)….

  8. Andy T says:

    Just heard this on Bloomberg…..

    Ken Heebner’s CGM Focus Fund Lags 99% of its PEERS this year. That’s worse than last year when he lagged 97% of its peers. Is that guys’ commercials still on CNBC? WTF. How the mighty have fallen….oh my! I’m guessing he hasn’t made too many appearances on CNBC since last year when he was telling us all how great everything was going to be…..

  9. Steve Barry says:

    @benn22

    I voluntarily retired from my first career in telecom and started teaching math last year…so you will see me posting more often during the summer!

  10. dead hobo says:

    Steve Barry Says:
    July 13th, 2009 at 2:34 pm

    I see signs of a stock bubble…insane P/E…interest in penny stocks (seen in infomercials)…analysts moving markets…people trading worthless shares of GM

    reply:
    ————-
    Me too. So do lots of other people. This time is different. Computers and ignorant foreigners in the far east are running the markets. Computers are using the market as a means to try to outfox each other. Valuations don’t mean anything to them. It only looks like the stock market. It’s really something entirely different that permits side bets by others. It’s not investing in any traditional or commonly accepted sense. Regarding the far east, bubbles are their middle name. Except for Japan … it’s just inscrutable.

    This time is different. The pretense is gone although a lot of people haven’t noticed yet. It will continue as a zombie market for a long time without regard to fundamentals. I don’t think the market you and I and others remember is ever coming back.

  11. Andy T says:

    ben22 Says:
    July 13th, 2009 at 2:43 pm

    “Regarding penny stocks, I get calls from clients now more than ever before about a penny stock that is about to go up, always a tip from a buddy that “knows about this stuff”. I got one from a client this morning: SPNG.”

    There’s a powerful tendency for people to want to “catch up” and recoup all their losses quickly…so they chase a bunch of speculative crap….like doubling down in a casino.

  12. Steve Barry says:

    @Andy:

    Heebner is a piker compared to Bill Miller…Miller lags 99% of large blend funds for a 3 and 5 year basis, and 95% on a 10 year basis.

  13. cvienne says:

    @ben

    “I mentioned a frontier markets etf here a few weeks back”

    I remember that…I couldn’t find a dedicated ETF though…

  14. uno says:

    @ben22: Something I’ve come up with over (too much) time. It’s quite difficult for a human — including this one — as the conscious mind often gets in the way, but it’s still d0-able. Fully algo is best. Am getting into discussions with a high-freq shop about it, or would air it out a bit here.

    Per Mauldin’s comments this weekend, the high-freq model would seem to be at regulatory risk. Regs such as a 1-sec minimum bid-hold are likely a good thing for most folks…but if it’s not good for GS, I’m not sure how that plays out. Would expect most high-freq shops to be looking at alternative methods though, as risk may become reality.

    Would point parties interested in fractals toward Mandelbrot’s “The (Mis)Behavior of Markets.” Those seeking spoonfeeding should save the sawbuck & change, but at the same time the answer is in the obvious and the notion that if it doesn’t scale over time, it ain’t fractal. Other major inspiration: Paul Tudor Jones.

  15. Steve Barry says:

    My pessimistic brain has concluded that with high-speed computers doing most of the trading, a non-linear event becomes much more possible…didn’t quant algos breakdown suddenly last fall?

  16. ben22 says:

    @Steve,

    I would have guessed accountant or something with numbers, math teacher seems about right.

    as far as posting more in the summer, great, always enjoy your posts.

    Re: Heebner

    Many of the “master stock pickers” have been shown not be masters at all during this bear market, they just always picked stocks that fluctuated up and down more than the indexes. They aren’t any smarter than anyone else, they just pretend to be on tv.

    @hobo,

    I don’t think the market you and I and others remember is ever coming back.

    Don’t go getting all sentimental now. lol.

  17. leftback says:

    hobo: “It will continue as a zombie market for a long time without regard to fundamentals. ”

    Flat line + prop trading desks + HF computer trading + day traders = Our market.

    Enjoy.

  18. uno says:

    It’s all non-linear, SB…only our strap-on prefrontal cortex thinks otherwise.

  19. ben22 says:

    Bill Miller and Rich Pzena take the cake.

    Pzena didn’t just double down on C, BAC and FRE and FNM last year, he quadrupled down. I was on a conference call with them last summer just to see what the hell he was doing and I could not believe the stuff they were saying.

    @uno,

    thanks, and interesting.

    @cvienne,

    I could not find one either, was hoping if I brought it up again someone might know of one.

  20. Transor Z says:

    @efrltd: Nice post.

    The real question is below the leveraging to human behavior. A few million people engaging in folly is too extensive to chalk up to laziness/stupidity. The politics haven’t yet caught up to the science which is pretty relentlessly debunking myths about the extent of free will …

  21. dead hobo says:

    Steve Barry Says:
    July 13th, 2009 at 3:00 pm

    My pessimistic brain has concluded that with high-speed computers doing most of the trading, a non-linear event becomes much more possible…didn’t quant algos breakdown suddenly last fall?

    reply:
    ————
    That’s the big question. My pessimistic brain assumes the market is irrelevant to the computerized trading. It’s only the playing field. Fundamentals are irrelevant. They’re really just off in their own world that you and I don’t see. It has more to do with trying to trick computers to act in Pavlovian ways and outfox them than anything else. The most manipulative one wins and the dumbest one (literally) loses.

  22. Andy T says:

    CIT bonds trading very heavily today….huge losses…..but guess who’s the biggest bondholder?

    Not surprisingly it’s Pim(p)co. My guess is that Tim Geithner comes up with some kind of plan to save CIT…..It’s strictly forboden that Pim(p)co can lose money….

  23. cvienne says:

    Everyone today should understand why they did a 1-10 split on FAZ…

    So they could take it down to 4 again! :-)

    @ben22
    Re: frontier

    Actually I think I did find something but it is traded on a foreign exchange or something…Maybe my mind was just foggy…

  24. uno says:

    @DH: Ed Seykota, he of Market Wizards fame, calls fundamentals “funny mentals.”

  25. ben22 says:

    fundamentals relevance is vastly overstated, even in what some consider “normal” markets.

    Markets are driven by social mood.

  26. uno says:

    Closer to the right answer, Ben. But, ask yourself: what drives social mood…?

  27. DL says:

    Andy T @ 2:32

    “…there are all sorts of colorful ways of describing a squeeze….I couldn’t even share them here amongst mixed company….

    Oh, go ahead.

    Karen can handle it.

  28. leftback says:

    “So they could take it down to 4 again! ”

    Exactly, just think how much the prop trading desks made on that pup…. in bear markets you could probably short all doubles and triple ETFs, long or short and then just count the money as the volatility kills the little guys.

    Not us at Schadenfreude Asset Mgmt™, though – we are MASSIVE.

  29. dead hobo says:

    With respect to computerized trading as it is practiced today …. The stock market is the equivalent of a Monopoly board. The quants are just programmers who have automated the game. Investment is not relevant except in the same context as buying a hotel on Boardwalk. According to the WSJ, these people are about 70% or market volume at this time.

  30. call me ahab says:

    I’ll 2nd DH’s comment @ 2:52

    reality- small investors studying candlesticks- trying to divine the future- competing against proprietary trading platforms of large players- and the large players ARE the market- you can only draft on their moves- and-

    the USA- a big casino- no new investing- no new industry- just people trying to get a piece of what’s left- selling the furniture- before the house is left empty

  31. cvienne says:

    @lefty

    Parsing some comments:

    “How many times do you have to…feel the cold steel on your balls to know that this is a squeeze?”
    “we are MASSIVE”

    THAT would explain how you get twins!

  32. Steve Barry says:

    @Ben:

    Markets are driven by social mood in the short term. Longer term, to make rational decisions, you must turn to fundamentals. Since in the last 85 years, the as reported P/E of the S&P has never been above 46 (and that was a bubble) and it is currently 130 and in 2 months will be about 1800, that is relevant. if not, we are back to “this time it’s different.” 85 years of data is hard to throw out…it runs the gamut from depressions, to bubbles and everything in between.

  33. karen says:

    DL, I will handle it by shutting my eyes :P

  34. ben22 says:

    Uno,

    Prechter discusses the answer to that in detail in his books on Socionomics.

  35. uno says:

    @ DH: Not all market-modelling programmers are ‘quants’ in the sense of being quantitative statistic modelers. Some actually get it.

    Investment is relevant. However, group-think MBA-ish ideas on “valuation” are completely dorked. Mandelbrot proved the non-Gaussian/Bell Curve nature of price variation over 40 years ago, yet EMH and MPT and Gaussian-quant methods still rule the financial landscape.

    It would not surprise me in the slightest if it took another 60 years for Mandelbrot’s concepts to be widely adopted. I’ve often said that the right answer could be shouted by a naked person on top of the Empire State Building…and no one would listen. It’s just where we’re at in the grand scheme of things, which is to say a bit arrogant/entitlement-oriented, and projecting rather than observing.

    We’ll get over it.

  36. cvienne says:

    @SB

    One thing I’m CERTAIN of…When the S&P finally trades back to proper fundamentals…

    …the social mood will change!

  37. karen says:

    Annoying smiley face defaulted my : capital P…

  38. call me ahab says:

    I’ll 2nd DH’s comment @ 2:52

    reality- small investors studying candlesticks- trying to divine the future- competing against proprietary trading platforms of large players- and the large players ARE the market- you can only draft their moves

  39. leftback says:

    uno: “group-think MBA-ish ideas on “valuation” are completely dorked”

    Exactly. That’s actually very elegantly stated. Dorked, indeed.

    cvienne: “…the social mood will change!”

    I think the mood will be quite anti-social after the second crash, the Hunt for Red October™ Redux.

    “THAT would explain how you get twins!”

    The mind is a powerful thing, indeed.
    Fascinating close upcoming, here, chaps and Karen. This isn’t really a squeeze until a 3% day.
    Tomorrow is…. Turnaround Tuesday.

  40. dead hobo says:

    karen Says:
    July 13th, 2009 at 3:31 pm

    Annoying smiley face defaulted my : capital P…

    question:
    —————
    Is it wearing lipstick? Very trashy!

  41. leftback says:

    “:- with a capital P ”

    were you trying to give some tongue, Karen?

  42. manhattanguy says:

    Sold 1/2 of $FAS into a nice rally. I wouldn’t short Financials until after GS reports. $UCO is not doing that bad either. Oil might recover a few points before trending lower.

  43. call me ahab says:

    massive- tiring isn’t it- I hear it all the time- and gargantuan- man that one really gets old- I think I’ll start packin’ a thesaurus

  44. CapitalistCanuck says:

    @manhattanguy

    I also sold my FAS calls today, I’ll try and fade the move tomorrow after retail sales…

  45. DL says:

    If XLF can get up to $12.1 this week, it would probably be worth shorting it, especially if the VIX drops below 25.

  46. leftback says:

    @DL: That’s the sort of model I have in my head for this week, the rally that is a bit stronger than bears expect. This is why you often see rounded tops instead of sharp H&S like the breakdown of oil last year.

    There ya go, late day pump action, it’s getting more like a squeeze now….

  47. I-Man says:

    Long cold hard steel on my balls.

    Short noise.

  48. ben22 says:

    I-man,

    Not sure if you saw me post this yesterday in another thread:

    ben22 Says:

    July 12th, 2009 at 8:16 pm

    @I-man,

    I’ll go out on a limb and say all the big banks are going to have some great “earnings” this quarter. Hard to say though what that leads to in the market. Lots of pressure right now to the downside. I wouldn’t be surprised to see a bounce early this week to the 900-905 area.

    I didn’t think it would all be today!

  49. leftback says:

    Ouch. I-and-I can relate based on past experiences….

  50. CapitalistCanuck says:

    yup short squeeze. Mr. market had to discipline jr. thinking the H&S pattern was easy money. I really don’t feel confident in retail sales tomorrow. Oil/Gas peaked in June taking a bite out of disposable income, savings up and employment worsened. We got a peak at retail sales figures last week and it was disappointing over-all.

  51. call me ahab says:

    what a fucking show- people are wetting themselves re bank earnings- GS better deliver tomorrow or you’ll see a mass exit for the doors

  52. ben22 says:

    gasoline counts in the retail sales figures, so yeah, it was higher in June however this can be spun as a positive if the retail sales go up, doesn’t matter how we go up, just that we go up, that’s why I’m expecting anyway from the MSM.

  53. ben22 says:

    Gotta love this:

    After a bleak 2008, equities are looking up. But whatever the market, our trademark long-term portfolio can help you build a nest egg for a secure future. NEW YORK (CNNMoney.com) — Stocks surged Monday, with financial and consumer shares leading the advance, as investors welcomed an analysts …

  54. leftback says:

    I have been bullish on the $ – and bearish on the Euro – of late but the € has a little room overhead here, and the yen can certainly give up some of last week’s gains. Since €/yen is a proxy for equities, I’d say more room to rally.

    Play the technicals and try to beat the rush for the doors. It’s always better to be sitting outside in the sunshine when the guy inside the theater yells “FIRE”.

  55. I-Man says:

    It is what it is.

    Just like its hard to not get all giddy when you’re having a huge up day, its hard to not get all pissy when you’re having a huge down day.

    Luckily, I had to go out for a lunch meeting so I didnt even see the final leg. Good thing, I might have been inclined to do something emotional… but that’s soooo 2008.

    Yall have a good one-
    I

  56. CapitalistCanuck says:

    Ben22

    That’s plausible but I have noticed a generally negative tone in the media the last couple weeks. It seems they keep bringing out the bears and more calling a retrace to 850-820. Recent example is the ISM data is relatively good yet the media didn’t put their usual spin on it. Of -course I found it troubling since I was counting on the market to rise and all it did was go lower and lower…never anticipated that 900, 888, 880 would all get taken out last week, and here we go with the bounce…geez talk about hard to time a trade!

  57. Andy T says:

    Lloyd Blankfein is going to need to shit out gold bars on the conference call in order to “surprise on the upside” at this point….

    If we don’t sell off into those numbers or just after those numbers I’ll be surprised…

  58. CapitalistCanuck says:

    @I-Man

    Funny that way sometimes it works in your favor. I had a conference call today at 10AM and the market was down. I checked back at 11AM after the call and had to do a double-take lol

  59. I-Man says:

    Oh come on AT… cyborgs dont shit.

  60. leftback says:

    “Lloyd Blankfein is going to need to shit out gold bars”

    Excellent. That’s got to be the second best phrase of the day, there, AT.
    Chill with a Red Stripe, I-Man. Tomorrow is another day.

  61. Andy T says:

    Actually, I take that back….even if Blankfein proved he could crap 16 oz. gold logs every day, that’s only about 5mm/year….so he’ll need to introduce some sort of breakthrough in nanotechnology in order to surprise on the upside….

  62. ben22 says:

    Capitalist,

    Yeah, I guess that’s why I’m expecting that trend to reverse, the trend has been down for five straight weeks on the index with louder calls for a pullback, even from bulls, especially since the H&S that the whole world saw.

    The market during that time stopped going up big on bad news and the bears saying stocks are ahead of themselves are just stating the obvious for anyone paying attention so I guess it would not surprise me to just see the market do an about face right here and start ignoring bad news again for a time, especially if somehow a few companies give decent guidance. This would be a better set up for a big drop in the Sept/October time frame, we can’t have most bears AND bulls skeptical and expect a big drop can we?

    It has been interesting these last few weeks but often lost in the noise have been lots of big CEO’s stating that they are seeing signs of a bottom (lol) so if they can push this message in the next few weeks we could see the market jump again. Who knows, there is a ton of resistance just overhead at this point, but I still wouldn’t want to be big time short just yet. Fwiw, I think your best shorts are on select financials and retailers in the next few weeks. The energy and materials stocks have probably already sold off too much for any easy money to be made there on the short side in the next few weeks. Healthcare spots might also be worth a look, that sector has not really come down since June 11 like the others.

  63. leftback says:

    I think ben is right, and here is why:

    The early earnings are dominated by big financials, and I think they are likely to surprise on the upside, the key here being Mark to Magic and Prop Trading. Later earnings releases will feature more retailers, regional banks and industrials, which should be fairly disappointing. As far as energy stocks are concerned, the disappointments in earnings may already be priced in, as this group had sold off even before crude started to head south.

  64. karen says:

    from djn: Dell Inc. (DELL) said it expects to report a slight sequential revenue increase in its fiscal second quarter, saying year-over-year demand for its information-technology products appears to be stabilizing.

    Still, the world’s second-largest personal-computer maker said it anticipates a “modest decline” in gross margins as a result of higher component costs*, a competitive pricing environment and an unfavorable mix of product and business-segment demand.

    *emphasis on higher component costs

  65. karen says:

    csx beat… up 5.5+% in afterhours…

    thinking gap up open across the board tomorrow would be very fun…

  66. ben22 says:

    @lefty,

    if only I could make most posts shorter to get the same point across. It’s all about the schedule of what companies report when, and yeah, I think the damage short term is priced into the energy space, some of the declines in the last several weeks have been brutal in that space.

    Who gets credit for the Mark to Magic? That is nice.

    @Karen,
    Re: Dell, that’s what I was talking about in my last para @ 4:27, especially the spin on the higher component costs being the main issue with the margin pressure.

    Everyone needs to remember how easy it is to beat “earnings”, especially when the expectations are so low, and especially after sentiment has been drawn out of the depths, but is not at the extremes on the bullish side right now.

  67. ben22 says:

    Re my 4:48/sentiment:

    AAII Results as of
    July 9, 2009
    Bullish 27.91%
    Neutral 17.44%
    Bearish 54.65%

    This week’s survey results saw bullish sentiment fall to 27.91%, below its long-term average of 38.9%. Neutral sentiment fell slightly to 17.44%, below the long-term average of 31.1%. And bearish sentiment rose to 54.65%, above the long-term average of 30.0%.

  68. Thor says:

    Ben – do these sentiments have much relevance in terms of accurately predicting near term market moves? I see them from time to time but haven’t noticed if there’s any correlation . . .

  69. leftback says:

    “Who gets credit for the Mark to Magic? That is nice.”

    Not sure. It isn’t mine. Jack McHugh has commented on this many times at TBP.
    We are getting to the point where beating the comparable earnings m/m and y/y is becoming easier and easier.

    The next steep leg down will be initiated not by earnings, but by a shock. Plenty of catalysts will be available.

  70. karen says:

    The other expression i remember is Mark to Make Believe… been around since at least 2007…

  71. ben22 says:

    Thor,

    Not one’s like I listed above, mostly when they are very extreme to one side or the other it can signal a trend change in the near future. You look for the herd groupings in sentiment as a red flag.

    Two recent exemples:

    Record levels of bulls on AAII in October 2007 at the market peak and extreme levels of bears at the 3/6 LeftBack Bottom.

    Huge bearish levels on the dollar last July 15

    Unfortunately for the full AAII service it’s a pay site and not cheap so I’d suggest signing up for the free stuff if you are interested in tracking it.

  72. uno,

    way to be on the Target, with Fractals. it is Amazing that, as you say “~40 years after Mandelbrot…”, but that EMH, etc., BS was ginned-up to sell “Buy & Die” to MutFunders/401(k), et al., di-vestors..ya know, someone needed to prime the ‘Font of the Eternal Bid’..

    past that, if you’d ever like any type of assistance, send a ping..

  73. I-Man says:

    @ uno…

    Stick around. I hope you are here when I’m done letting Mandelbrot marinate in my dome piece…
    I find it all, well, fascinating. There was a fantastic program on PBS not too long ago about him that mentioned Technical Analysis… got me thinking. But where does Paul Jones fit in?

  74. karen says:

    fwiw, Jonathan Weil of Bloomberg, seemed to use the mark to make believe quite a bit… here’s a great 2007 article.. but he was one of the early (2000) skeptics of Enron, apparently.

    http://www.bloomberg.com/apps/news?pid=20601039&sid=awZJNZCT7waY

  75. CapitalistCanuck says:

    ben22

    I traded on this notion but suppose you lose some conviction watching SSO tank on the intra-day last week and do lots of technical damage.

    A pure-play in the sectors you mentioned is probably a better bet considering the backdrop of this economy. The bar is set low, but I believe investors are more keen on guidance then actually beating the number. I did see the AAII report and that could be indicative of a counter move, but the MSM is not giving anyone the warm and fuzzy feeling and inflows in equity mutual funds were negative last month, with a sharp rise in money flow to bond funds. I’m looking for treasuries to move lower and oil/materials to move back up as a sign this market can make another leg up.

  76. ben22 says:

    @CC,

    All the scenarios could happen, should be an interesting second half of the month, July tends to be the best month of the third quarter according to the almanac. In any event, while I traded most of this rally on the long side I’m still very bearish in the big picture.

    It’s been pretty easy to fall out of love with a strategy that seems so good since March. I didn’t do it with SSO but got burned twice in SRS. Thankfully there is a such thing as a stop.

  77. I-Man,

    I hate to do this to you, though, see– http://clusty.com/search?input-form=clusty-simple&v%3Asources=webplus&query=Paul+Tudor+Jones

    4 starters..

    w/that, it gets, pretty, self-explanatory..

  78. uno says:

    @MEH: Muito obrigado. We should talk.

    @I-Man: Just listen to Jones (or his alter ego) via Amazon’s CD offering of Market Wizards. As a former welterweight champ, he’s an indomitable buy-low-sell-high guy. Take that to the extreme, like this morning’s bottom confirmation, and look around — you’ll start to see what he’s after.

    A few key things for all of us to register & remember:

    (1) A great deal of what everyone ‘thinks’ — including you and me — is pretty much group-think bullshit. If you refuse to swallow the red pill, i.e., refuse to realize the Big Idea message behind the concept of ‘fractal,’ then IMHO eventually you’re flushed and done in the real world of fractal-semiotic trading. Also Matrix-like, once you truly perceive what’s really going on (BTW, you undoubtedly already see it — your ego is just shutting out the reality), you might just throw up…but y’gotta keep on going.

    (2) Per Ed S.: “Everyone gets what they want from the markets.” If someone is regularly losing money, then that’s pretty much what they’re after. Philosophically, Ed’s cutting his own path to a large degree, but he gets dharma, and essentially tells losers that they’re not listening or looking for their right path, and losing is just the universe’s way of turning up the volume til they get it. If they refuse to get it, well…not to be harsh, just slapping to consciousness, but it’s questionable as to whether or not they’re actually alive if they’re not reactive to stimuli.

    (3) Reinforcing #1 & #2: Results = intentions. There is no “them,” just “your” results that “you’ve” chosen. Period. If you’re busy blaming the PPT and others for your choices, then that’s just one big honkin’ blue pill. Don’t choke on it.

    Thus A Major Caveat: I strongly encourage a full-fledged and permanent trading halt for anyone who isn’t regularly making money in the markets. You have no idea of the risks you’re facing — to yourself and your family — or how bad this can get. Find something else to do with your life… something you actually enjoy… something that contributes to society and the human world at-large. What to do with your money? Watch more Seinfeld:

    JERRY: I’m not an investor. People always tell me, you should have your money working for you. I’ve decided I’ll do the work. I’m gonna let the money relax. You know what I mean? ‘Cause you send your money out there – working for you – a lot of times, it gets fired. You go back there, “What happened? I had my money. It was here, it was working for me.” “Yeah, I remember your money. Showing up late. Taking time off. We had to let him go.”

    END OF SHOW.

  79. ben22 says:

    uno,

    nice post, loved this:

    (3) Reinforcing #1 & #2: Results = intentions. There is no “them,” just “your” results that “you’ve” chosen. Period. If you’re busy blaming the PPT and others for your choices, then that’s just one big honkin’ blue pill. Don’t choke on it.

    I see a lot of people bitching about this stuff all the time, especially lately, the market right now, it is what it is, deal with it.

    As for your advice, I basically gave that same advice here several months ago, if you aren’t going to trade you shouldn’t be anywhere near this market.

  80. [...] Barry Ritholtz on McArdle’s assertion that there aren’t any villains: Um, Megan, I am going to have to beg to differ with you. There were many, many identifiable villains who through their own action and inaction, helped create the crisis. There were people who remained slavishly  devoted to an outmoded and disproven ideology, which led them to decisions that were indefendable. Some people engaged in utter recklessness when it came to risk management, or such gross irresponsibility that they are not merely morally culpable, but legally also. Then there are those regulators who gave the corporate interests they supervised pretty much everything they asked for.  And of course, the people simply trying to grab a free lunch contributed mightily to the collapse. [...]

  81. Wes Schott says:

    @uno -

    man you are layin’ down some good stuff here

    Brazilian, Portuguese?

    whatev, nice stuff…words to the wise…

  82. [...] yet some people continue to think there were no villains in all of this. Some folks have suggested its simply a [...]