Interesting results of Merrill’s Monthly Manager Survey: It seems that most managers are very upbeat about the economy and the state of corporate health:

• Cash balances plunge to 3.5%, lowest since July’07;

• Highest equity allocation (34% from 7%) since Oct’07;

• Bond allocation (-28% from -12%) lowest since April’07.

• Tech (28%) is the most favored sector everywhere;

• 75% believe the world economy will strengthen in the coming 12 months (highest reading since November 2003 and up from 63% in July).

• 70% of the panel respondents expect global corporate profits to rise in the coming year, up from 51% last month.

• Confidence about corporate health is at its highest since January 2004

While I keep hearing about cash on the sidelines,. the professionals seem to be “All In.”

>

Source:
Merrill Lynch Fund Manager Survey Finds Economic Optimism Highest Since 2003 as Investors Put Cash to Work
August 19, 2009

http://tinyurl.com/n5ddgt

Category: Investing, Trading

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.

96 Responses to “Merrill Lynch Global Fund Manager Survey”

  1. me says:

    The little guy has been burned too many times and if they haven’t jumped in by now I think it will take a few more years or more money in their bank accounts. Their 401Ks got decimated the beginning of the decade and now the end. One time shame on you two times shame on me. They know there is nobody to bail them out like the big money gets.

  2. Cash on the sidelines? It is more like cash is in the dressing room being attended to by the team doctor. Someone said they could hear the sounds of an ambulance coming down the road. I guess cash was foolish to try to come out of retirement like that ;)

    At least with these numbers we know one of the sources of the latest run up

  3. zyzy says:

    i was telling all alone – “market is up, market is up”…..
    oh, well. I guess, Barry doesn’t have a magic ball….

  4. beaufou says:

    Bloomberg “U.S. Stocks Advance as AIG Says It Expects to Repay Bailout”

    ahahahhhahahahahahahahahahhah
    some funny shit.

  5. zyzy says:

    @”how common”:
    yeah, but how come the volume has been decreasing all the time if prof. moved in ?

  6. I-Man says:

    Oh, they’ve bought it hook, line, and sinker BR…

    I see it firsthand from my perch. There is widespread fear of “missing the rally” out there on the professional side.

    Many of these folks were over cautious at the low, and still havent taken the full plunge. They are taking shit from clients for missing the rally, and taking shit from Mgmt for having too many peeps in cash and not turning enough revenue. So they’re really in a tough place.

    I’m sure alot of them actually believe the garbage the “chief investment officers” and the like are spewing to justify jumping into this shell game with both feet… the rest know its all bullshit, but they gotta do “something”… to keep their jobs.

    I’m sure there is still money that is going to trickle in, but lots of it is going to insurance and annuity companies I imagine… those folks have a whole ‘nother saga coming to them about to unfold… they cant guarantee income forever…

    This whole saga has completely destroyed any semblance of hope I had lingering for the brokerage business and my future in it.

    I have absolutely zero desire to climb the ladder in this sham.

  7. Onlooker from Troy says:

    Wow. We’re sure being set up for a disappointment if all these “professionals” can’t see the forest for the trees.
    The next couple (minimum) years are going to feel like recession (if we don’t actually dip again) and all this built up excitement is going to lead to quite the let down.

    We’ve still got initial jobless claims at 576K! That’s a disastrous number at this point (any point really). Those analysts who think that companies are just getting lean and mean to reap huge profits once all that wonderful growth driven revenue starts rolling in, are just delusional.

  8. ben22 says:

    If we don’t roll-over later today it looks like the market is going to push to new recovery highs in the next week or two, 1013 needs to be filled next on S&P.

  9. ben22 says:

    This is absolutely not a surprise. The companies RIC Report last issued was titled The Recession is Over. Why would we think that the fund mgrs there are thinking any different.

  10. ben22 says:

    I-man says:

    I’m sure there is still money that is going to trickle in, but lots of it is going to insurance and annuity companies I imagine

    Yes it is, look at sales of annuities with some promised income for life or other living benefit riders. Sales are big this year, and really started picking up last year. Sadly, many will find out in the fullness of time, there is no free lunch.

  11. Transor Z says:

    Barry, either late last year or early this year you posted a graphic showing market cap shrinkage after the fall crash (little circles inside big circles).

    Any chance that’s been updated?

  12. Onlooker from Troy says:

    Interesting perspective I-Man. It’s what Jeremy Grantham refers to in his letters as “career risk”, I think he calls it. It’s tough to stand in the face of these forces. You can be right, but even if you’re the boss and can’t fired, money is very fickle and will run off elsewhere to chase performance. We’ve all seen that.

    You can hear it in John Hussman’s commentary. I’m sure he’s taken heat because his model and discipline have kept him hedged during this. Even though he kept shareholders from losing money during the huge downdraft. I wonder if he’s had net redemptions over the last few months. I’m sure he has even though now would be the best time to give him money to manage, undoubtedly. Greed takes over. He owns the joint though and even if he loses shareholders he won’t break his discipline.

  13. I-Man says:

    I love John Hussman… if I were going to invest in a mutual fund, it would be with him. I see him as a total maverick… and I like it.

    Funny how all the really smart cats seem to be OUTSIDE of the major Wall St firm establishment… I wonder why that is???

  14. Cohen says:

    @ zyzy

    “yeah, but how come the volume has been decreasing all the time if prof. moved in ?”

    good question, nonetheless, this report at least partially discredits the money on the sidelines/performance anxiety argument. There’s likely still money remaining on the sidelines but I guess not that much. Either way, things should get more interesting after labor day.

  15. EricTyson says:

    I wouldn’t make much of this survey – take a look at the total assets of managers covered in this survey and now compare that to global stock market cap – small, small fraction.

    Also, Hussman is 80 net invested in stocks per his fund.

  16. Transor Z says:

    @I-Man:
    Because companies of all kinds reward people who mesh with a corporate persona and mindset. The corporate persona is based on the lowest common denominator. Elite organizations just have a higher lowest common denominator. Most organizations, by definition, aren’t elite. :)

  17. Andy T says:

    @Eric Tyson. Of course it’s a small sample size. You can’t sample everyone! But you should not dismiss it. It’s not like this group of people lives in some alternate universe. They’re probably a decent representation of what many managers are doing.

    Another thing I’ve recently observed with “cash on the sidelines.” I think there’s a lot of cash on the sidelines with grandparents and parents who have seen their grown kids/grandkids run into shit piles of economic problems. This group may be saving their cash in order to subsidize their kids/grandkids lives right now. I’m seeing this first hand with the families we know who are having issues.

  18. @zyzy Says:

    yeah, but how come the volume has been decreasing all the time if prof. moved in ?

    Maybe they were only using their “bait ‘n’ switch” money and the suckers haven’t taken the bait yet

  19. ben22 says:

    There’s likely still money remaining on the sidelines but I guess not that much

    This is not true to my knowledge. On page 6 of Marc Fabers august letter he shows a chart labled as Cash as a Percentage of US Stock Market Capitalization including money market funds and savings deposits. While the amount in cash as a % of US Market Cap has dropped a lot since the early part of this year, it remains at levels, on the chart, that are as high as they were in 1989. Perhaps cash will stay elevated like this for a very long time but this is a major risk right now for people trying to get really short right here right now. This chart was as of the end of July.

    I wondered yesterday if is this cash fueling the speculation in oil as you aren’t being rewarded staying in cash and everyone is so convinced of coming inflation, not, as so many believe the Fed’s provided “liquidity”. In a system made up of $52T in credit and $2T in actual banknotes I find the Fed’s balance sheet growth of $900 bil to $2t insignificant in the face of credit deflation.

    Faber goes on to say:

    I believe that one of th emost negative factors for the longer term is that whereas a serious financial crisis is supposed to clean the system, the current crisis has actually increased dubious financial practices and reduced financial and economic transparency. Therefore, the ultimate financial crisis still lies ahead of us!

  20. HCF says:

    All this discussion reminds me of a piece that Hussman wrote back in 2006 called “There’s No Such Thing as Idle Cash on the Sidelines “:

    http://hussmanfunds.com/wmc/wmc060710.htm
    “And when you go to put your “cash on the sidelines” to work, what really happens is that your money market securities (T-bills, commercial paper, etc) now have to be sold to someone else. And at that moment, the cash on the sidelines that you had suddenly becomes somebody else’s cash on the sidelines. And that same amount of cash on the sidelines will continue to exist until the borrowers pay it off.”

    In other words, money is never doing “nothing.” It’s like energy, it doesn’t just disappear or reappear spontaneously…

    HCF

  21. ben22 says:

    To add to my post above, one might argue that the bear market of 2007-2009 will cause people to stay in “cash” for a long period of time and when looking at the chart I reference we could have an extended period of time with higher cash allocation. I do not believe this argument. The United States investor has remained in the mindset that stocks for the long term ALWAYS win out and therefore the longer the countertrend rally lasts, the more people will follow the herd and put the cash back into risk assets. Large brokerage houses, if we didn’t learn from the subprime mess, are part of the herd.

    The countertrend rally has barely met the timing of how long it should last based on how long the initial decline was. Grantham said earlier this year, for the first time in almost 20 years stocks were cheap here, now just several months later, we are over his most recent fair value calculation by roughly 14%. People didn’t see value in March and jump on board. Greed is still rampant from my perch.

    Then next decline will do what is speculated about in my first para above. It will happen sooner than the amount of time spent between last two bear markets.

  22. Transor Z says:

    Sample size was sufficient to draw conclusions about Merrill managers. Do you really think Merrill managers have no value as representative sample of the industry?

  23. Mike in Nola says:

    Hussman did lose some money last year. We have a small amount of our IRA’s with him. He, like some of us, got bullish a bit early in the fall and got burned. Up to then he was up for the year. It wasn’t too bad, but he still hasn’t recovered to his highs. He keeps a performance chart easily accessible on his site. How many of the mouths on CNBC do that?

    BTW, Rosie must have been reading the inflation/deflation thread yesterday. This morning’s newsletter starts with that topic. He comes down on the deflation side. A small portion:

    “We have said often that just as society couldn’t spell ‘inflation’ in 1937, it has no clue what causes deflation now. That’s beginning to change in the aftermath of the housing and credit collapse, but try to explain the deflationary forces contained in debt liquidation or global manufacturing over capacity or a socio-economic trend towards savings, and the notion of ‘deflation’ gets fuzzy for most thinkers (even Warren Buffet). That doesn’t change the fact that the deflationary forces are enormous (and current) and the policy-induced reflationary forces are a partial antidote.”

  24. Mortimus says:

    Isn’t this part of the market correction process? Investors losing faith in the market?

    I imagine “cash on the sideline” levels will remain elevated for years. Why do we assume that all ‘inwestors’ are morons? Maybe a good majority of them have come to the realization that it’s all a rigged Vegus roulette wheel that isn’t worth their hard earned money throwing down on ‘red’ anymore. Throw in the glorious economic prospects of this country and Andy’s point about family money and this game is more than likely crippled whether the market is willing to acknowledge it or not. “Fool me once, shame on me…..can’t get fooled again”

    The fact that we try to lure them back in to the 0TB with free krispy kreme’s and hot chocolate is F–ckin despicable. Shame on everybody.

  25. Andy T says:

    @ben22 11.49

    I wish I could find this study I once read on the Nikkei bubble bursting. The conclusions of the study were that after a major bubble bursts, it takes a generation of investors to go away before the market can ever recover again. The idea is that once people get really, really burned a large number just stay away forever.

    If you were a big investor in 2000-2003 and then again in 2007-2009 I’m not sure how you could ever feel real comfortable ever buying stocks again.

  26. ben22 says:

    ML isn’t what they used to be, they’ve lost 3,500 reps or so to my knowledge. That said, they are still huge. You should see the deals they are offering right now to move your book there if you are on the retail side. It’s huge based upon your trailing 1 year production.

  27. Mortimus says:

    Isn’t this part of the market correction process? Investors losing faith in the market?

    I imagine “cash on the sideline” levels will remain elevated for years. Why do we assume that all ‘inwestors’ are morons? Maybe a good majority of them have come to the realization that it’s all a rigged Vegus roulete wheel that isn’t worth their hard earned money throwing down on ‘red’ anymore. Throw in the glorious economic prospects of this country and Andy’s point about family money and this game is more than likely crippled whether the market is willing to acknowledge it or not. “Fool me once, shame on me…..can’t get fooled again”

    The fact that we try to lure them back in to the 0TB with free krispy kreme’s and hot chocolate is F–ckin despicable. Shame on everybody.

  28. Mortimus says:

    OT
    Who would have ever thunk ‘roulete’ (sp) would be a no-no word according to word press

  29. cvienne says:

    @Andy T

    ” it’s a small sample size. You can’t sample everyone! But you should not dismiss it. It’s not like this group of people lives in some alternate universe”

    For the record…cvienne DOES live his life in an alternate universe (which, btw, IS and incredibly small sample size, AND is accompanied by incredibly low brainwave output)…

    Sorry guys, take NOTHING I say today seriously…I’m still ROTF with the UBS thread…

    World is good…

    My serious alterego, though, notices that the 1003 FIBO retrace that I talked about yesterday was met, exceed for a moment, then pulled back to sit on 1003…I kept 1008 on the table because of the trendline, and this IS opex week…

    sooooooooooooooooooooo…

    Andy…does that move off of 978 look like a mini 5 wave?

    …now back to my UTTERLY BLANKMINDED SOLITUDE

  30. @Andy T

    You said a mouthful there. I think it is especially true of the boomers. I’m pretty sure you could safely argue that much of the cash on the sidelines is theirs and they have to be pretty scared to do anything right now. Will they ever put money in the markets again?

  31. ben22 says:

    @AT,

    I have thought an awful lot about that, would love to see that study. I’m wondering about the timing of those bear markets, they were really spread out, and what that does to psychology. I think the next very large decline is only a short time away, that will finally accomplish scaring many out for good imo.

    In the meantime though, very short term, I see this as a risk of going too heavy on the short side just yet. While underlying social mood seems to be setting up for change, the dominant mood still seems to be one of optimism.

    Anecdotal but I have had a few new clients referred to me in the last 30 days. I have advised some of them that are very near retirement to reduce some of the exposure to stocks, some of the allocations they had previously would blow your mind, one that came in lost almost 60% last year at 61 years old. They are more than happy to be reducing stock exposure, no push back from them whatsoever as I reduce the risk in the accounts.

    @Mike in Nola,

    that para should be forwarded to Pat G.

  32. Groty says:

    I’ve never understood why Merrill spends the money to conduct these surveys and create proprietary information, then publicly publish the results. Guess it’s altruism.

    It’s also interesting that by looking at the size of the global and regional repondents, Merrill doesn’t include itself or Blackrock in the survey results.

  33. [...] number of folks have referenced the recent Merrill Lynch global survey of money managers.  Click here for the link to Barry Ritholz’s version of it.  Please note the first three dates referenced [...]

  34. cvienne says:

    @Andy T @ ben @htcmsi

    Permit me, if you will, to give some simple anecdotes towards that idea…

    As a sideline, I still teach group fitness… The job puts me in personal contact with all sorts of people (who all over the map in terms of age demographics, and economic status)…

    As many may have noticed from this site, I’m a chatterbox… I’m ALWAYS at the gym an hour early, (and setting up in my class a half hour early)… Mine is one of the few classes that people come VERY EARLY to stake out a spot, and basically chill out and “shoot the shit” (some private conversations, some group conversations)…

    Anyway, I get A LOT of feedback from MANY different types of people… Most I talk to still have jobs, feel “fairly” secure about that, BUT ARE WORRIED AS SHIT ABOUT THEIR MONEY…

    I had a conversation with a girl named “K.” (name withheld) yesterday (who works for NBC)… She has given me her story of how her fortunes were tied with GE Capital, and more or less how she’s spread out right now…She said, “it’s hard” right now because they still do some sort of “matching contribution” structure, but she’s not sure either how long that’s going to last, or, if it will get to the point of diminishing value (if the markets were to roll over again)…

    That’s the GIST people…

    It feels like…the people IN the markets are willing to do a “True Grit” and ride the horse until it dies…At the first signs of trouble though…THEY’RE OUT…

    The people OUT of the market seem more interested in paying down debt… To them, it’s no longer a matter of “keeping up with the Jonses”… It’s survival…

    So bottom line… CASH ON THE SIDELINES is out of the picture… Sure, some will naturally come in, but that is VERY STUPID MONEY…

    That’s what I hear from the trenches… and FWIW I see these people half naked every day, so we talk on a pretty straightforward level…

  35. I-Man says:

    Will oil drag down the SPX today???

  36. Moss says:

    Any cash on the sidelines is no where near as potent as it once was.
    Who is using margin anymore?
    A potential positive may be the dismay Pension funds have with illiquid PE investments.
    The market does provide liquidity so some of the Pension $$ may eventually find it’s way to equities.

  37. Bruce N Tennessee says:

    Unabashed Bullish Sentiment…

  38. Andy T says:

    Someone needs to alert the folks who trade natural gas that the economy is recovering nicely. In the sense that 5o+% of Natural gas demand comes from industrial demand, as opposed to home heating, this seems fairly bleak.

    That said, I’m looking forward to finally buying some natural gas someday soon. Excessive negativity is permeating that commodity…..

  39. cvienne says:

    @Moss

    “potential positive may be the dismay Pension funds have with illiquid PE”…

    POTENTIAL POSITIVES 4 PE’S OF PENSIONS!!!!!!

    Son…Is that a “PLEDGE PIN…ON YOUR UNIFORM!”

    Sorry people…I’m still in my UBS mode :-)

  40. cvienne says:

    @Andy T

    Shhhhhhhh!

    I want them to take NAT GAS down to zero…

    I converted my truck to run on NAT GAS…& of course, the part of my home that is not solar & wind powered is covered by a nat gas generator…

    Every 20% drop in the price & I buy another storage tank…

    Don’t bust me out Andy! I beg you!

  41. I-Man says:

    Long UNG, Short UGA could be a nice pairs trade perhaps…

    If you’re into the vampire thing… :)

  42. rootless_cosmopolitan says:

    What is “money on the sidelines”? What does this mean?

    rc

  43. cvienne says:

    Come on I-Man!

    I thought u were my brah (because you expressed interested in converting your truck to NAT GAS)…

    Whadda got? a Sierra?

    Anyway…bust that puppy down, make the moves, and you’ll be driving FREE for the rest of your life while everyone else charges up their VOLTS off of coal burning furnaces!

    What a bunch of dorks!

  44. cvienne says:

    @rc

    Money on the Sidelines = 1 step short of putting it in tin cigar boxes and burying it in the tomato patch

  45. Onlooker from Troy says:

    Mike

    I apologize. I overstated Hussman’s recent record of not losing. You are correct.

    EricTyson

    Yes, Hussman is invested in stocks, but he’s also completely hedged and therefore has almost zero market exposure (just a little via a 1% position in index calls right now), as he has been for months now. I know exactly how he’s invested and he has no confidence in the market at this point, via his proprietary market climate investment model. He’s highly disciplined.

    What’s your point?

  46. Onlooker from Troy says:

    And by the way, when will the world stop believing the cash on the sidelines nonsense? Hussman says it best as HCF pointed out.

    That said, if new money is created, literally or via debt (i.e. margin buying) then yes, there can be new net money put into bidding up stocks. But looking at money market and other cash allocations and calling it “cash on the sidelines” is absurd. And of course that’s also misleading; as the market goes up and down the same amount of cash will be a changing percentage of the whole. It goes back to the fact that the market goes up or down based on the marginal demand and investors’ willingness to pay more and bid them up, or pay less and force prices down.

  47. cvienne says:

    Well…

    While I’m sitting here missing LB’s & karens comments at the moment…

    I’m thinking…

    Wouldn’t it be a nice time right about now to just SEAL THE DEAL and start the process of a nice 10% market correction… Down to about 914-930 or so?

    manhattanguy… you planted that seed in my head… It looks reasonable at this point…

    Whadda ya say?

  48. cvienne says:

    & BTW

    I saw those SOB’s toying around with taking the UUP down to 23.18 in extended hours trading…

    Go ahead…DO IT!… I’ll buy everything you want to sell!

  49. ben22 says:

    @CV

    Wouldn’t it be a nice time right about now to just SEAL THE DEAL and start the process of a nice 10% market correction… Down to about 914-930 or so?

    I don’t know man, the next step might be a gap up above 1013 on s&p and then on to new recovery highs after. It will be a chance for me to add to my growing short book.

  50. Onlooker from Troy says:

    ben

    Suggestion: Use some quotation marks or something to distinguish other peoples’ remarks you’re responding to from yours. I find myself often confused by your posts due to that. Just a helpful, hopefully constructive criticism. And only because I want to understand your thoughts as I find them helpful to me.

  51. Matt M. says:

    UUP trade….(Evienne))

    Where are you currently long?

    What’s your stop?

    How’s your positione sized vs. your overall portfolio risk?

    Do you handicap the other side of the trade or just consider that side wrong?

    I have no position in UUP, but get a kick out of the bravado the posters on this site display.

    “Those who have knowledge don’t predict.Those who predict don’t have knowledge”….. Lao Tzu

    ” If a man will begin with certainties, he will end in doubts, but if he will be content to begin with doubts, he will end in certainties”….Francis Bacon

    Wisdom that all traders should follow, as ego is the ultimate enemy of traders.

  52. Cohen says:

    @ben

    I’d be doing the exact same thing.

    If China continues to falter, it’s only a matter of time for U.S. markets to follow. China bounced overnight but the BDI, not so much.

  53. manhattanguy says:

    @cv
    I am sure LB and Karen are as sick as I am in watching this boring market. This is what happens when computers are trading to each other? I am looking for a sharp pullback but it is lacking volume. They might just keep the markets here until early Sep just to frustrate us shorts. But S&P above 1000 is a little scary. I hope it will close below 1k. I would think this recent push is due to the latecomers to the party (buying on the dip)? If yes they have plenty to lose.

  54. franklin420d says:

    @cvienne 12:20 – “That’s what I hear from the trenches… and FWIW I see these people half naked every day, so we talk on a pretty straightforward level…”

    That is amazing because I was sitting here reading your post naked…….Errrrr I mean half naked. Yea that’s it I am only half naked, well anyway under my clothes I am naked – HONEST.

    One of the guys I work with retired from HP and was “set for life” until last year, when his 401k lost a tons of money, his house value declined and he was forced to go back to work. This is a man who has a degree in economics, who knows how to save and played things as safe as he could.

    From where I sit there are quite a few people who are afraid to put their money any were near the market, and who can blame them, it seems in today’s environment more people owe far more money then the value of all their belongs combined, so for them the safest bet is to pay off the company store rather then continuing to put their hard earned dollars into financing a losing game.

    And I am NOT naked……..

  55. I-Man says:

    The cynic in me thinks that if Government Sachs says the market is going to 1060, then thats where its going.

    Just ask that man behind the curtain.

    There are certainly forces with way more capital than I-Man that are at work in these things… and they seem predisposed to be long only, and to bloodsport shorts… any shorts… at every opportunity.

  56. Cohen says:

    @manhattanguy

    i’d be somewhat satisfied just to get it under 1003 for the close

  57. manhattanguy says:

    Starbucks to up some drink prices by 25 cents: WSJ

    Excellent timing!

  58. I-Man says:

    @ Matt M.

    A young monk once asked Yunmen, “What is buddha?”

    Yunmen replied, “A dried piece of shit.”

  59. cvienne says:

    @Matt M

    FWIW –
    The bravado in my BOOK isn’t as aggressive as the bravado in my TEXT…

    This is all “fun & games” for me… I don’t need the money, but I like the action…

    I think it is a GREAT TIME to be long dollar… I have been initiating some LONG DOLLAR trades & LONG TREASURY trades over the summer… So far it has worked… I’ve done it in the options space… In June I caught a DOUBLE on the TLT by buying out of the money options (which I booked out of)…I re-upped on that same trade and caught a TRIPLE (which I took half position off recently)… I’m not saying in a bragging way (because we are all ONE TRADE away from looking like dorks)…

    I’m giving this UUP a whirl right now… I have options spread out all over (March 2010, Dec 2009, Sept 2009)… We’ll see??… I also heaped a bunch into the stock… So far I’m losing money on those trades, I was down 50% on the TLT options before they kicked in and paid me double…

    The rest of the market is anybody’s guess… Personally, I think a 10% correction is in order here (but I don’t have a lot of bones on it)…

    I’d be looking at a bounce after that… We MAY JUST end the year higher from here…

    Anything else you need to know?

    BTW – If you’re interested in “hedging” strategies… I own quite a lot of GOLD BULLION (stored all over the world)… The LOSSES I’d take on my recent LONG UUP positions (even if they went to zero) would be less than 10% of my gold bullion (if the dollar shits the bed and gold bolts)…

  60. cvienne says:

    @Matt T

    …and, if I can properly distinguish, the “comments” I made that seemed cocky were…

    “Go ahead…DO IT”… which is not really a call, but a baiting”

    &

    “Wouldn’t it be a nice”… which isn’t a market call at all, just a hope…

    So I guess Warren Buffet & Bill Gross can talk their books all they want and become “sainted” for it… But if I PLEAD my book I’m a dick?

  61. cvienne says:

    @I-Man (2:17)

    If anyone is listening… I presented an exact technical scenario on how the Goldman call of 1,060 could easily be reached…

    I broke it down into detail… The only difference is that I ended up with a 1,058 – 1,073 scenario…My bad!

  62. cvienne says:

    @I-Man

    and around here… BUDDHA is something you smoke :-)

  63. Andy T says:

    “This is a man who has a degree in economics, who knows how to save and played things as safe as he could.”

    Ummm….I would suggest that the degree in economics is probably what undid him. Things like 2008 don’t happen in MBA or Economics texts, at least not the ones I read. Having money tied to stocks is not safe at all. Being “diversified” is not safe at all. Cash is the only true diversification strategy.

    FWIW

    Some of the smartest (non trader) friends I have got smoked last year…..

    Some of the smartest and best traders (commodities) I know have never ever invested one single dollar in the stock market. They keep all the money they make in cash.

  64. franklin420d says:

    @cvienne

    12:55
    Shhhh!
    I want them to take NAT GAS down to zero…
    I converted my truck to run on NAT GAS…& of course, the part of my home that is not solar & wind powered is covered by a nat gas generator…
    Every 20% drop in the price & I buy another storage tank…
    Don’t bust me out Andy! I beg you!

    “I want them to take NAT GAS down to zero” ….(Evienne))

    How big of a zero will you be looking for?

    If it reaches zero what’s your stop?

    What size storage tanks are you buying and more importantly what color are they?

    Do you handicap the oil side of the trade or just consider that side wrong?

    I have no position in NAT GAS, but get a kick out of the bravado the posters on this site display.

    “Those who have knowledge are knowledgeable .Those who predict are predictable ….. Some Dude

    ” Petting a mangy mutt can give you flees”….a mangy mutt

    Wisdom that all should follow, as ego is the ultimate enemy of all.

  65. cvienne says:

    @ben22

    This isn’t directed AT you (because I know you are systematically your own man and trade by an admirable & disciplined set of parameters)…

    So this statement is just “idle banter”…

    But, you know how everyone talks about the HARD TRADE?

    I think the HARD TRADE right now is to “short” the S&P into an opex Friday (in August low volume), & given the past 5 1/2 months…

    Just saying…

  66. I-Man says:

    @ CV:

    I know you did… and I buy it because I see it too, and I know why its 1060 and not 1035 or 1015…

    Heres my percolation:

    My point is, you and I both know “what it takes” to make those scenarios play out… the difference between “us” and “them”, is that we dont have the levels of capital + leverage to paint the tape like we want it.

    So when I say that GS will make it so… I say that because I know that if thats what they want to do, they have the power to make it happen.

    Now, if we had more volume, their effect would be muted of course. But they know that in this trading environment they can paint the shit however they want, and its on the market prove them wrong.

    We’ve discussed all of this at length, and its beyond conspiracy theory, its simply reality. Until the market itself “wakes up” and spits out their garbage, the song remains the same… and we will continue to have to think 3 chess moves ahead and consider that they know what we will do before we do it, and will capitalize on making us second guess our trades, so either we just dont make them, or we think way ahead and game them… what I’d like to think I am doing.

    However, it still pisses me off to see their blatant moves play out across the tape all day.

    I could of course, be full of a dried piece of shit.

  67. franklin420d says:

    @Andy T – too true, I have heard more horror stories about investing then bed time stories.

    I believe investing is very important to success, but I do not have any money in a 401k. If I am foolish enuff to give my money over to a broker and hope for the best, I can not believe it would be MORE foolish to try and do it myself – At least that way I will at least gain a little knowledge.

    Might still be poor, but at least I will be a smart(er) poor guy :)

  68. cvienne says:

    @franklin420d

    1. Zero is relative…I just mean I love it that nat gas prices are coming down (given my modality of real life nat gas usage)

    2. The nat gas tanks in my trucks are from Praxair (& they’re yellow)

    3. Oil handicap… I have no effing idea…

  69. ben22 says:

    @OT,

    I’ll be sure to use those quote marks moving forward, good tip.

    @CV,

    Yeah, short now is the hard trade but I have to say after today’s action I’m cautious here, very unpredictable so I’d rather be small short (which I am) than fool myself into “knowing” that a sharp pull-back is here because I can come up with a million reasons why we should go down here. All the way up since March people looked for it (a pullback) and at each sense that it was starting we pulled back only a little, moved sideways, and then on to new recovery highs. I’m wondering if this will be the last leg up so just being careful. I’m still thinking cash as a precentage of market cap does in fact matter here and it’s the one thing that scares me the most right now. I mentioned the other day if all the mm’s I see on t.v and many in print do what they say, they are still dip buying, just maybe not as aggessively as in bear market rallies volume reduces towards the top as buyers become more selective. I guess I’d say, I’m just not trying to be a hero.

    Also, that could be a trade on the S&P but my favorite two shorts right now remain in Silver and China fwiw. There is another prediction that LOTS of people are making which is that China will rule the world soon and they will take over everything etc etc, I’m selling that story. I think most of the data coming out of China is as made up as madoff.

    @AT,

    Are you mainly trading e-mini’s right now for the leverage?

  70. ben22 says:

    @franklin420,

    I’m not sure what kind of capital you are working with, but if you really don’t want to do it on your own then your only option isn’t just a broker. BR’s shop Fuison, for example, I don’t think they require heavy minimums and those guys are just some joe blow broker. What about hussman’s funds for example? Just sayin, it takes a lot of time and effort to do this well and most people aren’t willing to do it, but don’t give up that you have to just give it away to a small broker.

  71. ben22 says:

    I meant to say:

    those guys are not just some joe blow broker

  72. cvienne says:

    @I-Man

    My brah… It doesn’t even piss me off anymore…

    Do you know how I’ve survived this summer? (Hell brah, Understand that it was MY inclination to be short the market at 840 – and we KNOW how that rigidity would have fared)…

    I just started playing “shorts” with tight stops, and thankfully made some money on the T-options side…

    I feel the DOLLAR TRADE is really where it’s at at the moment…

    I’m willing to try and TRADE the SPX here & there, but it’s a loser… I’m even thinking that even though the dollar & equities have moved OPPOSITE of each other for quite some time, that correlation might get broken a little for a short time…IOW, dollar UP – equities UP…

    But the real trade is the dollar…It’s too crowded in the other direction…

    I think Andy T said it in one of these posts around here, that WB & BG might have “rung the bell” yesterday…

  73. cvienne says:

    I’m short the JBB’s (joe blow brokers)

    & long B22

  74. cvienne says:

    @ben22

    Again, I want to re-iterate here, that I’m not making ANY calls here…

    I’m just looking at levels for fun & games…

    But 1006..RIGHT HERE RIGHT NOW…Is sitting right on the trendline down from 1018…

    A market “middle” right now (10% down, 10% up) would put you in the 914 range to the down (based on 1018)… or, 1,106 to the up…

    I counsel “correction”…

  75. ben22 says:

    I don’t have the calendar, when does Q3 prelimary GDP get reported? Anybody know that?

  76. bkold3000 says:

    I’ve got “money on the sidelines.” Sold half my 401k/IRA/529s in spring 08-summer 08. Sold my manhattan apartment in summer 07 and it’s still in cash. I’m now invested about 50% in bonds, commodities, pms and Canadian and Australian dollars. I’ve got about 5% in alt energy and some utility/divvy stocks. Funny I *knew* the market was going to crash, but what’s really got me spooked is the rally. The crash made sense and I was looking forward to a return to reality. Alas, twas not to be. I think I’ve been scared out of equities for a lifetime – that is, I look at them as a speculative investment that will never be more than 20% of my portfolio – the game is just too rigged. I’d rather invest in real estate when it starts to cash flow (in a couple of years in my hood, I think). Or vintage high-grade comic books, for that matter. Not that I ever had a lot, but I’ve lost ALL faith in Wall St, financial TV, Wall St. Journal, Barrons – and the equities market. Buy and hold is a sucker’s game, and I don’t even want to do short-term trades as everything’s so detached from fundamentals (see oil, financials, etc). I’m not cut out to be a day-trader (tho I respect the hell out of you guys who can do it) so that leaves me with “cash on the sidelines” to be invested in pms, commodities, real estate and collectibles. And maybe a smidgen of equities to satsify the degenerate gambler within me…

  77. HCF says:

    Market creeping up…

    Pump pump pump!

    HCF

  78. Cohen says:

    nice ramp job into the close.

  79. cvienne says:

    @bkold3000

    In SMS text messaging terms…

    ids2bu = it doesn’t suck to be you :-)

  80. Cohen says:

    no SPY 101 calls will allow go unrewarded

  81. batmando says:

    @franklin420d
    as @ben22 says at 3:09 pm
    “if you really don’t want to do it on your own then…, BR’s shop Fusion, for example, I don’t think they require heavy minimums..”
    After years of self-inflicted pain, that ‘s the way I went last October, splitting most of my IRA between BR & Mish, retaining a sliver as bkold3000 says at 3:30 pm ” to satisify the degenerate gambler within me”
    Meantime the 401(k) piles up in cash ‘cos it has no worthwhile vehicles in it, all long, all the time.

  82. cvienne says:

    @Cohen

    Yeah…but it “shooting star” doji’d on a 76.4% fibo retrace…

    Stay tuned…

  83. cvienne says:

    remember what I said…

    The HARD TRADE now is to short right here…

  84. cvienne says:

    Meanwhile…

    While all those other fireworks are going on, the UUP hit an EXACT 61.8% retrace back to 23.04…

    Stay tuned…

  85. Cohen says:

    Noticed the UUP retrace. I’m long UUP

  86. franklin420d says:

    Ben22 – Thank you for your reply.

    I do not believe I have the skills, time or tools to go it myself (Maybe someday) so Fuson is a definite option.

    As far as capital, this year is the first in many that I have true disposable income and when my wife finds work, it will increase greatly. I realize there is risk involved but sometimes the greatest risk is doing nothing. I will never take food off my families table to even make a “sure” bet. I have about $2000 set aside for investing and I have physical gold and silver. I do not have great resources of capital, but I have some.

    In 2003ish I got scared seeing how home prices were increasing and people taking out 125% value and some people having interest only loans, what I did not know is how long it would take to play out, but seeing the aftermath that was left behind I am glad I stayed out of it.

    I also strongly believe the market is currently being played and I do not believe it is wise to game the gamers. It was a stroke of good fortune to come across TBP and you folks, you have presented clear cut and logical arguments that have helped confirm my “feeling”. Even from a complete novices point of view it is incredulous that oil is where it is and stocks are as high as they are. Had I stayed in real-estate until 2005/6 I would of course had more capital, but my balls are not that big and when I saw the writing on the wall I was heading for the door.

    Before the first crash there were some household names that got taken out. Without a doubt there will (more then likely) be a second crash and who will be left standing after that?

    The shake out isn’t over yet and the transfer of wealth not yet complete, but if I do nothing I will get nothing and my family will suffer more then it should over the next few years. During cherry harvest you can still get plenty of cherries by being under the tree, someone (GS, Feds…) is up on the ladder, picking them cherries as fast as they can and yup they are making a mess for those below and most people are steering clear of the flying mess. I might be the biggest fool on this planet but I want to be under that tree, with the hopes of having enuff that some day being able to plant and cultivate my own cherry tree and with time learn to (properly) climb the ladder. Because someday things WILL turn around.

    Thanks again for your reply.

  87. Cohen says:

    @cvienne

    I’m certainly not a chart expert by any means, but is that a potential rev. H&S in the UUP or am i dillusional?

  88. Transor Z says:

    Good food for thought today from John Jansen at Across the Curve at http://acrossthecurve.com/?p=8016 (ignore the typo in his title, he’s having a rough day)

    There is also some cognitive dissonance within the bond market. TIPS bonds in the 10 year sector are sending a bit of a warning as those bonds are rallying more than the nominal rate 10 year note. The breakeven inflation rate for the 10 year is now 185 basis points. It closed yesterday at 179 basis points.

    Conversely, the breakeven inflation rate as measured by 30 year TIPS declined to 214 basis points from 215 basis points yesterday.

    Finally, there is a gigantic disconnect between stocks and bonds. Stocks continue to rally and buyers emerge on every dip.

    Thirty year bonds and stocks should not move in tandem for an extended period (to coin a phrase). I will put my money on the bond market in this battle.

  89. cvienne says:

    @Cohen

    I can’t claim to be an expert on charts either, but I’ll share my thoughts…

    1. I think basic H&S patterns are overrated (in a sense, that they’re TOO EASY to spot)… Many who missed the huge move from 870 did so on the notion that the SPX had broken an established H&S.

    2. If anything, one might look at the UUP and are bearish, saying that it broke a H&S (from June 2nd)… They may prove to be right, time will tell.

    3. I’m more into fibonacci numbers… 23.29 was an exact 61.8 fibonacci retrace to the most recent low from the most recent high… It is a mistake to use fibonacci numbers as being PRECISE… Oftentimes, they can be breached, but a return to that median often occurs… Sometimes one has to be patient… The SPX hit a FIBO number today at 1008 (a very important one)… It did not succeed to rally through… Not that it won’t, but I’m just saying.

    4. What I’m also interested in is the potential creation of “channels” & “divergence”… The LOWS on the UUP on the MACD & the RSI were set in June… While the UUP eventually traded lower (and made a new low on 8/5), both the MACD & RSI showed less conviction (sometimes a signal of a bottom)… Some EW people also can see the completion of a 5 wave down on the index… As for “channels”, 23.29 matches up well (almost parallel), with an upward channel established between the 7/23 low, and the 8/5 low/closing… Notionally, that means I might even expect to see a 23.18 print on UUP (as early as tomorrow), or, 23.29 might hold… But I’m a buyer of that dip…

  90. Cohen says:

    Yeah I was happy to see it hold around 23.29/23.30. I was eyeing that level too.

    As for H&S patterns. I agree with you that they can be overrated but I’ve found it’s usually the case when everyone and their grandmother are pointing it out, which I haven’t seen so far.

    As far as EW, I’ve seen Prechter everywhere talking about it and Mish seems on board with the analysis.

    I’m long UUP and if I have the balls to back-it up, I’d buy on that dip too

  91. cvienne says:

    @Cohen

    Another thing that interests me about the trade is that it is true that the dollar has made an *intermediate bottom*

    *I’ll define that as a bottom that may hold for at least the next six months before reaching a potential top which requires exiting from the trade…

    Well, that takes me into 2010… So, If I happen to have made some percentage points in ’09 (on an unprecedented equity rally), and to CASH IN on that… I can, pay the taxes on it, but I might not have to sell my dollar position until early ’10…So if I make additional profits there, the taxes don’t come due until 2011…

  92. cvienne says:

    I made a typing error…I meant to say “if it is true…”

  93. WaveCatcher says:

    A HUGE fan of Hussman here too.

    His focus on full-cycle returns make a lot of sense, and his approach of buying high alpha stocks w/ a hedge against the market make a lot of sense to me. I like his systematic approach, using market conditions to drive his allocations. I also like his Prior Peak Earnings Model.

    Unfortunately, his method of selecting stocks hasn’t paid off in the past couple of years… his stock portfolio hasn’t generated enough alpha to overcome his hedge against the market.

    At one time I had a significant amount of money invested in his funds. I still enjoy his weekly commentaries. I always learn something new from Hussman. His ideas were instrumental in developing the trading system used for the WaveCatcher model portfolio.

  94. Seattle Chill says:

    In addition to the recent run in TLT, I note that JNK is still well off its highs. Fixed income traders appear to be taking off risk at the quickest pace since the March lows.

    I know folks who are heavily into US equities because they think the government is on the verge of default. “Just look at Argentina,” they say. I’ve given up even trying to talk to these people. I just hope they don’t show up on my doorstep a year from now wearing burlap sacks.

    It makes no sense to me that, even as inflation fears are rampant, land prices continue to fall. Isn’t land pretty much the best inflation hedge on Earth? People need it just to survive, no one is going to suddenly discover vast new underground deposits of it, and it’s practically impossible to steal. True, the taxes and maintenance are a financial risk, but at least you can build a shelter and grow food on it! Try doing that with your gold futures.

  95. KISSdly says:

    Seattle Chiller, but if I have gold I can buy food can’t I?

  96. Bthewee says:

    Why does the FED stop buying Treasuries for one week (Aug. 13-Aug. 23, 2009) you might ask??? Why, dear sheeple, the answer is, to allow Goldman Sachs to steer the heard into an ever-closer tighter pack for picking off the weak and tired. Get rid of the “Shorts” and you can control the market (on Options Expiration Week, no less). With no one left to short their (F.E.D.) position, they can move the herd any way they want. (Buy low – Remember!)

    So go the “Day Traders” (Quaint little group, they really believe their doing something productive) and small hedgy firms still trading the market these days.

    Tell me… how much trading has the average 401K toting American done in the last 60 days??? – None – Some – or …not nearly enough to raise the market to the level we see today.
    (I’ll go with – “… not nearly”…)

    SO, … who is left still trading everyday?? Certainly not the masses as most would hope. Money on the sidelines is still firmly parked on the sidelines (in a steel vault buried in the back yard of most of the people still working). Cash is still the King on Main street. (As the latest consumer spending data clearly points out) Only the hard-core day traders are left at Wall & Hanover, and they certainly cannot raise the market as we have seen in the past few weeks.

    No, my dear friends only the Blackrock’s, PIMCO’s and Goldman’s of the world, still have enough dry powder to manipulate the market these past weeks. If you are one of the lowely options traders relying upon your “Vectorvest” screens, you have already lost. And now you know it. (Your now trading commodities futures in a vain attempt to recoup your Leman gap, Good Luck!). You just can’t figure out why you lost out on the biggest bull surge in modern history, can you? You still think it’s market driven, …poor fools, – Not.

    Today, the sheeple are being driven to great cliff once more. Look out below. Your 401K’s are in the crosshairs, and then your day trading nest egg is next. Get out of the market sheeple, and into cash, September 09 cometh.