Liquidity/Sentiment Review
Its seems the general consensus is this rally has to end and that we must correct, if not crash sooner rather than later. Yet Mr. Market remains uncooperative with this widely accepted view. His plan seems to be to take the direction that involves frustrating the greatest number of traders.
Rather than look at what people are saying, let’s see what they have been doing, via how much they deviate from typical equity exposure:
>
AAII Stock Allocation % Deviation from 21-yr. mean
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My partner Kevin Lane is fond of saying “Stock price direction is a function of several factors; valuation, future expectations, sentiment and liquidity.”
That last component, liquidity, seems to be most dominant lately since buying power (or lack thereof) determines if stocks go up or down.
Typically, liquidity is strongest when expectations are the most negative and people have already dumped equities; It is weakest when expectations are most optimistic.
Why? At market tops, investors tend to be “All In” — their expectations for the future are most optimistic, and that means their liquidity is spent. By the time investors go “all in,” things are about as fundamentally bullish as they are ever going to get, and stocks are fully valued. Indeed, at these “all in” junctures, valuations are typically highly stretched, with no room for earnings misses or weak forecasts.
With investors “all in” there is no buying power left in the aggregate to push stocks higher. The opposite occurs at bottoms: Investors become so pessimistic about the future they move large amounts of cash to the sidelines. We get the added benefit at this point as valuations typically have contracted as well and are now attractively priced.
With large sums of cash moved to the sidelines, valuations attractive and selling exhausted, there is no where to go but up — even if its only for a period of weeks or months.
The chart above looks at how far above or below the 21-year average allocation of 60 % invested in stocks individual investors are presently. As seen above when stock allocations drop 15 % or greater below that 22-year mean, (red circles) which has occurred only 3 times in the last 22 years (1990, 2002 and late 2008/early2009) it has equated into significantly higher stock prices 3/6 months up to several years later.
Even given the extent of the current rally, investors remain 6% below their mean allocation to stocks, and significantly below fully invested levels of 10-15 % above the mean. Sideline liquidity remains strong, investors are still not fully invested, and dips have remained fairly contained.
Anecdotal sentiment also echoes the under-invested theory as most investors expect a correction and refuse to invest as the market melts up. Typically investors talk their positioning and under investment breeds statements of caution.
~~~
For more information about Fusion institutional research & trading, contact Peter Greene:
September 11th, 2009 at 11:52 am
You forget to mention the hundreds of billions of dollars in liquidity being pumped into the world markets by the Fed. $300b alone was a direct injection with a couple maybe $10b left to inject. Compare this little outlier to prior slumps and you see why magic charts are not relevant.
September 11th, 2009 at 12:00 pm
makes sense that the first leg up in a bull market are liquidity driven events as the selling is exausted. I remember 90-91, when the market bottomed 5 months before the recession officially ended, and I sat on the sidelines in the “safety” of cash. An expensive lesson as it cost me 40% of upside.
September 11th, 2009 at 12:03 pm
dead hobo has a point…
…but the one that puzzles and “frightens” me is that when you look at PEs (Shiller’s data or S&P’s back to 1936) instead of betting the ranch on future expectations (we know how good those are) they are still wildly high above historical norms. Here’s a chart of S&P’s numbers comparing the average from 1936-1990 to differences from the average:
http://llinlithgow.com/bizzX/MktCharts/LTMktPerform/PELTTrends36-08.jpg
Might be worth your time to consider – at these valuations where’s the value and the return? And if we’re in the economic doldrums for the next decade triple-down on that question.
September 11th, 2009 at 12:05 pm
Well if “sentiment” reached it’s last low in November 2002 (coinciding with the October 2002 lows), within 5 months, there was almost a 100% correction of that low in sentiment.
After the “mini-bull” started in 2003 (which I still classify as a bear rally off the 2000 highs), there was not even a 10% correction for a long time. But that was a time where Greenie had rates low, growth in the economy was somewhat organic because of China, ROW, the GREAT AMERICAN HOME ATM PHENOMENON, and full employment.
The present rally has had barely a 5% correction thus far…
So unless one thinks that it’s 2003 again and we’re poised for growth…The only “growth” I see is in debt… So as long as Ben, Timmy, & O keep spending money for 30 years in one or two fiscal quarters, I suppose the charade can continue…
September 11th, 2009 at 12:06 pm
BR considered:
With investors “all in” there is no buying power left in the aggregate to push stocks higher. The opposite occurs at bottoms: Investors become so pessimistic about the future they move large amounts of cash to the sidelines.
question:
————-
Since so much liquidity is Fed induced, with the happy assistance of China and other central banks that are using a firehose full of cash to save the world, why do you believe that the investor is already not completely in. By “in” I mean already in as far as they plan to get. The stock market is clearly an asset bubble. Basically, the sales pitch above is considering and promoting the wisdom of joining in and building a new and better asset bubble in stocks. This one is probably different.
Sorry, but my stash will only chase asset bubbles after they pop, since this much liquidity will make it a sure thing for it to blow a new, replacement asset bubble. Putting cash in today is just gaming on when the next pop will happen. To me, that’s not investing. Neither is jumping in after the explosion, but it is more of a sure thing. I’ll just wait.
September 11th, 2009 at 12:12 pm
I’m with hobo. I have NO intention of going “all in” at this point or any time in the near future, and I’m guessing that many more feel the same way. Too many have been burned badly by the prior two bullshit bubbles to believe in these games anymore, or maybe I’m giving We the Sheeple too much credit? I don’t think so. I think that until trust & confidence return to the markets and the system, we will continue to see some things that bear little resemble to past time periods. I may be wrong though. We shall see.
September 11th, 2009 at 12:17 pm
Mannwich Says:
September 11th, 2009 at 12:12 pm
I think that until trust & confidence return to the markets and the system, we will continue to see some things that bear little resemble to past time periods.
reply:
———-
You are spot on AOK hitting the bulls eye with nothing but net. This is all new.
Even if magic charts were useful in the past, they have no frame of reference for what is going on today. I’m still guessing on a high probability of a liquidity trap and a big deflation.
September 11th, 2009 at 12:18 pm
I meant to say “RESEMBLANCE”. Need….more…coffee.
September 11th, 2009 at 12:20 pm
@hobo: Totally agree. Think it’s time to throw out all the playbooks on this one. We’re in unchartered waters now. Going to be one hell of a ride though. Pull up a chair. This puppy’s just getting started.
September 11th, 2009 at 12:20 pm
[...] By one measure investors remain underinvested in equities. (Big Picture) [...]
September 11th, 2009 at 12:23 pm
I said
Even if magic charts were useful in the past, they have no frame of reference for what is going on today. I’m still guessing on a high probability of a liquidity trap and a big deflation.
addendum:
—————-
In fact, once the SEC and CFTC clean up the current excesses in trading techniques and commodity pricing and the excess liquidity finally leaves the market (as it must eventually), the stock market may fall to levels lower than March, 2009. The liquidity trap and the big deflation will reprice the entire world – including equity markets – back to a low ‘reset’ level. I don’t know where that level is, but I am sure it is far far far South of where it is today.
September 11th, 2009 at 12:29 pm
Barry, you have been the king of sentiment analysis in this market. I wonder if this time the economy is so fragile and the investor mix a little unusual, that sentiment could be less of a guideline than usual. In addition, all of the liquidity has been pumped in by the government, and Geithner has made noises about withdrawing that support.
The only comparables we really have for this time would be Japan 1990s and the 1930s, so the data above may be of less relevance. I bet there was a rebound in sentiment in 1930, but not to the level of before The Crash. The Treasury curve is shallower every day: market participants are saying that the economy is looking weaker ahead.
September 11th, 2009 at 12:29 pm
@dh
Agreed…
Especially with regards to commodities… Those are small exit doors there to handle a large stampede…
September 11th, 2009 at 12:35 pm
@leftback
“market participants are saying that the economy is looking weaker ahead”
The January ‘10 earnings season reports are going to be the last time everybody gets to skate on cupcake YOY earnings comparisons…
FWIW – Even with the S&P up here around 1,040, a 10-15% correction takes you down to near FLAT on the year… What took 6 months to build (with lots of happy talk, programs, and nice weather), could evaporate very easily in a 2-3 week timeframe… If and when that happens, SENTIMENT is going to be a different animal…
Yesterday, the TITANS were putting on a pretty good show against the STEELERS (until they WEREN’T)
September 11th, 2009 at 12:39 pm
BTW –
I love these quick little “rip ups” and “rip downs” that the market has been doing lately INTRADAY…
It ‘feels’ to me like it’s trying to get a handle of where the $$ is going to flow when the correction comes, and what’s going to sell off most quickly…
Hint: oil is often involved, so are the weaker banks…
September 11th, 2009 at 12:41 pm
“Cash on sideline” fallacy again? Is it always true that for each trade there is a buyer AND a seller—the buyer parts with an exact amount of cash as what the seller receives, no?
As dh pointed out, the are more “digital dollar” was pumped into the world via outright Treasury buying and RBS buying from Fed. These is truly “addition cash” getting to the sideline of all financial asset market, be it oil, stock, gold, bond.
I did a quick calculation some time ago on the “stock money market allocation”. The change of the “cash” allocation ratio, from low (stock index high) to high (stock index bottom), is caused mostly by the change of stock-index-level while “cash on the sideline := money parked in money market fund in brokage accounts” remains largely unchanged.
September 11th, 2009 at 12:42 pm
I wonder if Harry’s buying this dip?
September 11th, 2009 at 12:43 pm
I was just thinking about the big deflation. Cash will be king. Assets will cost less so anyone holding some will be holding a gaggle of unrealized losses.
But ….
Since everything will cost less and be repriced at a lower level due to the fact everything costs less … EXISTING CURRENT DEBT WILL BE COMPARATIVELY WORTH A LOT MORE THAN IT IS TODAY. If the USA owes trillions now, the value of that debt relative to the cost of living will skyrocket, and so will the cost to service it, relative to incomes. What a frickin’ mess.
I think the big surprise will be that the toxic end game nuclear option of massive inflation won’t work to pay off the national debt because of the liquidity trap and the big deflation. The hole the Fed is digging is only getting much deeper. I think Mr Market has this trick up his sleeve as, intuitively, it is the only rational option if a normal economy doesn’t appear soon.
September 11th, 2009 at 12:43 pm
@cvienne,
Hey bud, I need a bailout now after I went ALL IN on the Stillers laying 6……. Who recommended that anyway?
September 11th, 2009 at 12:48 pm
Speaking of deflation, for the first time I can’t GIVE my Red Sox tickets away in September, even vs. the Angels in the middle of a pennant race. First time that’s ever happened since we’ve had the tickets.
September 11th, 2009 at 12:49 pm
21 year average allocation takes you back to 1988(or am I not interpreting that correctly)? Two factors about that period make me think that that average is going to decline – that was the reign of easy Al and credit expansion and demographic tailwinds from boomers peaking in earning capacity and retirement savings. I note that the chart shows we didn’t get as far above the average in ‘03-’07 as we did in ‘97-’99. Maybe we don’t get as high this time either. It’s definitely a nice chart, but like all data, it’s rearward looking. Have conditions changed? Maybe we make a third, lower high. Interesting also how it continues to rise throughout the ’90’s but the rally ‘03-’07 it just hits a top and plateaus.
September 11th, 2009 at 12:51 pm
“Typically investors talk their positioning and under investment breeds statements of caution.”
Not in my experience, Barry. People often HEDGE their financial capital by taking vocal positions in opposition of their investment positions. If markets move against their positions, they SOUND smart but are poorer. If markets move in the direction of their positions, they SOUND stupid but are richer.
You’re a good example, Barry. Most of your posts are bearishly skewed, but every now and then you slide a comment about your investment positioning, which is aggressively long. I’m in exactly the same boat. I am aggressively long, but I am exceedingly bearish and ready to reverse course at any moment.
It behooves us to remember that what people say, and what people do, often do not align.
Also, in reference to cash on the sidelines, I urge you to check out:
http://gestaltmacro.blogspot.com/2009/08/fallacy-of-cash-on-sidelines.html
September 11th, 2009 at 12:54 pm
@Whammer
“The Madden Curse” my friend… Troy Polamalu went down with a sprained knee and the Titans scored a quick & cheap TD after that (Troy was one of two on the cover of Madden ‘10 NFL, the other, Larry Fitz)…
It happens every year, whoever is on the COVER of Madden is doomed…
I lost on the Steelers too (but I had it hedged with a TEASER)… So if I can get a 2nd spot pick on the teaser, I’ll net out to only losing the “juice”
…
September 11th, 2009 at 12:55 pm
God almighty, this will be a hell of an unwind. Just as stocks fell in massive waves a few months ago, the pricing system of the entire world will fall in a sort of feedback loop. It will probably take years. People will lose jobs because of the ability to make things at lower cost elsewhere. But, since costs are falling, getting a replacement job at a lower wage will be not so bad (over the long run). This will be a process that repeats until prices fall to a new equilibrium in a few years. Basically, a world wide systematic asset bubble is beginning to burst in slow motion. It’s probably been building since we left the gold standard and has reached it’s limit of bloat.
Mannwich, you’re right. This puppy is just getting started.
September 11th, 2009 at 1:01 pm
@spoonman
Just look at the VIX from the 2003-2007 time period…Some of the lowest and steadiest on record…
I suppose it’s not a hard life when your 401k’s are going up, along with your home value, and the amount you can EXTRACT from your home at record low borrowing rates (in an economy full of jobs)…
Positive sentiment ain’t hard to come by in those ‘climes…
What amazes me even more is the fact that we are able to even reach November 2007 levels…
IMO – It all boils down to the indices… Green on the screen and people stay happy… Nobody bothers to wonder is KEEPING green on the screen (the same way nobody bothered to wonder where people were going to get money to afford the mortgages on the houses they were buying)…
September 11th, 2009 at 1:02 pm
This market is the wildest thing I have ever seen. Yesterday, after getting frustrated with natural gas manipulation for the last two months, I spent some time cheking basic metal markets for the last 5 years( I had not done that in quite long time). I just could not believed what I was watching. Inventories in the LME are at incredible high levels ( in relative basis even higher if you compare them with this year world GDP) but prices have increased while inventories keep mounting. Current, jul 2008, 2004-2005. Inventories in tons, prices usd/ lb. Nickel, inventories: 120,000 (highest in five years) 50,000, 20,000; prices: 8.6 , 8.6, 6.0. Aluminium, inventorie: 5 mill ( until mid 2008 never reached 1 million tons), 1.1 mill, 0.7 mill; prices: 0.8, 1.4, 0.9. Lead, inventories: 120,000 ( highest in 5 years), 100,000, 45,000; prices: 1.15, .95, 0.45. Cooper, inventories: 300,000, 130,000, 60,000; prices: 2.9, 3.9, never above 2.0. Zinc, inventories: 440,000, 150,000, 600,000; prices: 0.8, 0.65, 0.6. My conclusion is that governments are also popping up metals and I guess any asset. The dollar devaluation scenario is just a way to cheat people and keep metal prices high. I guess many banks were heavily invested in futures and they are being helped in this front too. This is the biggest scam in history. How can alluminium inventori be 400% higher than in 2004 and almost keep the same price with the current economy conditions. This time they do not have the China infinite demand to pop prices, so they only have the dollar story and are using in a very efective way. No demand, higher inventories in 5 years ( without considering chinese ones which i guess are quite high) , worst world growht year in decades,but they have moved up prices. There is no way how to invest under this manipulation. Anything could happen tomorrow depending what they are trying to achieve.
September 11th, 2009 at 1:03 pm
Barry,
Please explain this money on the sidelines. It’s never made sense to me. If I have money to invest and move into stocks, doesn’t my money merely go to someone’s sidelines? For every buyer, there must a seller who pockets that sideline money.
~~~
BR: That’s Hussman’s argument, and you both are right.
The way we use the phrase, it refers to the collective allocation to cash versus stocks
September 11th, 2009 at 1:11 pm
I 100% disagree all looking for a correction. look at the stats on shorts selling as its declined 5 of 6 months, put to call ratio is low and 90% of tv is raging buls called fro 1200. bulls always say this as ammunition for the mkt to go higher or bears say this as they want the mkt to rise even higher to get a better short. ALL ON WALL STREET TALK THERE BOOK WETHER BULL OR BEAR
September 11th, 2009 at 1:11 pm
cacerolo Says:
September 11th, 2009 at 1:02 pm
This market is the wildest thing I have ever seen. …. My conclusion is that governments are also popping up metals and I guess any asset.
reply:
——
You nailed it. While I just came to the realization of the big deflation with this level of clarity (I suspected it earlier but dismissed it each time) I think you nailed it. Debasement of the currency is far preferable to the end of inflation. With inflation, the credit card never gets maxed out. Governments can spend on whatever they want. High commodity prices are both a smokescreen and a tool to perpetuate this charade. This may explain the foot dragging on fixing the long only index fund problem. I think Mr Market will ultimately burst the bubble though.
September 11th, 2009 at 1:11 pm
The chart above shows sentiment for “individual investors”. However, the professional money managers are a lot more bullish.
September 11th, 2009 at 1:12 pm
barry why not do a piece on how fdx lowered est’s then beat them. there stocks up 140% near levels of 2006 when they made 2-3 times the money
September 11th, 2009 at 1:12 pm
You can make a good argument for being short commodity stocks in general and basic materials stocks especially. We are not very far off the dollar hitting the July 2008 lows here. Once the dollar carry trade reaches its peak, then commodities can only go in one direction.
September 11th, 2009 at 1:22 pm
Mannwich says
Speaking of deflation, for the first time I can’t GIVE my Red Sox tickets away in September, even vs. the Angels in the middle of a pennant race. First time that’s ever happened since we’ve had the tickets.
Interesting.
Did you know the Jacksonville Jags had to tarp their entire upper deck to avoid blackouts.
Phoenix, Oakland, Detroit, San Fran, all looking at blackouts this weekend
September 11th, 2009 at 1:22 pm
Cautiously, Small Investors Edge Back Into Stocks
quote: “Recently, with help from their financial adviser, they nudged some of their cash into mutual funds and took on riskier investments. They have even stopped tossing unopened 401(k) statements into a filing cabinet.
“This time last year it was doom and gloom and dire,” said Ms. Canup, 48, who works for the health care provider Kaiser Permanente. “I’m kind of amazed that we’re able to get back in as quickly as we are.” ”
quote: “While they are poorer today and still leery of the markets’ returns, many are still chasing the gilded promise of profits and wealth.”
September 11th, 2009 at 1:26 pm
@Foghorn: As someone else here (danm, I think) mentioned recently, people’s lifestyles are sticky. Most will refuse to downshift them until the bitter end when we are FORCED to. That’s starting to happen in bigger numbers now, I’m guessing. Also, I think that other season-ticket holders like me are trying to dump their tickets all at once, creating more supply on the market and thus driving down prices. September always was a little tougher to get rid of tix due to back to school, fewer tourists, and the wait for postseason to get really engaged, but not ever this tough. I’ve never seen anything even remotely close to it.
September 11th, 2009 at 1:36 pm
Ah yes, the big money sports bubble is bursting too. A repricing and resizing will occur and the poor star athletes will only make a million or two a year instead of 15-20 (who knows, maybe lower). And an average family may actually be able to afford to go to games again without jeopardizing their financial future to do so. How terrible would that be?
September 11th, 2009 at 1:40 pm
@Foghorn
San Fran plays ON THE ROAD, & Detroit plays ON THE ROAD this weekend, so does JAX
September 11th, 2009 at 1:40 pm
There’s still room in your chart for the double dip. In 1987, there was a double dip in stock allocation.
September 11th, 2009 at 1:41 pm
Hey, I wonder if Dallas doesn’t sell out their new stadium, they’ll “black out” the game on that big jumbotron?
September 11th, 2009 at 1:41 pm
http://www.washingtonpost.com/wp-dyn/content/article/2009/08/27/AR2009082701572.html
…In addition to Minnesota, the teams having trouble selling tickets include the San Diego Chargers and Jacksonville Jaguars. The list of teams with ticket-selling issues also could include the Oakland Raiders, San Francisco 49ers, Detroit Lions and possibly the St. Louis Rams and Cincinnati Bengals. Thursday night’s preseason game in Cincinnati and Saturday’s games in Detroit and Oakland are blacked out on local TV….
…Jaguars owner Wayne Weaver said in an interview with the Florida Times-Union that he expects all of the team’s home games this season to be blacked out on local TV. The club’s first preseason home game was blacked out…..
Here is some back-up info. I heard this yesterday on the radio and feel a need to clarify a little.
Green shoots everywhere.
And here is what the big bad NFL is going to do for those fans in struggling cities.
http://www.tvweek.com/blogs/tvbizwire/2009/09/nfl-makes-concession-on-blacko.php
The National Football League said most games affected by its blackout rule will be available starting at midnight Monday in the local markets on a delayed basis, The Hollywood Reporter says.
The games will stream on NFL.com for free for 72 hours after they are played.
September 11th, 2009 at 1:45 pm
Back to the AAII Sentiment chart…
Again…these things are like “inkblots”, and you can read anything you want out of them… I’ve looked at it 5 times now and come to different conclusions each time…
My latest (and simplest) is this…
That chart cover exactly the Greenspan – Bernanke era… ENOUGH SAID…
September 11th, 2009 at 1:46 pm
cvienne
That is what I get for going from memory after hearing some jack ass on the radio. See the other post upstream.
Nice call on the Steelers.
I’m with Emmitt, 7 wins for the Pokes.
September 11th, 2009 at 1:49 pm
@Foghorn
San Fran, San Diego, Oakland, Jacksonville, & Detroit
Gee I wonder how many of those cities are either in California/Florida, or have “car manufacturing” as their industrial base?
September 11th, 2009 at 1:52 pm
@Foghorn
I’m completely unemotional about “sides” on football games… The trend was that taking the Superbowl winner in a Thursday opener paid you 9 straight times ( so I went with the trend)…
I actually HATE the Steelers more than life (Penguins too)… I’m a Ravens & Washington Capitals fan
…
Besides, I hedged the Steelers play with a TEASE (which is in the money)…
September 11th, 2009 at 1:55 pm
Let’s not forget,
Cincinnati, Rust belt
St. Louie, Rust belt
Minnesota, 3M
Phoenix, Real estate
And the Boss Hawg Bowl doesn’t have a name and is not sold out, despite Jerrahs lies.
September 11th, 2009 at 1:57 pm
@Foghorn: Hence the signing of Brett Favre in Minny. Gotta sell ticket and that seems to have done the trick a bit here.
September 11th, 2009 at 1:58 pm
cvienne
Was just a friendly poke with a sharp stick.
I thought you were crazy, it takes a few weeks for a new season to shake out and firm up for profit taking.
At least it does for me.
September 11th, 2009 at 2:00 pm
@Foghorn
I was going to mention those places as well (& I knew you were smart enough to figure that out)…
Actually, I think we had a long discussion on one of these threads a couple of months ago regarding which SPORT would be the first to topple…
If I remember correctly, the consensus revolved around NBA, & NHL, with the NFL perhaps downsizing…
I’m pretty sure most people would end up being happy with college hoops, & NCAA Football, but most of the NFL I’m sure could tough it out… The big revenue is in those TV rights, and despite a few blackout areas in smaller market cities, there are plenty of eyeballs elsewhere…
September 11th, 2009 at 2:01 pm
Mannwich,
Hope it works out better for Minny than it did the J E T S, Jets, Jets, Jets.
September 11th, 2009 at 2:01 pm
DL Said:
“The chart above shows sentiment for “individual investors”. However, the professional money managers are a lot more bullish.”
Agreed DL. The pro chart showed a different story as I recall, all time record lows allocated to cash at the market peak in 2007, not too far from those levels of cash then today. Which group controls more money, or more of that “cash on the sidelines”?
Further, BR, don’t you typically knock charts that show whatever during a time that was primarily a giant bull market driven by credit? As far as the red circles, one might say that it has happened 3 times in 22 years, OR, one might say it’s happened twice in the last 7 years.
If we do in fact get a double dip, maybe we’ll be able to read this chart in another few years as the early signs of the decline of a stock ownership mindset amongst individuals as the primary tool to build wealth.
As LB has been pounding the table on, demand for things like govt bonds could come from within.
September 11th, 2009 at 2:01 pm
Another way of saying that smart money sells assets to the idiots at the top and buys them back at the bottom, this process has repeated every 3-6 yrs as long as I have been alive. Maybe it will be different this time…….where have I heard that before, it’s a signal to go short, until then corrections will be contained.
September 11th, 2009 at 2:03 pm
my money is on the NBA first Manny. I remember that chat.
September 11th, 2009 at 2:06 pm
I agree with cvienne to a certain extent. This type of data, while interesting, can be interpreted multiple ways. Also it doesn’t go back over a long enough time to make it very meaningful, in my opinion. Furthermore, it doesn’t include any deflationary time periods like the one we are currently going through.
Having said that, I do feel that it is going to be much more difficult than it was in 2007 and 2008 to make money on the short side going forward because of all the govt intervention in the markets. I instead feel that a safer area to invest in is gold related assets, which should continue to do well given the Fed’s stance on avoiding deflation at all costs. There are some good articles at http://www.goldalert.com that discuss the prospects for the gold price in light of the government’s money printing efforts, and the inflationary consequences that may develop as a result of these efforts.
September 11th, 2009 at 2:06 pm
Onlooker, stuff like this makes me afraid, not for me, but for many people who may be destitute in retirement:
http://www.nytimes.com/2009/09/11/business/11investors.html?_r=1&th=&adxnnl=1&emc=th&adxnnlx=1252692166-WBOeLYtzsMwBW2nJjU0AKA
Market cannot possibly finish down on 9/11, ben, let’s get some brewskis and head to BRIAN’S place to hear about all those 3-BAGGERS his clients are in. BRIAN is bullish on stocks, bullish on America and bullish on brewskis.
September 11th, 2009 at 2:08 pm
@foghorn
“Was just a friendly poke with a sharp stick.
I thought you were crazy, it takes a few weeks for a new season to shake out and firm up for profit taking”
No offense taken whatsover… I pride myself on being vocal about picks (right or wrong – I take a stand…beforehand…hear that Harry Wanger?)…
Anyway, I kind of disagree with waiting… I’ve actually found that the sportsbooks toss out some cupcake lines in week 1 to give the sheep confidence & ‘double down’…
It’s week 3 or so when you start to see the SHADY lines…
I’m happy to go 57 – 58% on the year… Just ahead of the “juice”…
I still think that it was the freak injury to Troy Polamalu last night that caused the Steelers not to cover… Or you could point out the ball getting slapped away from Hines Ward at the end when he was a yard away from going in for a TD with a minute left in the game (which would have allowed them to cover)…
It’s a game of crazy bounces!
September 11th, 2009 at 2:08 pm
@ben22: Perhaps, but I’m thinking NHL, THEN NBA.
September 11th, 2009 at 2:09 pm
@Foghorn: I’m fading that one. People here are excited though.
September 11th, 2009 at 2:11 pm
Damn, missed out on a great thread! Manny and Hobo have already said pretty much everything I was thinking. I agree deflation is coming. Most especially agree with lifestyles being sticky. I’ve finally started to see some of my friends up in SF come to the conclusion that it’s impossible for them to afford to live in the city anymore.
People will hold on to their over-consumption until the bitter end. They’ll go kicking and screaming (and stealing all the fixtures in their foreclosed mc mansions) the whole way down.
September 11th, 2009 at 2:14 pm
@ben22
“If we do in fact get a double dip, maybe we’ll be able to read this chart in another few years as the early signs of the decline of a stock ownership mindset amongst individuals as the primary tool to build wealth.”
—
Good point… “build wealth”… you said it there… In a high liquidity macro phase, the tendency might be towards whatever offers someone high single digit, or double digit gains… Therefore, a false sense of WEALTH BUILDING occurs when people see the compounded results…
Now we’re in a “preservation of capital” macro cycle… The next dip in equity markets will lead people to NON-WEALTH DESTROYING behavior…
Not just with investments, but also with basic purchases of discretionary items…
September 11th, 2009 at 2:18 pm
@cvienne: The way I see it is peeps just reloaded at the c@sino ATM (credit card cash advance, of course) after losing their shirts at the b-jack and cr@ps tables and have decided to try to get even. Of course, they’re on a nice run now but will sadly and tragically play a few too many hands before getting shellacked AGAIN. At 6 a.m. they’ll make the long, lonely trek home with just enough change in the car to buy a burger off the McD’s Value Menu. Good times.
And, yes, I’ve have this very experience before (although I no longer play in those rigged houses AND am starting extricate myself from this other rigged “house”).
September 11th, 2009 at 2:27 pm
LB
I hear ya. If we are truly heading into a Japan like market and people stay with the conventional money management “wisdom” that developed in the bull market (B&H and such), a whole lotta wealth is going to get burned up. Of course I don’t know if the mindset would survive after one more severe downdraft any time soon. That would probably get most of them out, but not before a whole lot of damage has been done.
September 11th, 2009 at 2:30 pm
CV: Sounds like you really enjoy that pigskin/gridiron business… agree with you about basic purchases and the demise of big ticket sports. Seeing signs of retrenchment in all kinds of local middle class communities.
The upper classes are out of their minds with denial, they still think they are going to get a MILLION for the raised ranch… market always comes back, real estate never goes down….
Op ex next week. Any thoughts? We are also looking forward to NFP on October 2 and then the start of earnings season. LB is thinking DOWN into op ex, then rally into the end of the month before earnings reality will tank the market. Treasuries to stay bid for a few weeks with a yield ceiling of 3.5% on the 10-year. Geithner’s latest comments about withdrawing support from the markets… ?? What was that all about?
LB is thinking about taking a punt from the short side into the close today, but with half a mind to the possibility of a run up to SPX 1050. Anyone know when all these secondary stock offerings are going to start appearing? LB feels like shorting oil and materials stocks might be a good play if only the dollar can find a floor.
September 11th, 2009 at 2:31 pm
there is entirely too much pessimism on this board-
caucas of gloom or doom or whatever-
H Wanker says everything is ok-
what more do you need to hear-
long and strong- that’s my motto
September 11th, 2009 at 2:32 pm
@Manny
Reminds me of that scene in Jerry Maguire where Cuba Gooding Jr. & Tom Cruise are leaving in a taxi after Jerry Maguire lost “Kush” on the eve of the draft and is lamenting his failure…
…and Cuba Gooding says to him… “Hey, didn’t we arrive here in a limo”?
September 11th, 2009 at 2:32 pm
Thor
“People will hold on to their over-consumption until the bitter end. They’ll go kicking and screaming (and stealing all the fixtures in their foreclosed mc mansions) the whole way down.”
Yes, no doubt many, and maybe most, will do so. Unfortunately they’ll just make things worse in the long run, of course. If they’d just come to grips with the reality much earlier they’d save themselves much pain later (sounds like America from about the ’70s, eh?).
September 11th, 2009 at 2:34 pm
“Anyone know when all these secondary stock offerings are going to start appearing?”
I thought they’d already started on Tuesday after the bell.
http://capitalobserver.blogspot.com/2009/09/holy-offerings.html
September 11th, 2009 at 2:35 pm
Ahab – Clever, and good timing too. I was just reading an excerpt from a book I’m about to read.
Bright-Sided: How the Relentless Promotion of Positive Thinking Has Undermined America by Barbara Ehrenreich
September 11th, 2009 at 2:36 pm
@LB
Oh I VERY MUCH have an eye on a possible run-up to 1054 into the close…
That is why cvienne is making no moves…yet… Although, I did jump on a molecule of a bite on ZSL at the open this morning… That little squirrel is up 2% on the day, but it may end up being “bail city” if it passes any stops…
Got my eye on some BAC puts into October…
September 11th, 2009 at 2:40 pm
BEHOLD THE 9/11 PATRIOTIC PUMP, brought to you by your prop trading desks. We salute you, robots….
Onlooker, my best guess is that one more severe downdraft below the SPX 880 “consensus fair value” level might cause something approaching panic among B&Hers (“oh no, it’s happening again!”) – perhaps sufficient to produce a long-lasting revulsion from stock investing – think about it, if maybe 10-25% of 401Kers actually SOLD this time after a 20-25% drop, instead of holding all the way down, then that might lead us to a true bottom in the market. But I’m really a macro trader and spend all day looking at FX and bonds, I am no expert on sentiment extremes, that’s Barry’s domain. So much depends on whether the government is going to kick-save all the time.
September 11th, 2009 at 2:43 pm
call me ahab Says:
September 11th, 2009 at 2:31 pm
there is entirely too much pessimism on this board- … long and strong- that’s my motto
reply:
———
Strong drink and harsh language – that’s my motto. Your motto would work better than mine when trying to make a good impression. Cheers.
September 11th, 2009 at 2:43 pm
@LB
With regards to OPEX… My mind is trying to juxtapose the 1054 level, the 1060 level (Goldman’s year end call), and somewhere around 1080 (which is about where we’d meet Louise Yamada’s 89 week MA – and has been a GOLD – TA going back many years)…
Mostly, I’m in for a little schenanigans around OPEX week, but the opportunity for schenanigans hasn’t presented itself yet… Therefore, if I see a wicked dip on Monday or Tuesday, I might buy that… OR if I see a rally to those levels early, I might fade that…
September 11th, 2009 at 2:48 pm
@Manny,
NHL first would seem to be the most sensible idea if that plays out but I like the aspect of NBA going down as people no longer aim for goals above themself. Loftier ambition is traded in for practicality and every man for himself, hence the ever rising popularity of MMA. Man am I doom and gloom.
@LB,
Op-ex in September is a very dangerous triple witch according to my trusty almanac. That’s about as much insight as I can provide. : )
Currently my main concern is how my strategy will need to change if we gap into the 1090-1120 range on the S&P.
@Onlooker, we discussed that article on Andy’s blog last night re: with the help of advisor. I noticed that Vanguard said in there that the average plan balance in a Van401k was $3,300, which of course is all fully taxable upon distribution. I believe Vanguard runs 1 out of every 3 or 4 401k plans in the country. How’s that for financial stability? I get a real kick out of people who discuss the increase in household savings, as if for those without a pension and ss in retirement (everyone my age) is doing anywhere near enough. We are all going to be taxed to hell as well, who do you think will pay for the healthcare plan. Just imagine what that also means for people who’s pensions send them a nice letter explaining how liabilities exceed assets….
Sorry, I know, overly pessimistic.
September 11th, 2009 at 2:48 pm
I’m really not sure what this chart means. I think this is the same chart with the same flaws that were pointed out several times. I don’t think this chart tells you anything about investor sentiment. If the average person is sort of a ‘buy and hold’ type, then all this chart does is mimic the up and down of the general markets.
i.e.
If the average investor is 60% stocks/40%bonds or cash and lets assume a $100K total investment:
Then Investor has
$60K in equities
$40K in cash/bonds
If the stock market tubes 50% and everything else sort of stays the same, then:
Investor has
$30K in equities
$40K in cash/bonds
The new investor mix is 42% exposure to stocks….WHOA…they really underinvested in stocks!!!!
But not really….they’re mix just floats with the stock market volatility.
I’m probably missing something here…need some help.
September 11th, 2009 at 2:49 pm
@LB
“kick-save”… good one
The exact meaning of that metaphor is lost on this “non-soccer” culture…
September 11th, 2009 at 2:55 pm
@Andy T (2:48)
Perfect!
I love the notion of RATIOS…
That’s what I’ve told the ladies who spent all their time doing “cardio group exercise” all the time…
I said…”Fine – burn all the fat you want, but you won’t have the body you want… You’ll just become a smaller PEAR”… (and your ass will look like an ironing board)…
September 11th, 2009 at 2:56 pm
Yall’s is too smart to be trading this tape. This a dummies tape.
September 11th, 2009 at 3:00 pm
Is there such a thing is as contrarian-contrarian double reverse psychology?
Is the following view becoming mainstream?: “Everybody is expecting a pullback, therefore we won’t get a pullback. It’ll just melt up as new shorts get stopped out. ” If that sentiment shows up on a popular blog, does it make it “mainstream?”
But what about all the investors who believe that the economy has bottomed and we’ll NEVER see the lows again? Isn’t that the mainstream view?
What’s the more contrarian view right now? a) We trend higher slowly to 1100-1200 with minor pullbacks…5%, 10% no biggies; or b) we CRASH to 500?
My head hurts trying to understand it all….
September 11th, 2009 at 3:09 pm
@CV — kick save works for hockey also.
Which reminds me of an old hockey bumper sticker:
Jesus Saves
And Esposito Scores on the Rebound!
September 11th, 2009 at 3:09 pm
@Andy T
There’s “double secret probation”… I know that…
& the tag on my (2:55) was a hook to get YOU KNOW WHO to put down the alfalfa laced lite lunch wrap, and JOIN THE FRAY…
September 11th, 2009 at 3:11 pm
AT,
I’d have to say b right?
September 11th, 2009 at 3:11 pm
@Whammer
I’d always heard it as GRETZKY getting the rebound… Is it “age” we’re talking about here?
September 11th, 2009 at 3:13 pm
@Andy: That’s why we show up every day.
@CV: Franklin 411 likes alfalfa laced lite lunch wraps?
September 11th, 2009 at 3:18 pm
@Andy T
Well… Look at it this way…from 1044…1150 is 10% up “in a grind”…
Whereas…
500 is 50% down… In a runaway elevator…
September 11th, 2009 at 3:23 pm
@LB
“Franklin 411 likes alfalfa laced lite lunch wraps?”
NO… I said your “ass will look like an ironing board”…
So I’m referring to someone who might be CONCERNED ABOUT how their ass might look like from time to time (and take great pains to keep it looking good), rather than, say, someone who is either just a @ss, or has the brainwaves of an ironing board…
September 11th, 2009 at 3:25 pm
OH MERCY ME THE PUMP…
I just KNEW they couldn’t resist trying to get a weekly CLOSE of 1044 or above…
Come on Lloyd! Hit those buttons… Call it up to 1054, MAKE ME PROUD!
September 11th, 2009 at 3:32 pm
I mean…
If Lloyd Blankfein… USING MY EFFING TAXPAYER MONEY to place his bets… Can’t get this market called up to above 1044.31 (the high intraday print on 10/14 rally after Lehman)… On a FRIDAY which happens to be the 9/11 anniversary!!!!!!!!!!!!!
I mean, how UN-AMERICAN would that be?
September 11th, 2009 at 3:33 pm
long and strong says-
yes we can go higher and higher and the buying frenzy will just get uncontrollable-
H Wanker said that too-
and I believe him
dh-
a little hard and foul language never hurt anyone
September 11th, 2009 at 3:33 pm
“Come on Lloyd! Hit those buttons… Call it up to 1054, MAKE ME PROUD!”
Last hour trading is very predictable. They will never allow it to go down much. Bogus markets. When the party is over, it will be bloodshed on the streets.
September 11th, 2009 at 3:34 pm
Not that I’d ever question…LLOYD…Your dutiful service to the citizens of this country, or humanity in general…
September 11th, 2009 at 3:36 pm
@Cvienne – My little bro likes WHAT!!!! Why that little stinker has been holding out on me.
BTW – The Dr. said it was OK to up uncle Harry’s meds – Which I did last night and he has spent most of the day resting peacefully, BUT the Dr. also said he can also build an imumity to these meds.
September 11th, 2009 at 3:40 pm
1045.128
September 11th, 2009 at 3:42 pm
Every day trader on Earth is now fully aware of the last-hour pump, so how would we know who’s doing the pumping anymore? Would we really be able to tell if the IBs had switched to selling into the close?
September 11th, 2009 at 3:42 pm
lloyd did say it was justifiable for people to be upset about bank pay and bonuses-
what a guy-
he’s just like one of us-
i want to have a beer with him
September 11th, 2009 at 3:44 pm
also-
hines netted mt 8.3 pts last night- after the fumble- should have been 10.3 with a bonus for a TD-
i was robbed
September 11th, 2009 at 3:48 pm
@ahab
If “if’s” & “but’s” were CANDY & NUTS, oh what a world it would be!
September 11th, 2009 at 3:51 pm
see – H Wanker did say that it was like shooting fish in a barrel-
can’t keep a good market down
September 11th, 2009 at 3:51 pm
I’m confused… all this talk of buts and nuts and ironing boards…
what the hell is going on around here???
September 11th, 2009 at 3:57 pm
“but it may end up being bail city if it passes any stops…”
Gotta wonder how many stops are just below the surface.
Cynical traders = actual trailing stops
Retiring seniors = mental trailing stops*
* I’ve heard retired people say, “I’ll sell the company stock when it gets back to $xx.” Not even the peak, but enough to be comfortable-ish. Of course, few actually do this on the way up. But on the way down… that might be another story.
Back to the main topic, I wonder how this chart would look for Japan? Maybe layer on the changing age of the workforce, etc.
September 11th, 2009 at 3:57 pm
Sorry Barry, I know this is way OT, but since there was no open thread, I had to post this.
Ooops, never mind. Are people on edge or what?
http://www.nytimes.com/aponline/2009/09/11/us/AP-US-ODD-Gas-Station-Assault.html
September 11th, 2009 at 4:01 pm
@ I-Man
Well… Here’s how it goes…
BR posted a nice thread early this morning in commemoration of 9/11… In that thread, everyone was able to get their POLITICAL rant on… So that was nicely contained…
Now, we’re left with the normal Friday afternoon haberdashery, (which soon turns to FRIDAY NIGHT LIGHTS – this being the ’season’ we’re in)…
All in the context of SENTIMENT INDICATORS & EYE RAISING stock valuations in advance of a 2009 ‘weekly close’ high approaching a quadruple witching SEPTEMBER OPEX…
So “nuts” & “ironing boards” naturally creep into the discussion…
Hai capito bene?
September 11th, 2009 at 4:04 pm
@CV — I’m 51, so old enough to remember Esposito, but not that much older than you if I remember correctly. I seem to think you are late 40’s?
WTH happened with the treasuries today? Weird — last hour pump did them in?
September 11th, 2009 at 4:05 pm
Thanks for Andy T 2:48pm. That’s exactly what I looked some time ago as I stated in my previous comment on this “cash allocation ratio”.
September 11th, 2009 at 4:06 pm
@Whammer
10 & 30 year auctions this week… Fervor diminished after the fact…
September 11th, 2009 at 4:06 pm
I’m shocked….SHOCKED!! there is gambling going on here!!
Betting football against a good handicapper is a real tough nut. Kinda like trying to outtrade GS. From what I’ve seen if you aren’t successful early in the season….it isn’t going to get any better.
MLB is only sport left with no point spread. Of course there is a moneyline….odds if you will….but the winner is always the winner. Godblessmerika….
My hospital is talking layoffs again. Green shoots!!
I’ve poured my first liquid sentiment of the weekend.
CHeers!
September 11th, 2009 at 4:07 pm
And anyone in their right mind still trusts anyone on Wall Street? Why is that again? Perhaps the sheep ultimately get what they want out of life: that is, being led to slaughter?
UBS Employee Called CDO ‘Vomit’ in 2007 E-Mail
By Carlyn Kolker and David Voreacos
Sept. 11 (Bloomberg) — A UBS AG employee referred to asset-backed securities sold by the Swiss bank as “vomit” in an internal e-mail in 2007, according to a fraud lawsuit brought by hedge fund Pursuit Partners LLC.
http://www.bloomberg.com/apps/news?pid=20601087&sid=aIdHERaRSLCM
September 11th, 2009 at 4:09 pm
CV: I’ll take a reversal on Monday/Tuesday for this Teflon market. It CAN go down, really… crude was down today.
Tend to agree with you that there would be a pump into OpEx after that, target SPX 1060…
September 11th, 2009 at 4:10 pm
manny-
i am sure it was taken out of context-
probably said something like “mostly vomit”
September 11th, 2009 at 4:13 pm
comet
September 11th, 2009 at 4:13 pm
projectile comet
September 11th, 2009 at 4:15 pm
@ahab: LOL. Now how does one defend THAT in court? I’m continually amazed the ability of human beings to sell not only their souls but future generations’ souls as well so they can keep up appearances of “living the good life”.
September 11th, 2009 at 4:19 pm
“projectile comet’
good one- that is probably his defense- shooting up to the stars like a “projectile comet”
September 11th, 2009 at 4:20 pm
Looks like Mr. Cassano could finally be headed for some perp jigging down the street.
http://www.reuters.com/article/bondsNews/idUSN1144867720090911
September 11th, 2009 at 4:21 pm
@Christopher
Oh don’t forget that there is a MONEYLINE on all NFL & NCAA games as well (well, maybe not ALL)…
It’s not 100% true about your season VS. the first week… With average OFFICE POOL bettors that’s the case because they have the psychological tendency to “double down” when they are losing…
Pros don’t act that way… I’m just saying… I probably end up playing 10-12 what I call “unit picks” per week (all LEGAL of course)…
But what I’m saying is this… I’ve charted my own statistics over more than a decade now… I tend to do better EARLIER in the season, than LATER… I think it’s because lines are easier early in the season…
You have to be a SEASONED VETERAN to spot “traps” late in the season (& it always happens)… That’s what’s hard about it… The TRAPS are to “avoid” (not to bet the other way on)… That’s a difficult behavior to manage when someone’s bankroll is down…
It’s INCREDIBLE to me how much sports betting & playing equity markets is similar with regards to behavioral psychology…
September 11th, 2009 at 4:28 pm
Manny: Here at Schadenfreude we are long perp walks and clawbacks.
September 11th, 2009 at 4:30 pm
cvienne
It seemed easier to pick games before free agency, after free agency the teams can change so much in one off season, it takes a while to get a handle on things.
Take one guy for example, TO
will the pokes be better because he is gone,
will the bills be better because he is there?
Give it a couple weeks and you find out.
My gut feeling is yes to both.
September 11th, 2009 at 4:33 pm
Jeff, thank you for the throw up link!
Cvienne, wrong bait for this tuna : P
September 11th, 2009 at 4:44 pm
@karen
That…my dear…is why Men fish…
In the end, it’s somewhat about the fish, but it’s equally about the bait…
and BTW, your clever “shout out” to Manny was a good disguise… You’re a clever fish indeed
September 11th, 2009 at 4:46 pm
@k
&k, who said I was talking about you anyway?
September 11th, 2009 at 4:49 pm
@foghorn
You see, THAT’S WHAT I’M TALKING ABOUT…
It’s NOT ABOUT the teams and their personnel… Instead, it’s about the LINES…
It always has been…
Don’t embrace the teams, don’t embrace the players…EMBRACE THE LINES (there is where the value exists, or doesn’t)…
September 11th, 2009 at 4:51 pm
We interrupt the regularly scheduled flirtation to provide something for chartists everywhere, especially Andy:
“Three Peaks and a Domed House”:
http://anonymousmonetarist.blogspot.com/2009/09/is-s-1044-point-23.html
The chart regresses to our beloved SPX 880 level. BTW, Bears should check out the Art “Crashin” piece today.
September 11th, 2009 at 4:58 pm
cv-
parlays?
September 11th, 2009 at 5:00 pm
@foghorn
For example… There was VALUE in laying 6 points with the Steelers last night… Hard to believe, but true…
The general public thinks of the Steelers as Superbowl winners, the class of the NFL, 6 Superbowl rings, yada, yada… Hell, even Obama named their owner Rooney as Ambassador to Ireland…
But a lot of the PUBLIC also hates a winner… That same public remembers that Tennessee CRUSHED the Steelers late last season (in Nashville), and that the Titans had the best regular season record in the NFL going into the playoffs (before MY Ravens crushed them)…
Tennessee even stomped on “terrible towels” after the game…
One has to get past ALL of that… Let’s put it this way… A HOME TEAM in the NFL gives away 3 points (so that basically made the Steelers a 3 point favorite on a neutral field)… In a “personnel” matchup, with the Steelers fielding the same Superbowl winning squad, & HEALTHY… I’ll take them any day of the week over the Titans with Kerry Collins a year older, & less Albert Haynesworth…
You win, you lose, you place your bet… It’s not emotional for me…
September 11th, 2009 at 5:11 pm
Anyone get the feeling this Market is setting itself up for a Blow Off Top– with Lots of Volatility to ensue thereafter?
I’d like to see a correction on the S&P down to around 950-970 first, but it does not look like that is in the cards. The word for the last couple of weeks is ‘Liquidity’ with Bonds and Stocks moving in the same direction. I caught the end of Someone on Bloomberg (maybe quoting Mr. Lane above) that said this happened during the 91′ recession. If so, it would be interesting to know for what ‘Duration’ stocks and bonds continued to move in the same direction in the past. The Ten Year Yield hardly moved today with the, ahh, “Better Than Expected” Consumer Confidence Reading. So my take would be, along with Global Central Bank QE (and monetization…) and end of the year performance anxiety for the Big Institutionals, there is a combination of hedging with Bonds and higher risk like (overbought) Stocks.
Forgetting (temporarily) about Unemployment, wage growth, PCE, Inventories and New Orders.. I think the foremost number one question is is how much further does the FED have to go with it’s QE Policies. This website shows how far along they are according to their original plan of 1.25 Trillion worthe of MBS/Agency purchases:
http://www.clevelandfed.org/research/data/credit_easing/index.cfm
They have bought about 750 billion of MBS/Agency Debt and nearly 300 billion of Long Term Treasuries. So if I understand it they still have approx. 500-600 billion of MBS to go according to their original statement… and all of this, I would presume, is subject to change.
When do the currency markets (i.e. the Dollar) begin to sense an end to QE?
Off Topic: I’m going with the Ravens vs. Cowboys in the Super Bowl.
September 11th, 2009 at 5:14 pm
@ahab
PARLAYS???
I generally HATE the idea of them because of the mathematical incongruity…
You generally get paid 5-2 on a two team parlay, 6-1 on a 3 team, and 10-1 on a 4 team (past that it’s your basic lottery)…
None of them pay out, in the long run, more than just playing straight up bets on teams…
But then…
There’s the TEASER notion… Common logic tells you that TEASER bets are “sissy” bets, and stupid (mostly correct)… But if you are experienced enough to understand swollen lines, you can use teasers as an effective strategy to HEDGE)…
For example… Yesterday, I bet the Steelers SU (straight up)… I lost…
But I also HEDGED the same bet with a two team TEASER… ( a two team teaser moves the line 6 points, a 3 team teaser moves the line 10 points)…
The Steelers were (-6), so in the TEASER I had them at EVEN… My SU bet lost, my TEASER is still active…
So now I just need another team (of which I have more than a half dozen in mind)… Let me give an example… I think USC will CRUSH Ohio St., but let’s say they just win… Since the latest line is USC (-6.5), I can use them in my teaser scenario and cover the hedge on the Steeler loss…
At the end of the day… If the Steelers fail to cover AND the USC Trojans fail to simply beat an inferior Ohio State squad… Then I lose… I can live with that… Crazy things happen, but the odds are in my favor…
September 11th, 2009 at 5:20 pm
“IF YOUR MOTHER DOES NOT UNDERSTAND WHAT YOU ARE SAYING THEN NEITHER DO YOU.”
Loved that link, LB; bookmarked it. And, as I tend to shy away from conspiracy theories (despite my thots of a new world order at times), I know that the government did not inflate home prices to obscene levels, likewise the stock market. They may have unwittingly (and/or unwittedly) aided and abetted, but it was John and Jane that ultimately bought in.
September 11th, 2009 at 5:23 pm
Good score Leftback… how ever did you find that blog?
I like that pattern, it seems to correlate nicely with the one I have brewing on my charts that sees another volatility spike…
One that ultimately carves March lows out as a left shoulder of a much larger pattern… but we’ll see.
September 11th, 2009 at 5:25 pm
Stolen from ZH, if I remember correctly. Lots of wingnuts, but a few acorns for the determined squirrel…
September 11th, 2009 at 5:26 pm
@John Clarke
I’d LOVE a Ravens – Cowboys Superbowl… (I’m a huge Ravens fan)…
That’s a tough call…
Let’s see… I’ve got it…
AFC
East – Patriots
SOUTH – Colts
NORTH – Steelers/Ravens
WEST – Chargers
WILDCARD – Titans/Jets/Texans/other of Steelers/Ravens
NFC
East – Eagles/Giants
SOUTH – Saints
NORTH – Bears
WEST – Seahwaks
WILDCARD – Eagles/Giants, plus Falcons/49ers/Cardinals/Packers/Vikings/Cowboys
One can toss out most of the wildcards…So…
AFC
Patriots – Steelers – Ravens (it’ll depend on how HOME TEAM comes out)
NFC
Eagles – Bears – Saints (if the NFC Championship game gets played in Chicago or Philly, no chance for Saints)
September 11th, 2009 at 5:29 pm
@John Clark
(if the NFC Championship game gets played in Chicago or Philly, no chance for Saints)…
…and that would be my NO CHANCE reference with regards to LB & karen’s “no dome” theory…
September 11th, 2009 at 5:30 pm
AT at 3:00 (hey, I’ve been doing something useful the last two hours, cleaning bathroom)
Been thinking that’s possible – contrary(squared) for about a month.
And that MSM “correction” camp, anyway, thinks 10% (“Oooooo”s for those saying 20%) – not _50_.
I’m not praying for black swan, but I”m expecting it.
September 11th, 2009 at 5:54 pm
Cvienne I am glad to see you had the sence to put the Seahawks in the NFC West – cuz if you didn’t I was going to have my little bro and uncle Harry come spend the weekend with you.
September 11th, 2009 at 6:04 pm
@mangy420
Yeah bro, I had to “re-capitulate” and put the Seahawks in as division winners…
In July, I had the Hawks 3rd (out of 4), in the division…
But I’m UNIMPRESSED with how the Cardinals have managed their pre-season…49ers will win some games, but still have needs… SEAHAWKS seem poised to better their 2008 performance…
September 11th, 2009 at 6:04 pm
I guess I’m a bit late to the party … it was a nice piece on sentiment, and sure, fundamentals are off in another reality on holiday … but, isn’t it about time for one of those “unpredictable” black swans to make life interesting again?
I mean, if you step back and look at the state of this reality, there’s not a whole lot that is different from the pre-Lehman markets, the banksters are still playing all the crazy reckless games with leverage and they probably feel VERY secure, what with mark-to-market being a thing of the past, and even if they do run into trouble, Uncle Sam has assured everyone that he will move heaven and earth to bail them out, now and forevermore.
What would happen if some trader got energetic and got caught cross-wise against a HFT buzz-saw, and predictably doubled down trying to save his bonus, and before you know it, he has a trillion-dollar oops making the papers. Would that be so far-fetched in the current market?
I guess then we would get to test the confidence that the rest of the planet has in Bernanke and Geithner’s ability to conjure up the necessary bailout funds without sinking the nation.
That might present a problem for the sentiment-drives-the-markets … or I suppose we might see a significant change in the sentiment, and liquidity … things are so liquid these days that they might as well be considered vaporous. Kinda tough to swim in the fog. As for valuation — well, that seems not matter much any more, and “future expectations”? I dunno what kind of expectations the people that are buying stocks have, but anyone who looks at the state of our national finances (not to mention our personal finances!) surely cannot have expectations that are very high. It would seem to me that most people have a keen appreciation for capital preservation these days, and plowing money into growth stock mutual funds in the old 401-K … say, does the man in the street still have money to even put into 401-K’s?
Yeah, I guess it’s onward and upward. Traders have gotta make a living. It’s just a pity that markets are composed of more kinds of people than traders. There’s still a lotta personal debt to be paid down, and my guess is that given the choice, John Q Public is gonna continue to pay down debt rather that pouring his hard-earned unemployment checks into the stock markets.
The Nikkei did not arrive at its peculiar stairstep-lower progression out of choice. It was forced into it by the course that nation took with its financial problems. I’m sure that their market seers had their own charts that painted pictures they wanted to see. If only it were that easy.
It seems possible that our own course might be similar.
September 11th, 2009 at 6:07 pm
cvienne : I like your AFC Final. I agree 100% with you their.
With the NFC I’m not sure about the Eagles… Defensively they lost (in my view) two key players– Lito Sheppard and Brian Dawkins (although the Eagles seem to be a favorite amongst some on ESPN Talk Radio). I guess Vick could be a distraction, but on the other hand it could push McNabb to perform at his best.
With the Bears I just can’t get too excited about Cutler:
1) His Attitude
2) His time with spent with the team (i.e. Receivers/Timing).
The Saints.. perhaps.
For me I guess it’s more about playing time together (good mix of veterans/rookies), keeping Key Personell, and the ability to stay Injury Free. Last year if Romo hadn’t been hurt (and lost momentum) I think the cowboys would have gone further (although the Eagles did Blow Them Out at the end).
The Cowboys Offensive and Defensive lines are both Huge, their running backs are all studs…. the only possible weak point I see maybe defensively with their corners…
And this is a team that has played together now for a while and has kept all of their key personnel…
(FWIW I’m NOT a Cowboys fan…)
September 11th, 2009 at 6:09 pm
i have not read any of the other comments but i find it comical that anyone relies on such allocation models. who in their right mind with any serious money would commit 60% to the stock market. this is based on pure poppycock. also what does this chart matter anyway since it only goes back to 1987 and the start of the belief in asset mania and bubblonia. these figues are completely absurd just like the asset allocation models of wall street car salesmen. if you find the deleveraging of this country to be simply cyclical then go ahead and buy stocks you will be creamed eventually. if you find it secular as i do then stocks and most assets are equally horrendous but will take the hit in even a shorter time period. there will be no recovery in this cesspool until the destruction of debt takes it’s course
September 11th, 2009 at 6:11 pm
Here is an idiot who says Jim Roger was wrong.
Jimmy Rogers Is Wrong: Letting Lehman Fail Was a Mistake, Bookstaber Says
http://finance.yahoo.com/tech-ticker/article/328082/Jimmy-Rogers-Is-Wrong-Letting-Lehman-Fail-Was-a-Mistake-Bookstaber-Says?tickers=XLF,SKF,FAS,FAZ,JPM,C,BAC
September 11th, 2009 at 6:16 pm
@cn
“Kinda tough to swim in the fog”
You need to trademark that, my friend (before LB beats you to it) …:-)
I say that because I dunno what realm of metaphor you were playing in…
Swim in the fog = Ok, we all can guess what that means.
Swim in the fog = with your VAPOR reference (vapor being a gaseous state of H2O, therefore having a less buoyant state of liquid H20, as the case may be)…
Perhaps only the great MEH will immediately comprehend what I allude to here…
September 11th, 2009 at 6:19 pm
manhattanguy, do you know who Bookstaber is? FCOL! he is NOT an idiot.. his opinion may differ from yours…
i’ve debated this myself.. but have come to the perhaps lazy conclusion that they f*cked up big time on this one. the repercussion will take years to resolve.. thank goodness currency is all 1s and 0s in computer.. and they can tweak it as needed…
September 11th, 2009 at 6:35 pm
@John Clark
Good points… Well thought out…
COWBOYS… Let’s put it this way… The NFL would probably LOVE to see the Cowboys contending again (good for business)… I have exactly zero personnel arguments with you there… The defensive line is solid (DeMarcus Ware is a beast)… On offense – Flozell Adams is too fat and jumps offsides too often, but that’s not something they can’t overcome… I don’t think the T.O. loss will effect them one way or another… Marion Barber & Jason Witten will earn their paychecks every week, and I think FELIX JONES could become a superstar… Romo?… Well, He just needs to figure out how to play in December… It’s as simple as that!
EAGLES…Lito Sheppard was, IMO, overrated… McNabb is already schooled in how to be immune to the “highs & lows” of PhillyFan capriciousness (so Vick isn’t an issue either way)…
Bottom line?
The Philly offensive line is old and has to step up or get out of town… If they can stay injury free, and play as a unit, I’m putting the Eagles into my top 3 NFC squads… If they JACKBOOT around like they did last year, forget it…
Note: The Eagles always play best when their backs are against the wall, so even if they start off slow, you can’t eliminate them until they’re MATHEMATICALLY out of it… a nice “betting” posture (if you know what I mean)…
Lastly…
The two Cowboys/Giants matchups during the year should tell the story… Especially how the Giants play in the new Cowboys stadium…
September 11th, 2009 at 6:46 pm
manhattanguy, i think/know i have every book on your “worth reading” list… we must have something in common.. you are missing “A Demon of Our Own Design.”
cvien, ugh, americain futbol, let’s go to Italia!
September 11th, 2009 at 7:02 pm
cvienne: “The Eagles always play best when their backs are against the wall”… No question about it.
I think it will be interesting to see how Runyan plays after the rehab on his knee.
I think it will also be interesting to see how the loss of Jim Johnson, one The Best Defensive Coordinators out there, will effect this team.
The Eagles are overdue for a Championship… I’d like to see them win one (Despite what some think, I like the way their Front Office/Management/Jeff Lurie operates– and I like Andy Reid… despite some family issues off the Field).
I also notice the word ‘Redskins” is missing from your vocabulary… Being a Ravens Fan I can understand that…
September 11th, 2009 at 7:04 pm
futbol?
puhhlease- put me to sleep already- ZzZzZzZzZzZzZ-
in fact let’s invent a sport where athletes crawl on their hands and knees pushing a ball with their noses-
why use legs?
when i was a kid- in school- we played soccer once- so we knew what it was- and that was the end of that
September 11th, 2009 at 7:12 pm
OK, ahab, you have baited my ire. But I am biting my tongue.. it is bleeding.
September 11th, 2009 at 7:17 pm
@karen
FUTBOL – I agree what a slob I am, but I can’t help it… When I lived in Italy, I was the ATHLETIC TRAINER for AC Perugia (which was in Serie A)… Now, after I left, they play in Serie C…
Alora, ti dico… non e che sono un allenatore da DIO… ma dai!.. Serie C?…
In questo momento e difficile di essere un tifo vero (x loro o x la lega)… Va bene… Sono sempre, u po, un Juventino & un Itner-ista…(x-che sono stato un allenatore di qulache giocatori di loro, fra il’ mio tempo in Italia)…
Communque…I mio impressione? SAMPDORIA??? 2nda squadra de Genoa?… Non e possible x loro a vincere la Lega Calcio ‘09- ‘10 (nonostante 6 punti dopo due settimani)…
Other than that… I’M READY FOR SOME FOOTBALL!
mind you “x” = “per”, in Italian SMS slang (if you didn’t know)…
September 11th, 2009 at 7:31 pm
“baited my ire”
interesting prose-
but karen-
i like soccer- my daughter plays
however- it is not a sport for men-
fighting of the bulls- of course, climbing of the mountains- of course, but kicking of the ball-
well . . . a fancy that real men avoid
September 11th, 2009 at 7:50 pm
@John Clark
I’ll take your side 100% on how Lurie operates (or how Andy Reid operates, for that matter)…
That is my testimony… Neither one seems to be very popular in the mainstream, and BOTH are oftentimes subject to criticism… But in the NFL, how many franchises can you label with those accusations, YET STILL manage to rise to elite status over DECADE time periods?…
I, personally, respect BOTH… Regardless of slings & arrows…
On the other hand…THE REDSKINS…
I was the biggest Redskins fan you could imagine as a boy (I was born in DC)… I had photos of Jurgenson, Billy Kilmer, Larry Brown, Charlie Harraway, Roy Jefferson,, Charley Taylor, Myron Pottios, Chris Hanburger, Past Fischer, Mike Bass, Ron McDole, & Brig Owens all over my bedroom wall…
Alas, I moved away to LA… & the RAIDERS came to town (Plunkett, Bo Jackson)… I tried to stay loyal to the Redskins, AND DID mostly, thru the 90’s (through the Joe Gibbs era & until Jack Kent Cooke died)…
When Daniel Snyder took over, I abandoned the team… The idea was quickly replaced when the CLASS of the NFL, “Art Modell”, moved to Baltimore …
I’ve been a RAVENS fan ever since…
September 11th, 2009 at 8:04 pm
i knew a raider’s offensive linesman once. (actually went from cowboys, to colts, to raiders over 12 years.) quite handsome actually, and tall. most gentlemanly, too. LOL.
September 11th, 2009 at 9:01 pm
@karen
I knew MANY strippers (quite handsome in a man to woman sense), tall, mostly feminine, (some horny)…
Who, over a 12 year period, passed from airport clubs in Inglewood, to Tokyo, to Hong Kong, to…well – um – DALLAS, if you know what I mean… One was named “Debbie” if I remember
September 11th, 2009 at 10:15 pm
This analysis is very original. Nice work. Tends to support the notion this rally could continue to defy calls for a correction, at least for awhile longer.
September 11th, 2009 at 10:45 pm
NYT: Cautiously, Small Investors Edge Back into Stocks
Trader Mark’s take on this NYT article. Good stuff as usual.
quote: “Ever feel like we are being herded? Sort of like sheep. (or is it sheeple?) Look you stoopid (sic) sheep, stop eating in those safe areas. We have wolves to feed (Wall Street) and the kind and gentle “all knowing” shepherd (Uncle Ben, or Uncle Alan) wants you to graze in that area over there… yeah, by the cliff. Where wolves can corner you much more easily. Err, I mean where the grass is greener. So get your darn money out of a savings accounts or CDs and bring them over here…. yes, here is a pamphlet to make you feel better about it… yes it says right here …. “8% long term returns in the stock market”. Can’t lose. As long as you have a 150 year time frame. What’s that? Performance in the past decade? Umm, let’s not talk about that… have I told you about this great grass we have over here by the cliff? Very tasty.”
September 11th, 2009 at 11:46 pm
NYT: Cautiously, Small Investors Edge Back into Stocks
Trader Mark’s take on this NYT article. Good stuff as usual.
quote: “Ever feel like we are being herded? Sort of like sheep. (or is it sheeple?) Look you stoopid (sic) sheep, stop eating in those safe areas. We have wolves to feed (Wall Street) and the kind and gentle “all knowing” shepherd (Uncle Ben, or Uncle Alan) wants you to graze in that area over there… yeah, by the cliff. Where wolves can corner you much more easily. Err, I mean where the grass is greener. So get your darn money out of a savings accounts or CDs and bring them over here…. yes, here is a pamphlet to make you feel better about it… yes it says right here …. “8% long term returns in the stock market”. Can’t lose. As long as you have a 150 year time frame. What’s that? Performance in the past decade? Umm, let’s not talk about that… have I told you about this great grass we have over here by the cliff? Very tasty.”
September 12th, 2009 at 8:25 am
The Nikkei did not arrive at its peculiar stairstep-lower progression out of choice. It was forced into it by the course that nation took with its financial problems. I’m sure that their market seers had their own charts that painted pictures they wanted to see. If only it were that easy.
It seems possible that our own course might be similar
————
When I was managing my financial fund in the early ’00s, every second week we’d take a look at Japan in our weekly investment meeting, to see if it was the time to jump back in. Meanwhile, my talk of the credit bubble would only be met with blank stares and the subject would go back to Japan! LOL.
It will take a LONG time for people to get it if Japan is any indication.
September 12th, 2009 at 8:33 am
Talking about currency debasement…
Our TSX is up year-to-date: 27%
S&P500 ytd in local currecny: 15.6%
S&P 500 in CAD: 2.2%
It’s amazing how much we’ve gained in purchasing power vs. the US. And it’s not just Canada.
September 12th, 2009 at 8:35 am
harold hecuba Says:
I have been doing some consulting in DC plans. And let me tell you that I find it amazing that the older the plan members, the more equity they have. Many are at 70-100% in equity at 5 years from retirement!
September 12th, 2009 at 10:54 am
@mannwich 12:48 on 9/11:
you didn’t ask me!
September 12th, 2009 at 11:57 am
Im with dblwyo, “at these valuations where’s the value and the return? ”
Even if the money sitting on the sidelines is greater it has to want to be put in the market for a high risk/low return play.
But I think we are just in for low volume on the market , the Fed has made it where liquidity is great and money is cheap so nobody has to sell. Then you get the standard 401k contributors with their automated buying as a natural upward pressure. We’re living in a true goldilocks world right now, reality is suspended but everyone is acting like it is not and going about their business.
I guess the open question is.. will reality ever return?
September 12th, 2009 at 12:00 pm
“The idea was quickly replaced when the CLASS of the NFL, “Art Modell”, moved to Baltimore …”
Yeah…real classy the way he took a shit on Cleveland….
Just saying….Modell couldn’t carry Rooney’s jock imho….
September 17th, 2009 at 8:40 pm
[...] Here are the 4 most reasons why I think we can have more upside, plus a look at some grim economic realty. 1) Individual investors remain under-invested (See Liquidity/Sentiment Review). [...]