December 2009
Good old Huck! Pardoned the guy who later killed 4 police in Seattle.
You might think he is one of those liberals who are soft on crime. But no, he is just an idiot.
Logic Dictates
December 11, 2009
The one year anniversary of the discovery of the Madoff scam. Hedge funds are claiming that they have beefed up the audit process, and they may have. Still, with so little transparency, I would not invest in a hedge fund.
Market moves the last several days have been very tentative. Nobody seems to be able to decide what to do if the dollar goes up. Personally, I would like to see it go down further, but I really do not think that a small fluctuation in the DXY should make much of a difference in the market. The performance of the stocks in my portfolio is extremely uneven. IOC +69%, NANO +69%, NTRI +38%, SCSS +16% (got in late on that one), for example. On the other hand, there are small losses in others, and FSYS unexpectedly went down over 8% today. Very uneven overall.
Still, I am up over 3% for the month, and that beats all the major indices except for IWM, which underperformed the rest of the indices last month.
December 14, 2009
Nice day in the market, and particularly for my holdings. I added to the list of stocks from which I trade. I included all of the ADRs from Brazil, Russia, India, and China. Some of those are doing very well.
December 16, 2009
Here is the current FastBreak System I am trading. First, the list of stocks. This is a .CSV file, which you can open with Excel, Star Office, or Open Office. Next, the FastBreak system, which you cannot access unless you have FastBreak. Therefore, I will describe it briefly: Hold 30 stocks. Rank the stocks by Most Anchored Momentum (8, 60). This means taking the ratio of the 8-day Exponential Moving Average and the 121-day Simple Moving Average, and ranking high to low. Buy the top 30 stocks, and hold for a minimum of 9 days. Sell if a stock ranks below the top 6% and replace it with the highest ranked stock you do not already hold. In addition, there are two buy filters, the 8-day EMA and the EMA crossover (8,15). I do not have a market timing signal programmed in, but of course I do try to time the market. There are no stops programmed into the system, but of course I watch the holdings and use common sense if something looks bad.
December 18, 2009
Houston, my old home town, elected a Lesbian Mayor. Definitely a step forward towards equal rights and tolerance for everybody. Still there are lots of bigots left.
December 21, 2009
Strange action in some of my stocks last Friday. Triple witching, plus the turmoil caused by a huge secondary offering by Citi. That may explain some of what happened, at least. Now we are moving into the time when the 3-day settlement will make you book the profit or loss for next year. So there may be a lot of loss selling up to that point, and then profit taking afterwards.
However, today there were some nice gains in my stuff.
December 25, 2009
Merry Christmas! Nice rally in the small caps this month, unlike last month. I wonder what, if anything, it means.
December 31, 2009
At the end of the year, and the end of the decade, which, for all those people who took Bogle's advice and did not time the market, was a totally unproductive period. I did OK, because I sold out on March 15, 2000, and got back in later. On the other hand, my timing this year, while it was certainly better than buy and hold, was not good. I should have held long since April. But this is the most difficult market to trade I have ever seen, with 5-6% fluctuation in some stocks on a daily basis.
So here are the annualized results for the indices over the last 10 years: SPY (with distributions reinvested) - 1.01%, QQQQ (with distributions reinvested) -6.43%, Russell 2000 (IWM did not exist 10 years ago) 2.17%, EFA and EEM did not exist 10 years ago, but those indices were closely matched to FOSFX and FEMKX. FOSFX (with distributions reinvested) -.71%, and FEMKX (with distributions reinvested) +7.94%. So the only thing that did better than a money market fund, on a buy and hold basis, was Emerging Markets. So much for investing at home. Of course, all those things could have been traded profitably.
My accounts went down over the last 3 days, as people took profits, to be paid next year. Still, for the month I did have a decent profit. It would have been prudent to sell some stuff on Monday, but I believe that most of these stocks will rebound next month.
Looking Forward and Looking Back
Last January, 2000, I made some predictions. I actually wrote these after midnight, Dec. 31, 1999, when it was clear that planes would not fall out of the sky because of the Year 2000 bug. Remember that "crisis"? The page has been taken down (I have limited space), but I resurrected it below.
Portrait of the Author
as a
Young Militarist - 1954
January 1, 2000: Looking Forward and Looking Back
Well, things have certainly changed since that picture was taken of me in my High School ROTC uniform. I had no idea what I would do with my life. It was my senior year in High School, and I knew I would be going to Rice University. I had no idea that I would major in philosophy and history, go to Yale Divinity School and Yale Graduate School of Religion, and fail to complete my PhD in New Testament. That I would then get a job teaching in prep school, get fired for flunking the son of a very rich man, and get a job programming at United Aircraft. That I would thereafter have a good career as a software engineer. Some time on the way, I married my roommate's ex-girlfriend, and had two children who are now teenagers. I always had a great interest in the stock market, but I did not know that I would ever have this web site - such a concept was not even around in 1954, of course.
Then vs Now:
We were in our most paranoid phase of the cold war; now Communism has collapsed, and the Soviet Union is a disaster area. Looking at my picture, I sense a certain amusement in my expression. After all, everybody was telling me that Communism did not work, and yet we were afraid that it was going to take us over. Didn't anybody see the contradiction in that? So finally Communism did what its critics said it would - collapse from its own internal contradictions.
No computers - at least nothing that would pass for one now. Of course, we did not have a Y2K problem either.
No Internet; and so no web sites.
No online trading, and if you wanted a chart of a stock you had to draw it yourself, or possibly pay for something on paper. Technical analysis was not really very practical for most people.
Racial segregation, which I always detested, was very much a fact in Houston Texas, where I grew up. The Methodist Church near Lamar High School, which I attended, was on the border line between a black neighborhood and the white neighborhood where I lived. It had a fantastic recreation center, which was of course for whites only. The hypocrisy of a "Christian" church being segregated filled me with contempt.
Gay and lesbian people did not exist; or if they did they were supposed to be hiding in shame. The situation for gay and lesbian people has improved dramatically, however much more needs to be done.
Things will change even faster in the future
No center of supposed religious authority will be able to stand in the way of people's freedoms and rights. The pope will make his stupid pronouncements, and claim his infallibility, but he will not be able to hold back people's rights and freedoms, whether it is on the issue of abortion rights or on the issue of sexual persuasion.
The retrograde forces will become ever more desperate. They will (and some already have) retreated into paranoia and fanaticism, as seen in certain fundamentalist groups, and in the militias. The Klan will continue to exist, and blatant cases of racism and racial violence will occur, but will be countered. For example, consider the Adams Mark Hotel discrimination case just brought by the Justice Department. Black customer? Charge him more and take the pictures off the walls of his room lest he steal them. Now there is a hotel chain at which I will never stay, no matter what. But such people will be increasingly isolated and marginalized.
Nevertheless, those forces will still cause a lot of trouble, whether it is racism, or it is inducing guilt and fear because of a person's sexual persuasion. There will be individual tragedies, most notably suicides of gay teenagers, rejected by their families and by their churches. All those nice people can cause a lot of grief.
The web will become more and more important for commerce, communication, and liberation. It has already liberated a lot of people, and helped oppressed minorities, such as gay teens trapped in a hell-hole like Mormon Utah, make contact with the outside world, and realize that they are not alone.
With the increasing use of wireless technology, and with the development of wireless "books" and "newspapers", print media will become a curiosity.
Newt Gingrich, that great supporter of "the family" and "morality", will fade into obscurity, having admitted a 6-year affair (during his 18 year marriage) with a woman 20+ years younger. Too bad he never had to testify about that under oath; of course we all know he would have told the truth.
Militant Islam will continue to be the main enemy of liberation and progress in civilization.
Well, those are the easy predictions - I think I should quit while I am ahead.
Oh - and about the market: It will, in the words of a famous banker (J. P. Morgan), "fluctuate". However, the methodology I have outlines in these pages will continue to yield superior results.
You
might consider a previous prediction - Popular Mechanics Feb. 1950 -
not one of mine
There is more
Well, I think I did pretty well, particularly compared to Popular Science. Sorry that Newt is still around, and that there are people who want him to run for President. The champion of morality is still doing his stuff, and even that disgusting hypocrite, Elliot Spitzer, is being rehabilitated. We have way too many second chances in this country. I underestimated militant Islam, that's for sure. Those people are just plain crazy. Not long ago one pious Muslim father in this country ran over and killed his daughter because she was too Western, or some such. Yet my daughter is dating a modern Muslim man, who is a really nice person. Of course, he comes from Tunesia, a Muslim country which has given women equal rights. Very different there from Saudi Arabia.
I did not predict the .com bubble, but I did sell all my tech holdings on March 15, 2000.
I was certainly right that the religious right would become desperate and move to paranoia and fanaticism. They pray for Obama to die, for example. Wiley Drake, pastor of First Southern Baptist Church in Buena Park, Calif. prays for Obama to die. He even has a radio show.
Adams Mark Hotels is now down to one hotel, but they did learn how to behave.
Print media still exists, but I sure do not know why. I expect the Kindle and other such devices to make print virtually obsolete shortly. If the newspapers go away, what will I use to start a fire in the cast-iron stove I have?
I certainly did not predict anything like 9/11, or the wars in Afghanistan and Iraq. Nor did I predict that so many people would be so foolish as to buy houses and other real estate at hugely inflated prices, that the idiot banks would loan them money to do it, and that this would cause such a recession. When I hear the financial "experts" on CNBC and elsewhere giving advice, I just wonder how they can straight face it. The guys who were supposed to be so sophisticated and so able to give up advice on our financial matters were the ones who basically brought the system down. I looked at the real estate market in California (and elsewhere) and said it was horribly over priced. Let's face it, if a person with a median income in the area cannot afford a house with a median price in the area, then the system is horribly unbalanced, and doomed to fail. Why did so few people see that? Simply because they were mesmerized by the increase in "value" of their own properties? But there is no such thing as "value". There is only price.
Then there was the selling of those mortgages, complete with lying probability and statistics, as Wired Magazine demonstrated.
So what is going to happen over the next 10 years?
Well, at 73 years old, I do not know if I will be around at the end of the next 10 years. But still...
We will see the continued decline of the West and the emergence of China, India, Brazil, and possible Malaysia and Indonesia (providing that those last two can free themselves from extreme Muslims), as leading economic powers. I am not convinced about Russia, given the demographics. The reason for the decline of the West is, at least in part, this terrible housing disaster, brought on by the greed of the banks and the idiocy of the consumers. It will take years to dig out from under that, together with the associated debt, and the United States will never become the absurd consumer society it once was. People have stopped buying just because they want to buy, and that is a good thing and ought to be a permanent thing. Nevertheless, it will slow the recovery. Or, to put it another way, the recovery will not be led by a $65 tank top from Dolce and Gabanna.
In fact, that tank top has been reduced to a still ridiculous $32.50.
There will be an effort made to improve educational standards in the United States, and some progress will be made. But there will not be any substantial success unless parents become more responsible. Children need to be brought up to believe that their job is to do well in school. But, overheard from a high school girl at CVS, "I don't see why I have to learn trigonometry. I am just going to get married and let some man take care of me." Not a way to a successful life, unless you consider Anna Nicole Smith successful.
Things will continue to get better for gays, particularly if Obama gets to appoint another member to the Supreme Court. We will see gay marriage become legal most places, (it was just legalized in Mexico City) and the religious idiots will become more and more isolated. Still, the anti-gay religious forces will do a lot of harm, whether it is something like an exorcism to "cure" somebody, or just naming a gay teen and asking the congregation to pray him straight. Those are interesting forms of child abuse that have been performed recently. Personally, I think that the straight world has done a rather bad job when it comes to honoring marriage, but I think that it should be available for all. We will see more and more couples not bother with marriage at all - in fact a middle aged unmarried (heterosexual) couple just moved into this block. So of the five houses on the block we have one gay couple, one unmarried straight couple, two married straight couples (and we have been married for37 years), and one single mother. This is the new reality.
The worst threat to peace will be from Iran. Israel may be able to take out their nuclear capability, but it may be at a great cost. We are likely to be attacked by some "home grown" terrorists, like those 5 idiots that recently went to Pakistan to get terrorist training. They all had perfectly good futures here, but decided that they needed to attack this country. Fortunately, they were so stupid as not to be any threat. The next bunch may not be so stupid. We have certainly benefited from the stupidity of the terrorists, particularly when their explosives do not work. The United States was extremely lucky in that incident. The authorities in the United States government were just plain stupid in not canceling his visa, and this kind of stupidity will cost American lives sooner or later.
Now Here is a Solution
Here is an easy one: The CMBS backed by Stuyvesant Town/Peter Cooper Villiag will default. Serves them right, since the whole scheme was to find a way to get around rent controls in NYC. I thought that they were crazy at the time, but who am I to argue with Tishman? I do not believe in rent control, at least not in situations where developers are allowed the freedom to build housing, but not believing in rent control in NYC is like not believing in gravity. It is just there, that's all.
Here is a big one: Nobody will do anything about climate change that actually changes the climate. It is not clear to me at all that carbon dioxide is the cause of warming, and even if it is, we will not be able to substantially cut emissions in the world as a whole. But we will develop some neat "green" technology, we will lessen our dependence on oil, and we will learn to cope. The United States will continue to be backward in its use of nuclear energy, which should be used to generate substantially all of out electricity. We are so behind the French in that regard that it is pathetic,
And, as before, the market will fluctuate, but I sincerely doubt that the next decade will be as zero-sum as this one.