Posts
As the title suggests, we are at war, or at least, in serious and dangerous times.
For those that aren't familiar with the phrase, "keep your powder dry" it is a reference to firearms.
In the early evolution of firearms, Flintlocks and later, Muzzle Loaders were the state of the art in weaponry. Where Gun powder was poured into the barrel of a gun followed by wadding, then one or more projectile(s). This layered mix was then tamped down and ready for a some type of ignition. The problem comes when moisture is introduced. If your gun powder becomes, even slightly damp, you are done. Now, if you are in a stressful environment, and those days were filled with them, pulling the trigger and hearing nothing but a "click" could have dire consequences. Later "bullets" as we commonly call them, came into use, more properly called cartridges. These made firearms much more dependable and rendered muzzle loaders obsolete.
I like the imagery that the warning evokes. It conjours up visions of being in stormy weather with dangerous people and/or animals, prowling in the darkness, ready to do you harm, as you hunker down, out of the rain, trying to keep your gun dry and ready to fire when needed.
I do think that this is precisely the position we are in right now. If you listen to the financial community as a whole, you might conclude that we are heading out of dangerous waters, with the storm behind us and conditions improving.
I couldn't disagree more.
If you consider the bigger picture, what really has improved? True the stock market has recovered much of it's losses, but the fundamentals behind it are, at best, wounded and limping along at an anemic pace. At worst, hemorrhaging and desperately looking for someone with a hot iron to cauterize the wound. Recovery is a long ways off and we have yet to stop the bleeding. The longer this economy goes on bleeding, the longer and more painful the recovery.
This administration is trying to give the economy a transfusion, but it is also using failed methods, to heal the patient. It's "bleeding the patient" and applying leeches faster than it can pump fresh blood into the veins. Unfortunately the pool of blood donors(US Taxpayers) is dwindling at an alarming rate.
So where does this leave us?
Waiting.
If I had not already done so I would be taking some profits and keeping cash ready to be deployed. Yes I sold a little early and missed some of the gains over the last month. Much of those gains have evaporated in the last few days, so all in all, my timing may prove to be pretty good. It all depends on what happens next. Is the market taking a pause before proceeding higher? I doubt it. I am expecting a broad pullback in most, if not all sectors.
Most of the resource stocks that I talk about on this blog have pulled back to support levels. If support holds and the stocks move higher from here, I'll look for a point to re-enter those positions and call it a missed opportunity. If you've followed my examples, you've made some nice gains in KOL and MOO. I'm not willing to risk those gains. Remember, it's not only about profits, it's also about preservation of capital, and your gains are also your new capital. There is always another opportunity around the next corner.
If I am right and those support levels don't hold, I'll be able to sit back and let the carnage happen to others and wait for the trend to reverse so I can pick up shares at a discount.
As for my core holdings of gold and silver, I never sell. I am a buyer at all opportunities and I don't think this is one. These are also at support levels and I am concerned about a pull back here. Again, watch and wait and keep your powder dry. Next week may tell the tale and I'll post if things are resolved.
Good Luck and Godspeed
JT
Sunday, October 4, 2009
Saturday, August 22, 2009
Back To Work
Back to work.
Here's where I'm at; I'm selling. I'm locking in profits(40% in KOL alone).
But then what?
It's very simple, I'm going back to work. I believe that the markets, if not at their tops, are nearly there.
If I'm wrong, the only thing I'm losing is potential gain.
I called oil at $70 when it was trading at $50. True it went down to $40 before moving back up, but that is what trend investing is about. I don't try to hit the tops and bottoms exactly. Just identify the broad trend and get in at attractive levels. Then stand back and let the markets overshoot the range.
I will be posting ideas as I develop my new portfolio structure, but for now, look for oil to correct lower as well as the broader markets. This will probably take metals lower, but I am not selling silver or gold. Those are my core holdings, and part of a mega trend that isn't even close to playing itself out. As always, pullbacks in prices are buying opportunities. Same holds true for my short on treasuries(TBT). I am accumulating.
Stay tuned and stay nimble(in cash).
I may be moving quickly if things turn the way I think they will.
Good luck and Godspeed
JT
Here's where I'm at; I'm selling. I'm locking in profits(40% in KOL alone).
But then what?
It's very simple, I'm going back to work. I believe that the markets, if not at their tops, are nearly there.
If I'm wrong, the only thing I'm losing is potential gain.
I called oil at $70 when it was trading at $50. True it went down to $40 before moving back up, but that is what trend investing is about. I don't try to hit the tops and bottoms exactly. Just identify the broad trend and get in at attractive levels. Then stand back and let the markets overshoot the range.
I will be posting ideas as I develop my new portfolio structure, but for now, look for oil to correct lower as well as the broader markets. This will probably take metals lower, but I am not selling silver or gold. Those are my core holdings, and part of a mega trend that isn't even close to playing itself out. As always, pullbacks in prices are buying opportunities. Same holds true for my short on treasuries(TBT). I am accumulating.
Stay tuned and stay nimble(in cash).
I may be moving quickly if things turn the way I think they will.
Good luck and Godspeed
JT
Sunday, August 2, 2009
The Whisky Fish
My apologies for the lack of attention to this Blog of late, but I have just returned from a week of fishing in Alaska.
So for those of you not interested in that story, I will again apologise. My attentions in this post will be toward that trip. However after reviewing my portfolio and the current financial climate, I find no pending emergencies and I am quite pleased with current positions.
Now on to the fish story:
It occurred to me upon arrival on the Prince of Wales Island in the city of Craig, Alaska, that part of the Alaska experience, is the journey to reach it. While not difficult, compared to 50 years ago, it is still a bit of a jaunt by today's standards. With the last connecting flight being a float plane, you are truly primed for an Alaskan fishing trip. The first day on the boat was amazing. Making our first run to the fishing grounds through the fog, we began to get a "feel" for our captain(Lee) and guide; a young native Alaskan, who upon making a wrong turn in the fog, grinned and explained that he wasn't used to this boat. hmmm.
As we made it through the islands and open Alaskan ocean and into the fishing grounds, I looked and saw several other boats drifting through and hooking up with fish, the adrenalin started flowing and I couldn't wait to get my line in the water.
After receiving instructions from our guide and one of the other, more experienced, members of our group(Eddie), I dropped in my line and began the "top to bottom" technique that would dominate the trip. This simply means dropping your bait to the ocean floor and immediately retrieving it all the way to the surface and then repeating the process. This gives your bait exposure to the bottom feeders as well as the more aggressive and unpredictable Salmon who, as the captain explained, could be hanging out at any depth.
I'm not sure if I hooked up with any Silvers(Salmon) first or whether it was a King that first took my bait, but catching a King salmon first, makes for a better fish story, so I'll stick with that. It wasn't a huge fish by King standards but it was big and it was a King Salmon and I was thrilled. Time went on, several Silvers were boated and another King was nabbed by Eddie, of roughly the same size, and then it happened;
At first I thought I had just hooked up with another fish but as the momentum built, our guide said confidently that I had a King on my line, a big one. He directed everyone to pull in and the fight was on. Later, someone said it lasted for a half hour, another said 45 minutes, again I'll stick with the better story of 45, because afterwards it felt like an eternity. During that time that fish almost spooled me twice(ran out all my line). At one time, Lee said "how much line do you have left?". I looked down at my reel and it looked like a single wrap of cellophane around a thimble.
I grunted "not much!"
He replied "reel faster" as he gunned the little outboard "kicker" toward the chase.
At another point the stubborn salmon ran under the boat. The danger here is that if he rubs the line across the keel or other sharp part of the boat he can cut your line. So all I could do was jam the tip of my rod underwater to try and clear the bottom of the boat. It was at this point that I turned into Captain Quint from the movie Jaws. "he's gone under the boat!" I yelled and I might have even included the pirates "arrg" with it. Lee spun the boat and cleared my line and it was back to work again.
At one point, I'm not sure of the chronology of it, a snapshot was taken by my brain that will stay with me forever. A picture of a brief moment in time, that took my breath away; there in the distance, running directly away from me and toward the open ocean, he broke the surface. With the line singing off my reel, he came out of the water like a torpedo, straight as an arrow and not losing any momentum. As he sailed through the air, something unintelligible escaped my mouth and "click" the moment was eternally captured in the camera of my mind.
As time wore on, my arms began to burn and the only things that kept me going were pride and the repeated urging from the captain of "reel faster". Then the fish gave me a break. He bunkered up at about sixty feet and took a break. He kept swimming and so kept tension on the line, but at that point the real fight had left him. I was able to shake out my arms and get the blood going back into my hands, sending oxygen to my starving muscles.
After the short respite, he began again and the gut check was back on. As I continued to make ground on the stubborn fish, I was exhausted to the point of reeling in square circles. A hurky jerky motion, no angler would be proud of, but anyone has been there, knows what I'm describing.
Another surreal moment came when at one stage of the fight, Eddie who is never given over to much exaggeration, quietly and calmly said "Now JT, I don't want to make you nervous but, remember that fish you caught a little while ago?(my first King), well this one's twice that size."
He made me nervous.
As the King neared the boat, he gave a few more attempts at escape. It was at this point that I really began to think of everything that could still go wrong, I thought "don't you dare let him get away" and the terror of losing this fight began to materialise. More adrenalin kicked in and I summoned up enough strength to finish the fight.
As Lee finally got the net around him and, with help from Eddie, they hauled the fish aboard I got my first good look at the Whisky Fish.
Now, not being familiar with the term and clearly not aware of what I had just accomplished, I was curious about why the captain was jumping up and down hugging me and yelling "you got the Whisky Fish!"
I looked around at my girlfriend Lynn, who, only moments before was struggling against sea sickness, was jumping up and down screaming with delight and stoic Eddie had a big wide grin. Our other group member, Jim gave me a high five which I was barely able to return with a shaky hand and the reality that, hey, this might actually be a really big fish, began to take form.
After the Captain finished calling his fellow captains from the lodge on the radio and telling them that, not only were we "on the Kings", but that we also had caught the elusive Whisky Fish, the rest of the boat started fishing again.
The rest of the day was wonderful.
Eddie nailed another really big King, but even as he was reeling it in, he gave me a wink to tell me "don't worry you've still got the biggest fish". He also hammered the bottom fishing out in the deep water and the Silvers were piling up at his feet.
Lynn, Bravely fought the sea sickness and continued to fish. And while she boated a halibut and caught a couple monster Ling Cod that we had to cut loose, she didn't have many fish to show for her efforts. She was having fun, but was clearly yearning to catch some Salmon. A curse that she would later destroy on our final day of fishing.
Jim had a respectable day and went on the following day, to catch his own monster King.
As for me, that was the last King I would catch on this trip.
As we finally came back to the lodge, word had gotten out that we had bagged the Whisky Fish, and the dock was filled with the other boat captains as well as all the guests. There was back patting and picture taking and generally a bit of a festive mood all the way around. It was my tiny 10 minutes of fame and it was great.
But what's with the Whisky Fish?
After the group on the docks dispersed one of the deck hands from the biggest boat came over and said that Lee wanted to see me on it. So I went over and was invited aboard and into the cabin. There sat all the captains from the lodge, around a monster bottle of Crown Royale, which we proceeded to pass around as I recounted my fish story. Their excitement was genuine as I told of the various aspects of the fight and they interjected their own fishing tales throughout, with much laughter and many more tugs at the bottle. I was briefly invited into their world as I had passed the test and was temporarily a fisherman in their eyes. The following day I would return to being just another guest, but for that brief moment, I was on an episode of "After the Catch"
Any fish over 50 pounds is a Whisky Fish and the owner of the boat buys the captain a bottle of Crown.
Mine was the only Whisky Fish of the season it weighed in at 54 pounds and it represented the return of Captain Lee's Mojo. He had been on a losing streak this season and was clearly relieved that it was broken.
One of the captains informed me that he had fished all his life and his best was 49.
Sure there have been bigger fish, Lee bagged a 64 the year before and further north in the Kenai they get bigger still.
All in all it was a phenomenal trip and I am eternally grateful to the Whisky Fish. Cheers!
Good Luck and Godspeed
JT
So for those of you not interested in that story, I will again apologise. My attentions in this post will be toward that trip. However after reviewing my portfolio and the current financial climate, I find no pending emergencies and I am quite pleased with current positions.
Now on to the fish story:
It occurred to me upon arrival on the Prince of Wales Island in the city of Craig, Alaska, that part of the Alaska experience, is the journey to reach it. While not difficult, compared to 50 years ago, it is still a bit of a jaunt by today's standards. With the last connecting flight being a float plane, you are truly primed for an Alaskan fishing trip. The first day on the boat was amazing. Making our first run to the fishing grounds through the fog, we began to get a "feel" for our captain(Lee) and guide; a young native Alaskan, who upon making a wrong turn in the fog, grinned and explained that he wasn't used to this boat. hmmm.
As we made it through the islands and open Alaskan ocean and into the fishing grounds, I looked and saw several other boats drifting through and hooking up with fish, the adrenalin started flowing and I couldn't wait to get my line in the water.
After receiving instructions from our guide and one of the other, more experienced, members of our group(Eddie), I dropped in my line and began the "top to bottom" technique that would dominate the trip. This simply means dropping your bait to the ocean floor and immediately retrieving it all the way to the surface and then repeating the process. This gives your bait exposure to the bottom feeders as well as the more aggressive and unpredictable Salmon who, as the captain explained, could be hanging out at any depth.
I'm not sure if I hooked up with any Silvers(Salmon) first or whether it was a King that first took my bait, but catching a King salmon first, makes for a better fish story, so I'll stick with that. It wasn't a huge fish by King standards but it was big and it was a King Salmon and I was thrilled. Time went on, several Silvers were boated and another King was nabbed by Eddie, of roughly the same size, and then it happened;
At first I thought I had just hooked up with another fish but as the momentum built, our guide said confidently that I had a King on my line, a big one. He directed everyone to pull in and the fight was on. Later, someone said it lasted for a half hour, another said 45 minutes, again I'll stick with the better story of 45, because afterwards it felt like an eternity. During that time that fish almost spooled me twice(ran out all my line). At one time, Lee said "how much line do you have left?". I looked down at my reel and it looked like a single wrap of cellophane around a thimble.
I grunted "not much!"
He replied "reel faster" as he gunned the little outboard "kicker" toward the chase.
At another point the stubborn salmon ran under the boat. The danger here is that if he rubs the line across the keel or other sharp part of the boat he can cut your line. So all I could do was jam the tip of my rod underwater to try and clear the bottom of the boat. It was at this point that I turned into Captain Quint from the movie Jaws. "he's gone under the boat!" I yelled and I might have even included the pirates "arrg" with it. Lee spun the boat and cleared my line and it was back to work again.
At one point, I'm not sure of the chronology of it, a snapshot was taken by my brain that will stay with me forever. A picture of a brief moment in time, that took my breath away; there in the distance, running directly away from me and toward the open ocean, he broke the surface. With the line singing off my reel, he came out of the water like a torpedo, straight as an arrow and not losing any momentum. As he sailed through the air, something unintelligible escaped my mouth and "click" the moment was eternally captured in the camera of my mind.
As time wore on, my arms began to burn and the only things that kept me going were pride and the repeated urging from the captain of "reel faster". Then the fish gave me a break. He bunkered up at about sixty feet and took a break. He kept swimming and so kept tension on the line, but at that point the real fight had left him. I was able to shake out my arms and get the blood going back into my hands, sending oxygen to my starving muscles.
After the short respite, he began again and the gut check was back on. As I continued to make ground on the stubborn fish, I was exhausted to the point of reeling in square circles. A hurky jerky motion, no angler would be proud of, but anyone has been there, knows what I'm describing.
Another surreal moment came when at one stage of the fight, Eddie who is never given over to much exaggeration, quietly and calmly said "Now JT, I don't want to make you nervous but, remember that fish you caught a little while ago?(my first King), well this one's twice that size."
He made me nervous.
As the King neared the boat, he gave a few more attempts at escape. It was at this point that I really began to think of everything that could still go wrong, I thought "don't you dare let him get away" and the terror of losing this fight began to materialise. More adrenalin kicked in and I summoned up enough strength to finish the fight.
As Lee finally got the net around him and, with help from Eddie, they hauled the fish aboard I got my first good look at the Whisky Fish.
Now, not being familiar with the term and clearly not aware of what I had just accomplished, I was curious about why the captain was jumping up and down hugging me and yelling "you got the Whisky Fish!"
I looked around at my girlfriend Lynn, who, only moments before was struggling against sea sickness, was jumping up and down screaming with delight and stoic Eddie had a big wide grin. Our other group member, Jim gave me a high five which I was barely able to return with a shaky hand and the reality that, hey, this might actually be a really big fish, began to take form.
After the Captain finished calling his fellow captains from the lodge on the radio and telling them that, not only were we "on the Kings", but that we also had caught the elusive Whisky Fish, the rest of the boat started fishing again.
The rest of the day was wonderful.
Eddie nailed another really big King, but even as he was reeling it in, he gave me a wink to tell me "don't worry you've still got the biggest fish". He also hammered the bottom fishing out in the deep water and the Silvers were piling up at his feet.
Lynn, Bravely fought the sea sickness and continued to fish. And while she boated a halibut and caught a couple monster Ling Cod that we had to cut loose, she didn't have many fish to show for her efforts. She was having fun, but was clearly yearning to catch some Salmon. A curse that she would later destroy on our final day of fishing.
Jim had a respectable day and went on the following day, to catch his own monster King.
As for me, that was the last King I would catch on this trip.
As we finally came back to the lodge, word had gotten out that we had bagged the Whisky Fish, and the dock was filled with the other boat captains as well as all the guests. There was back patting and picture taking and generally a bit of a festive mood all the way around. It was my tiny 10 minutes of fame and it was great.
But what's with the Whisky Fish?
After the group on the docks dispersed one of the deck hands from the biggest boat came over and said that Lee wanted to see me on it. So I went over and was invited aboard and into the cabin. There sat all the captains from the lodge, around a monster bottle of Crown Royale, which we proceeded to pass around as I recounted my fish story. Their excitement was genuine as I told of the various aspects of the fight and they interjected their own fishing tales throughout, with much laughter and many more tugs at the bottle. I was briefly invited into their world as I had passed the test and was temporarily a fisherman in their eyes. The following day I would return to being just another guest, but for that brief moment, I was on an episode of "After the Catch"
Any fish over 50 pounds is a Whisky Fish and the owner of the boat buys the captain a bottle of Crown.
Mine was the only Whisky Fish of the season it weighed in at 54 pounds and it represented the return of Captain Lee's Mojo. He had been on a losing streak this season and was clearly relieved that it was broken.
One of the captains informed me that he had fished all his life and his best was 49.
Sure there have been bigger fish, Lee bagged a 64 the year before and further north in the Kenai they get bigger still.
All in all it was a phenomenal trip and I am eternally grateful to the Whisky Fish. Cheers!
Good Luck and Godspeed
JT
Monday, June 15, 2009
A Moment Of Clarity
In a rare opportunity to sit and enjoy the ambiance and view of the Bay with one of my favorite people, I met up with Fred at a local seafood shop. We finally had a chance to sit and talk about investing. Fred is a broker for a great company many of you would recognize by name. And as with most large brokerages, their policy is buy and hold for life. So I'm not giving away any trade secrets.
Fred, being the really great person that he is, has felt his clients pain as they have taken a beating in this last stock crash. I can see the concern he has for people he has known for years, clients as well as friends, and I can tell that my oft stated opinions on the direction of the markets and economy, don't sit well with him.
We discussed many things but I'm afraid I missed an opportunity to illustrate my concerns.
Fred asked me why I believed that the markets were going to crash again. Rather than explain my overall view, I pulled out just one of the many things that come together to complete "The Big Picture".
So Fred, here's what I should have said;
It all started a few years ago when I read a book by Harry S. Dent, The Next Great Bubble Boom Ahead. Mr. Dent, while not perfect, has been spooky accurate in his predictions. His research on demographics are incredibly insightful and it is not possible for me, to ignore the implications. One of his overarching concerns was the cycle of retiring Baby Boomers. The economic effects of this segment of the population have been, and continue to be, profound and they are impossible to deny. Mr Dent does an excellent job of explaining this. That's just one piece of the puzzle, and his book contains a multitude.
Another piece comes from my research into precious metals and as my regular readers know, the historical cycles are well established and we have been following those patterns perfectly.
Yet another chunk of evidence comes from the political climate that we are in and it seems as if, for years, our leaders have had no regard for the lessons of history and indeed seem to be rushing toward disaster with oblivious glee. If my aim was to destroy a country's financial health, I would do everything that these clowns have been doing for the last 20 years. Starting with "Read My Lips, , ," and culminating with "Hope and Change". And yes, I am including Alan Greenspan, Ben Bernanke Hank Paulson, Et all, on the list of big shoe, red nose and funny hat crowd.
And then there are the Kondratieff Wave theories. Without boring you to tears with the details, suffice to say that, when applied to the last 300 hundred years, these cycles have repeated themselves roughly every 50 years without fail. With the current downtrend looking to bottom in 2020. That's 10 years of decline before we can look toward expansion.
Just the one fact, that no country has ever devalued it's currency with successful financial results, in 4 thousand years, is enough to make me trade in my cash for tangible assets. But when you add in all the above and think about levels of Government debt, spending and revenue generation, and the ignorance of a population willing to embrace socialism, it is impossible for me to come to any other conclusion than this, we are facing the perfect storm.
I am constantly researching and for every positive economic argument I come up with, there are 5 counter arguments which negate it.
There is one intangible positive out there. and while it is impossible to quantify it is also impossible to ignore. That is the inventive, ingenious, stubborn, indomitable American spirit.
That's our wild card.
So while I can't ignore the gathering storm clouds, I still have some hope that we can sail around it. But I am continuing to rig for stormy weather.
So Fred, I hope that answers your question more precisely.
Will I be right about my dire predictions? For once in my life I would welcome being wrong and Lord, I hope I am.
With all that said, the portfolio I have put together should do well in a booming economy as well. I will continue to look for those assets that are in demand no matter what the economy does. People will always need to eat, they will always consume energy, they will always need clothing and shelter. And even in the worst of times they will always seek entertainment. Which brings me back to seeing Fred over looking the bay and sipping a glass of wine. Alcohol should be added to my portfolio. I'll find us a good one for next time.
Good Luck and Godspeed
JT
Fred, being the really great person that he is, has felt his clients pain as they have taken a beating in this last stock crash. I can see the concern he has for people he has known for years, clients as well as friends, and I can tell that my oft stated opinions on the direction of the markets and economy, don't sit well with him.
We discussed many things but I'm afraid I missed an opportunity to illustrate my concerns.
Fred asked me why I believed that the markets were going to crash again. Rather than explain my overall view, I pulled out just one of the many things that come together to complete "The Big Picture".
So Fred, here's what I should have said;
It all started a few years ago when I read a book by Harry S. Dent, The Next Great Bubble Boom Ahead. Mr. Dent, while not perfect, has been spooky accurate in his predictions. His research on demographics are incredibly insightful and it is not possible for me, to ignore the implications. One of his overarching concerns was the cycle of retiring Baby Boomers. The economic effects of this segment of the population have been, and continue to be, profound and they are impossible to deny. Mr Dent does an excellent job of explaining this. That's just one piece of the puzzle, and his book contains a multitude.
Another piece comes from my research into precious metals and as my regular readers know, the historical cycles are well established and we have been following those patterns perfectly.
Yet another chunk of evidence comes from the political climate that we are in and it seems as if, for years, our leaders have had no regard for the lessons of history and indeed seem to be rushing toward disaster with oblivious glee. If my aim was to destroy a country's financial health, I would do everything that these clowns have been doing for the last 20 years. Starting with "Read My Lips, , ," and culminating with "Hope and Change". And yes, I am including Alan Greenspan, Ben Bernanke Hank Paulson, Et all, on the list of big shoe, red nose and funny hat crowd.
And then there are the Kondratieff Wave theories. Without boring you to tears with the details, suffice to say that, when applied to the last 300 hundred years, these cycles have repeated themselves roughly every 50 years without fail. With the current downtrend looking to bottom in 2020. That's 10 years of decline before we can look toward expansion.
Just the one fact, that no country has ever devalued it's currency with successful financial results, in 4 thousand years, is enough to make me trade in my cash for tangible assets. But when you add in all the above and think about levels of Government debt, spending and revenue generation, and the ignorance of a population willing to embrace socialism, it is impossible for me to come to any other conclusion than this, we are facing the perfect storm.
I am constantly researching and for every positive economic argument I come up with, there are 5 counter arguments which negate it.
There is one intangible positive out there. and while it is impossible to quantify it is also impossible to ignore. That is the inventive, ingenious, stubborn, indomitable American spirit.
That's our wild card.
So while I can't ignore the gathering storm clouds, I still have some hope that we can sail around it. But I am continuing to rig for stormy weather.
So Fred, I hope that answers your question more precisely.
Will I be right about my dire predictions? For once in my life I would welcome being wrong and Lord, I hope I am.
With all that said, the portfolio I have put together should do well in a booming economy as well. I will continue to look for those assets that are in demand no matter what the economy does. People will always need to eat, they will always consume energy, they will always need clothing and shelter. And even in the worst of times they will always seek entertainment. Which brings me back to seeing Fred over looking the bay and sipping a glass of wine. Alcohol should be added to my portfolio. I'll find us a good one for next time.
Good Luck and Godspeed
JT
Sunday, May 31, 2009
Just The Facts Ma'am
For those of you too young to remember, the title is a quote from a TV series named Dragnet, starring Jack Webb. Webb as Sargent Joe Friday delivers this line as an admonishment to an emotional rant from a crime witness. In other words, stop with the hysteria and give me the straight poop.
I strive to be as positive and constructive as possible. Sometimes I fail. Sometimes I am driven to failure by people who are determined to pee in my Cheerios. Some of the things that I unearth in researching investment opportunities have that same effect on me.
That having been said, in an effort to avoid tainting your breakfast cereal, don't read this if you want someone to blow sunshine up your butt.
Here's the link for those of you who can handle the graphic image and to follow along at home; http://www.usdebtclock.org/
Warning; this stuff is scary.
So here goes, Just The Facts;
National debt, 11.3 Trillion and rising
US Spending year to date, 1.68 Trillion and rising
Tax revenue, 974 billion and rising
Budget deficit 749 billion and rising
Here is the impact on you;
Debt per citizen, $36,920.00
US Govt. spending per citizen, YTD, $5,387.00
Private debt, 6.97 Trillion
Private debt per citizen $22,862.00
US Unfunded liabilities (what we are committed to pay for Medicare, Prescription drugs and Social Security) 57 Trillion
Liability per citizen, $188,406.00
So if we add up US Government debt per person, private debt per person, and unfunded liability per person, we come up with, $248,188.00.
Just the facts.
These are the numbers, as of Today.
If we stop right now.
Now for my personal opinion;
We won't stop now. Washington is just beginning to ramp up the spending.
Please understand that these numbers reflect a trend that is relatively new in this country. 30 years new.
It is not, however, new in historical terms. It has happened over and over again throughout history and every time it happens, countries, governments and civilizations fall.
So just because we have seen deficit spending and increasing national debt for most of our lives, please don't for a moment, think that this is sustainable, it is not.
The question is, which generation will pay our debts?
Even if we wanted to pass the buck down the road to our kids or grand kids (which I believe to be despicable and morally bankrupt), I seriously doubt that the "buck" will last that long.
I used to think we could stop this and reverse the trend, but I no longer believe that we have the ability, collective societal education or self discipline.
So where does that leave us?
With the absolute need to remain positive.
I realise after my dire predictions that sounds ludicrous, but it is not. Being prepared is positive. Being proactive is positive, looking to not only survive, but to thrive is positive. With every crisis comes opportunity. And while we may wish that we could avoid the pain in the future, we can be confident in our ability to turn adversity into advantage.
Be ready and stay financially nimble.
Good Luck and Godspeed
JT
I strive to be as positive and constructive as possible. Sometimes I fail. Sometimes I am driven to failure by people who are determined to pee in my Cheerios. Some of the things that I unearth in researching investment opportunities have that same effect on me.
That having been said, in an effort to avoid tainting your breakfast cereal, don't read this if you want someone to blow sunshine up your butt.
Here's the link for those of you who can handle the graphic image and to follow along at home; http://www.usdebtclock.org/
Warning; this stuff is scary.
So here goes, Just The Facts;
National debt, 11.3 Trillion and rising
US Spending year to date, 1.68 Trillion and rising
Tax revenue, 974 billion and rising
Budget deficit 749 billion and rising
Here is the impact on you;
Debt per citizen, $36,920.00
US Govt. spending per citizen, YTD, $5,387.00
Private debt, 6.97 Trillion
Private debt per citizen $22,862.00
US Unfunded liabilities (what we are committed to pay for Medicare, Prescription drugs and Social Security) 57 Trillion
Liability per citizen, $188,406.00
So if we add up US Government debt per person, private debt per person, and unfunded liability per person, we come up with, $248,188.00.
Just the facts.
These are the numbers, as of Today.
If we stop right now.
Now for my personal opinion;
We won't stop now. Washington is just beginning to ramp up the spending.
Please understand that these numbers reflect a trend that is relatively new in this country. 30 years new.
It is not, however, new in historical terms. It has happened over and over again throughout history and every time it happens, countries, governments and civilizations fall.
So just because we have seen deficit spending and increasing national debt for most of our lives, please don't for a moment, think that this is sustainable, it is not.
The question is, which generation will pay our debts?
Even if we wanted to pass the buck down the road to our kids or grand kids (which I believe to be despicable and morally bankrupt), I seriously doubt that the "buck" will last that long.
I used to think we could stop this and reverse the trend, but I no longer believe that we have the ability, collective societal education or self discipline.
So where does that leave us?
With the absolute need to remain positive.
I realise after my dire predictions that sounds ludicrous, but it is not. Being prepared is positive. Being proactive is positive, looking to not only survive, but to thrive is positive. With every crisis comes opportunity. And while we may wish that we could avoid the pain in the future, we can be confident in our ability to turn adversity into advantage.
Be ready and stay financially nimble.
Good Luck and Godspeed
JT
Wednesday, May 20, 2009
Update
Well, since the various schools around the country are starting to wind down for the summer break, I thought it would be a good time to evaluate my performance on a few picks.
Here are my grades;
Gold A+
I have been championing gold personally and publicly for more than 8 years and I'm still an advocate. In fact more today than ever before. I'm up over 400 percent on this one.
Hold, Buy below $800
Silver A
While I am more bullish on silver than ever, it has taken more abuse than gold in recent pull backs. That having been said I think this grade will be A++ before all is said and done. I'm up 100% here.
Strong Buy/Accumulate. Buy below $16.50
Dow Chemicals (DOW) F-
Wow did I ever screw up on this pick, I caught the falling knife, blade first on this one. I would have been fine had I set my stop 50 cents lower. I was looking for support at $8.50 and it broke down below that, triggering the sale and then, it proceeded to rally to over 16 bucks a share, which is what I paid for it. Oops! That's proof that I make mistakes too. I took a fifty percent haircut on this one. This also demonstrates the importance of position sizing.
Position closed
Johnson and Johnson (JNJ) C-, D+
Down 10%
Hold
Van Eck Global Market Vectors Coal (KOL) A
Up %19
Accumulate
Market Vectors Agri-business (MOO) A
UP %27
Accumulate
Kinder Morgan Energy Partners (KMP) A
Up %5 in 2 months
Accumulate
ProShares UltraShort 20+ year Treasuries (TBT) A
Up %22 in 5 months
Accumulate
Chesapeake Energy (CHK) C
Unchanged
Buy
Not too bad all things considered.
This is not my whole portfolio. This list, just represents what I have been writing about in this blog. I have many other positions in resource and junior resource companies that I have been accumulating for quite some time. Since I am in the accumulate mode in this sector, the radical pull back that wiped out so much value for so many people, allowed me to add to those positions at bargain basement prices. This is the speculative portion of my portfolio and I would not recommend these stocks as investment vehicles for any one, other than a seasoned trader.
The ones listed here, however, should continue to perform going forward, beware of a pull back this month, as I wrote about in my last post. This may or may not happen, if it does, I plan on using it as an opportunity to expand the positions in my "accumulate" rated stocks.
As for my percentages on gold and silver, they represent a much larger time span and they predate this blog. For instance silver; I acquired some shares or ounces at around 4 bucks, some at 5,6,10, 11, 17, 18, 14 and 12. The %100 gain is from the average cost of my holdings. Which works out to about 7 bucks an oz. The thing to be observed here is that you can afford to mistime the market if you are always buying on pullbacks in a cyclical bull market. That is how to "accumulate" a position. The trick is in knowing when it turns from a bull to a bear. We ain't there yet but it'll be dramatic right before it turns.
Good Luck and Godspeed
JT
Legal disclaimer: This post is for informational purposes only and is solely the opinion of the writer. Nothing in this post should be considered investment advice. Before investing in anything, the reader is encouraged to do his or her own research and consult with a certified financial advisor, which John Tompkins makes no claim to be. John Tompkins and Toro Creek Investments accept no liability for financial losses or damages incurred by the reader because of this post
Here are my grades;
Gold A+
I have been championing gold personally and publicly for more than 8 years and I'm still an advocate. In fact more today than ever before. I'm up over 400 percent on this one.
Hold, Buy below $800
Silver A
While I am more bullish on silver than ever, it has taken more abuse than gold in recent pull backs. That having been said I think this grade will be A++ before all is said and done. I'm up 100% here.
Strong Buy/Accumulate. Buy below $16.50
Dow Chemicals (DOW) F-
Wow did I ever screw up on this pick, I caught the falling knife, blade first on this one. I would have been fine had I set my stop 50 cents lower. I was looking for support at $8.50 and it broke down below that, triggering the sale and then, it proceeded to rally to over 16 bucks a share, which is what I paid for it. Oops! That's proof that I make mistakes too. I took a fifty percent haircut on this one. This also demonstrates the importance of position sizing.
Position closed
Johnson and Johnson (JNJ) C-, D+
Down 10%
Hold
Van Eck Global Market Vectors Coal (KOL) A
Up %19
Accumulate
Market Vectors Agri-business (MOO) A
UP %27
Accumulate
Kinder Morgan Energy Partners (KMP) A
Up %5 in 2 months
Accumulate
ProShares UltraShort 20+ year Treasuries (TBT) A
Up %22 in 5 months
Accumulate
Chesapeake Energy (CHK) C
Unchanged
Buy
Not too bad all things considered.
This is not my whole portfolio. This list, just represents what I have been writing about in this blog. I have many other positions in resource and junior resource companies that I have been accumulating for quite some time. Since I am in the accumulate mode in this sector, the radical pull back that wiped out so much value for so many people, allowed me to add to those positions at bargain basement prices. This is the speculative portion of my portfolio and I would not recommend these stocks as investment vehicles for any one, other than a seasoned trader.
The ones listed here, however, should continue to perform going forward, beware of a pull back this month, as I wrote about in my last post. This may or may not happen, if it does, I plan on using it as an opportunity to expand the positions in my "accumulate" rated stocks.
As for my percentages on gold and silver, they represent a much larger time span and they predate this blog. For instance silver; I acquired some shares or ounces at around 4 bucks, some at 5,6,10, 11, 17, 18, 14 and 12. The %100 gain is from the average cost of my holdings. Which works out to about 7 bucks an oz. The thing to be observed here is that you can afford to mistime the market if you are always buying on pullbacks in a cyclical bull market. That is how to "accumulate" a position. The trick is in knowing when it turns from a bull to a bear. We ain't there yet but it'll be dramatic right before it turns.
Good Luck and Godspeed
JT
Legal disclaimer: This post is for informational purposes only and is solely the opinion of the writer. Nothing in this post should be considered investment advice. Before investing in anything, the reader is encouraged to do his or her own research and consult with a certified financial advisor, which John Tompkins makes no claim to be. John Tompkins and Toro Creek Investments accept no liability for financial losses or damages incurred by the reader because of this post
Monday, April 27, 2009
Sell in May? Or right now?
The old adage of "Sell in May and go away" is well known and well played by many on and off The Street. The thought is that many traders simply take the summer off. Whether this is truly the case, is debatable. There are indicators that show a drop in volume during these summer months and trends tend towards the negative. The problem is, as always, determining how to play this. Is this simply a case of self-fulfilling prophesy? I think it probably is. Whatever the cause, I believe this May will be a good time to visit Hawaii.
Does this mean sell everything? absolutely not. But I am moving out of some of my more speculative holdings and shoring up my core positions. I think, at this time, being in cash is not the answer. If you are a short seller I think that this would be a great time to go short several areas. The financials are ripe for another sell off. This would probably cause other stronger sectors to sell off as well and may present another buying opportunity for some other sectors like commodities and energy. Look for disappointment in the usual summer oil rally. I do think oil will return to the $70 neighborhood but not for some time.
Furthermore, this move in precious metals may be another head fake but it doesn't matter I'm still extremely bullish on precious metals and am enjoying buying silver anywhere around 12 bucks. I can't believe that the markets are letting me accumulate at these prices.
I apologise for the short post today but things have really not changed much. The overall Macro picture is playing out exactly as expected and the trend is still in place. The only thing to concentrate on is your short term trades and those moves are typically difficult to predict, so protect yourself against next month and don't be surprised if a sell off happens before May. Traders don't like to "react" They want to be in position ahead of time. If you are reacting, you are probably loosing money and setting your self to lose more of same.
Good Luck and Godspeed
JT
Legal disclaimer: This post is for informational purposes only and is solely the opinion of the writer. Nothing in this post should be considered investment advice. Before investing in anything, the reader is encouraged to do his or her own research and consult with a certified financial advisor, which John Tompkins makes no claim to be. John Tompkins and Toro Creek Investments accept no liability for financial losses or damages incurred by the reader because of this post
Does this mean sell everything? absolutely not. But I am moving out of some of my more speculative holdings and shoring up my core positions. I think, at this time, being in cash is not the answer. If you are a short seller I think that this would be a great time to go short several areas. The financials are ripe for another sell off. This would probably cause other stronger sectors to sell off as well and may present another buying opportunity for some other sectors like commodities and energy. Look for disappointment in the usual summer oil rally. I do think oil will return to the $70 neighborhood but not for some time.
Furthermore, this move in precious metals may be another head fake but it doesn't matter I'm still extremely bullish on precious metals and am enjoying buying silver anywhere around 12 bucks. I can't believe that the markets are letting me accumulate at these prices.
I apologise for the short post today but things have really not changed much. The overall Macro picture is playing out exactly as expected and the trend is still in place. The only thing to concentrate on is your short term trades and those moves are typically difficult to predict, so protect yourself against next month and don't be surprised if a sell off happens before May. Traders don't like to "react" They want to be in position ahead of time. If you are reacting, you are probably loosing money and setting your self to lose more of same.
Good Luck and Godspeed
JT
Legal disclaimer: This post is for informational purposes only and is solely the opinion of the writer. Nothing in this post should be considered investment advice. Before investing in anything, the reader is encouraged to do his or her own research and consult with a certified financial advisor, which John Tompkins makes no claim to be. John Tompkins and Toro Creek Investments accept no liability for financial losses or damages incurred by the reader because of this post
Sunday, April 5, 2009
To my Friends and Family
For my regular readers this weeks post may seem a little redundant, but as the title suggests, I am targeting my family and friends with this article. Why? because the time is upon us to act decisively.
But before I launch into my speech I would like to preface it by making the following distinction;
This is not a political issue. It's just fundamental analysis. I don't care to evaluate the policies just the implications of those policies. If you are on the right I apologise, if you are on the left, I apologise and if you are in the middle, I probably don't have to apologise, but I will just in case. Sorry everybody.
The reason for my concern for family and friends, is that I don't want to see you suffer the consequences of a government gone mad. I don't see anything that can reverse the path that we are on and that path will lead to inflation. Serious inflation. The creation of money on this magnitude can only lead to inflation.
Let me say that again in a different way.
There is no other reaction to an increase in the supply of dollars, than inflation. It's a cause and effect relationship.
If you take that at face value and forget politics, there is only one reaction that you can have; And that is to protect your family and friends from this hidden tax increase.
How is this a hidden tax?
The best way to look at that is to think about what a politician must do if he wants a new program and there is no available money to pay for it. They can either borrow money or increase revenue, that's it, those are their only options. Wait, there is one more option they have now that we are no longer on a gold standard, they can just wave a magic wand and create more money.
Well heck, waving the magic wand sounds pretty easy. You don't piss off voters by raising their taxes, in fact you make them happy by giving them what they want. You don't have to make those annoying debt payments on borrowed money. In fact by making more money out of thin air you actually make the existing debt smaller. Even better!
What politician wouldn't like this. The best part is that when voters look at their savings and their paychecks they won't see that hidden tax, they'll just say that "man, things are getting more and more expensive, it must be those greedy Wall Street guys or those damn oil tycoons". They won't see that there are simply too many dollars chasing too few goods or services.
Why do you think politicians(on both sides of the isle), over the years, have moved us away from a currency backed by gold? It's because you can't create gold by government decree. There is a finite amount of gold in the world and when you peg your currency to that supply, you essentially cap the amount of currency that can be created to the amount of gold that exists.
The problem here, is that we have 4000 years of monetary history that tells us that every nation that has debased it's currency has failed and ended their future prosperity. It's played itself out over and over again throughout the ages and we are doing it again.
People will ultimately return to tangible wealth. Things of value, that can't be created out of thin air. Things that can't be devalued by morally bankrupt politicians. Things that are a store of value. Gold and silver have always been that store of value and they will increase in price, relative to the value of the dollar.
So to my friends and family, you have to save your money in the only form, that the government cannot devalue by endless borrowing, spending and printing. Buy real physical gold and silver and keep it somewhere safe. My preference is silver for various reasons, but I don't care, buy which ever you prefer. If you need help, let me know, I have several reliable sources I can send you to.
There are a lot of talking heads in the financial world that are advocating re-entering the stock market at these levels. I have had a lot of people telling me that I missed the boat on Bank of America. Maybe I did, I can't pick every one correctly. But I still wouldn't touch the financials with anybodies money. I don't have any faith in them and now that they have relaxed regulations on Mark to Market accounting, I am even more afraid of the banking sector. Keep in mind that while they may take off in value, there is no foundation under that house of cards and they can tumble just as fast as they did last time. If you want to come back into the markets, please do so, cautiously and buy stocks with strong underlying value and little or no debt. This storm is not over yet, in fact it's about to take a new turn, an inflationary one.
Debasing the currency has always resulted in it's destruction. This has always happened throughout history. I don't know if it will happen today, tomorrow, next year, in the next 10 years or even the next 100 years, but it will happen. What I do know with certainty is that inflation is here and now and for every dollar that they print, every dollar I have, is worth less and less. I want my friends and family to be safe and prosperous, so trade in those dollars before they are worthless.
JT
Legal disclaimer: This post is for informational purposes only and is solely the opinion of the writer. Nothing in this post should be considered investment advice. Before investing in anything, the reader is encouraged to do his or her own research and consult with a certified financial advisor, which John Tompkins makes no claim to be. John Tompkins and Toro Creek Investments accept no liability for financial losses or damages incurred by the reader because of this post
But before I launch into my speech I would like to preface it by making the following distinction;
This is not a political issue. It's just fundamental analysis. I don't care to evaluate the policies just the implications of those policies. If you are on the right I apologise, if you are on the left, I apologise and if you are in the middle, I probably don't have to apologise, but I will just in case. Sorry everybody.
The reason for my concern for family and friends, is that I don't want to see you suffer the consequences of a government gone mad. I don't see anything that can reverse the path that we are on and that path will lead to inflation. Serious inflation. The creation of money on this magnitude can only lead to inflation.
Let me say that again in a different way.
There is no other reaction to an increase in the supply of dollars, than inflation. It's a cause and effect relationship.
If you take that at face value and forget politics, there is only one reaction that you can have; And that is to protect your family and friends from this hidden tax increase.
How is this a hidden tax?
The best way to look at that is to think about what a politician must do if he wants a new program and there is no available money to pay for it. They can either borrow money or increase revenue, that's it, those are their only options. Wait, there is one more option they have now that we are no longer on a gold standard, they can just wave a magic wand and create more money.
Well heck, waving the magic wand sounds pretty easy. You don't piss off voters by raising their taxes, in fact you make them happy by giving them what they want. You don't have to make those annoying debt payments on borrowed money. In fact by making more money out of thin air you actually make the existing debt smaller. Even better!
What politician wouldn't like this. The best part is that when voters look at their savings and their paychecks they won't see that hidden tax, they'll just say that "man, things are getting more and more expensive, it must be those greedy Wall Street guys or those damn oil tycoons". They won't see that there are simply too many dollars chasing too few goods or services.
Why do you think politicians(on both sides of the isle), over the years, have moved us away from a currency backed by gold? It's because you can't create gold by government decree. There is a finite amount of gold in the world and when you peg your currency to that supply, you essentially cap the amount of currency that can be created to the amount of gold that exists.
The problem here, is that we have 4000 years of monetary history that tells us that every nation that has debased it's currency has failed and ended their future prosperity. It's played itself out over and over again throughout the ages and we are doing it again.
People will ultimately return to tangible wealth. Things of value, that can't be created out of thin air. Things that can't be devalued by morally bankrupt politicians. Things that are a store of value. Gold and silver have always been that store of value and they will increase in price, relative to the value of the dollar.
So to my friends and family, you have to save your money in the only form, that the government cannot devalue by endless borrowing, spending and printing. Buy real physical gold and silver and keep it somewhere safe. My preference is silver for various reasons, but I don't care, buy which ever you prefer. If you need help, let me know, I have several reliable sources I can send you to.
There are a lot of talking heads in the financial world that are advocating re-entering the stock market at these levels. I have had a lot of people telling me that I missed the boat on Bank of America. Maybe I did, I can't pick every one correctly. But I still wouldn't touch the financials with anybodies money. I don't have any faith in them and now that they have relaxed regulations on Mark to Market accounting, I am even more afraid of the banking sector. Keep in mind that while they may take off in value, there is no foundation under that house of cards and they can tumble just as fast as they did last time. If you want to come back into the markets, please do so, cautiously and buy stocks with strong underlying value and little or no debt. This storm is not over yet, in fact it's about to take a new turn, an inflationary one.
Debasing the currency has always resulted in it's destruction. This has always happened throughout history. I don't know if it will happen today, tomorrow, next year, in the next 10 years or even the next 100 years, but it will happen. What I do know with certainty is that inflation is here and now and for every dollar that they print, every dollar I have, is worth less and less. I want my friends and family to be safe and prosperous, so trade in those dollars before they are worthless.
JT
Legal disclaimer: This post is for informational purposes only and is solely the opinion of the writer. Nothing in this post should be considered investment advice. Before investing in anything, the reader is encouraged to do his or her own research and consult with a certified financial advisor, which John Tompkins makes no claim to be. John Tompkins and Toro Creek Investments accept no liability for financial losses or damages incurred by the reader because of this post
Sunday, March 29, 2009
Bear Market rally
As the title suggests, I'm not buying into the notion that we have reached the bottom and it's all smooth sailing from here. I find myself firmly in the camp of the profit takers. What this represents to me is opportunity. If you've made some money here, it's a good time to take something off the table and/or reallocate your portfolio. The thing to remember here is that the fundamentals of the economy haven't changed. In some data, conditions, although not as bad as forecast, are still abysmal. Don't be sucked into the argument that we've turned the corner. Nothing goes either, up or down in a straight line and until now, it's been a free fall for most asset classes. The overall trend for the broader markets is still down.
This is indeed a rally, but a rally in a bear market. This is no different than a bull market sell off.
What I mean here is treat it the same way you would if the markets were doing well and then pulled back. You would add shares on the pull back in price right? The only difference here is that we are given a chance here to either, take some profits from our new investments or recoup some losses from our older, beaten down positions, then reallocate those funds in more profitable sectors.
All of this applies to other assets only. What do I mean by "other assets"?
Everything except gold, silver and anti-dollar investments such as TBT. These things should be accumulated over time because their overall trend is up and fundamentally, that trend is still in place.
I still see serious times ahead, this rally just puts me in a place where I can correct earlier mistakes, such as DOW, sell it off and either, wait to reallocate those funds, after the next leg down, or play the down move with a short position.
So what's the best sell technique here?
Set your stops.
This is the absolute perfect time to use this sell strategy. There are a couple ways to do this, but essentially I'll be letting the market take me out.
Let's look at the DOW trade. First let me repeat, I screwed up on this one. I bought into the old line about buying blue chips and I realise now that the old blue chips are just that, old. But my mistake wasn't in buying DOW, all investors pick losers every now and then. My mistake was in holding DOW as it continued down. The buy and hold mentality took control and I figured that over the long term it was a good acquisition. It may well be, given enough time, but is it the best acquisition?
That's where we let the market decide. I'll be entering a stop loss order. What that means is that it is a conditional order to sell if the price hits a certain price level. In this case I'll dump it if it hits $8.50. Current price is $8.96. That's about 5% down from here and it's a critical support level. This trade will automatically execute with or without me around.
The advantage here is that it removes emotion from the decision. If DOW holds the support level and continues higher the trade doesn't go off and I can participate in an ongoing rally. In that case I would cancel the stop loss order and issue a new one at a higher support level. Or I can issue a trailing stop order which is the same thing, but it works off of percentage drop rather than set price levels and the stop level ratchets up with the price on it's own. I prefer to be more active and use predetermined support levels. But either method works. Your own broker may have different procedures to accomplish these trades, so do your homework and consult with your broker to learn their methods and restrictions.
If, on the other hand, DOW breaks the support level, the trade is automatically entered and executed with no further action from me. I just wake up with a new account balance and no shares of Dow Chemical.
Good luck and Godspeed
JT
This is indeed a rally, but a rally in a bear market. This is no different than a bull market sell off.
What I mean here is treat it the same way you would if the markets were doing well and then pulled back. You would add shares on the pull back in price right? The only difference here is that we are given a chance here to either, take some profits from our new investments or recoup some losses from our older, beaten down positions, then reallocate those funds in more profitable sectors.
All of this applies to other assets only. What do I mean by "other assets"?
Everything except gold, silver and anti-dollar investments such as TBT. These things should be accumulated over time because their overall trend is up and fundamentally, that trend is still in place.
I still see serious times ahead, this rally just puts me in a place where I can correct earlier mistakes, such as DOW, sell it off and either, wait to reallocate those funds, after the next leg down, or play the down move with a short position.
So what's the best sell technique here?
Set your stops.
This is the absolute perfect time to use this sell strategy. There are a couple ways to do this, but essentially I'll be letting the market take me out.
Let's look at the DOW trade. First let me repeat, I screwed up on this one. I bought into the old line about buying blue chips and I realise now that the old blue chips are just that, old. But my mistake wasn't in buying DOW, all investors pick losers every now and then. My mistake was in holding DOW as it continued down. The buy and hold mentality took control and I figured that over the long term it was a good acquisition. It may well be, given enough time, but is it the best acquisition?
That's where we let the market decide. I'll be entering a stop loss order. What that means is that it is a conditional order to sell if the price hits a certain price level. In this case I'll dump it if it hits $8.50. Current price is $8.96. That's about 5% down from here and it's a critical support level. This trade will automatically execute with or without me around.
The advantage here is that it removes emotion from the decision. If DOW holds the support level and continues higher the trade doesn't go off and I can participate in an ongoing rally. In that case I would cancel the stop loss order and issue a new one at a higher support level. Or I can issue a trailing stop order which is the same thing, but it works off of percentage drop rather than set price levels and the stop level ratchets up with the price on it's own. I prefer to be more active and use predetermined support levels. But either method works. Your own broker may have different procedures to accomplish these trades, so do your homework and consult with your broker to learn their methods and restrictions.
If, on the other hand, DOW breaks the support level, the trade is automatically entered and executed with no further action from me. I just wake up with a new account balance and no shares of Dow Chemical.
Good luck and Godspeed
JT
Legal disclaimer: This post is for informational purposes only and is solely the opinion of the writer. Nothing in this post should be considered investment advice. Before investing in anything, the reader is encouraged to do his or her own research and consult with a certified financial advisor, which John Tompkins makes no claim to be. John Tompkins and Toro Creek Investments accept no liability for financial losses or damages incurred by the reader because of this post
Sunday, March 22, 2009
New stuff!
Before getting into the main topic of today's Blog, a quick note on the silver action of the past week; After what appeared to be a bounce off the support level of 12.50, silver looked poised to rally, then it collapsed. What happened?
I don't know for certain, however it looks to be a failed attempt of the short sellers to bring down the price. I'll know more this week as the details unfold.
The interesting thing here is the action of silver after the close in New York on the 18th. After it tumbled during the day, it shot up, as the overseas markets took control. Which leads me to believe that there are some short sellers here in America that are having an Imodium AD moment.
The "gap up" in price tells me that the rest of the world thinks that silver below 12 bucks is too cheap. I agree. Personally I think silver below 50 is too cheap, but only time will tell. Depending on what happens this week, I may do a mid week post, so keep an eye out.
On to our main topic.
KMP and CHK.
Kinder Morgan Energy Partners and Chesapeake Energy Corp.
Here's how these two companies fit into the macro picture. We all witnessed the collapse of the financial sector, and how this took out many people that didn't deserve to get hit. Chesapeake was no different. In fact the CEO of this company literally put his money where his mouth was and was buying massive quantities of his own stock. He, as did many others, misjudged the severity of this downturn and as a result, got called on margin and lost a ton of his personal wealth. What he saw in his company was value, intrinsic and substantial value. They are a natural gas company with first rate drilling and transportation operations. I've been watching this company for years and the thing that attracted me to them in the beginning was the insider trading activity. Some people believe insider trading is illegal, it's not. It just has to be done under close scrutiny by the SEC and in the full light of day. The thing that flagged CHK for me was the fact that all the top people in this company were buying the shares for their personal portfolios, consistently. This is what you look for under normal market conditions, which we are decidedly not seeing right now. But the fact remains that the people in the best position to see the condition of a company, thought pretty highly of CHK before everything tanked. Now if you are of the opinion that a recovery will come some day, as am I, then we want to buy the stuff that is on sale right now and has real tangible value. A look at their chart(which I encourage you to with all stocks) shows that they have stabilised in the 15 to 20 dollar range. As a trader, I'm a buyer in the 15 dollar range and a seller at 20, but for you buy and holders, this is a great one at 15 bucks. I see some great basing action here folks and that just means that they've consolidated nicely. In addition to that, I believe the price of Nat gas is unusually low and as the price climbs, as I think it eventually will, their P/E ratio of 15.5 should plummet, making this company a steal at $15, but if I wanted a long term play, I still think it's a buy under 20. Oh yeah, their 52 week high was $74, cool huh?
Okay let's look at Kinder Morgan.
A very different story but still a Nat gas company with first class assets in place. Their volatility is quite a bit higher so if I wanted to hold this one, I'd buy the dips and avoid watching it every day. That helps cut down on the Tums. As a trader the volatility aspect only makes it more appealing. Another appealing aspect is it's yield, check this out, 9%! And there is little danger of them losing that yield. They have an interesting tax status that requires them to pay out 90% percent of their profits or risk losing exemptions. (It has been some time since I researched that, so don't quote me exactly on the 90%. There are some timber companies with that same tax status so maybe I'll dust off that research and do a blog on that in the future).
KMP's P/E is a little high at 23.6, but in this environment that just indicates that they've got some pretty good institutional support, and again that will drop as pricing power in gas improves.
Their 52 week high is $60.89 so don't expect a home run on this one. conversely their low is $35.59 which indicates some risk to the downside, but with high yielding investments being a rarity these days, I think they are relatively safe.
Good luck and Godspeed
JT
Legal disclaimer: This post is for informational purposes only and is solely the opinion of the writer. Nothing in this post should be considered investment advice. Before investing in anything, the reader is encouraged to do his or her own research and consult with a certified financial advisor, which John Tompkins makes no claim to be. John Tompkins and Toro Creek Investments accept no liability for financial losses or damages incurred by the reader because of this post
I don't know for certain, however it looks to be a failed attempt of the short sellers to bring down the price. I'll know more this week as the details unfold.
The interesting thing here is the action of silver after the close in New York on the 18th. After it tumbled during the day, it shot up, as the overseas markets took control. Which leads me to believe that there are some short sellers here in America that are having an Imodium AD moment.
The "gap up" in price tells me that the rest of the world thinks that silver below 12 bucks is too cheap. I agree. Personally I think silver below 50 is too cheap, but only time will tell. Depending on what happens this week, I may do a mid week post, so keep an eye out.
On to our main topic.
KMP and CHK.
Kinder Morgan Energy Partners and Chesapeake Energy Corp.
Here's how these two companies fit into the macro picture. We all witnessed the collapse of the financial sector, and how this took out many people that didn't deserve to get hit. Chesapeake was no different. In fact the CEO of this company literally put his money where his mouth was and was buying massive quantities of his own stock. He, as did many others, misjudged the severity of this downturn and as a result, got called on margin and lost a ton of his personal wealth. What he saw in his company was value, intrinsic and substantial value. They are a natural gas company with first rate drilling and transportation operations. I've been watching this company for years and the thing that attracted me to them in the beginning was the insider trading activity. Some people believe insider trading is illegal, it's not. It just has to be done under close scrutiny by the SEC and in the full light of day. The thing that flagged CHK for me was the fact that all the top people in this company were buying the shares for their personal portfolios, consistently. This is what you look for under normal market conditions, which we are decidedly not seeing right now. But the fact remains that the people in the best position to see the condition of a company, thought pretty highly of CHK before everything tanked. Now if you are of the opinion that a recovery will come some day, as am I, then we want to buy the stuff that is on sale right now and has real tangible value. A look at their chart(which I encourage you to with all stocks) shows that they have stabilised in the 15 to 20 dollar range. As a trader, I'm a buyer in the 15 dollar range and a seller at 20, but for you buy and holders, this is a great one at 15 bucks. I see some great basing action here folks and that just means that they've consolidated nicely. In addition to that, I believe the price of Nat gas is unusually low and as the price climbs, as I think it eventually will, their P/E ratio of 15.5 should plummet, making this company a steal at $15, but if I wanted a long term play, I still think it's a buy under 20. Oh yeah, their 52 week high was $74, cool huh?
Okay let's look at Kinder Morgan.
A very different story but still a Nat gas company with first class assets in place. Their volatility is quite a bit higher so if I wanted to hold this one, I'd buy the dips and avoid watching it every day. That helps cut down on the Tums. As a trader the volatility aspect only makes it more appealing. Another appealing aspect is it's yield, check this out, 9%! And there is little danger of them losing that yield. They have an interesting tax status that requires them to pay out 90% percent of their profits or risk losing exemptions. (It has been some time since I researched that, so don't quote me exactly on the 90%. There are some timber companies with that same tax status so maybe I'll dust off that research and do a blog on that in the future).
KMP's P/E is a little high at 23.6, but in this environment that just indicates that they've got some pretty good institutional support, and again that will drop as pricing power in gas improves.
Their 52 week high is $60.89 so don't expect a home run on this one. conversely their low is $35.59 which indicates some risk to the downside, but with high yielding investments being a rarity these days, I think they are relatively safe.
Good luck and Godspeed
JT
Legal disclaimer: This post is for informational purposes only and is solely the opinion of the writer. Nothing in this post should be considered investment advice. Before investing in anything, the reader is encouraged to do his or her own research and consult with a certified financial advisor, which John Tompkins makes no claim to be. John Tompkins and Toro Creek Investments accept no liability for financial losses or damages incurred by the reader because of this post
Monday, March 16, 2009
Resistance and Support
It's all about Resistance and support.
I called the top in silver back in my February 22 update at 14.50. The following week, March 2, I called the bottom at 12.50. In both cases I was wrong by 6 cents. I guess in the grand scheme that's not too bad, but what's next?
While no one can know with certainty, things are looking very nice right now. The current price action is encouraging in that, the markets seem to be consolidating nicely in preparation for a new run at the 14.50 resistance.
But lets talk about resistance and support as a concept for a minute. What are they?
Resistance is simply a technical analyst's term for an overbought condition, a condition where market psychology is such that the smart money gets nervous and takes some or all of their profits off the table. It's the "how and why" of the way to make money as a trader.
Support is the other end of the trade. When an asset hits a support level, it is simply another way of saying that the asset is at a fair value at that given time.
Are these indicators always right? of course not. But they are right a majority of the time.
Here is an important point to remember; Each time resistance or support holds, it gets stronger.
Another important point to remember is that, if you can break through resistance, say in this case 14.50, that resistance level becomes the new support level. And the reverse is true as well, if the support level, 12.50, is broken through on the downside, it, in turn becomes the new resistance level.
Important point #3; These concepts hold true in both bull and bear markets, the distinction that needs to be made is that in a bull market support is more likely to hold and resistance is more likely to be broken through. Conversely, in a bear market resistance is the strong one and support is more likely to be broken through.
Sometimes these things happen very quickly and are difficult to spot. But they do happen and whether or not the smart money is creating a self full filling prophecy is irrelevant. This is what they do, it's what they talk about over drinks and it's how they consistently make profits. As small players in an ocean of big fish, we can become big fish too, if we stay out of their way and feed off the scraps of their kills. Does this mean we are scavengers? no, it just means we are smaller smart money.
Here's where I see us right now, I think we will bounce around here for a very short time before moving higher. I will be surprised if we don't break through the 14.50 resistance level and have that in turn become support for a run at 16 bucks. After that we'll wet our finger and see which way the wind is blowing. If 14.50 does hold, it is simply another opportunity to add to our position down to the 12.50 level.
We are still in a bull market correction, but strength is building for a strong upward move.
James Turk is reporting of continuing backwardation in the silver futures market as well as rumors of physical bullion shortages. I'll save the definition of backwardation for another post, but suffice to say for now, this is a very bullish sign for silver.
Good luck and Godspeed
JT
Legal disclaimer: This post is for informational purposes only and is solely the opinion of the writer. Nothing in this post should be considered investment advice. Before investing in anything, the reader is encouraged to do his or her own research and consult with a certified financial advisor, which John Tompkins makes no claim to be. John Tompkins and Toro Creek Investments accept no liability for financial losses or damages incurred by the reader because of this post.
I called the top in silver back in my February 22 update at 14.50. The following week, March 2, I called the bottom at 12.50. In both cases I was wrong by 6 cents. I guess in the grand scheme that's not too bad, but what's next?
While no one can know with certainty, things are looking very nice right now. The current price action is encouraging in that, the markets seem to be consolidating nicely in preparation for a new run at the 14.50 resistance.
But lets talk about resistance and support as a concept for a minute. What are they?
Resistance is simply a technical analyst's term for an overbought condition, a condition where market psychology is such that the smart money gets nervous and takes some or all of their profits off the table. It's the "how and why" of the way to make money as a trader.
Support is the other end of the trade. When an asset hits a support level, it is simply another way of saying that the asset is at a fair value at that given time.
Are these indicators always right? of course not. But they are right a majority of the time.
Here is an important point to remember; Each time resistance or support holds, it gets stronger.
Another important point to remember is that, if you can break through resistance, say in this case 14.50, that resistance level becomes the new support level. And the reverse is true as well, if the support level, 12.50, is broken through on the downside, it, in turn becomes the new resistance level.
Important point #3; These concepts hold true in both bull and bear markets, the distinction that needs to be made is that in a bull market support is more likely to hold and resistance is more likely to be broken through. Conversely, in a bear market resistance is the strong one and support is more likely to be broken through.
Sometimes these things happen very quickly and are difficult to spot. But they do happen and whether or not the smart money is creating a self full filling prophecy is irrelevant. This is what they do, it's what they talk about over drinks and it's how they consistently make profits. As small players in an ocean of big fish, we can become big fish too, if we stay out of their way and feed off the scraps of their kills. Does this mean we are scavengers? no, it just means we are smaller smart money.
Here's where I see us right now, I think we will bounce around here for a very short time before moving higher. I will be surprised if we don't break through the 14.50 resistance level and have that in turn become support for a run at 16 bucks. After that we'll wet our finger and see which way the wind is blowing. If 14.50 does hold, it is simply another opportunity to add to our position down to the 12.50 level.
We are still in a bull market correction, but strength is building for a strong upward move.
James Turk is reporting of continuing backwardation in the silver futures market as well as rumors of physical bullion shortages. I'll save the definition of backwardation for another post, but suffice to say for now, this is a very bullish sign for silver.
Good luck and Godspeed
JT
Legal disclaimer: This post is for informational purposes only and is solely the opinion of the writer. Nothing in this post should be considered investment advice. Before investing in anything, the reader is encouraged to do his or her own research and consult with a certified financial advisor, which John Tompkins makes no claim to be. John Tompkins and Toro Creek Investments accept no liability for financial losses or damages incurred by the reader because of this post.
Wednesday, March 4, 2009
Is Ted Butler right?
For those of you not familiar with Theodore Butler, he is a former precious metals futures player turned market analyst/crusader. It is his contention, that the precious metals markets are manipulated and the silver market, in particular, has been manipulated down to artificially low prices by large investment banks taking massive short positions. On the other side of the fence his critics claim that his conclusions are fantasy bordering on fanatical. Rather than going through his claims and his reasons, I will let you do the research yourself, Mr. Butler explains it far better than I. http://www.butlerresearch.com/archive_free.html
So is he right?
Yes and No
I tend to come down on the same side of the road as David Morgan of Silver-investor.com. To paraphrase his position, Mr. Morgan believes that the overall market price is not manipulated but it can be temporarily influenced.
My position is similar, mainly because I, as well as other analysts, have been successfully calling the market tops and bottoms through the use of various charting techniques as well as fundamental analysis. This is not to say that the people who may be manipulating aren't using those techniques as well. Of course they are.
Market forces will have their way. Manipulation can only work temporarily, but "temporary" can be a relative thing. It could be weeks, months or years.
Where I find Mr Butlers position to be very useful, is in taking his analysis from the COTs (Commitment of Traders report) data and use it as a confirmation of my technical analysis. If he flags an unusually large build up or spike on the short side at the same time I find overbought or topping indicators, it just strengthens my conviction to put on a trade.
The question remains as to which comes first. Are the manipulators causing the top or are they just taking maximum advantage of technical analysis.
From a moral standpoint I stand firmly behind Mr. Butlers concerns because these banks are not merely taking obscenely large short positions, his contention is, that they are colluding with other shorts to force the price to extremes. These are not the actions that can be allowed in a free market. So his crusading, as some have called it, is a just cause.
That the regulators at the CFTC are not responsive to this issue, is of course, to be expected. Having worked for the government for so long, it comes as no great surprise that there is incompetence in the government and this ineptness, actually lends credibility to Mr. Butlers arguments.
Illegal activity right under the nose of regulators?
Can anyone say Bernie Madoff?
Stick to your analysis and look to all sources for information. It is a mistake to dismiss Mr Butlers analysis as fantasy. Puzzle pieces often take on strange and unfamiliar shapes, but when correctly put together, can present a very pretty picture.
Good Luck and Godspeed
JT
So is he right?
Yes and No
I tend to come down on the same side of the road as David Morgan of Silver-investor.com. To paraphrase his position, Mr. Morgan believes that the overall market price is not manipulated but it can be temporarily influenced.
My position is similar, mainly because I, as well as other analysts, have been successfully calling the market tops and bottoms through the use of various charting techniques as well as fundamental analysis. This is not to say that the people who may be manipulating aren't using those techniques as well. Of course they are.
Market forces will have their way. Manipulation can only work temporarily, but "temporary" can be a relative thing. It could be weeks, months or years.
Where I find Mr Butlers position to be very useful, is in taking his analysis from the COTs (Commitment of Traders report) data and use it as a confirmation of my technical analysis. If he flags an unusually large build up or spike on the short side at the same time I find overbought or topping indicators, it just strengthens my conviction to put on a trade.
The question remains as to which comes first. Are the manipulators causing the top or are they just taking maximum advantage of technical analysis.
From a moral standpoint I stand firmly behind Mr. Butlers concerns because these banks are not merely taking obscenely large short positions, his contention is, that they are colluding with other shorts to force the price to extremes. These are not the actions that can be allowed in a free market. So his crusading, as some have called it, is a just cause.
That the regulators at the CFTC are not responsive to this issue, is of course, to be expected. Having worked for the government for so long, it comes as no great surprise that there is incompetence in the government and this ineptness, actually lends credibility to Mr. Butlers arguments.
Illegal activity right under the nose of regulators?
Can anyone say Bernie Madoff?
Stick to your analysis and look to all sources for information. It is a mistake to dismiss Mr Butlers analysis as fantasy. Puzzle pieces often take on strange and unfamiliar shapes, but when correctly put together, can present a very pretty picture.
Good Luck and Godspeed
JT
Monday, March 2, 2009
Nothing new. Metals are still the place to be.
Here's the scoop; There isn't one. At least nothing new.
As I pointed out last week both gold and silver were up against strong resistance and probably, could not break through. Look for a consolidation period here before they continue their upward trends. I am sticking with 850 support for gold and 12.50 for silver. These are my buy levels. If they break below these levels we could be in for another dance with 11 bucks and 750, but I view that as highly unlikely. With current world economic events, I see a much more likely chance that they will turn around even before those support levels and resume their climb.
In times like these, I would worry about the future for precious metals, if the Government was doing anything that would strengthen the dollar. They are not. In fact the inverse is true.
If I were writing a strategy to ruin the dollar, I would be advocating everything the government is doing, as well as what they are planning on doing.
This is not a criticism of President Obama, it is a criticism of all politicians, past and present from both sides of the isle. It would be charitable for me to say that they are just uneducated in monetary history. They know, but they are saying that "this time is different".
For almost a hundred years, politicians have refused to acknowledge history's precedents.
Rather than going through examples, suffice to say, that no country has ever successfully debased their currency.
Our founding fathers were mindful of past monetary catastrophes, that is why they spelled out, very carefully, what a dollar is. When we departed from that definition, we set ourselves on a path, the destination of which, is the destruction of the dollar. Can we turn from that path and save our currency?
Probably not. In fact the opposite is true, as I already stated, I couldn't come up with a better plan to destroy the once mighty Greenback, than what our leaders are doing. Not only are they continuing past practices, the are ramping up debt at a geometrical pace, with monetary supply following closely behind.
From psychology we know that true and lasting change will not come without a "significant emotional event", and we have yet to see that happen. It's beginning but, unfortunately, much more economic pain has to occur before that significance can be realised.
Back to the gold standard?
Yes, but I realize that in our current climate, that will not happen. The entire world will have to realize the necessity of a currency backed by silver and gold, and again, that will not happen without a world wide "significant emotional event".
Am I hoping for it to happen?
Absolutely not.
In fact, I would give away every ounce of silver and gold, as well as every dollar I have, to avoid it and return to our previous standard of living. But that would do no good. Instead I am trying to get friends and family to prepare for the hurricane ahead.
I am, by nature, an optimist. I know that sounds strange following my dire predictions, but I do think we will find a way out of this and my optimism is illustrated by the belief that I will emerge from the future events in much better shape than I am entering them, but not without being prepared.
As Doug Casey from Casey research is fond of saying "Rig for stormy weather!"
Good Luck and Godspeed
JT
Legal disclaimer: This post is for informational purposes only and is solely the opinion of the writer. Nothing in this post should be considered investment advice. Before investing in anything, the reader is encouraged to do his or her own research and consult with a certified financial advisor, which John Tompkins makes no claim to be. John Tompkins and Toro Creek Investments accept no liability for financial losses or damages incurred by the reader because of this post.
As I pointed out last week both gold and silver were up against strong resistance and probably, could not break through. Look for a consolidation period here before they continue their upward trends. I am sticking with 850 support for gold and 12.50 for silver. These are my buy levels. If they break below these levels we could be in for another dance with 11 bucks and 750, but I view that as highly unlikely. With current world economic events, I see a much more likely chance that they will turn around even before those support levels and resume their climb.
In times like these, I would worry about the future for precious metals, if the Government was doing anything that would strengthen the dollar. They are not. In fact the inverse is true.
If I were writing a strategy to ruin the dollar, I would be advocating everything the government is doing, as well as what they are planning on doing.
This is not a criticism of President Obama, it is a criticism of all politicians, past and present from both sides of the isle. It would be charitable for me to say that they are just uneducated in monetary history. They know, but they are saying that "this time is different".
For almost a hundred years, politicians have refused to acknowledge history's precedents.
Rather than going through examples, suffice to say, that no country has ever successfully debased their currency.
Our founding fathers were mindful of past monetary catastrophes, that is why they spelled out, very carefully, what a dollar is. When we departed from that definition, we set ourselves on a path, the destination of which, is the destruction of the dollar. Can we turn from that path and save our currency?
Probably not. In fact the opposite is true, as I already stated, I couldn't come up with a better plan to destroy the once mighty Greenback, than what our leaders are doing. Not only are they continuing past practices, the are ramping up debt at a geometrical pace, with monetary supply following closely behind.
From psychology we know that true and lasting change will not come without a "significant emotional event", and we have yet to see that happen. It's beginning but, unfortunately, much more economic pain has to occur before that significance can be realised.
Back to the gold standard?
Yes, but I realize that in our current climate, that will not happen. The entire world will have to realize the necessity of a currency backed by silver and gold, and again, that will not happen without a world wide "significant emotional event".
Am I hoping for it to happen?
Absolutely not.
In fact, I would give away every ounce of silver and gold, as well as every dollar I have, to avoid it and return to our previous standard of living. But that would do no good. Instead I am trying to get friends and family to prepare for the hurricane ahead.
I am, by nature, an optimist. I know that sounds strange following my dire predictions, but I do think we will find a way out of this and my optimism is illustrated by the belief that I will emerge from the future events in much better shape than I am entering them, but not without being prepared.
As Doug Casey from Casey research is fond of saying "Rig for stormy weather!"
Good Luck and Godspeed
JT
Legal disclaimer: This post is for informational purposes only and is solely the opinion of the writer. Nothing in this post should be considered investment advice. Before investing in anything, the reader is encouraged to do his or her own research and consult with a certified financial advisor, which John Tompkins makes no claim to be. John Tompkins and Toro Creek Investments accept no liability for financial losses or damages incurred by the reader because of this post.
Sunday, February 22, 2009
Market update
With silver at 14.44, it is right at overhead resistance.
What happens next is a coin toss. If I was day trading silver futures I would take some profits now but retain some exposure in case it breaks through resistance. If it does break through and move higher look for more, strong resistance at around 16 dollars.
If it can't break through resistance here, it will likely fall to support levels around 12 and a half.
That is simply another buying opportunity.
In all likely hood silver can't move past 16 without some type of correction in between.
Gold is in similar circumstances with strong resistance all the way from here, 997 through to around 1020. I expect a corrective pullback from here and that will be likely to put more downward pressure on silver, further reducing the odds that it can move past 16.
I don't try and trade the silver market. I am in acquisition mode when it comes to metals. I use pullbacks as buying opportunities. Silver is too volatile to day trade without hedging. I use other markets to day trade, markets that offer more investment vehicles to reduce risk.
Despite what some experts are spouting in unified voice, "Buy and Hold" isn't dead as they would have you believe. "Buy and Hold" is alive and well, as long as you are buying the right thing.
Good luck and Godspeed
JT
Legal disclaimer: This post is for informational purposes only and is solely the opinion of the writer. Nothing in this post should be considered investment advice. Before investing in anything, the reader is encouraged to do his or her own research and consult with a certified financial advisor, which John Tompkins makes no claim to be. John Tompkins and Toro Creek Investments accept no liability for financial losses or damages incurred by the reader because of this post.
What happens next is a coin toss. If I was day trading silver futures I would take some profits now but retain some exposure in case it breaks through resistance. If it does break through and move higher look for more, strong resistance at around 16 dollars.
If it can't break through resistance here, it will likely fall to support levels around 12 and a half.
That is simply another buying opportunity.
In all likely hood silver can't move past 16 without some type of correction in between.
Gold is in similar circumstances with strong resistance all the way from here, 997 through to around 1020. I expect a corrective pullback from here and that will be likely to put more downward pressure on silver, further reducing the odds that it can move past 16.
I don't try and trade the silver market. I am in acquisition mode when it comes to metals. I use pullbacks as buying opportunities. Silver is too volatile to day trade without hedging. I use other markets to day trade, markets that offer more investment vehicles to reduce risk.
Despite what some experts are spouting in unified voice, "Buy and Hold" isn't dead as they would have you believe. "Buy and Hold" is alive and well, as long as you are buying the right thing.
Good luck and Godspeed
JT
Legal disclaimer: This post is for informational purposes only and is solely the opinion of the writer. Nothing in this post should be considered investment advice. Before investing in anything, the reader is encouraged to do his or her own research and consult with a certified financial advisor, which John Tompkins makes no claim to be. John Tompkins and Toro Creek Investments accept no liability for financial losses or damages incurred by the reader because of this post.
Sunday, February 15, 2009
Silver is performing. What's next?
So far, so good for silver, so what do we do now?
Besides wait and watch there are some things we should be looking at.
Let's start by examining where we are.
First nothing has changed to derail my overall "big picture" view of hard assets. If anything the new "stimulus" package strengthens my prediction for a weaker dollar moving forward. I still like TBT which is an ultra short position against Treasuries and the Dollar. This is a long term play, whereas I see people fleeing the dollar when the effects of the stimulus take hold and we flood the world with our currency.
So logically, since we are positioned to benefit when that happens, we are going to be selling into that price strength. But here is the rub, once we sell our position in TBT, we are going to be sitting in a cash position. The key word being cash.
You may be asking, "Well didn't you just say that you don't like cash?
I'm glad you asked.
We want that time frame, when our cash exposure is the greatest, to be very short. Having an escape plan is vital. But it's not enough to just have a selling strategy, because in this case, the asset class we are betting against, is the medium of exchange we must use to settle the trade. So where do we go to grow and protect our wealth.
More gold and silver?
Maybe, but maybe not.
The problem is that, if the dollar slides, as I believe it will, gold and silver will be much more expensive too. And they can't go higher forever. They will have to top out at some point and go the other way. So increasing our exposure to the metals, will start to appear very risky. It all depends on how deeply the damage to the dollar goes. Remember many things can happen that we don't expect. So view this as a broad and flexible plan.
The problem is determining value.
What is an apple really worth?
If it costs a dollar today for one apple, then what's it worth when, because of inflation, it costs 10 dollars?
That's the beauty of silver and gold.
Today one ounce of silver will buy you a crate of apples. When inflation hits in ernest, maybe it will buy a truckload of apples, maybe not. Who knows, there might be a shortage of apples that year or maybe a glut. The point is, that we need to identify, at that time, what value is.
For some time, I have been feeling that real estate will be that truck load of apples. If real estate continues to fall as I believe it will, it will be falling in conjunction with a falling dollar and creating a massive, once in a lifetime, buying opportunity for real estate. A perfect storm of low price relative to the dollar, a weaker dollar, and overvalued precious metals. It is at that point that you will probably be getting as sick of me writing about real estate, as you probably are, sick of me writing about silver now.
If real estate turns around before the run on precious metals, so be it. There will be a buying opportunity in some other, under valued, tangible asset at that point.
I believe that commodities like food and clothing as well as energy and materials will retain or grow their value in the future and will appear to be very expensive, but in actuality, will be fairly valued.
Real Estate will appear to be fairly valued but will actually be dirt cheap and no one is going to want to touch it. That's when we will start accumulating, with the profits from our positions against the dollar.
So from here, this is where I am concentrating my efforts; I will be increasing my knowledge about real estate and I will begin to value properties and real estate investment vehicles in terms of silver, instead of dollars. For instance if a property is valued at 300 thousand dollars, I will refer to it as being worth about 22 thousand ounces of silver. Or if you prefer, that same 300 thousand dollar house is worth 320 ounces of gold.
By doing this I will get a better idea of the true value of the investment and where it sits relative to a true measure of wealth.
I don't believe that the dollar can be counted on to be a good yard stick anymore.
One more thing, with houses being foreclosed on in record numbers, the need for rentals is going to increase, be it houses, condos or apartments, I'll be educating myself on these markets as well. Particularly apartments. All those displaced homeowners are going to need a place to live and most likely a cheap place. This may be a good interim investment before housing and commercial comes back.
Remember I am looking at long term strategies here, so I am not purchasing anything yet. Just as I am not selling anything yet. I am still accumulating real tangibles and moving decidedly out of the dollar.
Good luck and Godspeed
JT
Legal disclaimer: This post is for informational purposes only and is solely the opinion of the writer. Nothing in this post should be considered investment advice. Before investing in anything, the reader is encouraged to do his or her own research and consult with a certified financial advisor, which John Tompkins makes no claim to be. John Tompkins and Toro Creek Investments accept no liability for financial losses or damages incurred by the reader because of this post.
Besides wait and watch there are some things we should be looking at.
Let's start by examining where we are.
First nothing has changed to derail my overall "big picture" view of hard assets. If anything the new "stimulus" package strengthens my prediction for a weaker dollar moving forward. I still like TBT which is an ultra short position against Treasuries and the Dollar. This is a long term play, whereas I see people fleeing the dollar when the effects of the stimulus take hold and we flood the world with our currency.
So logically, since we are positioned to benefit when that happens, we are going to be selling into that price strength. But here is the rub, once we sell our position in TBT, we are going to be sitting in a cash position. The key word being cash.
You may be asking, "Well didn't you just say that you don't like cash?
I'm glad you asked.
We want that time frame, when our cash exposure is the greatest, to be very short. Having an escape plan is vital. But it's not enough to just have a selling strategy, because in this case, the asset class we are betting against, is the medium of exchange we must use to settle the trade. So where do we go to grow and protect our wealth.
More gold and silver?
Maybe, but maybe not.
The problem is that, if the dollar slides, as I believe it will, gold and silver will be much more expensive too. And they can't go higher forever. They will have to top out at some point and go the other way. So increasing our exposure to the metals, will start to appear very risky. It all depends on how deeply the damage to the dollar goes. Remember many things can happen that we don't expect. So view this as a broad and flexible plan.
The problem is determining value.
What is an apple really worth?
If it costs a dollar today for one apple, then what's it worth when, because of inflation, it costs 10 dollars?
That's the beauty of silver and gold.
Today one ounce of silver will buy you a crate of apples. When inflation hits in ernest, maybe it will buy a truckload of apples, maybe not. Who knows, there might be a shortage of apples that year or maybe a glut. The point is, that we need to identify, at that time, what value is.
For some time, I have been feeling that real estate will be that truck load of apples. If real estate continues to fall as I believe it will, it will be falling in conjunction with a falling dollar and creating a massive, once in a lifetime, buying opportunity for real estate. A perfect storm of low price relative to the dollar, a weaker dollar, and overvalued precious metals. It is at that point that you will probably be getting as sick of me writing about real estate, as you probably are, sick of me writing about silver now.
If real estate turns around before the run on precious metals, so be it. There will be a buying opportunity in some other, under valued, tangible asset at that point.
I believe that commodities like food and clothing as well as energy and materials will retain or grow their value in the future and will appear to be very expensive, but in actuality, will be fairly valued.
Real Estate will appear to be fairly valued but will actually be dirt cheap and no one is going to want to touch it. That's when we will start accumulating, with the profits from our positions against the dollar.
So from here, this is where I am concentrating my efforts; I will be increasing my knowledge about real estate and I will begin to value properties and real estate investment vehicles in terms of silver, instead of dollars. For instance if a property is valued at 300 thousand dollars, I will refer to it as being worth about 22 thousand ounces of silver. Or if you prefer, that same 300 thousand dollar house is worth 320 ounces of gold.
By doing this I will get a better idea of the true value of the investment and where it sits relative to a true measure of wealth.
I don't believe that the dollar can be counted on to be a good yard stick anymore.
One more thing, with houses being foreclosed on in record numbers, the need for rentals is going to increase, be it houses, condos or apartments, I'll be educating myself on these markets as well. Particularly apartments. All those displaced homeowners are going to need a place to live and most likely a cheap place. This may be a good interim investment before housing and commercial comes back.
Remember I am looking at long term strategies here, so I am not purchasing anything yet. Just as I am not selling anything yet. I am still accumulating real tangibles and moving decidedly out of the dollar.
Good luck and Godspeed
JT
Legal disclaimer: This post is for informational purposes only and is solely the opinion of the writer. Nothing in this post should be considered investment advice. Before investing in anything, the reader is encouraged to do his or her own research and consult with a certified financial advisor, which John Tompkins makes no claim to be. John Tompkins and Toro Creek Investments accept no liability for financial losses or damages incurred by the reader because of this post.
Saturday, February 7, 2009
Silver is making a move!
It's starting to look good for silver.
For those of you in SLV or the bullion market, I see some good times ahead. I see clear sailing up to around 14.50 an oz. But expect some resistance there and maybe a temporary pull back. Breaking above 14.50 will signal a major run up so don't miss it.
Here's how and why I'm playing it;
SLW, Sliver Wheaton. Currently $6.72 a share. Their 52 week range is $2.51-$19.54.
I'm not thrilled with their PE ratio at 17.47 but I can tolerate that.
And here's why, SLW is a pure silver play, and while they refer to themselves as a mining company, that's not really what they do. They acquire silver cheaply and sell it at the market price.
SLW has several long term contracts by which they are committed to purchase a mining company's silver output for a fixed cost. Which according to their website, http://www.silverwheaton.com/main/?en&home is $3.90 per ounce with their averaged realized price over $13 an ounce. That's a nice little profit.
What is their risk? That the price of silver will tumble to below 4 bucks an ounce.
We already know that's probably not going to happen.
The interesting thing about silver is that it is not the target of most mining companies. It's a byproduct. Those miners are looking for gold, copper and zinc. Silver just happens to be deposited in the same locations and it is pulled out and sold. Often financing the operation so that their target ores are obtained for free. That's why mining companies are willing to lock themselves into contracts for such a ridiculously low price. They are guaranteeing their continued operation no matter what prices do. They simply don't care about the silver.
But Silver Wheaton does.
So where does all this lead us?
I'm building up a position in SLW, but (now pay attention here), because SLW is announcing 4th quarter results on Feb 19th, I'm hedging.
So what does that mean?
I am buying the shares outright but I'm also buying puts, as insurance for the earnings release. Which could be bad due to the recent price collapse.
I am not concerned about the long term prospects of the company because their business model is so good and I know that silver is here to stay, at least for the foreseeable future. But you never know how the traders will react to news of any type.
Of course the news could be good, in which case I will probably lose a couple bucks on the puts, but, again, it's insurance, not a trade.
I'm buying short expiration, in-the-money puts.
Now if I didn't know what that meant, I wouldn't try it. I would simply wait until they report and then either, buy at a discount if they fall in price or take my lumps and pay up for the shares.
The mining sector has sure taken a beating lately, some of them have been hit 70, 80 even 90%,
but as a trader I view this as a golden opportunity and as you know, I like gold too!
Good luck and Godspeed
JT
Legal disclaimer: This post is for informational purposes only and is solely the opinion of the writer. Nothing in this post should be considered investment advice. Before investing in anything, the reader is encouraged to do his or her own research and consult with a certified financial advisor, which John Tompkins makes no claim to be. John Tompkins and Toro Creek Investments accept no liability for financial losses or damages incurred by the reader because of this post.
For those of you in SLV or the bullion market, I see some good times ahead. I see clear sailing up to around 14.50 an oz. But expect some resistance there and maybe a temporary pull back. Breaking above 14.50 will signal a major run up so don't miss it.
Here's how and why I'm playing it;
SLW, Sliver Wheaton. Currently $6.72 a share. Their 52 week range is $2.51-$19.54.
I'm not thrilled with their PE ratio at 17.47 but I can tolerate that.
And here's why, SLW is a pure silver play, and while they refer to themselves as a mining company, that's not really what they do. They acquire silver cheaply and sell it at the market price.
SLW has several long term contracts by which they are committed to purchase a mining company's silver output for a fixed cost. Which according to their website, http://www.silverwheaton.com/main/?en&home is $3.90 per ounce with their averaged realized price over $13 an ounce. That's a nice little profit.
What is their risk? That the price of silver will tumble to below 4 bucks an ounce.
We already know that's probably not going to happen.
The interesting thing about silver is that it is not the target of most mining companies. It's a byproduct. Those miners are looking for gold, copper and zinc. Silver just happens to be deposited in the same locations and it is pulled out and sold. Often financing the operation so that their target ores are obtained for free. That's why mining companies are willing to lock themselves into contracts for such a ridiculously low price. They are guaranteeing their continued operation no matter what prices do. They simply don't care about the silver.
But Silver Wheaton does.
So where does all this lead us?
I'm building up a position in SLW, but (now pay attention here), because SLW is announcing 4th quarter results on Feb 19th, I'm hedging.
So what does that mean?
I am buying the shares outright but I'm also buying puts, as insurance for the earnings release. Which could be bad due to the recent price collapse.
I am not concerned about the long term prospects of the company because their business model is so good and I know that silver is here to stay, at least for the foreseeable future. But you never know how the traders will react to news of any type.
Of course the news could be good, in which case I will probably lose a couple bucks on the puts, but, again, it's insurance, not a trade.
I'm buying short expiration, in-the-money puts.
Now if I didn't know what that meant, I wouldn't try it. I would simply wait until they report and then either, buy at a discount if they fall in price or take my lumps and pay up for the shares.
The mining sector has sure taken a beating lately, some of them have been hit 70, 80 even 90%,
but as a trader I view this as a golden opportunity and as you know, I like gold too!
Good luck and Godspeed
JT
Legal disclaimer: This post is for informational purposes only and is solely the opinion of the writer. Nothing in this post should be considered investment advice. Before investing in anything, the reader is encouraged to do his or her own research and consult with a certified financial advisor, which John Tompkins makes no claim to be. John Tompkins and Toro Creek Investments accept no liability for financial losses or damages incurred by the reader because of this post.
Thursday, January 29, 2009
Will President Obamas plan work?
Will President Obamas plan work?
It depends on how you measure success.
If you want to re inflate the bubbles, then yes it might possibly. The amount of money we are looking at is truly mind wrenching. This has never been done before. At least on this scale. But what are the longer term ramifications?
Ken Gerbino writes an excellent article, that lays out the details but his overall conclusions are very plausible. While the collective wisdom is that, this is the collapse that all the gold bugs have been waiting for, Ken believes that there is one more recovery before that happens.
I have been pondering this for some time.
This is how I see it panning out;
As this year unravels there will be ups and downs in the market at various levels of volatility. essentially a sideways market. Strangely, times of violent sideways action.
As the "stimulus" money works it's way into the market and these new funds are monetised and ultimately "realised" by the economy. There will be some measure of recovery. This is when I believe inflation will begin. The stock markets will recover much of their losses, but commodities will begin to soar as the supply pendulum swings from over supply to under supply as a direct result of this current climate of demand destruction (people and companies belt tightening). As money floods the system and economic activity returns, companies will rush to ramp up production and the supply will be strained. We still have China and India to deal with. They have had a taste of a higher quality of life and it would be naive to think they are going to give this up.
Here is where my cracked crystal ball, begins to distort the image of the future and it all hinges on time. How long and how far will the recovery go?
Who knows. But I do believe that commodities will soar and the dollar will suffer hugely.
What is the ultimate end game?
Whatever it is, it'll be one for the history books.
And most likely it will be something no one expects, including myself.
But if you stock up on tangible assets now while they are incredibly cheap, you will be in a position to take the best advantage of the situation when the direction becomes clear.
Take a look at MOO, it's a play on Agri-business. And again this is a long term buy and hold.
Good luck and Godspeed
JT
Legal disclaimer: This post is for informational purposes only and is solely the opinion of the writer. Nothing in this post should be considered investment advice. Before investing in anything, the reader is encouraged to do his or her own research and consult with a certified financial advisor, which John Tompkins makes no claim to be. John Tompkins and Toro Creek Investments accept no liability for financial losses or damages incurred by the reader because of this post.
It depends on how you measure success.
If you want to re inflate the bubbles, then yes it might possibly. The amount of money we are looking at is truly mind wrenching. This has never been done before. At least on this scale. But what are the longer term ramifications?
Ken Gerbino writes an excellent article, that lays out the details but his overall conclusions are very plausible. While the collective wisdom is that, this is the collapse that all the gold bugs have been waiting for, Ken believes that there is one more recovery before that happens.
I have been pondering this for some time.
This is how I see it panning out;
As this year unravels there will be ups and downs in the market at various levels of volatility. essentially a sideways market. Strangely, times of violent sideways action.
As the "stimulus" money works it's way into the market and these new funds are monetised and ultimately "realised" by the economy. There will be some measure of recovery. This is when I believe inflation will begin. The stock markets will recover much of their losses, but commodities will begin to soar as the supply pendulum swings from over supply to under supply as a direct result of this current climate of demand destruction (people and companies belt tightening). As money floods the system and economic activity returns, companies will rush to ramp up production and the supply will be strained. We still have China and India to deal with. They have had a taste of a higher quality of life and it would be naive to think they are going to give this up.
Here is where my cracked crystal ball, begins to distort the image of the future and it all hinges on time. How long and how far will the recovery go?
Who knows. But I do believe that commodities will soar and the dollar will suffer hugely.
What is the ultimate end game?
Whatever it is, it'll be one for the history books.
And most likely it will be something no one expects, including myself.
But if you stock up on tangible assets now while they are incredibly cheap, you will be in a position to take the best advantage of the situation when the direction becomes clear.
Take a look at MOO, it's a play on Agri-business. And again this is a long term buy and hold.
Good luck and Godspeed
JT
Legal disclaimer: This post is for informational purposes only and is solely the opinion of the writer. Nothing in this post should be considered investment advice. Before investing in anything, the reader is encouraged to do his or her own research and consult with a certified financial advisor, which John Tompkins makes no claim to be. John Tompkins and Toro Creek Investments accept no liability for financial losses or damages incurred by the reader because of this post.
Thursday, January 22, 2009
Is buy and hold, a bad strategy?
With the recent collapse of so many icons of American capitalism, is a strategy of "Buy and Hold" such a good idea?
I think that taken by itself it is more important now than ever.
If taken in the context of buying and holding Blue Chip stocks, I am not so sure anymore.
My approach to navigating this market, while I've been unconsciously doing it for some time, is to buy and hold real tangible assets as my core portfolio. I didn't realize that I was doing this until I went to analyze my over all position and portfolio allocation, which I do periodically to check my"investor psychology".
This is really a 180 degree shift.
The collective wisdom of the past was to buy and hold blue chips and speculate with risk capital(money you can afford to lose), in other markets such as commodities, energy, tech and Bio-Tech.
As it stands now I find that I sleep better at night knowing that my real wealth is protected by hard assets. When you look at some of the monsters in the financial industry teetering on the brink, I wonder if they are in any stronger position than Bernie Madoff was prior to his collapse.
Take for instance B of A, a year ago they were trading at 40 bucks now they are worth 5 and standing under the bailout TARP
Yeah I know that Bank of America deposits are insured by the Government, but who insures the Government?
We do, the people, with our tax dollars. And despite what some politicians believe, that is a finite and unpredictable number. It is a dangerous merry go round that the Government is on. As the economy worsens, they continue to bail out failing companies. Companies that still cut jobs and production with the end result being a smaller tax base.
Fewer workers, fewer payroll taxes.
Less production, less profit for the corporations and therefore less corporate taxes.
Less sales, less sales tax collected.
President Obama has stated that he is not concerned with deficit spending, but I am and we should all be. With foreign nations less willing to buy our debt, the only other way to fund his stimulus plan and various other programs is through the printing press.
Sure he could raise taxes but I doubt that he will do this. Despite the rhetoric the Democrats know that tax hikes in this financial environment would be a disaster.
So that leaves increasing monetary supply as the only avenue.
This is the big picture; Monetary supply has doubled from this time last year, which means that you have half the spending power that you had a year ago.
Don't let the fact that we have had a dramatic drop in the price of fuel as well as other commodities, lead you astray. These things take time to work through the system.
In fact this lag is itself the very opportunity that we should be looking at.
I am looking at this sale in precious metals the way I would have looked at a major pull back in Boeing two years ago.
Or Johnson and Johnson, Dow Chemical, Lockheed Martin even Exxon. Had someone told me last year that I would be able to buy these names at the current prices, I would have thought them insane.
But now, looking at precious metals, I see that they must rise in price and I don't have to know when, I just have to know when they are on sale and then buy and hold.
A very good analyst that I trust, points to a possible, further pull back in metals before they take off to new heights. It's possible. I don't think it will happen, but because I trust his conclusions, I am putting some extra cash aside in case it does. And no, I'm not selling my real metals. Those I will hold for the foreseeable future. Don't try and time this market it is still way too volatile. Buy the dips and hold. Build your positions.
Another position that I will be hanging onto is the short position on treasuries(TBT)(see Obama Bounce? Dated 1/08/09) Again I don't know when these things will happen but in the big picture they must happen.
Good Luck and Godspeed
JT
Legal disclaimer: This post is for informational purposes only and is solely the opinion of the writer. Nothing in this post should be considered investment advice. Before investing in anything, the reader is encouraged to do his or her own research and consult with a certified financial advisor, which John Tompkins makes no claim to be. John Tompkins and Toro Creek Investments accept no liability for financial losses or damages incurred by the reader because of this post.
I think that taken by itself it is more important now than ever.
If taken in the context of buying and holding Blue Chip stocks, I am not so sure anymore.
My approach to navigating this market, while I've been unconsciously doing it for some time, is to buy and hold real tangible assets as my core portfolio. I didn't realize that I was doing this until I went to analyze my over all position and portfolio allocation, which I do periodically to check my"investor psychology".
This is really a 180 degree shift.
The collective wisdom of the past was to buy and hold blue chips and speculate with risk capital(money you can afford to lose), in other markets such as commodities, energy, tech and Bio-Tech.
As it stands now I find that I sleep better at night knowing that my real wealth is protected by hard assets. When you look at some of the monsters in the financial industry teetering on the brink, I wonder if they are in any stronger position than Bernie Madoff was prior to his collapse.
Take for instance B of A, a year ago they were trading at 40 bucks now they are worth 5 and standing under the bailout TARP
Yeah I know that Bank of America deposits are insured by the Government, but who insures the Government?
We do, the people, with our tax dollars. And despite what some politicians believe, that is a finite and unpredictable number. It is a dangerous merry go round that the Government is on. As the economy worsens, they continue to bail out failing companies. Companies that still cut jobs and production with the end result being a smaller tax base.
Fewer workers, fewer payroll taxes.
Less production, less profit for the corporations and therefore less corporate taxes.
Less sales, less sales tax collected.
President Obama has stated that he is not concerned with deficit spending, but I am and we should all be. With foreign nations less willing to buy our debt, the only other way to fund his stimulus plan and various other programs is through the printing press.
Sure he could raise taxes but I doubt that he will do this. Despite the rhetoric the Democrats know that tax hikes in this financial environment would be a disaster.
So that leaves increasing monetary supply as the only avenue.
This is the big picture; Monetary supply has doubled from this time last year, which means that you have half the spending power that you had a year ago.
Don't let the fact that we have had a dramatic drop in the price of fuel as well as other commodities, lead you astray. These things take time to work through the system.
In fact this lag is itself the very opportunity that we should be looking at.
I am looking at this sale in precious metals the way I would have looked at a major pull back in Boeing two years ago.
Or Johnson and Johnson, Dow Chemical, Lockheed Martin even Exxon. Had someone told me last year that I would be able to buy these names at the current prices, I would have thought them insane.
But now, looking at precious metals, I see that they must rise in price and I don't have to know when, I just have to know when they are on sale and then buy and hold.
A very good analyst that I trust, points to a possible, further pull back in metals before they take off to new heights. It's possible. I don't think it will happen, but because I trust his conclusions, I am putting some extra cash aside in case it does. And no, I'm not selling my real metals. Those I will hold for the foreseeable future. Don't try and time this market it is still way too volatile. Buy the dips and hold. Build your positions.
Another position that I will be hanging onto is the short position on treasuries(TBT)(see Obama Bounce? Dated 1/08/09) Again I don't know when these things will happen but in the big picture they must happen.
Good Luck and Godspeed
JT
Legal disclaimer: This post is for informational purposes only and is solely the opinion of the writer. Nothing in this post should be considered investment advice. Before investing in anything, the reader is encouraged to do his or her own research and consult with a certified financial advisor, which John Tompkins makes no claim to be. John Tompkins and Toro Creek Investments accept no liability for financial losses or damages incurred by the reader because of this post.
Sunday, January 18, 2009
TEOTWAWKI?
It is very difficult, while searching all the resources on the net, to avoid all of the analysts that believe that this is "The End Of The World As We Know It". But in some ways, I think that they are right.
"The times, They are a changin'"
As those of you who read my stuff regularly know, I think that the dollar is in serious trouble. At the very least I believe that in addition to some really awful times ahead for Real Estate, Auto Makers and Financials, I see some scary hyper inflation in the future.
But do we need to employ the bomb shelter mentality?
In my life time I have experienced several times when this was the "fringe" tendency. While growing up it was The Cold War, with the policy of "Mutually Assured Destruction".
When that threat ended, it was time to create another, Y2K. Remember when the computers were going to ruin the world because they couldn't count from 1999 to 2000?
Then came the very real and frightening 9/11. And now we have the, also very real, collapse of the financial system.
But the question remains, Is this financial Armageddon?
I don't believe that it is, yet.
and I don't really believe that it will be.
It all depends on what Washington does in the next few months.
But, have I stocked my shelves with a few extra cans of Beenie Weenie?
Maybe.
Being prepared is not the same as being paranoid. Having been part of a disaster response team I have been at ground zero for some serious events. Hurricane Ofa, Typhoon Russ, and the Loma Prieta earth quake in San Francisco in '89. I've had to eat MREs, out of necessity before. Here at home, I have also seen a time when our rivers flooded and took out bridges, leaving us isolated for days. So I do believe in being self sufficient and managing risk. That is a crucial element of investing, as well as surviving in any situation.
So let them call you paranoid, stock up on the Beenie Weenie and SpaghettiOs (and maybe some silver and gold) so that if something does happen, be it a man made or natural disaster, you can say "I told you so", as you toss your neighbor a spare can.
Good Luck and Godspeed
JT
"The times, They are a changin'"
As those of you who read my stuff regularly know, I think that the dollar is in serious trouble. At the very least I believe that in addition to some really awful times ahead for Real Estate, Auto Makers and Financials, I see some scary hyper inflation in the future.
But do we need to employ the bomb shelter mentality?
In my life time I have experienced several times when this was the "fringe" tendency. While growing up it was The Cold War, with the policy of "Mutually Assured Destruction".
When that threat ended, it was time to create another, Y2K. Remember when the computers were going to ruin the world because they couldn't count from 1999 to 2000?
Then came the very real and frightening 9/11. And now we have the, also very real, collapse of the financial system.
But the question remains, Is this financial Armageddon?
I don't believe that it is, yet.
and I don't really believe that it will be.
It all depends on what Washington does in the next few months.
But, have I stocked my shelves with a few extra cans of Beenie Weenie?
Maybe.
Being prepared is not the same as being paranoid. Having been part of a disaster response team I have been at ground zero for some serious events. Hurricane Ofa, Typhoon Russ, and the Loma Prieta earth quake in San Francisco in '89. I've had to eat MREs, out of necessity before. Here at home, I have also seen a time when our rivers flooded and took out bridges, leaving us isolated for days. So I do believe in being self sufficient and managing risk. That is a crucial element of investing, as well as surviving in any situation.
So let them call you paranoid, stock up on the Beenie Weenie and SpaghettiOs (and maybe some silver and gold) so that if something does happen, be it a man made or natural disaster, you can say "I told you so", as you toss your neighbor a spare can.
Good Luck and Godspeed
JT
Saturday, January 10, 2009
Re: Obama Bounce
I received a comment on my latest blog(see Obama Bounce below). When this person read that I was interested in Proshares Ultrashort Lehman 20+ year treasuries. Symbol TBT. They asked me "Didn't you know that Lehman Brothers went bankrupt?".
My apologies to any of you that had the same concern. I should have explained. Yes I did know that Lehman Brothers no longer exist. Their Index, however, lives on. The company that manages the fund in question is Proshares, part of the ProFunds Group. The reference to Lehman is simply an index, collection or list of stocks in a sector or in this case, treasuries. Just like the Dow Jones industrial average or Standard and Poors.
Kudos go out to the reader that pointed out this concern, because in times like these we need to beware and ask questions, keep it up!
Ah yes, another question was raised about my sign off slogan "Godspeed"
Here's the Wiktionary definition that most describes my intent in using the term;
An expression of good will when addressing someone, typically someone about to go on a journey or a daring endeavor.
Or from Wikipedia; Godspeed, as a word, is a wish for a prosperous journey, success, and good fortune.
The key here is that educating yourself is a journey and becoming financially liberated is one of the best gifts that you can give yourself and your family. Please keep the comments coming, because they help all of us on that path to freedom.
Email me at Torocreekinvest@aol.com
Good Luck and Godspeed
JT
My apologies to any of you that had the same concern. I should have explained. Yes I did know that Lehman Brothers no longer exist. Their Index, however, lives on. The company that manages the fund in question is Proshares, part of the ProFunds Group. The reference to Lehman is simply an index, collection or list of stocks in a sector or in this case, treasuries. Just like the Dow Jones industrial average or Standard and Poors.
Kudos go out to the reader that pointed out this concern, because in times like these we need to beware and ask questions, keep it up!
Ah yes, another question was raised about my sign off slogan "Godspeed"
Here's the Wiktionary definition that most describes my intent in using the term;
An expression of good will when addressing someone, typically someone about to go on a journey or a daring endeavor.
Or from Wikipedia; Godspeed, as a word, is a wish for a prosperous journey, success, and good fortune.
The key here is that educating yourself is a journey and becoming financially liberated is one of the best gifts that you can give yourself and your family. Please keep the comments coming, because they help all of us on that path to freedom.
Email me at Torocreekinvest@aol.com
Good Luck and Godspeed
JT
Thursday, January 8, 2009
Obama Bounce?
The other Night, while chatting with some friends over a couple of drinks the topic of the latest stock market rally came up and someone asked me what I thought (always dangerous when I've had a drink). My answer was, "If you've made a profit, sell". Another friend, who had the good fortune and sense to buy silver around it's current lows, asked if that advice applied to silver as well (I think she was testing me). My answer of course was no. And here is why.
This is not a market that any of us has ever witnessed before. I am even questioning my decision to buy and hold blue chips. So many people have made comparisons to the Great Depression, but there are too many differences to think that we would follow that pattern exactly. I don't know what is going to happen, nobody but God knows that, but here's the thing, if you walk out your door in the morning and the sky is cloudy and dark, grab your raincoat.
The sky is looking very stormy. In fact it looks more like a hurricane is right on our doorstep.
Many people are predicting an Obama bounce in the markets and I think they are right, in fact I believe that is what is happening right now. How high is the bounce? Who knows. But when Mr. Obama says that we are looking at "trillion dollar deficits for years to come" I pay attention.
He is going to kill his own rally.
That is a really negative thing to say to Wall Street. They hate uncertainty. They know how to make money in any environment, the trouble is in determining what your environment is. That statement, so emphatically stated, is not uncertain, it tells Wall Street exactly what environment that they are in and it tells them exactly what to do.
Bet against the dollar.
The President elect has told us exactly what he is going to do. Print more money and sell more debt. Without real economic growth, there are no other real options for generating revenue. Sure he could sell some stuff, like maybe Air Force One, some presidential ash trays or Hawaii or something, but why bother when you own the printing press.
Here's how to bet against the dollar;
Of course buy real silver and gold, but you can also short US Treasuries.
Well how do we do that and what does it mean? First going short or shorting something is just a another way of saying that you are betting that it will fall in value. You can short something by borrowing shares from your broker and sell them, then hope the value will drop so you can buy them back on the cheap, repay your broker the shares and pocket the difference. But you really can't do that with treasuries. For you and I it's not all that easy to take a short position in the US Treasuries market but thankfully there are some ETFs out there that will fit the bill perfectly.
Pro shares Ultra short Lehman 20+ year Treasury Symbol TBT and Pro shares Ultra short Lehman 7-10 year Treasury symbol PST.
Both are designed to move opposite the treasuries. And right now Treasuries are expensive and extremely over bought. There has been a flight to safety which has caused this bubble and that bubble will burst at some point in the future. When? who knows. So, as with other things I'll be buying slowly and building a position.
Remember I'm not advising you to do this, I'm just sharing my strategies. Do your own homework and check with your financial advisor before buying anything.
And as always,
Good Luck and Godspeed
JT
This is not a market that any of us has ever witnessed before. I am even questioning my decision to buy and hold blue chips. So many people have made comparisons to the Great Depression, but there are too many differences to think that we would follow that pattern exactly. I don't know what is going to happen, nobody but God knows that, but here's the thing, if you walk out your door in the morning and the sky is cloudy and dark, grab your raincoat.
The sky is looking very stormy. In fact it looks more like a hurricane is right on our doorstep.
Many people are predicting an Obama bounce in the markets and I think they are right, in fact I believe that is what is happening right now. How high is the bounce? Who knows. But when Mr. Obama says that we are looking at "trillion dollar deficits for years to come" I pay attention.
He is going to kill his own rally.
That is a really negative thing to say to Wall Street. They hate uncertainty. They know how to make money in any environment, the trouble is in determining what your environment is. That statement, so emphatically stated, is not uncertain, it tells Wall Street exactly what environment that they are in and it tells them exactly what to do.
Bet against the dollar.
The President elect has told us exactly what he is going to do. Print more money and sell more debt. Without real economic growth, there are no other real options for generating revenue. Sure he could sell some stuff, like maybe Air Force One, some presidential ash trays or Hawaii or something, but why bother when you own the printing press.
Here's how to bet against the dollar;
Of course buy real silver and gold, but you can also short US Treasuries.
Well how do we do that and what does it mean? First going short or shorting something is just a another way of saying that you are betting that it will fall in value. You can short something by borrowing shares from your broker and sell them, then hope the value will drop so you can buy them back on the cheap, repay your broker the shares and pocket the difference. But you really can't do that with treasuries. For you and I it's not all that easy to take a short position in the US Treasuries market but thankfully there are some ETFs out there that will fit the bill perfectly.
Pro shares Ultra short Lehman 20+ year Treasury Symbol TBT and Pro shares Ultra short Lehman 7-10 year Treasury symbol PST.
Both are designed to move opposite the treasuries. And right now Treasuries are expensive and extremely over bought. There has been a flight to safety which has caused this bubble and that bubble will burst at some point in the future. When? who knows. So, as with other things I'll be buying slowly and building a position.
Remember I'm not advising you to do this, I'm just sharing my strategies. Do your own homework and check with your financial advisor before buying anything.
And as always,
Good Luck and Godspeed
JT
Legal disclaimer: This post is for informational purposes only and is solely the opinion of the writer. Nothing in this post should be considered investment advice. Before investing in anything, the reader is encouraged to do his or her own research and consult with a certified financial advisor, which John Tompkins makes no claim to be. John Tompkins and Toro Creek Investments accept no liability for financial losses or damages incurred by the reader because of this post.
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