Saturday, January 2, 2010

Another Day... Another Dollar... Stock Watch...

Another Day... Another Dollar...

This title seemed to be a logical summary for the market over the past year. Dollars for TARP, Dollars for TALF, Dollars for Healthcare, Dollars to held states meet budget short-falls, and Dollars to the bloated numbers of unemployed Americans. As mentioned in previous blogs the U.S. Dollar's reserve currency status will be challenged over the next five years. Representative Steve LaTourette in a townhall meeting back in August made reference to the weakening dollars suggesting that a day could come where no other countries are interesetd in purchasing U.S. Treasury Bills (see Bank of England's last ditch effort to support the Pound Sterling) and suggested that the same could happen here in the United States. Congressman Ron Paul stated it more plainly suggesting that no government fiat currency ever stands the test of time because there is such an overwhelming urge to always spend more than the government makes, therefore driving the true value of that reserve currency into the dirt. Should this trend hold true, then one could continually make a case for GLD, SLV, and oil as the inflationary hedges.

Still though, he are reminded that Time Magazine Man of the Year Ben Bernanke is an expert on the Great Depression. That part of the reason Time Magazine raised Bernanke to this level was due to his financial engineering and manipulation along with the help of Boy Wonder Tim Geithner. Bernanke's insistence on pumping money into the economy was seen as a way to keep the wheels of U.S. credit mechanisms greased. We are reminded of his promise to sop up extra dollas before the inevitable wave of inflation weakens financial markets further, and send T-bill holders to the exit dors. With another wave of 2010 ARM's to hit, CRE on wobbly legs, and an unemployment rate of near 10.5% you can count rates staying low. This is not to sway financial institution into lending again, actually it is quite the opposite. With easy profits on Free TARP cash, we can only believe that cash positions + TARP repayment does not = an all clear sign for the economy.

I am led to believe that the thinly traded rally that started last March and has continued to the waning days of 2009 might be up. TARP funds are being repaid and banks are holding cash. While some investors are considering a re-entry into the market, to many it would seem almost fool-hardy to do so. Some experts are predicting a pull-back in early 2010. Others seem to think that this train will gain another 25% by year end. As one market strategist put it "If there is inlfation it is a flood of money into the market. All boats rise with the new flood of water."

Stock Watch
What started off to be the third and fourth leg up in my investing portfolio became much more of a roller coaster ride than I had anticipated. Call it tunnel vision if you would like, put I watched much of my hard-earned profits of shorts ebbed away with the rally of 2009. If I would have been the student of history and remembered the Great Depression charts, I would in theory have anticipated that whip back. Instead though, I created a few positions which have become my financial Gibraltir. SLV, D, and NEOP stand as my success stories. Also, I should include a profitable move in PQ which removed a bit of the sting I suffered in other losses. I have, and will continue to evaluate a few companies that will surely find success on this new playing field including Lucent and maybe even look-sees at FNM.

1 comment:

AX said...

happy new year TC! Hope you're not freezing too badly. Better luck to us this year, go gold.