[thegmanifesto]

For the financial G's on here, what do you think?

Good place to be?

Get out now?

Hold on till May?

Hold on till Election?

All in?

Buying with both hands?

F*ck it. I am Gold, Guns and a Getaway plan, you aren't?

Give some reasoning behind your theory.

[Brian]

risk/reward at this point favors that short side in my humble opinion

[Sly]

Buy the TVIX index. I think it will get back up to 60 within a few months. Only a matter of time before the European controversies and the U.S. debt ceiling start moving the market once again.
That'll be a 2% service charge

[cibo]

I believe in certain areas the US has a competitive advantage vis-a-vi the rest of the world. Mostly high tech equipment, software/computing/internet, medical equipment and financial services. Last of which is getting horribly pounded.

For me, if I were to limit myself to only US equities, I would be looking for US firms that are selling those hard to copy products/services mentioned above to the BRIC's and high growth developing countries which have much better debt to gdp ratios. Between the dollar's expected long-term decline, (lower prices) and the hand over foot growth of the developing countries (increasing demand). I expect those areas to do well in the mid to long term. I recommended about a 1/3rd in.

For short term, uhhhhhhhh, buy yen, gold or bonds?

[Samseau]

If there is QE3, I am very bullish on equities. No QE3, stay the fuck out.

QE3 = higher equities, higher gold/silver, higher oil, weaker dollar.

No QE3 = lower equities, lower gold/silver, lower oil (unless war breaks out), stronger dollar.


We've seen the patterns from QE1 and QE2, so QE3 should be more or less the same.

Especially with the recent eurozone crisis; there's plenty of room for the dollar to fall and prop up international markets.

[Lemmo]

I'm staying out. The market clearly wants to go higher. It has still trended up over the last week even with the bad US employment data, the European downgrades and the break-up of the Greece talks. So I don't think there is enough downside potential to justify going short. With all the bad news and the huge run-up in equity prices since 2011 4Q, I also don't think there is enough upside potential to justify the risk of going long. In the short-term, I see equity prices stabilizing as greed fails to force up prices in the face of bad news.

Longer term, I'll look for chances to go short as the bulls run out of steam and data comes out to confirm declining growth in the US and China and a recession and renewed debt pressures in Europe. I don't think QE3 or easing in China or Europe will do more than create a short-lived and modest upward blip in equity prices.

[thegmanifesto]

I tend to agree with Marc Faber's take.

Also with the election this year, I have a feeling Equities will be decent this year.

Marc Faber: Relax, Stocks Will Not Collapse

Stock markets have already discounted "some very bad news" and there is no reason to fear stocks will sink, despite gloomy prospects for the global economy, Marc Faber, publisher and editor of the Gloom Boom & Doom Report, told CNBC on Thursday.

"My view is simply: relax. I don’t think that equities will collapse. I think we have major support going back to August 2010 when the S&P was at 1010," Faber said.

Just over a year later, the S&P briefly dropped to a low of 1074 on October 4, 2011, he said.

"We have a lot of support around 1100, and if the S&P drops 200 points, I guarantee you the Fed will come in with QE3 and QE4 and so forth," he said, referring to a next round of quantitative easing by the Federal Reserve.

http://www.cnbc.com/id/46055852

[CGS]

I don't think you can just look at US Equities as a whole. It would be at least appropriate to look at sectors if not industries.

I think US Companies in general are far better off than the rest of the world. Firstly, we already had our market meltdown and our banking system, while not healthy by any stretch is not levered to the hilt. Secondly, ECB debt issues will likely cause a flight to safety if the whole thing collapses, which means investors will put their money into US markets.

However, to the extent that ECB debt lingers, volatility will continue to persist. I personally believe that the Greeks are going to try and receive as much austerity as possible, until they are able to leave the ECB and re-introduce the drachma. I'm not sure how long this will take, but if it does happen there will be a huge sucking sound in all the financial markets. If this happens the ECB will have a huge problem because European banks will face tremendous debt obligations they are not able to handle. Either the ECB can bail them out, which sets a very dangerous precedent, or they let them fail which will send European Markets tumbling. I think these reasons (and general European demeanor) are why this whole issue is taking so long to figure out. I imagine no long term solution will be completed by June. So US Equity Markets in my opinion will likely be rangebound and volatile through then.

That means a lot of in and out/daytrading/technical analysis will enable you to turn a profit. If you're looking for long term plays, Consumer Discretionaries look to be a bit overpriced and I would suggest shorting them now before earnings season really picks up in the next couple of weeks. The reason for this thought is that the holiday shopping season was propped up on massive discounts sparking demand. Margins were much thinner. Just stay away from high end stuff like COH or HRM etc... as income disparity in the US is growing and the rich can still afford $500 dress shirts and $3000 handbags.

I would stay the hell away from Real Estate and Financials. Financials are hard to gauge and legislation has really tied their hands. Real Estate has fared poorly since the recession and even if the fed were to impose QE3, I don't see how the minimal changes in rates are going to help spark demand... We're already at ~4% home loans anyhow... How much lower are things going to go? People might refi, if their not still underwater and are qualified, but nobody wants to sell their house at 75 cents on the dollar, especially when they rolled all kinds of extra bullshit like home entertainment systems and appliances into the mortgage.

Anyhow, sorry for the wall of text. I have more thoughts aned feel as though this is incomplete, but I think it's a good overview of my thoughts at the moment. I will revisit some Long ideas later since I know most folks can't take short positions.

[ElJefe]

I expect the dollar might surge 20% vs. the euro this year, so simply by owning dollars you're making money - that's basically concurring with what CGS expects. That said I know nothing about US equities - I can only handle information on our local stock exchange, but I need to figure a way to start investing from abroad rather than locally because taxes on capital gains are 43%.

[Vicious]

I've withdrawn everything into a bank account in a solid Swe bank right now. I'm going to wait until the hammer falls on Greece and see what happens.

[CGS]

(01-20-2012 03:56 AM)ElJefe Wrote:  

I expect the dollar might surge 20% vs. the euro this year, so simply by owning dollars you're making money - that's basically concurring with what CGS expects.

This statement is not correct.

By holding dollars you are not making money... unless your are in Eurozone country(where you would hold a higher purchasing power in the fututre). For you to make money, the principal of buy low sell high must hold. In this case it does not. You have not sold or bought anything. Your dollar has appreciated against another currency, but here in the US for example all that does is allow you to buy more european exports (because they are relatively cheaper... ceteris paribus).

If you wanted to make this trade work you would need to sell euros now and buy them back later, i.e. short the euro. If you wanted to do this you would need a margin account with your broker. Otherwise, you would have to purchase an ETF or other derivative instrument like a forward or futures contract; which are generally traded in $100,000 contracts and not all brokers have access to CME or you might have to pay extra etc.

The reason above is why the average investor is so fucked. You might understand markets but getting access to the instruments you need is another story. Without a relatively large bank roll, you're effectively playing with one hand tied behind your back. This fact is the shit that pisses me off about Wall Street and why everyone should be up in arms... not because of fees and huge salaries. Total horseshit that people have to give their money to somebody else to have access to these trades.

Oh yeah for those of you concerned with QE3, a strategy I'm waiting to execute (with my own money) is to short US short-mid term treasuries once it is announced. You can do this through ETFs namely TBX which will short the 7-10 year US treasury and also through TBZ and PST which are leveraged (note these levered etfs dont necessarily mimic 2x leverage) short US Treasury funds. By shorting a treasury you are essentially going long the yield. and w.r.t a bond as Price increases, yield decreases. So after the Fed buys up some more bonds Prices will appreciate and yields will depreciate, this will be the time to execute.

[[email protected]]

Four Primary Issues to consider in 2012-

1. After months of deliberation, no consensus has been reached on the Euro issue. Greece looks like its continuing to cook the books, a good chunk of the EU recently had its credit rating downrated and Germany is outright refusing to foot the bill for the PIIGs lack of fiscal discipline longterm. Signs point to at least a partial dissolution of the Euro with the resulting disorder causing a recession in Europe.

2. The Chinese over-investment heavy industry/construction appears to be near a correcting point. Worldwide recession, cheaper labor options, overbuilding of infrastructure are all stressing the internal Chinese economy- growth is decreasing and the real estate bubble appears to be near the breaking point. Already people, who looked at real-estated as a safe investedment, are rioting when prices are decreased for unfilled overpriced condos.

3. Its an election year- and Obama and incumbinents want to stay in. The fact that the debt ceiling once again needs to be increased is evidence to me that they're trying to pump up the economy through indirect "quantitative easing". I'd expect this, and outright "jobs" programs this year to make the economic situation seem hunky dory so Obama can win re-election.

4. Many powerful groups seem to be itching for a war with Iran. The sheer quantity of propaganda (which matches what occured before the Iraq invasion), and the fact that the Republican candidates (with the exception of Ron Paul) are tripping over each other to show how fast they would press the red button, tells me that war with Iran is almost inevitable- the question is when will it occur. My prediction- Obama will avoid starting a war this year so he can campaign on being a "peace president' who got us out of Iraq. Regardless of who wins I expect a false flag after the election, probably in early 2013, to kick off the war. The only way I can see the war starting this year is if the economy goes to the shitter or if it looks like Ron Paul will win the election.



So- what would I do given all of this? I would go with a breadbasket of stocks for the first 6-8 months of the year. After which I would switch to a combination of Gold and Oil. If Ron Paul wins the nomination, (or if it it looks like he'll beat Obama at the very least) or if the economy tanks, I would immediately switch to Gold and Oil.

Why?

Because of the election, The US will continue printing money for that time period, to pump up the economy during this election year; the Chinese will pay for this by continuing to buy our bonds- the bleak economic picture of Europe (either breakup of the Euro or severe austerity limiting consumption) means they need a strong US economy to prevent a hard landing of their own Industrial/Construction bubble. With the continued printing of money, via deficiet spening, the wealthier classes of the country will have excess liquid assets- a good chunk of the excess liquidity will end up in the market driving up prices in the Averages Indexes. This will not last.

I think war with Iran will start within 6 months of the end of the election. Iran will close the Straits of Hormuz and attack the oil facilities of neighboring countries. Oil prices will skyrocket; the economy will tank, stocks will plummit. China and Russia have both warned the US not to attack Iran; WW III may occur.

The only thing I can see changing this is Ron Paul being selected as the Republican candidate- in which case the time table will be moved up to insure that the war WILL happen.

So- in short.

1. Go short on the DOW/Nadaq, sell near the election or if RP is selected as the Republican Nominee
2. Go Long on Gold and Oil
3. Go Long on Defense Industry stocks

[[email protected]]

4. Go long on stocks with significant holdings in Domestic Oilfields/Tar Sands/Fracking technology

[Smitty]

My outlook is simple: It's all fucked up. Preserve wealth and live to fight another day (or year).

[Smitty]

(01-20-2012 07:28 PM)[email protected] Wrote:  

3. Go Long on Defense Industry stocks

The last thing I would do is go long on defense. The cuts are coming and the contractors (from metal benders to management services) are going to get fucked. SecDef Gates mandated a cut in contractor services and Panetta will continue down that path. Army, Air Force, Navy, Marines - all are reducing overall manpower and cutting big acquisition programs. Do some homework before going long on defense.

[[email protected]]

(01-20-2012 11:08 PM)Smitty Wrote:  

(01-20-2012 07:28 PM)[email protected] Wrote:  

3. Go Long on Defense Industry stocks

The last thing I would do is go long on defense. The cuts are coming and the contractors (from metal benders to management services) are going to get fucked. SecDef Gates mandated a cut in contractor services and Panetta will continue down that path. Army, Air Force, Navy, Marines - all are reducing overall manpower and cutting big acquisition programs. Do some homework before going long on defense.

I'm well aware of this. Obama recently made the decision to cut the US theoritical strength from being able to fight 2.5 wars simultaneously to 1.5.

I think that this is election year pandering to the peacenik crowd and a rhetorical tool he can use during debates. If anything, now would be a good time to buy- the second we have a false flag attack and war with Iran I expect both Patriot act 3.0 and defense spending to shoot up again.