On Monday I shared my approach with you. The wisdom of uncertainty (Mikey blog of Sept 29) and I would say that this week certainly qualified for the kind of uncertainty I look for. I mentioned that capitalism is built on stories that either rebuild or enhance the system. This one ..the financial crisis will repair and rebuild the system. Of course this will take time but it is a damn good bet. That is the central point of my approach ..what the system wants the system gets. Monday ended with the bailout bill being rejected and the DJIA falling 777 points to 10365.
I think that uncertainty captures that day. Most of the articles and commentary I read and heard used the word uncertainty many times. Alot of fear and anxiety at the close. In my next blog I will discuss a fear index that the traders follow called the VIX index. Without getting into it now it is off of the charts on the fear side at the close monday.
Tuesday Gold was all the rage to buy Gold to hedge yourself against all of this uncetainty. It was over 900 an ounce and all the rage. Not a good bet here because if the world does not come to an end ..and it only does that once..then the only thing that can emerge out of that is something that is better. Well the world is still here and Gold is 50 bucks lower now. Hell, I like this world its fun I don't want to bet that it comes to an end do you? Also, going unreported to the public or at least lost in the noise is the change in the mark to the market rules for the banks. This is a biggy hard to explain but lets just say it will instantly increases their value and allows them to get up and running again with the bailout bill. It is part of the game changing rules that the system executed this week.
Wednesday the bad economic news started to hit you know the economy sucks. That's a nice touch for the week in turmoil. Of course, we all knew this anyway,of course, but the government just figured it out this week. This creates more uncertainty right. Like adding gasoline to the flames. A Senator reports that he is hearing a major insurer is failing but later says that it was just a generaliztion. Just a little slip of the tongue sorry. Oh by the way, the Senate voted to pass the Bailout bill TARP overwelmingly. You don't think that was a designed misspeak by the Senator do you? Nah.
Thursday, the day before the House votes on the bailout, news of a global meltdown bursts on the seen. Nice time to lay that one on us boys. Interesting, because the Chinese market had already declined 60% (you knew that anyway because the international funds in you 401K have disintegrated right) in the last year and up until last week the Global economic growth story was still OK in the news vent though the internation fubds were tanking. The market starts to stabilize because it is said the house may have the votes to pass the bill. Really!!! Ok let's see, if I'm a congressman and we vote down this bill the fricking world comes to an end. Do you want to vote against it now boys?
Friday they all come back from an all night bender in the bars and pass the bill. Wachovia is bought out by Wells Fargo who already had an agreement with Citi bank. It is reported on CNBC that oh by the way the IRS changed the rules on write offs of aquired banks to allow write offs of huge loan losses. I call this the tax shelter for banks ruling(TSBR). Well, Wells just figured it out and I think soon the rest will. You know let me buy the lousy bank dump the assets in the TARP and take a nice juicey write off by issuing new stock ploy.
I digress the market had run up 300 points as they passed the bill and son of a gun it closed down 150 and was selling off into the close because...hey it may not work.
Mikey says it will..don't tell anybody.
All in all a very uncertain week woundn't you say. Well, when it all gets clearer and it looks like certainty is returning Mikey will sell. That is down the road for another blog.
Remember my approach is long term and I don't expect to make money quickly but I do expect to make money.
What I did this week:
Monday: Buy 1/4 position XLF 18.60
Tuesday: Buy 1/4 position DZZ 28.70
Buy 1/4 position SSO 47.71
Wed: Buy 1/4 position AIG 4
Thurs: Buy 1/4 UYM 36
Buy 1/4 GM 9.14
Buy 1/4 GE 22.45
Buy 1/4 EEM 32.36
Fri: Buy 1/4 AXP 33.13
Buy 1/4 MS 24.85
Buy 1/4 SSO 43.89 second buy
I expect that these will be good prices but THE WHEN is unknowable. If I did then that would be certainty and it would just defeat me if I tried to figure that out.
Uncertainty is not for most people in fact they avoid it I like to think I embrace it. I am trying to anyway but it is never easy as you can see. The beat goes on stay tuned ...Mikey
No comments:
Post a Comment