I love Claire McCaskill

"These people are idiots."



The closer we get to actually punishing the banks, the closer we get to healing the system and finding a bottom. This is a crisis of confidence, we need the rule of law and common sense returned to our financial system.

More hedging against the perma bulls....

Used my massive cash position and bought some AKNS at 2.00 to further protect myself against the impending short squeeze. I fully expect that the bulls will ignorantly bid us up to 920 on the the SPY by next week (they are pricing in the $825 billion stimulus and a 2nd half 2009 recovery). All I can say is "the market doesn't care what you think about all this." Just roll with the punches and patiently wait for your shot.

“Cry 'Havoc', and let slip the dogs of war!"

Upon hearing of Obama's "bad bank" bailout AH, I immediately hedged my bearish DUG position with some DXO (2x long crude) @ 2.60.

This does NOT mean I have changed my mind on the oil sector. The fundamentals indicate a prolonged period of oversupply in 2009, which will depress prices much to Wall Street's chagrin (most analysts still expect $70 crude by the EOY). However, XOM and CVX aren't currently trading off fundamentals, rather they are trading parallel with the S&P500 completely ignoring the underlying commodity they depend on.

This discrepancy makes for a monstrous shorting opportunity down the road, but in the near term we have to deal with idiot hedge funds and institutions bidding up shares of XOM because of another bank bailout (the correlation between the two beats me, but this market is irrational). Anyway I hedged my position, but I fully intend to be net short for big oil's reports on Friday.

Friday will be glorious...

In the mean time enjoy

Letting go of some long exposure...raising cash

Selling WFC at $16.45 (caught the falling knife this time)

Selling some APWR at $5.35

Selling some DUG at $23.00 (hoping to buyback a boat load at the $20-$21 range before CVX and XOM report later this week)

Now at 60% cash, 20% long and 20% short

Saturday Night Music - "Da Baddest"

Current asset allocation...

30% cash

30% long (mostly alt energy names that will likely bounce the highest with any Obama rally. Also have some bank exposure via WFC)

40% short (mostly short Oil and Gas names through the DUG)

My oil thesis continues to be confirmed. Did you see the inventory build this week? Enormous. More than 3x the expectations! Oil below $50 for at least the 1st half of year, no doubt. The lack of available credit is really preventing the speculators from pushing oil up and that's good for the oil bears long term....not to mention American drivers :-)


Position: F**k OPEC & XOM

UPDATED POSITIONS: Fuck John Thain

Damn I'm good....

my call for a Geithner rally was pretty on the spot (not to be self-aggrandizing :-)

The only thing that kept me positive for the day was my WFC scalp trade. I have kept the trade on even though we blew past my TP.

P.S. I will no longer speak to people named Doug, Douglass, or any derivation of the word "DUG."

Is another Geithner rally brewing?

Although the TA action clearly shows we will retest the November lows soon, nothing goes down in a straight line. Essentially the market will give itself some bullsh*t reason to bounce higher....I think Tim Geithner's confirmation as Treasury Sec. will be that reason (remember we rallied hard when Geithner was nominated...another bullshit reason in hindsight).



So why hasn't wall street already priced in the confirmation? Because of some bullsh*t tax evasion excuse...puhhhlease, every motherf**ker in Congress evades taxes in some form or another (Charly Rangel? etc.). Nevertheless, the idiot talking heads at CNBC keep yapping about this tax issue...so I figure wall street is buying into it as a serious "hangup" because: "If CNBC reports on it, then it must be pertinent information."

And yes I do believe wall street is stupid enough to watch and believe CNBC.

P.S. Confirmation Vote is set for Thursday.

Bought some WFC @ $14.44

Probably the stupidest things I've ever done, since ALL BANKS are f**ked long term. But this is a scalp trade with a tight stop at $13.75.....my TP is $16.50

Remember that the 2nd round of TARP was passed, so Obama can begin showering these zombie banks with cash immediately...if he wanted to.

Dollar Menu Millionaire Time

I took $7.50 of my gains from today (no losses suffered, despite the down tape :-) and went to Mickey D's for a celebratory meal...twas good

Fun Fact for the day...

With storage tight on land, there are an estimated 80 million barrels of oil being held in large tankers offshore, said Jim Ritterbusch, president of energy consultancy Ritterbusch and Associates.

"We're filling up every crevice of storage that anybody can find," he said. "The pipelines are filled up, the terminals are filled up. Refiners are amply supplied. This is a market that definitely has a surplus."

If crude at sea has reached 80 million barrels, it could supply nearly the entire globe for a day.

Despite my bearishness on crude, I will concede that Exxon might not be the greatest of shorting opportunities since it has more than $35 billion in cold hard cash just sitting on its B.S. (perfectly timed for a shopping spree), but I do think XOM should be trading below $65.

Obama can't fix this...

Wall Streeters used to think they were the "Masters of the Universe," now they are reduced to nothing. Biggest lesson of this debacle:

TRUST YOURSELF. NO ONE ELSE!

I'm up 2% today, and that's with DUG refusing to explode higher. Don't worry Exxon's days of mastering the universe will end in due time.

Hat tip to RC for the chart...he and Brian Shannon have nailed this TA action perfectly lately.

Oil Debate: The Amateur Investor vs. Cramer

My 2009 trading thesis on the integrated oil companies is clear:

Why Exxon is overvalued

A potential oil pair trade developing

Synopsis: as long as oil stays below $60 a barrel, companies like Exxon, Chevron and Conoco aren't breaking even on their current projects and are struggling to maintain their historical ROE & ROIC. Consequently, these oil players are substantially overvalued going forward. As an aside, OPEC says it needs oil actually closer to $75 to bring supply into the market.

Disagree with my thesis? Just look at Conoco Phillips' (COP) $34 billion writedown of its goodwill from its balance sheet (goodwill is the amount COP paid above the book value of its acquisition and is the firm's largest portion of intangible assets - basically anything that is not PPE).

The company plans to reduce the value of its equity investment in Russia’s Lukoil by $7.3 billion, Houston-based ConocoPhillips said today in a statement. Other asset writedowns totaling $1.3 billion will be recorded.

The biggest writedown, a $25.4 billion impairment charge in the oil and gas business, amounts to 87 percent of all the goodwill the company had on its balance sheet as of Sept. 30, according to Bloomberg data (Almost all of COP's good will is gone...wow!). The company plans to report its actual fourth-quarter results Jan. 28.

ConocoPhillips said it will have a 2009 capital expenditure budget of $12.5 billion, 18 percent less than the $15.3 billion authorized for 2008.

ConocoPhillips also said today that the drop in commodity prices will affect its reporting of reserves. Some reserves, primarily in North America and Lukoil’s, will be removed from proved reserves based on prices at the end of the year.

Forgot to mention that COP will also lay off 1,300 employees (4% of its workforce). Now ask yourself: Does COP think oil will rise 100% in 2009?

Oh yeah, let's not forget that with Democrats coming into power corporate taxes for these oil companies will probably increase further impairing their fundamentals. Alternative energy initiatives are also coming down the pike sooner rather than later with the impending stimulus.

Not to worry though Cramer is buying Chevron and Conoco for his charitable trust (the one that was down more than 40% last year ;-)

If you want to short Exxon, Chevron and Conoco then grab some DUG. Because of the severe tracking error with these shity ETFs, make sure you buy the dips and sell the rips. The first rip of DUG I'll sell is when Exxon prints $70 (currently $78).

I "HOPE" they're right about TARP II...

I will vote for this [TARP II] and I will do it because of the assurances I got from the president-elect himself that it will be different, that he will use these funds judiciously," said Sen. Barbara Boxer, D-Calif.

"I felt a little bit like after the last one, like Charlie Brown and Lucy," said Sen. Tom Harkin, D-Iowa. "You know she's always pulling the football from under Charlie Brown. Well, Lucy's 's not holding that ball any more. We have someone new holding that ball. Somebody named Barack Obama.

I just "HOPE" that the rate of foreclosures goes down (we saw an 81% jump in 2008). If we can get the foreclosure rate down to 30%-40% in 2009 and avoid the "Pay Option Arm implosion" in 2010 and 2011 (when I say "AVOID" I mean only 25% default rate)then:

- writedowns will slow by second half of 2010

- confidence will return

-unemployment won't reach 20%

-America will ultimately survive (of course this new country won't be the same gluttonous "America" we've known for the past several decades...that's a good thing).

FYI I know I just made a lot of "Kudlow'esque" statements just now, however, Kudlow probably thinks that foreclosures in 2009 will only grow by 1%-5% in 2009 vs. 2008 (so cut me some slack, ok).

Listen!!! I know "HOPE" is a four letter word, but if you don't have "HOPE" for America in the long run (I am talking 10-15 years out) then go f**k yourself and move to France.

Position: long humanity, but still hate politicians and CNBC.

It was 85 degrees today in beautiful sunny California

It will be this way for the rest of the week:
http://www.weather.com/weather/tenday/93401?from=36hr_topnav_undeclared

I made some serious coin today using technical analysis...

Here's my prescient post from earlier this week: "Rollover baby"

Get it through your head that fundamentals don't work in this market! The hedge funds control all the velocity of money (the "day to day" volume) and they are about as disciplined as Michael Jackson at a summer camp for 4th graders.

You need to use technical analysis (TA) to keep your discipline and conviction. Set stops and limits and let the market swings come to you. Watch for clear break outs and break downs (NO DIRECTIONAL BETS, unless you're willing to average down many times on the fake outs you'll encounter). Use multiple time frames when using TA, you must look at the long terms support and resistance you will likely encounter on the shorter time frames.

One day fundamentals will matter again, but not right now. Besides the overall macro fundamentals are so skewed in favor of the bears that EVERY rally must ultimately be sold when we hit a "frothy" top (see SPY at 920). I will only start "investing" again off fundamentals once we've stabilized the 20, 50 and 100 day moving averages.

As Brian says: "The market doesn't care what you think. Listen to the message of the market."

Late night drunken post....

Why am I doing this? Fuck you! That's why. Barely have enough soberness to type thoughts...fucks this is hard. Anyway....passout

This market has driven most traders insane...

Feel a little bit like Charlie?

Late Night Thought: These guys are bald a$$holes

I wouldn't be surprised if there was a "Brokeback Mountain" thing between the two of them...haven't you wondered why Paulson travels so much?

In the most scathing criticism yet of Treasury's implementation of the $700 billion financial-rescue package, a draft report being issued by a five-member congressional oversight panel said there appear to be "significant gaps" in Treasury's ability to track hundreds of billions of dollars of taxpayer money.

The report faults Treasury on a variety of fronts: having no ability to ensure banks lend the money they have received from the government; having no standards for measuring the success of the program; and for ignoring or offering incomplete answers to panel questions.

The draft report noted that Treasury hasn't used any of TARP's $700 billion to help borrowers refinance or deal with mortgages that are worth more than the market value of the homes they are tied to.

Game plan for tomorrow...

We are still range bound on the SP500 (855-920) so I will begin to cut my short positions into tomorrow's session as we near the bottom of the range. Of course, this sell off could be "THE MOMENT" we break 855 (which has already been tested 4 times before) but I continue to believe that Obama entering (even better Bush exiting) + $350 billion in additional TARP funds will give this market enough "kool aid" to stave off execution (aka a trading range breakdown). Besides my portfolio was UP 3.5% today, so I can afford to be more conservative.

For FAZ:

If the XLF hits $10.40 (currently $10.90) then I will sell 50% of my position. I will only cover entire FAZ if the XLF creeps back above $11.35.

For SRS:

If VNO hits 49.75 then I will sell 100% of my SRS position. If VNO gets back above $56 then I will cover.

For DUG:

Unless XOM jumps to $80 I will continue ADDING to my DUG position (THAT HOW MUCH I THINK XOM IS OVERVALUED). However, I will sell 100% of DUG if it hits $30 (currently $26) or when XOM hits $71 (the tracking error on these proshares ETF's are egregiously stupid!)

Rollover baby...

LONG SRS




LONG FAZ


Long DUG.




XOM and CVX will need a little more coaxing, but they will be mine SHORTly (get it :-)

60% short
30% long
10% cash

Using my cash and buying a sh*t load of DUG...

XOM, CVX, RIG, SLB, COP are all overvalued pieces of paper. Oil won't climb back to $60 until late 2009 (I believe 2010).

DUG @ $25.05 is 15% of my portfolio, it will become 25%-20% once XOM rolls over, which I expect soon.

Presto!!! I can make up to 4 million jobs....

First Obama promised to make 2.5 million jobs (that was in November)

Then he upped it to 3 million jobs (December)

As of yesterday Obama can make 4 million jobs and most importantly give my little sister that unicorn she always wanted!

Watch out David Blaine...

Disclaimer: The 14-page analysis, which was posted online, says estimates are "subject to significant margins of error" — because of the assumptions that went into the economic models and because it is not known what might pass Congress.

Calvin and Hobbes on the money...

Why Exxon is overvalued...

If you were to take off the religious veil from Exxon and look under the surface, you'll find quite a different story. The incredible double-digit revenue and earnings growth came completely from the big rise in oil and natural gas prices. XOM spent close to $90 billion finding new oil and natural gas, but oil reserves have not increased at all. Gas reserves are up 25% since 2003, but gas production increased very little.

Because XOM has not made many major acquisitions since the late 1990s and its reserves and production are the same, it is basically the same company today that it was in the early part of this decade. Earnings per share may be higher, but that comes courtesy of massive stock buybacks. Also, costs have increased substantially. The cost of finding new oil doubled from 2003, and getting oil out of the ground is up 40% from 2003. These two factors cancel out each other.

To estimate XOM's earning power at today's prices, let's look what it made when oil prices were in the 30s and 40s. In 2003 and 2004, when oil prices averaged $28 and $38, XOM made about $3 and $4 a share, respectively. Since XOM's reserves are not growing, it is reasonable to expect no growth of production in the future. Don't deceive yourself: XOM is just an operationally leveraged proxy for oil (and natural gas).

If oil stays where it is today XOM's earnings will be around $3 or $4. It is trading at 20 to 25 times these earnings. This is a very high valuation for today's environment, where companies with similarly strong balance sheets, with pricing power (XOM is a price taker), and whose cash flows are increasingly independent of what commodities are doing (non-cyclical) pay higher dividend yields and trade 10 or 12 times true earnings. Yes, there is a 50% downside in XOM's stock.

Let's call today's $30-$40 oil the seminormal case, though it could get worse. But what if oil prices go to $150? It is an unlikely scenario, at least while the global economy is in a recession, but in this case XOM has an upside of about 20%, as this summer it traded in the 90s when oil went to $147.

Investors who own Exxon are gambling on oil and natural gas prices, and the odds are stacked against them: tails (high probability) you are down 50%, heads (low probability) you are up 20%.

Grabbing some DUG....

This is not a play on oil continuing to go lower, but rather crude staying below $60, which will screw the integrated/drilling companies.

F**k your buyback Exxon! You're going lower in 2009....much lower :-)



Still neutral position: 50% cash, 25% long (AKNS, GFA, GU) and 25% short (SRS, DUG, sold out of FAZ).

Good morning...

Wake and bake prohibited, says this pusherman.

With crude tanking I sold 1/3 of my DUG position

The post right below this one seems quite prescient...no?

FYI, oil and gasoline inventories rose +5x the expectations. Yeah, I'd say crude is f**ked here.

Short oil here?

Resistance on the USO is at $40, and we're at $37.80

POSITION: Moving half of FAZ short position into DUG (very short term trade though)

Forbes Magazine actually has a good quote...

Perhaps a less popular question investors must consider is, "Why buy stocks after a near 25% rally in six weeks?" In other words, if selling after a 40% decline in 12 months does not make sense, does buying into a 25% rally in six weeks make sense?

I was just thinking the same thing, so I am neutral: 20% long, 20% short, 60% cash.

My longs are risky as f**k stocks including: AKNS, APWR, GU and GFA

My shorts are the pathetic ETF's: FAZ and SRS (at least they are not the FXP)

40% of Obama's stimulus is tax breaks???

Mr. Nobel Prize himself explains why this is not the best solution:

Let’s lay out the basics here. Other things equal, public investment is a much better way to provide economic stimulus than tax cuts, for two reasons. First, if the government spends money, that money is spent, helping support demand, whereas tax cuts may be largely saved. So public investment offers more bang for the buck. Second, public investment leaves something of value behind when the stimulus is over.

That said, there’s a problem with a public-investment-only stimulus plan, namely timing. We need stimulus fast, and there’s a limited supply of “shovel-ready” projects that can be started soon enough to deliver an economic boost any time soon. You can bulk up stimulus through other forms of spending, mainly aid to Americans in distress — unemployment benefits, food stamps, etc.. And you can also provide aid to state and local governments so that they don’t have to cut spending — avoiding anti-stimulus is a fast way to achieve net stimulus. But everything I’ve heard says that even with all these things it’s hard to come up with enough spending to provide all the aid the economy needs in 2009.

What this says is that there’s a reasonable economic case for including a significant amount of tax cuts in the package, mainly in year one.

But the numbers being reported — 40 percent of the whole, two-year plan — sound high.

I like tax cuts as much as the next token Republican, but we need to invest in this country's infrastructure and develop alternative energy to save us from OPEC and Global Warming. That won't happen with consumer tax cuts, which probably won't even get spent. NOBAMA :-(

Late night comedy....

The occasion? I was up 4% today :-)

Letting go some of my Gafisa and A-power here...

got to raise more cash (I'm shooting for a 75% cash position)

It's Friday night, so be cool and don't do nothing crazy

Take a guess

So the market has broken out of its trading range (granted it is on thin-volume bullsh*t action), the VIX is crashing, and the Obama inauguration is coming up (so is that juicy $1 trillion stimulus for Wall Street). Given all the News Year's optimism and HOPE (THAT IS FOUR LETTER WORD WHEN IT COMES TO INVESTING!!!), this rally might last throughout January. Of course, the BSD's (aka Hedge Funds/Institutions) will be back to work on Monday, so we shall see if THEY CHOOSE to bid up stocks and promote the "OBAMA BUBBLE," which will ultimately prove to be just another Bear Market Rally.

To ride this likely rally I will get long Solar, Building/Construction stocks, and maybe....just maybe...Real Estate, ewwww :-(

If Obama is smart then he will tackle the "Pay Option Arm" crisis emerging in housing...

He needs to make these mortgages fixed rate in order to avoid millions of impending foreclosures. If he doesn't then the U.S. housing market will NOT STABILIZE UNTIL 2012 at the earliest, which would guaranty a repeat of the 1930's. You can call it "another move to socialism" but I don't give a f**k...we can't have another +2 million Americans lose their homes to poorly designed pay option mortgages, just because we want to preserve the illusion of free markets (an illusion which disappeared long ago).

Job searching

Aside from partying New Year's Eve, I have spent nearly all my free time looking for a job. I am graduating in 6 months with a degree in Finance and Accounting (perfect timing huh?). Clearly the job market for both fields is very dry right now and I expect it will only get worse in 2009 - we will hit 9%-10% unemployment this year. Consequently, I must prioritize my time accordingly and that means this blog will occasionally go through some "dead air" phases. Nobody likes making excuses but I gotta make some changes in 2009.