Wednesday, January 28, 2009


It is amazing how quickly the Mainstream Media coins terms. I have heard good bank/bad bank until I am about to puke. Right now the idea of getting the bad assets off of the banks balance sheets should be dealing a blow to the deflationistas. If the banks recapitalize by truly offloading toxic assets to the government, it will get them lending again. Sound like a great solution? If you like inflation and another step toward government insolvency. If we do this in one quick "swoop" of bad asset purchases--you will see inflation run in a hurry as the money multiplier will increase rapidly.

For those of you that listened to our interview with Jonathan Hoenig, I think he has the right idea by letting price action of individual stocks dictate moves in this market. The macro picture is far too tainted with governmental announcement risk to even suggest a buy and hold strategy. I favor buying stocks that are showing favorable price action and using good money management techniques (which in this market for me has meant not holding any position overnight.) I think we will see gold hit $1000 per oz soon even though it may fall over the next day or two. It is almost a foregone conclusion in the minds of many traders that gold has to test $1000 per oz.

The house passed the pork bill tonight (commonly referred to as the stimulus package). I am amazed at the number of brokers in the MM that are coming on TV and saying---just don't sell now!!! It will come back, it always does. Will it? I don't think in the fashion that they suggest. I believe that the game has forever changed and I just hope the new regulations will not adversely affect the small investor. I believe that now is a good time for a trade in USO and I will look to trade it over the next couple of days. I have been shorting RNT with some success. I don't like their business model and have traded in and out of that one several times over the last few days. I am looking to do the same type trade with EMS. I can't see the fundamentals for this one right now and I think it has set itself up for a decent short in the next few days. Again, I am moving in and out of these type trades and have not closed the regular session with any of these positions open.

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