3/18/11…hubris!

Bloomberg Quote of the Day: “Life is divided into the horrible and the miserable  “ – Woody Allen, who else, always the optimist! TB

Beware of yesterday’s rally for two reasons. Volume, advance/declines, and breadth were only average or less (volume missed by 100 million shares) while new 52 week highs ran just 68 as new lows hit 102. The second reason is today is options expiry meaning that after the precipitous decline of the past week, short-covering was in order. Note also that it was an inside day (lower high and higher low than the prior session). How can we be so smug in the wake of an incredible disaster that has yet to play out? Confirmed deaths have reached 6,700! On Wednesday, the VIX volatility Index on S&P options spiked to 31.28, the highest since 7/1/10 and almost closed a gap there at 32.72, but yesterday the move was tempered to a still-high 26.37, while the VXN (Nasdaq) hit 32.46, highest since 7/2/10 (there is a gap above from 33.96-34.28, it also moderated yesterday to 28.41 – bears watching (pun intended!).

The big winners yesterday were the oil stocks as Crude broke above 100 closing at $101.42 and was up almost $2 overnight broaching $103 as the UN voted to establish a no-fly zone in Libya…hopefully it is not too late! It then plunged again and is now $101.15 -.28…please tell TB how you can call this market ‘investing.’ Gold is at $1418, the highest in three sessions. Meanwhile, bonds continue to lose ground with the 10 yr at 3.28% and the 30 at 4.45% (-5/16 and coming back). Little change on foreign bonds.

The special session of the G-7 ended with immediate selling of Yen in the first coordinated intervention since 2000. Also, China raised bank reserve reauirements for the third time this year on inflation concerns. Japan is 9% of global GDP and the ‘smart money’ says that it won’t derail the global expansion as it isn’t big enough…this of course ignores the interactions…you know, like drug interactions? Same thing to TB. Overnight global stocks were little changed but since the intervention most are rallying, led by the Nikkei +2.7%, Europe up about 1%; China slightly positive; Korean KOSPI +1.1%; but India’s SENSEX if -1.5%.

Today could be interesting…one thing for sure: don’t rely on the open for information! DOW futures are +124; SPX +15; NDQ +18 –all climbing… will it hold?

…one of TB’s favorite writers has been John Mauldin, and while his comments are good it is the ones in his Outside the Box edition that are the best. Why is it when people attain success they snatch defeat from the jaws of victory?

Last weekend he devoted most of his column to promoting his book and ‘telling’ his readers to buy it from Amazon where it was, according to him, the number one non-fiction and number two overall seller that week. He told his readers not to ‘procrastinate’ and go out and buy the book. TB, and many of his friends were shocked and saddened that he would be so willing to destroy his credibility in this way, so TB wrote him a sincere and honest comment suggesting that he not have so little respect for his readers.

His response was: “Just curious, did you buy the book yet?” TB was appalled, and wrote back asking how he could take constructive criticism and be so flippant about it. He wrote back a scathing reply saying that he had put in 20 hours a week for ten years providing free information (forgetting that he has plugged all of his other books but never so blatantly, and even hyping some product he was getting a commission on at least once!), then accusing TB of freeloading off him. That turned TB’s stomach, what a fall from grace. I told him that sadly now I would not buy his book, The Endgame, or recommend it to readers…not that this will hurt him but other friends said they shared the same feelings on his sales pitch.

TB wrote back that Marcus Aurelius had a slave walk next to him through the adoring crowds, whispering in his ear “you are just a man.”

The last time something like this happened to TB was in 1999, at the peak of the dot com boom. Jim Cramer had a weekly syndicated column that was very good. He hated dot coms but then suddenly was for them. Sooooo, TB wrote him asking if his new love for dot coms was related to his company, The Street.com (TST) filing to do an IPO. Cramer wrote this back:

“My wife loves me, my kids love me, my dog loves me and I don’t give a damn what (you) think of me!” How does TB bring out the worst in people???

Let’s look at the history of TST: it was priced on 5/14/99 at $19.00 and hit $71.25 THAT day before closing at $46. its high close, then it dove to $18-1/8 on 8/6/99 (TB’s anniversary coincidentally), and never touched $19 again. The ultimate low came on 10/12/09 at 92 cents! Last is $2.99. So what did Cramer do? He bought steadily and is and has been for years the biggest shareholder (now 9.87%), he has had options that have expired worthless.

What is interesting about this and TB just did the research while determining when the letter was written, is that Cramer would have crucified any company or management that has performed as badly. Sadly, the site has some very good articles by contributors. Jim Cramer is NEVER about dollar cost averaging or averaging down, in fact he thinks that is for suckers. Good luck Jim…and on your recommendation for your former employer, Goldamn Sachs as well.

So why is TB writing this? Because…after years of procrastinating he is finally writing a book on the events of the forty years he has been in banking and investments. There will be a chapter on each year, some long, some short, with an uptake (moral? Summary?) of what we should have learned on that. He had been told to do this years ago because he had met so many interesting people and been deeply involved or aware of many events and debacles, most notably the 1994, Orange County bankruptcy…hey, that is what the chapter on that year will be about! That was supposed to be the longest chapter but the Japanese quake and tsunami may have changed all that!

TB promises to tell you when the book is finished and along the way provide summaries of some of the chapters but will NEVER TELL YOU TO BUY THE BOOK! Promise!

So how can he be so sure it will be published? Because either it will or TB will self-publish with the help of a very capable friend who retired from the publishing business, and has published three of his own books. Stay tuned.

Barron’s had an article two weeks ago on a computer that had been developed that was similar to Watson, the one that blew the socks off the two all-time winners on Jeopardy. This computer however detects when CEO’s are lying during conference calls by sorting key words – it has a very high accuracy rate and while the service is very expensive they have an analysis of the call to you within four minutes…wonder how the computer would have interpreted the comments of these two luminaries?

. . .   – – –  . . .

If you thought the Nazi’s were perverted you had better read the latest on how our government infected not only the Tuskegee men with syphilis (imagine a town no one give a hoot about having both heroes that took fifty years to get honored for their efforts to sharecroppers that were allowed to suffer and die from syhphilis…all in the name of medicine…no wonder some call it the hypocritic oath! Oh but it gets better in a class action suit filed by seven former Guatamalan prisoners who were infected with the disease in various unpleasant ways, we see yet another ugly side of our government in action. Doctor Mengela would be pleased. Think about this as you watch what would be a clown act in Congress if we didn’t have so much at stake on their judgment which seems driven by their wallets.

Have a terrific weekend but don’t forget about the suffering in Japan…they have even run out of painkillers in the hospitals.

TB

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