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Advisor

Michael Lewis crash?

Sorta remarkable really. A widely followed author happens to get a big news release on his new book that happens to remind the other 7 billion folks on the planet (well, clearly folks in Borneo probably don't care) that the king is buck naked. Which most everybody who is moderately sentient knew but hoped that nobody would bring up.

 

I don't know what it means if an estimated 70% of the volume in US stocks that comes from HFT is curbed, and neither does anybody else.

 

There's an old truism that the markets always test a new Fed Chair. Greenspan got his within a few months of his confirmation via the '87 crash and used it to establish himself as BFF of financial risk taking. Bernanke's didn't begin for almost two years and then ran continuously through the rest of his term.

 

I assume that Yellen's is coming, probably sooner than later. I have no idea what she plans to do when da boyz threaten to hold their breath until they turn blue but history indicates that Mom and Dad always cave. The only question is how big of a conniption is required to produce the result.

 

At any rate, the fit might present a substantial cross current to commodity bulls in the near to intermediate term. Might be bullish longer term as moar liquidity is the only answer. It is also possible that they miscalulate and/or at some point it just don't work any more.

 

I am hard pressed to think of what meaningful policy tools might be at her disposal at this point but am confident that much smarter folks than me are hard at work somewhere deep within the Marriner C. Eccles Building figuring it out.

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9 Replies
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Advisor

Re: Michael Lewis crash?

Used to say "Cash is King" now I say "Hard Assets Are King"  land, metals, green paint.

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Advisor

Re: Michael Lewis crash?

If the goldbug inflationary nirvana comes about it probably won't be until we've had the jeebers scared out of us by a hard deflationary scare first.

 

I would say that a cashed up farmer has about as good of a chance of weathering both scenarios as anybody does. It makes a nice barbell (two fat tails) having cash and having assets that will hold value well in an inflationary environment.

 

I think this is an environment where you don't try to keep up with the Joneses you try to be OK after a lot of the Joneses are gone.

 

 

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Veteran Advisor

Re: Michael Lewis crash?

well, you have two of the three parts of a well diversified portfolio

 

The third part is stocks of major companies, or a closely held company of your own outside of agriculture.

 

the simplest path to riches is to have all three, and to periodically reallocate your assets to make them roughly equal. That assures you of buying low, and selling high.

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Honored Advisor

Re: Michael Lewis crash?

I am one of the "Joneses" , now what?

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Veteran Advisor

Re: Michael Lewis crash?

For a couple of hundred bucks, I think you can change your name to "Smith".

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Advisor

Re: Michael Lewis crash?

Well, being a Jones has been a very, very good thing to be for most of the past thirty years.

 

The government always backstops risk.

 

Although there are more than  afew Dead Joneses back there who happened to be levered wrong or at the wrong time.

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Advisor

Re: Michael Lewis crash?

Where do you put the cash and still keep fairly liquid.. Not real impressed with some of the balance sheets of the big banks and most of the smaller banks are getting swallowed by the big ones.

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Advisor

Re: Michael Lewis crash?

Short dated treasuries or I suppose ideally, hedged gold. Neither has any yield to speak of.

 

Certainly maddening that the game is to make sure that cash is trash and thus force money into chasing yield. But as I've said, I'll just continue to go broke slowly- money removed from the stock market in 2007 is still ahead of the game.

 

If you think about where we are, we had a long post Volker run down the disinflationary slope- as interest rates fall asset prices rise. The problem, of course, is that eventually you get to 0 and by the time you do the whole world is dependent on assets staying high and coninuing to rise.

 

Say what you will (and many will) but the Deep State v. 44.0 (Obama as figurehead) has done a wonderful job of keeping the corpse pink and farmers should be deeply grateful that the game has been extended for 6 more years.

 

Although it is fair to say that all of the alternatives would have acted similarly, the made up hot button issues notwithstanding.  That's just people who want something from the government who need to get the folk stirred up about something or the other.

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Veteran Advisor

Re: Michael Lewis crash?

i meant to post this last weekend for ya cat - or anyone else...A nice ROI DAY- Fri 4/4, where one could have easily banked 1000-4000% ROI during 4-4's nice selloff day---see put highs and lows -- far right column.

 

4-4-14 SPY wkly option.png

 

 

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