Nice quotes, thanks, however there are a few bones of contention. Buffett was investing in 1969, a serious bear market, and 1973-74, a very large bear market. Each time he actually made a profit each year during the bear. Buffett was investing from 1969-1982, the worst period for stocks since the 1930s. So Tudor Jones is talking utter nonsense here. Obviously a 1929-32 scenario would be a very tough test of the Buffett style of investing. I for one would love to see that happen, just to see how Buffett handles the ultimate test. However, it could actually work out quite well for him as he will be able to scoop up businesses at historic bargain prices. Also, most of his owned businesses have dominant market positions and balance sheet strength - the potential for profitable M&A or expansion against weak & failing competition would be enormous. Buffett is a businessman not a trader. Fading extremes is a reliable and profitable strategy. There is a huge difference between fading a massively oversold panic market with limited risk and a contingency plan in case it turns into a true crash; versus averaging down with unlimited risk and if it's a true crash you get taken out. Most long-term trends have retracements more than 20% of the ultimate move, thus making it impossible to stay on board if you require a 5:1 risk/reward ratio. For example oil went from $49 to 147, however it had a move from 77 to 49 before that. This retracement was more than 20% of the subsequent $100 per barrel price advance thus 5:1 was impossible if you were staying in long-term. Equally, owning oil at $120 you had a $10 retracement and only $27 upside - another great trade that did not meet the 5:1 criteria. UK pound from 2.16 to 1.52 had several retracements of >10-12 points, again lowering the R/R below 5:1. Regardless of how many trades offer 5:1 R/R on *entry*, very few maintain that R/R throughout the lifetime of the trade.
Yeah I think tudor went too far on the buffett trashing Have been trying to increase my equity exposure and got out of the yen after the sell off yesterday. Trying to buy some bank bonds as well. C and MS are yielding 9-11% for 6 to 10 years with a limit order maybe one can get that even higher because there is no liquidity. This market is getting so oversold that one's got to decrease their bearish exposure even though whatever bullish position I put on tends to be underwater the next day
pimco is saying fed will cut 50 and signal they will stay there for a long time. hard to disagree with them, fed has been underdelivering since BSC bailout, dont think we get 75. I switched from Jul 09(98.86) contract to Oct 09(98.45), the whole fed funds futures curve and the 2year just seems so much like ridiculously free money that I got to stop I wonder if I'm missing something The only way the Oct contract loses money is if the fed cuts 50 then hikes more than twice in 09!(like that's gonna happen) anything else and that contract cashes economy should be keep tanking for a year, there is also the chance that pimco is wrong or disaster happens and bernanke goes to 0.5%
The USD is taking a beating and markets are recovering. I decided to go into a 100% hedged dollar position with the CAD, Im also glad to have gotten out of the Yen although I admit my timing was lucky The 'world is coming to an end' trade has been such a one way bet that I dont want to push it more, what if we see a sustained rally in risky assets, that doesnt look good for the yen/dollar/shortsales. Its hard to choose a currency these days, I think the EUR will disappear in 5 years. CHF and other european currencies will suffer because europe will implode when the euro goes. AUD NZD leaves you exposed to carry trade concerns(current account also very large), I choose the CAD because of their better fiscal and CC position Surprisinly pimco has wrong on the fed, they dont usually miss like this. the statement was as dovish like hell, they even stripped out that inflation risks remain, perhaps they could go another 25 or 50
Looks like the insurance co's are next on the BK block. HIG credit ratings downgraded by Fitch after close friday. The action in PRU CI et al was ugly friday.
I'm sure that wont include the bond insurers. california will hit a depression before the ceos admit there is something wrong. mbia still thinking the seconds from countrywide are golden. they report wednesday
I think we are just seeing a bear market rally. I understand the fundamental bullish arguments and I tends to agree with them but I think psychology will trump valuation or anything else. this market will for at least another 12 months face bad news after awful news, it can ignore it for a week or so but what about months?eventually it will throw the towel and we get another dip. the 2002-2003 model could be in play, we could keep testing and breaking those lows even if only for a while
I'm thinking of shorting GM following deustch bank. this is looking awfully like fnm and fre. the problem is if the government gets warrants but the stock doesnt go down right away because the market discounted tons of stuff, it happened with AIG. Also if the government simply makes a liquidity loan without wiping the shares out this could be bad. Will wait for a rally to increase my margin of safety
JPMorgan came out with data supporting this http://www.bloomberg.com/apps/news?pid=20601087&sid=ak7FQQWIAF5k&refer=home 86% of the time the low gets retested. I wonder the % for a double retest.(if the dip is big enough I guess its a new low that needs to be tested, shorting the rally should be a nice trade) On the GM trade barney frank in a bloomberg interview made quite clear he doesnt want these companies 'to collapse', given this post-LEH world it seems quite clear they wont be allowed to file chap 11. so a liquidity loan might be coming. the TARP is lending money at 5% with little warrants so I'm worried about a bailout like that, it wouldn't be good for shorts so I will just watch this one for now
im not to sure about what this would mean for shorts but i made a few observations. 1. FRE & FNM both stocks are trading like penny stocks and cant get back above $5.00 per share. they are stuck at under a buck. 2. GS has been in a downward spiral every since WB gave them the billions. 3. AIG is still stuck in the toilet and can't move. seems to me that taking the TARP or any artificial tarp like cash infusions is a death sentence for a stock at least for now.