Sunday, December 20, 2009

Jim Grant's Early Dollar Requiem; Bob Prechter on Munis; Dollar Turns Up

On December 5th, I bookmarked Jim Grant's Op Ed for the Wall Street Journal entitled Requiem for the Dollar. I had meant to blog about it, but got busy, and it actually worked out for the best, as we now have 15 days of trading hindsight since the op ed was published.

I should first do the obligatory expression about how I think the world of Jim Grant (I actually do). He's a great investment mind, and a truly eloquent writer. But this is a good lesson on why you should always read the financial news with a skeptical eye, no matter how convincing the argument for one scenario or another will be.

As you can tell by the title of Grant's piece, he's not enthralled with the buck's prospects, and kicks off the article with some ominous lyrics:

After a glorious run,
Has the greenback become
The General Motors of currencies,
Hobbled by bad management?

I personally agree with all of the points Grant makes...save for perhaps the timing of his call.

Ironically, while Grant and fellow WSJ readers were mourning the passing of the dollar, the buck itself was kicking off a megarally:

Somebody forgot to read Grant's article to the US dollar.
(Source: Barchart.com)

Of course, no market goes up or down in a straight line. But perhaps, for the time being, the dollar may already have all the "bad news" priced in.

Another great example of why it's so dangerous to use the news to trade - the news usually lags the price action!

Related reading:

Stephen Colbert's Investment Portfolio Recommendations

Earlier in the week, the Colbert Report did a fantastic spoof on gold. If you haven't caught it yet, check it out...it's absolutely hysterical!



America's Top VC - Uncle Sam?

Come one, come all - entrepreneurs and investors alike - and pitch your business to Uncle Sam, the newest kid on the Venture Capital block!

Please exercise caution when reading this piece, as any free market loving individual may throw up all over himself or herself!


Robert Prechter: Run, Do Not Walk, From Munis

Bob Prechter's latest Elliott Wave Theorist popped into my Inbox Friday afternoon. It's excellent as always, and the good folks at EWI were kind enough to allow us to reprint a portion of Bob's analysis, which you can read here.

Prechter advises readers to run, not walk, from muni bonds...as he thinks local and state governments are toast!


One More Good Jim Rogers Interview

Here's another gem of an interview from Jim Rogers on the Closing Bell with Maria Bartiromo:



Hat tip to The Daily Crux for the tip on this interview. And enjoy the hilarious Tiger Woods quip!


Positions Update - Holding S&P Puts, Waiting for Long Dollar Re-Entry

On Thursday, I took advantage of the market dip to close out both S&P shorts. They had to be closed out or rolled anyway. Both positions were closed at a loss, but I was fortunate to get a down day to sell on.

Still looking for a re-entry point into the dollar trade, which I basically got "margined" out of. I would have preferred to hold the position, rather than time the exit and re-entry, as I believe the trend has now changed (finally).

And I'm still holding the S&P 1050 puts, which continue to shed value. But, I think the risk/reward of holding them here is quite favorable still.

Another strong week for the dollar!
(Source: Barchart.com)


The S&P continues to defy gravity - but its time may be limited, if the dollar has indeed put a bottom in.
(Source: Barchart.com)

Open positions:

Holding 2 January 10 S&P 1050 Puts.

Current Account Value: $19,235.14

Cashed out: $20,000.00
Total value: $39,235.14
2009 Returns: Ugh, too depressing to calculate right now...

Prior yearly returns:
2008: -8%
2007: 175%
2006: 60%
2005: 805%

Initial trading stake: $2,000

1 comment:

Peehu Sharma said...

Silver December future has shed over 0.5 percent in early trade at $ 18.960.
Gold December and Platinum October contracts are slightly down at $ 1,325 an ounce and $ 1,037, respectively.
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