MarketVVizard's Market Thoughts

Top 560. Nov 24, 2003 9:16 AM

» MarketVVizard - Re: Re: NVLS

In response to message posted by Jas_Jain:

No Jas, I'm actually up about 1.6% on last two trades. I know you think using stops is "market timing" which is to be avoided at all costs, but that's what I do anyway smile

And if you need a recap, yes, this year has pretty much sucked, performancewise, for me. Heck, it took half the year just to get back into the black smile Feel free to rub it in a little more if it makes you feel good.

But seriously, if you don't want to participate in meaningful dialog or even bother to respond to questions then don't let me stop you from moving on. You can be an ass all you want over on your own board.

Deal?

p.s. When I meet a person that gets "happy" when I short something and "angry" when I cover or go long, I know that such a person is probably not objective nor are their emotions in check. From my experience such people lose money in the market long term and should be avoided at all costs if they influence one's investment decisions.

p.p.s. As I've said before, I don't agonize over the past thinking what woulda, coulda, shoulda. That drives people crazy. You could have done a million profitable things in the last week, month, or year. I got out this morning because the market looked poised for a big rally. The timing was great considering I would have lost $ holding the short. After tonights conference call NVLS could be up $5 or it could be down $5. Jas will probably berate me if its down, or we'll hear nothing from him if its up. I look at the market daily and make a decision without looking back. That's just my style. Take it or leave it.

-- posted by MarketVVizard

Top 561. Nov 24, 2003 10:15 AM

» Jas_Jain - Re: Re: Re: NVLS

In response to message posted by MarketVVizard:

--
1. Anyone who exposes someone's problems, ignorance being the most notable, is an ass. People love to be married to their problems, which, of course, they deny. But you are not alone, PROBLEM people on the subject of the economy and investements have great majority and they get a lot of support from each other. It is a group therapy.

2. You are not a MT and I am?! LOL!!

3. When I said, "Every idiot I know, and every Crook on financial TV I follow, is bearish on bonds and bullish on inflation. Draw your own concusions" not only I was challenging your assertion on the subject but stating a fact and some others agreed with my observation. Is it wrong to monitor Idiots and Crooks to get an idea about the long-term behavior of markets? In short-term, Idiots and Crooks reign supreme. Idiots have done quite well recently, as evidenced by many on Suite 101, but don't count on that continuing.

4. It is not good to expose your ignorance by talking about things you know nothing more than what you have been told by the propaganda machine, e.g., your "understanding" of the "Printing Press" and inflation. Have you ever spent great deal of time understanding the subject? Or, you accept views of some or other authority like Bernanke without examining them? These people are in propaganda business more than looking after public's interests. Beware.

Everyone is an idiot on most subjects; so, don't take it personally.

Jas

-- posted by Jas_Jain

Top 562. Nov 24, 2003 11:13 AM

» MarketVVizard - Hussman particularly relevant today

Force of Habit

John P. Hussman, Ph.D.
All rights reserved and actively enforced.

Market Climate

The Market Climate for stocks remains characterized by unusually unfavorable valuations and modestly favorable market action. The Strategic Growth Fund remains fully invested in stocks having evidence of favorable valuation and market action on the measures we use, but we have also hedged nearly 60% of that portfolio against the impact of market fluctuations. We continue to be positioned in a way that will benefit most from further advances in the market, but our exposure is not aggressive.

Stock market action is displaying fewer signs of robust strength, but the deteriorations we've seen have not been decisive. A number of past bull markets, including 1987 and 1990, have ended closely following deterioration in interest-sensitive sectors such as bonds and utilities, so those are areas of concern. In addition, overall market breadth has deteriorated somewhat, and I would be concerned by a substantial increase in the number of stocks registering new 52-week lows, particularly if it occurs when the major indices such as the S&P 500 remain relatively strong. Corporate insiders have increased the pace of selling to strikingly high levels – averaging 6.74 sales for every share purchased over the past two months, according to Vickers, with the latest week registering 8.59 sales for each share purchased. Heavy insider selling does not always pose immediate risks, as it tends to be a somewhat leading indicator, but these figures are far from benign.

As always, we are exposed to market risk because our favored stocks are generally sensitive to overall market fluctuations. We've hedged some of this risk due to unusual overvaluation and early deterioration in market action. But again, we remain positioned in a way that will benefit primarily from further advances in the stock market.

In bonds, we've shortened our portfolio duration even further. The Strategic Total Return Fund currently carries a duration of about 3.25 years, meaning that a 1% (100 basis point) fluctuation in long-term interest rates would be expected to result in a 3.25% fluctuation in asset value. Recent deteriorations center on the weakness in utilities, combined with evidence of stronger inflation pressures than previously.

At a macroeconomic level, my comfort with the bond market was not helped by reports that foreign purchases of U.S. securities plunged in September to less than one-tenth of August's pace. Of course, we saw what happened to the U.S. dollar versus the Yen at that time. Needless to say, the shift was partly a response to demands by Treasury Secretary Snow regarding the need for currency revaluations in Japan and China. In light of the enormous dependence of the U.S. economy on foreign financing of the massive U.S. current account deficit, the economic recovery may encounter difficulty if this reduction in foreign investment continues. The heavy dependence of the U.S. economy on foreign investment flows and a steep yield curve may be a subtle argument here (see Freight Trains and Steep Curves), but that does not make it any less critical.

We are what we habitually do

Over the years, I've written a lot about “daily action.” You decide on a set of actions that you believe will lead to good results if you follow them consistently. Then you follow them consistently. Unless a goal translates into daily, present action, focusing on that goal is simply a way of escaping reality. As Jean Paul Sartre wrote, “Je ne suis rien autre que mes actes” – I am nothing other than my actions.

If an investor consistently takes positions based on forecasts, and changes those positions only when the market proves those forecasts wrong, that investor's life will predictably be dominated by hope, uncertainty, disappointment, reaction and frustration. If an investor constantly takes positions by responding to opportunities and conditions as they develop, with equanimity to what will happen next, making a habit of purchasing favorable value or early strength, and a similar habit of selling overvalue and early weakness, that investor's life will most probably be dominated by a sense of peace and control. Though it is not obvious which investor will have better results, my own opinion on that should be fairly clear.

This doesn't mean that an investor who responds – rather than reacts – will know what will happen next. Rather, it means that this investor will be able to accept what happens next, knowing how to respond whatever the outcome. The point is to live in reality, and to take the next action from where one stands, without ignoring inconvenient aspects of reality in the hope of justifying one's position, and without wishing for the starting point to be somewhere else. The greatest source of human frustration is the desire for reality to be something other than it is.

The Big Idea is to avoid the need for Big Ideas

Occasionally, I am asked which “bets” or “calls” have accounted for the performance of the Hussman Funds. After recovering from my gag reflex, the answer I give is always the same – our performance is the result of literally thousands of small actions, taken deliberately day-after-day following a carefully planned discipline. It is very difficult to trace our returns to any “big idea” or specific investment position. We are what we habitually do.

For example, we're currently comfortable holding between 150 and 200 stocks in the Strategic Growth Fund, most in the range of 0.5% of assets, and very few in excess of 2%. Changes in our stock holdings are driven by day-to-day opportunities to buy higher ranked candidates on short-term weakness, and to sell lower-ranked holdings on short-term strength. These positions aren't “bets” on the direction of particular stocks, but transactions to constantly build better value and market action into the portfolio at opportune prices. Plant seeds day after day into fertile ground, tend to the weeds day after day to make room, and you've got yourself a garden. Not every attempt produces fruit or flowers, so you don't rely on one seed.

Likewise, we select our exposure to market fluctuations based on the condition of valuations and market action that we observe at any given time. Occasional changes in our exposure to market fluctuations are not “calls” or “forecasts” about the future, but responses to observable conditions. While some conditions are associated with much better expected return/risk than others, on average, it is impossible to reduce this “average” behavior into reliable forecasts for any specific period of time.

Planning for randomness

Inevitably, we'll sometimes be defensive during a market advance that occurs in relatively unfavorable conditions, or aggressive during a decline that occurs in relatively favorable conditions. Also, various stock positions may lose value. When these events happen, we will experience losses, or achieve smaller gains than otherwise. We plan for these possibilities through wide diversification in stocks, and through self-imposed investment restrictions. Since the Strategic Growth Fund can't take net short positions even in the most negative market conditions, even a strong market advance during such conditions would not lead us to predictably lose value (though losses might still occur if our stocks were to perform poorly). Since the Fund can use leverage only by investing a small percentage of assets into call options, any additional losses resulting from that leverage is limited to the few percent paid for those calls.

In short, we don't rely on specific forecasts of market direction, or make large “bets” on individual stocks. We adhere to investment restrictions that are intended to reduce the impact of unfavorable market outcomes on our positions. To believe that our performance relies on great forecasting precision, or is hypersensitive to “bets” or “calls,” is to neglect the importance of daily action, diversification, and investment restrictions. Unfortunately, it is something of a journalistic shorthand to talk about investment managers making “bets,” “calls,” and “forecasts.” As a rule, if you ever read a piece that uses these terms in reference to my investment views, you can conclude that the writer or analyst wasn't listening.

The Big Picture is important

On a related note, it's important to emphasize that our approaches to evaluating individual stocks and market conditions are not “formulas” but methods of analysis. While the quantitative aspect of what we do is essential, we are not a “quant shop” and do not rely on a “black box” approach to investing. As I've frequently noted, investing on the basis of any particular model, without carefully understanding the quality of the data and the reasons why that approach should be effective, is to invest on the basis of superstition rather than analysis.

These weekly commentaries are intended to provide background and context to current economic and financial conditions; to discuss important developments I'm monitoring; to describe my thinking and investment process (without, of course, compromising proprietary information). In addition to quantitative information, I spend a lot of time looking at qualitative factors such as the products of the companies we invest in, features of each company that might affect the stability of their future financial results, the “big picture” characteristics of the economy at any given time, and a wide variety of economic relationships that you would expect a careful economist to think about. My hope is that these efforts are evident in the articles I write. In short, our investment process is largely quantitative, but not exclusively so.

-- posted by MarketVVizard

Top 563. Nov 24, 2003 11:19 AM

» Makena - Re: Re: Templeton

In response to message posted by Kirk:

You are wrong again, about being wrong. You do need to be a British subject to use the title Sir, when you are knighted. He is one. If you are not a British subject, and you are knighted, your title is KCBE Knight Commander of the British Empire. Same honor, same ceremony, but you can't use the title Sir because you aren't a subject of the crown.

Alan Greenspan is KCBE, and cannot be Sir Alan, though people joke at him a lot about that, as they do to all knighted US citizens.

I believe Templeton when he says that he paid more in tax after becoming a British subject than he did as a US citizen. The taxes are very burdensome, but they have a quirk that you do not get taxed on your earnings from working overseas. (The US taxes you on your worldwide income, no matter where you live and work, as long as you retain US citizenship.) Ironically, to save taxes he should have become a British subject, with a legal residence in a UK territory, THEN moved to a haven country to do his day to day operations. THEN he would have not paid tax to his country of citizenship, nor to his country of residence, the best of both worlds. I also believe him when he says he did it because he had decided to reside there for life, and was convinced it was the right thing to do.

Now, as to why he moved, I believe it had little to do with tax, and more to do with regulation of what he was doing at the time. Many of the hedges and foreign direct investments he used are illegal here for sale to the general public, and could only be done here as a limited partnership and sold only to accredited investors, plus have to be blue skyed in all 50 states to be sold there, very burdensome. By relocating, he was able to create publicly sold funds which are unavailable in the US, but are fine for sale to the rest of the world. He hired Mark Mobius and others right after that.

-- posted by Makena

Top 564. Nov 24, 2003 1:00 PM

» MarketVVizard - More thoughts

It seems to me that this low volume rally will probably continue all week (which, as already pointed out, would match the statistical paterns for Thanksgiving week). I haven't been long all year, so why start now smile

but deep inside I think I probably should be long right now.

Two very talented traders I know are throwing out big caution on gold stocks.

One also had this to say:

"I don't think I've heard one person on the boards or on TV that has said this market can run to new highs.The consensus seems to be that bullishness is still high BUT the bulls don't expect the market to go higher more and 2-3% before year end.This being a holiday week it appears to be that the boys sold positions last thursday and now they can let the shorts do the rest pushing the market higher."

I agree. I see shorts everywhere like flies on dung. These idiots have to get wiped out before the market can go lower.

-- posted by MarketVVizard

Top 565. Nov 24, 2003 1:52 PM

» Jas_Jain - Re: More thoughts

. .
[Kirk Comment:

Post from an idiot deleted

JazNoBrain - Should I call you that? DO you like it???

I ONLY will allow you to call yourself an idiot.

Don't do it to anyone else PERIOD!!!!!

Continue the name calling or waste my time complaining and I'll kick your idiot butt off this site so fast your head spins.

I hope the next post I read from you is an apology for name calling.

If not, then no posts from you on this forum is a 2nd choice.

]

-- posted by Jas_Jain

Top 566. Nov 24, 2003 3:10 PM

» Jas_Jain - Re: Re: More thoughts

In response to message posted by Jas_Jain:

My dear buddy Kirk,

How can one really understand the "stock market" and speculation without identifying Crooks and Idiots, two most important drivers, especially, with all that has been learned over the past few years? You don't seem to mind lying, which is very common here (people making assertions that are patently false, such as, number of bears, etc.)

Ignore the subjects of Crooks and Idiots in the Scam Market at your own peril. It is a very useful tool to form a judgment about investing.

Just remember: Idiot is what idiot does. It is not an attack on a person but on a certain behavior.

-- posted by Jas_Jain

Top 567. Nov 24, 2003 3:22 PM

» Kirk - Re: Re: Re: More thoughts

.
In response to message posted by Jas_Jain:

I know you mean well, but your post read like an attack on the "owner" of this forum.

You need to learn to communicate without offending people here or find another place to post.

I enjoy your thoughts but not your delivery.

Treat people here with respect or leave... and I'd be sad to have you go as not too many call me a genius, even my mother! smile

-- posted by Kirk

Top 568. Nov 25, 2003 4:34 AM

» Austrian - Re: Re: Re: Re: More thoughts

In response to message posted by Kirk:

Kirk,
Thank you for stepping up to this situation. I thought long and hard about posting on site decorum and respect.

I post to share my thoughts (however limited) and to read the thoughts of well meaning, thoughtful people, who like me want to get better at investing, speculating and trading. Troll for ideas, new concepts, methods, trends.

I certainly do not come to this site for juvenile back biting. If I want that kind of non-sense I'll watch Jerry Springer.

Congratulations on a good year and thank you for your efforts.

Kindest Regards,
-Austrian

-- posted by Austrian