Dollar Drop Hop

The dollar and everything it is tied to is getting a comeuppance lately.

The dollar is dirt cheap, but there is a saying if it’s cheap, it’s cheap for a reason.

There is two scenarios going on right now.

1) a speculative top that will end bad and the dollar putting in it’s all time low. If this happens I don’t think that mining stocks will go up that much since the craze is in the futures market. And a notion that I haven’t read anywhere…The banks and hedge funds that took it on the chin with real estate are doubling up their bets in the commodity pits through leverage to make back money they have lost…If that is the case, imagine what would happen to this deck of cards if commodities came tumbling down (unimaginable)…A hedge fund lost a billion dollars on natural gas bets…300 billion was lost in the exotic mortgage business…Which is why this pessimistic scenario is the one I pray will not happen but option 2 which makes everyone happy…

2) the flight of the dollar which will show up in commodities (already has) and eventually in the windfall profits of the miners (many of them have production problems, even at these high prices, which truly reflects how amazing banks and tech companies can have such smooth earnings from year to year-Emeril couldn’t cook it better) who will need to replenish their resources and buy cheap prospective companies out there.

If case 2 is occurring presently then 1999 will occur, but amazingly more so then the tech mania, because this will be driven by fear and not greed.

I bought options on some gold mining companies but obviously not enough. But one has to look at the general market and see how amazing these commodity related companies can keep going up in the face of such bad news out there.

Here are some great cheap on book value basis that are volatile but have great potential

GROW (my favorite) IPSU ROSE (cheap till 30) ABH ROIAK AU LMC (this one is moving!)

I currently missed the boat on most physical commodities market,. but the mining stocks are cheap and have not reflected the reality of the new possibly sustainable commodity pricing; obviously some have but most haven’t and that is where Im going to focus on.

Of course physical uranium in an illiquid market is lagging and has dropped 50% from the top and I expect this to rally as well and I will not be driven from this horse.

http://www.reuters.com/article/rbssIndustryMaterialsUtilitiesNews/idUSN2823687320080228

Nuclear is back. And I bought my first uranium futures contract out to September.

I believe NAT gas will be hitting 12 which I have been saying for way too long. So on any pullback I will be buying UNG. A commodity that I don’t think we missed the boat on either.

Either way the dollar is in no man’s land. But so is the stock market. And as money is being poured into small commodity markets and driven to nosebleed levels, stocks that have been traditionally invested in will be drained. There is a statistical service I use and they are quite bearish which I have to agree on the general market especially real estate.

SRS should hit 200-300 by the end of this mess.
Oh and I cannot stand the Chinese mania so short that market FXP that is so 2006, but not their currency.

Arrogance vs. Modesty

"I learned long ago that a focus on the losses -- and they are losses, whether realized or not -- is much more constructive than dwelling on how well some of my stocks are doing."
--another great saying by Mr. Cramer.

You have to do this everyday and drill it into yourself that you cannot leap onto other things until you review where you currently have your money in.

Review, review, REVIEW!

You can not be arrogant and say that everything will work out, but be modest and say maybe it won't.

This dollar plunge that is currently happening

is very worrisome. This may be a currency collapse that will effect everything and our perception about what is a dollar.

Hope not.

But we need to be prepared if that happens and I am not sure how to cope with it.

As far as I cann see now, own gold.

Another quote by Mr. Cramer

"But when you buy quality names while they're on sale in a volatile environment like this, you also have to be willing to take some profits off the table when the stocks bounce back."

Never go broke taking a profit, but you don't always wind up with outsized gains either.
It is basically a judgement call, but with top quality stocks that are on innumerable screens, I would say the analysis has been done and they ebb and flow with the economic data of the day so it is a valid conclusion, unless they are severely oversold, to book profits as they come in quality names.

Vantage Point

This was a movie not highly regarded by critics nor good paying members of the public, but it had its good points; for instance, the regard and total disregard we have for our chosen leaders as well as life's precious moments vs. self important political goals that are ultimately fruitless.

I liked the idea that most of the movie occurred at the same moment but from different perspectives. It is something I wish one could have in life trading stocks but I guess I'll be satisfied being Dennis Quaid getting my man. And realizing that all the twists and turns still end the same way, a conclusion. But what part are you going to play, that is the question.

ROAIK

I think this 1 dollar stock that value line says has a 10 dollar book value has some room on the upside, considering that it caters to African Americans and as Obama's presence surges throughout the US, which is a trend signaling change in this country, would be good for this radio station.

Look at what happened to BET, bought for over 1 billion dollars!

Mary Blige and. Cramer

"It matter more where the stock is heading then where it came from."
is a quote I just heard from Cramer. This is important to know when closing a position that may have been painful to be in.

But when entering a position I believe this is what one should do ala Mary Blige:
"Leave all your troubles and your cares behind
Don't you worry 'bout a thing, not tonight, no
Don't drink too much because we have all night
Don't you rush because it's all night long"

Regret and Guilt

I have been trying very hard to put into words how I feel about missed opportunities and how to amend the mistakes of the past, but words fail me.

But this weekend Garrison Keillor helped put it into perspective "Something in my little brain resists the idea of big profits, windfalls, bonanzas. Maybe the story about the tortoise and the hare made too big an impression. Maybe it's the fact that a writer like me has to make one sentence at a time. There are no great leaps in this field unless you lift whole passages from other people's work, and there is an awful price to be paid for that."

And that applied to investing is the only way that I have made money in the market. Small positions that turn into big positions when you take it as a whole.

It is aggravating to get the big picture so right, in not just investing, but not be able to get any traction when I set my mind to it. And that passage sums it up.

Everyone is given his portion and I am going to enjoy it.

Kosovo and Natural Gas

Finally, the 6 month long persistence of a higher natural gas price is bearing fruit as leading financial rags are getting in on the action.
But is it a top?

Russia is the largest producer of natural gas and is not afraid of using it for political reasons. Kosovo's recent announcement of sovereignty backed by the US and EU states couldn't come at a worst time as energy commodities are at elevated levels.

Natural gas could go down but the chances of them being down are slim due to this recent announcement.

"Chip" Reese

A poker player who died before his time or, at least, as the various magazines on gambling dubbed it because I truly wonder what the age range for a career poker player is.

But I am dedicating this blog segment to him because after perusing the various magazines to see if I could gain some insight of a succesful gambler, there is something worth repeating, as far as I can tell, and it is his comment on his gambling style - he could only gamble if he felt a little nervous, like walking a tight rope.

And for a trader like me, it says that at that mental state you are focused and not inclined to goof off, since there is serious money on the line. A surgeon in an emergency room probably has that same rush trying to stave off death.

What I learned today

It hit me later on in the day why I'm giving back gains that I worked so hard to make. I'M NOT MAKING IT HONESTLY.

Honestly would equate to effort and time to make the position work. I am horribly impatient which is costing me too much money. Additionally, it is the concept of gambling, an admittedly hard word to define.

All I can say about the subject is if you have no confidence in your decision and not willing to see it out to the end then you are gambling saying "what the hell, if I dont get it this time around I'll hit hard the next time." That is not a championship mentality and has no room on the trading floor.

This occured to me looking over my notes on stockcharts which are tremendously accurate but has taken 30days to transpire. So in conclusion,

Patience.

CSCO redux

CSCO is down and down hard after hours. This may be the bottoming process or ACT II of the bear market. We'll see.

Reasons to buy CSCO

CSCO

2006 was the breakout for this stock.
It faced turbulence in the spring time and peaked in summer.
Their conference call sparked an initial sell off in the market.

It could be a catalyst for the market to go higher. As opposed to DIS which gave us the MSFT bounce and nothing more.

If their numbers are lousy and the call worrisome then the market will plunge 300-500 points!!!! You don’t make money worrying like that. So that is my logic as well that it only retraced 50% from the high so its bullish until otherwise.