Slope of Hope Blog Posts

Slope initially began as a blog, so this is where most of the website’s content resides. Here we have tens of thousands of posts dating back over a decade. These are listed in reverse chronological order. Click on any category icon below to see posts tagged with that particular subject, or click on a word in the category cloud on the right side of the screen for more specific choices.

The Year the Game Changed

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Gary from Biiwii with another macro chart worth noting.

In 1999, the price of gold bottomed after having ridden the
post-Volcker era down along with treasury yields. This was due to the
sound policies the former Fed chief rammed home and the confidence that
ensued.

Tyx

Enter the Maestro, Greenspan, who inherited the benefits
of this sound policy and used it for years as a lever to bail out the
system whenever needed. Many people thought Greenspan was a great and
powerful Fed chief, but in actuality he was simply playing off the
confidence that had been restored in the monetary and financial systems.

I
think this macro chart has profound implications and clearly shows that
sometime in the 1999-2001 period, we went off the charts as increasing
debt burden became not only acceptable, but necessary to support the
lifestyles we had grown accustomed to. Denninger's letter in the previous post illustrates China's role in the macro Ponzi scheme in the harshest of terms.

There
is talk of a gold bubble and in my opinion, the most unsavory of the
gold bug 'community' are out in full force, hoping for nothing less.
But gold is not in a bubble. That is because gold represents an anchor
to sensible systems and simpler times. It is going nowhere. The other
stuff, the remnants of a rotting system is what is going somewhere and
that somewhere is down. In short, confidence is being lost. It is no
coincidence that gold is the only asset in new high (blue sky)
territory.

Back to the chart, look at what happened as Greenspan
finally ran out of Volcker's ammo and the market realized that this was
simply a shell game promoted mainly by the macro vendor financing
relationship between the US and China. There have been various means of
keeping treasuries aloft, not least of which is the need for China and
other creditors to keep buying them or at the least, not talk them
down. Gold's honest monetary value has simply picked up on the rigged
game beneath the surface and sought the value that treasury yields have
thus far refused to seek.

At the very least, this is a picture
of honesty beneath the surface and sadly it is a picture that most
people will either never see or come to see when the media are shoving
it down their throats and they panic into gold at god knows what higher
price than it is currently at.

I'll kill it here, but when I see and ponder pictures like this, I hear thousands of words.

Bull List

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Over the past seven hellish months, every reason imaginable has been offered about why the market will continue higher in the short-term. As a time-saver, I've composed this little guide. Feel free to mention any I've forgotten.

  • It's options expiration week. Market makers will hit their price pegs.
  • It's a full moon (I am not making this one up).
  • The dollar has no reason to climb, and as long as it falls, equities will rise.
  • Goldman needs to push the market higher.
  • Obama needs to push the market higher.
  • The hedge fund year ends October 31, so hedgies want to drive prices up into that date (this reason is temporarily expired).
  • Retail hasn't even come into the market yet. That will really get things going.
  • Precious metals are in a secular bull market, and that will keep lifting assets.
  • There is no limit to how much money the Fed can or will print.
  • The recession is over.
  • Warren Buffett, the world's greatest investor, is bullish on the stock market. Just look at his purchase of BNI.
  • The government won't ever let the stock market go down again, now that they know the power they have and how to use it.

What else?

My Weakness is Strong

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As I've hinted, I've moved entirely away from options and e-mini trading and am focused strictly on individual stocks and ETFs. Why the change? Several reasons:

  • Reduction of risk – 2009 has been very rough, and I took on this move to radically reduce risk and volatility. Aggressive trading of leveraged instruments can wipe a person out. My main goal right now is capital preservation. Boring, but safe. That's why my big account is down 2.31% instead of some god-awful amount. No one likes loses, but I can handle a 2.31% drop.
  • Focus during trading hours – Watching the /ES from 3 p.m. Sunday until 1 p.m. Friday, week after week, can get exhausting. I have other things to do. And I'd rather not get caught up in the late-night shenanigans of low-volume markets.
  • Plays to strength – I'm a chartist. I tend to be good at smoking out individual charts. My portfolio is currently loaded with stocks I think are highly vulnerable. So I'm trying to play to my strengths.

Below is a case in point – Whole Foods – which I shorted at $33.38, is currently trading at $26.16 (a 21.64% drop), and has a stop at 28.94. This is my kind of trade – – – one which has a fat profit, is virtually guaranteed a profit even if stopped out, and on which I can just keep ratcheting the stop down. My goal is to have a portfolio filled with issues like this. When I saw WFMI was down even yesterday, when the market was exploding to new highs, I felt that much better about the decision.

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