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 Balance of 2010

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With about twelve weeks left this year, it might seem odd for me to be looking toward the completion of 2010, but I just wanted to share a few random musings about what I think the rest of the year has in store (short version: not much).

Whereas 2009 was – the first few weeks notwithstanding – simply fantastic for the bulls, I think 2010 is going to be a year that bulls and bears alike are going to want to forget. While it may seem to the bears right now that the bulls have absolutely blown everyone away this year, the cold fact of the matter is that the S&P is presently up about 3%. It wasn't that many years ago that a standard passbook savings rate on money in the bank was 5.25%. How times have changed.

So here's where my head is at now regarding the rest of this year:

+ I think the likelihood of an exciting plunge down is just about nil at this point. The plummet to 925 that I had so long anticipated was satisfied by the dip to about 1000 in the middle of the summer.

+ I believe my analog is still very much in place, and that the bears are "owed" one smallish drop – probably not even 9%, if that – before autumn is over.

+ Should we get such a drop, I think a precious metals melt-up and a dollar melt-down will be in store, as well as a equity-rally-based-on-a-plunging-dollar. It'll be a pretty sad situation, although most nitwit Americans will look at the nominally higher Dow Jones and marvel at Obama's magic.

+ The election will provide some kind of inflection point; I don't think the frauds and pretense of the government are going to vanish once the election is over, but the incentive to deceive will be diminished after November 2nd.

So that's it from Jolly Ol' Timmay. I am positioned with 16 longs and 84 shorts, with about an 80% portfolio commitment. I was terribly disappointed in how today went, since it truly seemed like things would finally start to tip our way, but Shalom is committed to destroying the dollar, and the bears don't stand a real chance until a crisis emerges that can't be destroyed by a printing press.

And the prospect of that, my friends, keeps me going.

No Arguing the Facts (by Gary Tanashian)

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The first three pages of NFTRH105 were mostly words.  The remainder was a combination of words, charts and graphs, which gave clarity to the writer.  I always like it when I finish writing and get the feeling that I actually learned something.  That is what happens when you tune out the din and just let facts speak for themselves.

We are on a bull party, but there are risks involved.  No matter how much fun it is hanging around the punch bowl, we must be aware of these risks.  No, I do not view the static emanating from Ms. Yellen as a risk.  But at some point, building pressures may abruptly cause a power outage when enough party goers have arrived and partaken. 

No Arguing the Facts

The facts are that the HUI index of major gold stocks closed (by a hair) at new all time high territory on a weekly basis, silver has launched to new highs dating back to the post-Hunt Brothers era, and gold has been flying around in its latest patch of blue sky since early September after being the only asset to repeatedly make new highs over the last decade, as ongoing inflation is promoted against periodic impulses toward deflation.

Gold is rising like a barometer that senses increasing pressures among various nations to competitively weaken their currencies in an effort to goose their economies; none more aggressively or in grander style than the US and its Federal Reserve.  Capital is frightened and it is going global in an effort to find shelter – and some nice returns 🙂 – from the storm.

Portfolio positions were added in the gold exploration sector as well as the global emerging theme.  While I added a token short position against the euro, the balance of evidence suggests that there is not yet a compelling reason to believe markets will not continue to bull short-term, with the real excitement being in the precious metals and some emerging markets and commodities.

Desperation In Play

Of course, volatility is probably a fact of life now as desperation comes into play; desperation on the part of policy makers to pretend to be fiscally responsible (St. Louis Fed’s James Bullard played bad cop last week in thinking aloud for the media regarding additional stimulus: “maybe we should push it off a meeting or two” pending economic data) while falling all over themselves to promote asset appreciation as a means to economic revival.  Then there is the desperation on the part of market players ever more strident in their attempts to will markets toward their point of view.

In short, crosswinds are blowing all over the place and the monetary metal is right in the middle of the action.  Soros and Buffett blow horns that sound a theme of gold as the “ultimate bubble”, mainstream investment advisers are taking the metal seriously in their asset allocations, and more of the mainstream is starting to think “hmmm, I want to get in on this gold rush before the train leaves the station”.

To this point in the precious metals bull, the sector has been the home of we crackpots, malcontents and weirdos.  Well get ready for company my friends, we are going mainstream.  Faith in policy makers is seemingly being rewarded by asset appreciation and the herd may come to a point where it just can’t stand clinging to intrinsically worthless treasury bonds any longer.  Volatility in many asset markets will almost assuredly accompany this desperation, and risk of reversal will be in play as well.

Transitioning Toward Global Re-Alignment

Beyond the ‘transitional’ asset class – the precious metals – the emerging global theme (that I have been compelled to pull in from ‘long-term’) to which the transition is geared, remains on track technically with many markets continuing their breakouts and is looking for all the world like it will not stop to let wannabe riders aboard.

The US markets meanwhile, continue to respond in their underperforming way to the fact of QE1 and the anticipation of QE2.  Some areas of the economy are responding – particularly in manufacturing thanks to the weak dollar, which would get a lot weaker if policy makers have their way. 

But the leveraged macro barge known as the vaunted US economy at the turn of the 21st century did not thrive on small potatoes like making things or being productive.  It thrived on creating paper and digital instruments, marking them up and selling them to gullible people and entities in a pyramid scheme of epic proportions.  In short, it thrived on selling garbage that naive buyers believed had value.

So when I tell you that my wife and I just sat with a real estate lawyer to close a refinancing on our small remaining mortgage (4.25%, which I must thank Mr. Bernanke for because there could easily be a ‘1’ in front of that ‘4’ in my opinion) and the lawyer told me business is brisk – with refi’s, although many who want to refi cannot because their existing mortgages are under water – but new buys and new mortgages are virtually dead in the water, you see the major caveat clearly; it is just one unsustainable part of the massive ‘stimulus’ by policy.

It occurs to me that upon completion of the ‘transitional phase’ of the global macroeconomic changes now taking place, US housing will one day be a good investment.  This is one asset class of value however, that probably has much lower to go in the interim because it was a target of the previous bubble in credit and is choked with legacy mal-investment, although general market speculation currently appears rampant

Meanwhile, all that stimulus poured into the system by US and developed global policy panic, is currently going into things of value that are not burdened by such mal-investment.  So while authorities may yet get their hoped for asset appreciation, it will manifest first and foremost in the ‘transitional assets’ and vital global resources required to build-out the global re-alignment.

Some Comment System Improvements

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As most of you know, Slope of Hope has its own comments system, which I'm quite pleased with. There is a new enhancement added today which lets you display which markets you like to trade. This is a good way to quickly give the world a sense as to what your markets are, and it will help begin understand what areas of expertise exist on Slope.

Here, for instance, is my icon showing that I trade ETFs and stocks:


Giving yourself these badges is a cinch. Just go to your profile (which you can do by either clicking one of your comments or clicking Settings in the upper-right corner of Slope) and check whatever boxes correspond to markets that you trade:


And that's all there is to it!

In addition, I am limiting the threaded hierarchy to five levels deep in order to avoid the ridiculous "half-inch wide comments" that occur when people reply to a reply to a reply to a reply (et cetera).