That's all we have lately. Greece's silly $171Bn loan is meant to distract us from Europe's $17Tn debt hole and the US continues to borrow $171Bn PER MONTH to cover it's deficit and we don't even talk about Japan as the debt climbs over 220% of their rapidly declining GDP and who knows what's going on in China but, generally, when you have double-digit declines in home prices on a monthly basis – there's going to be a problem down the road.
This may be my last bearish post before drinking the technical Kool-Aid this weekend and we've already selected 5 trades for our Members that will make 200-500% if the market keeps moving forward and there are still plenty of stocks we can make a lovely Buy List out of if this rally has legs – especially the way we like to bet, since our hedges allow us to make very nice returns, as long as we simply hold our current levels.
There's the rub though – are the current levels sustainable? The nice thing about consolidations like the one we've been having this year is that they firm up a floor and give us a very obvious exit point on the way down so we can move some of that sideline cash into play – as long as we hold 12,500 on the Dow and 1,300 on the S&P and 2,800 on the Nasdaq – pretty simple strategy, right?
Notice the 2nd row has our major indices priced in Euros and our third priced in Yen. My main issue has been that we've been much weaker than it seemed as the Dollar's relentless decline masked a downturn in the inflation-adjusted price of our stocks (and the weak Dollar also serves to inflate revenues reported by multinational companies) but, at the moment, we're at our breakout levels by any measure so we may as well go with the flow until we see a proper reversal.
First we need to get past our NFP report at 8:30 of course. I'm expecting a miss but will the market even care or will that just mean Uncle Ben has an excuse to pump up the QE according to their new "formula"?
Keep in mind that what Bernanke said last week regarding the Fed's system for determining policy boils down to – As long as US corporations don't hire American workers, he will continue to give them money at historically low rates. I don't know about you but if I'm GE and I'm thinking about hiring 10,000 workers but I'm also looking to borrow $100Bn – I think I'd put off the hiring until after I get my loans lined up in the very least.
8:30 Update – Well, I'm wrong (or so it seems from the headline number) – 243,000 jobs were added, almost double the 125,000 officially expected and unemployment dropped to 8.3%. Hours worked up is up as well so this is a strong report. Private-sector employment grew by 257,000, with the largest employment gains in professional and business services, leisure and hospitality, and manufacturing. Government employment down slightly for the month. Manufacturing added 50,000 jobs, mainly in the Durable Goods space – another positive. Even Construction added 21,000 jobs.
On top of all this good news, they bumped November up from 100,000 to 157,000. While it's horrible to think that the figure we have today could swing 57% one way or the other, the trend does look good with the initial adjustment to December going from 200,000 to 203,000. I guess the Conservatives will have to start calling Obama the Great Job Creator now…
NOW we get to see how much gas the market has left in its tank as there is no possible excuse not to bust out to new highs on this one. The big drag I see is that more people working means more demand for Dollars to pay them and less QE per the Fed's formula (especially if prices also kick up) and that is, of course, Dollar bullish which is oil bearish (not that oil should need any help with Shell saying oil may fall to $70) and other commodity bearish and makes for a tough dollar-adjusted gain in our indexes the same way that a week Dollar gave us an artificial boost before.
So let's keep an eye on that Dollar as it can really hold back the rally and this would also be a great time for the BOJ to run a Yentervention as they've been waiting for a chance to goose the Dollar into clear market strength and we're not likely to get a stronger number than this and we have TBills to sell next week so this should be the spot to run the Yen back to 77 at least.
As I mentioned, we had our 5 bullish trades in yesterday's post and it looks like we can look at 5 more already. Our plan was to add one a day, beginning yesterday, to layer up for an extended rally. Of course we've been doing this every week with FAS, BAC, TNA, etc. as we're never all bear or all bull (70/30 is EXTREME in our balance).
Since we are going to be popping into the open, let's concentrate on some longer-term trade ideas that will be less affected by the morning move. Keep in mind, as long as the net of the trade is the same, it doesn't matter what each leg trades for:
- BA ($75.22) is still very cheap at $75. If the World economy isn't going to collapse, then BA has over 3,000 planes to deliver against a current capacity of under 500 planes a year so a 6-year backlog and last year they grossed $65Bn with a $3Bn profit delivering older and less profitable planes as just ONE 787 was delivered in 2011. Although they pay a 2.5% dividend, I think it's unnecessary to own the stock as the 2014 $60/80 bull call spread is just $11 and you can sell the $65 puts for $8, which TOS says has an ordinary net margin of $6.50 so net $3 of cash to make $20 (566%) if BA gains $5 into Jan 2014 is better than holding and covering the stock for the $1.76 dividend. Don't forget, when you have those calls, you CAN exercise them and become an owner – if they raise dividends, for example (doubtful with their current cash-flow profile as they ramp up).
- F ($12.26) is still down in the dumps and their volatility makes them a fun stock to sell calls against. As I said, the way we hedge, we don't need the markets to go up, they can just stay flat and with F, you can pick up the 2014 $8/12 bull call spread for $2.40 and sell the $10 puts for $1.50 for net .90 on the $4 spread that's 100% in the money to start. TOS only wants $96.50 per contract of ordinary margin on this trade that makes $310 if F flatlines or better for 2 years. Meanwhile, SINCE you have a 300% upside, you can buy 10 of the long spreads (net $900 cash, $3,100 potential) and sell 2 March $12 calls for .65 ($130). If you get away with a $130 sale every couple of months, you have a free trade by the end of the year and you're giving yourself a very nice 15% bi-monthly dividend while you wait for your 300% pay-off!
- GS ($115.45) may be the devil but don't you think they know how to profit from a market that NEVER goes down? Let them worry about day-trading while you pick up the 2014 $80/110 bull call spread for $20 and offset that with the $90 puts at $12.50 for net $7.50 on the $30 spread that's $35.45 in the money to start. Your worst case is you end up owning GS long-term for net $97.50, which is 15% below the current price. TOS says net ordinary margin for shorting the $90 puts is just $9 – not bad..
Oops, out of time, I'll have a few more in Member Chat, of course – looks like we'll be closing this week off with a bang!
Have a great weekend,
Warning – Reality Alert!
morx – never heard of them. Makes money, but not much. I need to look at the market size. To me, looks like a shot in the dark…..
Please stop poisoning our koolaide Phil….I am drinking heavily this weekend, as I feel …. Barking mad!
Reality Alert, Phil, Aren't we still supposed to be ignoring reality? Suspension of disbelief is what great fiction is all about. Good weekend to all.
Well, even the Thompson article is saying you should ignore the facts… for now.
just a thought that crossed my mind reviewing the DAX……….100 point move up on a 5 minute bar on the NFP.
the DAX closed at 6,785, but is still below the July 2011 highs 7,500 although the DOW has already made it back to highs seen last summer.
MASSIVE RESET underway by central planners?……….
the other odd thing i picked up early this morning watching price action during European hours was how the EZ equity indexes were acting like there was no care in the world in front of the NFP print.
just an observation…………
I assume on the hopes that either things get better on their own or if they don't that the CBs will step in and do whatever they need to to prop up the economies I imagine. Moral hazard to the extreme?
Rather than trying to explain away the fact of a rocketing market, I tried plugging an explanation into the fact of it. There is a crystal clear intention on the part of the U.S. and European central banks to print money until inflation starts to erode job creation instead of inspire it — a plan that has quite a bit of room to run. And, In 2011, wasn't $80 billion taken out of stocks and dumped into banks? Interest rates either are, or are about to be, negative in inflation-adjusted terms going forward; BoA offers a withdraw-anytime CD/savings account rate of 0.003%. That's 30 basis points per year. Have I said anything untrue so far?
Hence anyone who reads any newspaper understands that — however badly "the economy" may be doing — the risk of having your dollar or Euro bank balances evaporate into nothingness must far outweigh the possibility that the corporations which comprise the S&P are collectively going to do much worse than that. And since most people don't read the paper — or read it often enough to understand the above-invented "explanation" — there is a potentially fantastic premium for getting in early, however much "uncertainty" may surround the future of Apple, or Google, or Ford, or Boeing, or Exxon, or Amazon, or — go through the list.
"Oh, but there could be a big selloff any minute!" And your point is……? I'm not even sure that an Israeli missile hitting Tehran would take down this market for long — it would probably constitute a CCJ buying opportunity! Remember Fukushima? It created an instant bull market in potassium iodide!
I'm not cynical. OK, maybe I am. I just don't see how the risk of owning U.S. large caps at their present price level — before the bank depositors abandon their CDs — overmatches the risk of accepting under-2% CD rates with the ECB and Fed hovering overhead shoving bales of money out of their helicopters. I'm not a TA guy — more a T&A guy, perhaps — and I accept that buying now may mean suffering through a bad month or two. I've already suffered one in the other direction, and I'm still standing. But I don't think Kool-Ade is needed to see that — even if the current market is the product of massive bot-driven manipulation — it is not likely to be for the purpose of dumping shares on the unsuspecting public, since they already have their money stashed in banks. It is more likely a government-driven plan to pump up equities to create a badly-needed "wealth effect." As long as the helicopter is hovering over my house, bomb bays agape, I don't see the risk in standing out there with my arms outstretched while my neighbors cower in theirs. But I'd be happy to be instructed.
0x0, that's exactly what they are doing: trying to create a wealth effect. Ben even admitted to it. Once.
Not exactly a ringing endorsement of NFP by Lee Adler as posted by Ilene;
Bruce Krasting calls the score for Sunday; Giants 37, Patriots 35.
Don't know………I think it depends on Brady. If Brady comes out hot then lookout.
I did call the Bruins 4- 0 over the Canucks for game 7 last spring, and did also call T Thomas to win the Conn Smythe.
for Canuck, if you are around; nice to see the Red Wings beat the Canucks the other night too!
Or is it political?
Is it a coincidence that oil went to $150 a barrel before the previous presidential election?
Outside forces have more control over our markets than we like to believe. One working theory is that foreign countries want to see Obama reelected because they believe his policies will make us more like them, or worse, like they used to be, since they are trying to reform the very policies in which the current administration is taking us. Additionally, there's the entire "new world order" thing going on which apparently this administration favors. Do you really believe that everyone wants the USA to be stronger than them? I'm sure Phil and many of the more liberal members will totally discount this concept, but I believe that it is possible that outsiders can influence our markets and our elections and thus they will not allow this market to fall during this election cycle.
I'm mad at myself because we were having this very discussion last fall and I didn't listen to myself and go fully long because I just couldn't make myself believe that they could control the markets so effectively. In hind sight, everything is playing out exactly as you would expect if there was a concerted effort to steer an election. Obama is already starting to deliver his "see my policies are fixing everything and I just need 4 more years to complete the mission speeches" from the BS news that was released yesterday. Bloomberg was reporting that one oil expert is expecting 50 to 70 dollar a barrel oil by mid summer. That's a far cry from the $150 a barrel oil that started the last meltdown. The media in general (with the exception of FOX) remind me of cheerleaders the way they report on Obama. Where's the daily death counts? Where's the daily Gitmo releases, the daily pain indicator, the homeless interviews, daily reporting on the unemployment crisis, energy crisis, the deficit crisis, there's no steady drumbeat of negative Obama reporting. I just scanned through the news on yesterdays unemployment numbers. You don't find anywhere the detailed analysis like you do on this site that explains what those numbers really mean. Instead, they spin everything to be a positive, or less bad, or better than expected. It's truly a joke. I can totally relate to Phil when he says he wants to get bullish all the way up to the point when he reads the paper. There's no logical explanation for why the market is doing what it is doing other than manipulation. This is by design.
They point is, they will do everything in their power to keep this market propped up until the election. What will be interesting is to see what will happen after the election. My guess is regardless of who is elected, they'll have to let the air out of this balloon. So hold your nose and jump in. Well be seeing double digit gains on the market which Obama will highlight eloquently in his campaign speeches.
I know the liberals despise this guy, and I understand he has an agenda, but he's politically astute and sees things the average American does not.
ZXZ- I think your point is fair. Asset valuations are relative. It is a simple mathematical fact that projected S&P earnings/cash flow represent a better return than Treasuries. The lower the "risk free" rate in a standard NPV calculation raises the current value of future cash flows. I think that is what is fueling the market more than anything else. I don't buy in to the grand conspiracy theories. The notion of wizards behind the curtain manipulating prices with the intent to unload on the Sheeple is just silly. Also convenient. As long as you have a boogey man to blame, then failure is rationalized.
Sure, there are HFT programs but these , in my opinion, just exaggerate the moves.
As long as future earnings look good and interest rates stay low, the S&P wins out. On the other hand, historical S&P valuation indicates caution. I like Doug Shorts analysis.
So, what to do? To his credit, Phil admitted he was wrong on his market call. Small consolation but he had a lot of company, me included. Perhaps his call is just early? I had a very good December and started going short in January based on Phil's call and the technicals. My gut instinct was the opposite- stay long. I have made adjustments to get more balanced and that has helped. My long term holdings are doing OK so no big deal overall. Right now, I am neutral and waiting for some clarity.
Seems like a good moment to share some thoughts on the PSW approach and its practical application. I have found the detailed explanations of lflan and StJeanLuc on their respective strategies most informative and educational – even though their different approaches do not fit in with my style. After a couple of years of being a member of this community and being open to absorb the different perspectives from the many different contributors I have distilled all these differing ideas into an approach that, up until now works for me. It may be more useful to those new to the board, but may offer some points of interest for longer term members as well. There is nothing original here, and I make no apologies for that, as the greatest contribution to my approach has come from ideas contributed here at PSW.
1. Selling premium. This exhortation from Phil, with constant reminders, may risk to diminish its importance. But repetition is the mother of learning. I now set myself a monthly target of premium to sell. This is not optional, it is simply a duty for anyone managing an inventory of options. Whether VIX is high or low, I sell premium to reach my target. It is the bedrock on which other profit enhancing approaches are built. It is interesting to note that over time my monthly target has increased substantially, and I force myself to look constantly for opportunities to sell.
2. The ledger only recognizes CASH. The P&L fluctuates, hides the complexities of rolling, but nothing adds to the cash flow than cash itself. And it is cash generation that your business of trading options should be focused on. Cash comes from closing winning positions. The one that got away may make for an interesting tale at the bar but it does not pay the rent. I wish I had reminded myself of this during the internet bubble of 1999-2001.
3. CASH makes many things possible. Phil has mentioned that managing large accounts opens horizons to many approaches not available to the more modest sized account. I can vouch for that. a CASH cushion allows the possibility to make corrective rolls and take offsetting positions that could not be supported by a small account. Another reason why selling premium is so important.
4. Although selling premium is the bedrock – the adrenaline for a portfolio is provided by directional spreads. I try to place zero cost spreads financed through the sale of Puts. One of the breakthrough discussions on this board was the realisation that there is no need to finance spreads through a sale of a Put on the same underlying. This was a liberating concept. Normally, there is a Put sale to finance most Bull Call spreads that will result in a zero cost basis – which is at a strike price 20% of the current stock price. This fulfills the 20% discount rule which makes sense. It may just be a question of going out far enough in time.
5. The focus stock. There are clear favorites on this board. But learning everything you can about a particularly company and how it's stock price responds to internal and external circumstances offers a wealth of information. I stick to a core set of stocks which will be familiar to this board (CHK, GS, JPM, MON, SLB, GE, CSCO, INTC, VLO, XOM). I watch their evolution closely over time. I know when they are moving to their upper channel (sell CALLs) and when they descend to touch the lower channel (SELL PUTs). I know when to get aggressive and when to assume a more conservative stance.
Apologies for going at length, but I thought I would make an effort to give something back. There's more but I will wait for another time.
Thanks for the post… excellent analysis for those of us attempting to "learn the system". Your explanation of "cash" is so importtant…. Go ahead and post the rest of your analysis. We appreciate your input. BTW, do you constantly monitorduring the day or is your trading less intensive… Thanks again
DEPO- Pharm- nice after hours pop based on this:
AMZN- some negative comments:
Amazon shareholders have been conditioned to expect slender profit margins in exchange for sales growth, but perhaps they should start holding Amazon to profit expectations as they do other retailers. "The market has always given Jeff Bezos a hall pass on margin erosion," says Larry Haverty, associate portfolio manager of the closed-end Gabelli Multimedia Trust, which owns a small stake in Amazon. "In this case, it seems that anything that Jeff wants to do, he has a license to do. Will investors ever take the hall pass away?"
The money manager's primary concerns, besides annual margins of 4% (based on 2011 earnings before interest, taxes, depreciation and amortization), are that the company is carrying too much inventory and that vendors are financing its growth. Inventory swelled 56% to $4.99 billion in 2011, outpacing the amount Amazon is owed by customers. Accounts payable, the money Amazon owes its vendors, rose 38.5% to $11.45 billion last year. That $3.09 billion surge in accounts payable was only $810,000 less than the company's total operating cash flow for the year.
IN ESSENCE, AMAZON IS THROWING OFF "low-quality" cash flow, which makes it difficult to justify the high price of the shares—even after last week's drop, Haverty argues. Amazon is trading at 70 times forward earnings, compared with Apple (AAPL), which is trading at 10 times earnings.
I've been driving north that past few days so I haven't been watching — sounds like a good game to miss!! Luongo must have been in goal if we got beat that bad.
In Salem, OR at the moment — took Hwy 395 north out of palm springs and it is a gorgeous drive up to Tahoe and Reno and then wide open driving after that — much nicer than I-5, but very rural and sparsely populated.
sounds like I'm not the only one feeling it this month on edz —
in hindsight, I think stealing Mike Tyson's pet tiger would be more fun than owning EDZ —
However, the month isn't over and we can always roll it down and out…
IWM- another one of those technical (shudder) resistance points:
LLY- 7:19 PM Eli Lilly says it will freeze base pay for most of its employees in 2012, citing financial pressures caused by patent expirations on top drugs. Shares -0.2% AH
Pharm- more confirmation of your hypothesis. I like it short again now especially below 39.
Zero Hedge has an article written by Bruce Kasting "DOJ' s Latest "Beat Down on Swiss banks". At the end of the article there is an article written by Konrad Hummler, the president of Wegelin Bank. WB is (was) the oldest private bank in Switzerland. In his article (written 3 years ago-prophesy has come true) he discusses the intent and current law(s) of the USA regarding taxation and the eventual backlash to come. it is a MUST READ, to truly appreciate the "reach of these laws" even for foreigners owning US securities…… enough said…
I would post a link…. but it does not work….
Winston..I enjoyed your post….good insight into the process, particularly the part about adaptation of your trading methodology to your own personality makeup…..very important. Several good points. Thanks
Canuck…………lived in Boston for 10 yrs so had to pick the Bruins. i know it hurts since I have been with the Red Wings in the bad years and playoff failures before that got turned around.
right about Luongo…………4-3 in a shootout
had a friend who followed the Red Sox (devoted) with season tickets (for yrs) looking down to 3rd base………..suffered for a long time until the spell was broken.
Canuck………i envy you the drive. haven't done that one but i always loved the West and imagine it must be pretty nice to see and experience.
Winston: Here Here. I am walking the same path as you friend. Perhaps the greatest realization I have come to is that for all that I lack in intelligence, investment prowess and experience I make up for by being very patient. I know KO, MCD, IBM, GE etc… are great companies. Warren Buffett, the greatest investor in the world, and Phil, the smartest investor I personally know, have told me as much. All that I have to do is be extremely patient and levelheaded and I can beat most of these exalted and venerated "geniuses" of Wall St. This has been the greatest thing I have come to realize, and it was ironically the very first lesson I learned when I clicked on the Man Who Plants Trees video.
New item….last week some members discussed the idea of ( paraphrased ) “Taking $100,000 to $500,000 in a year” Both Phil and I replied that it would involve taking too much risk. Someone else suggested using a smaller amount, say 5k. I’m interested in the concept, using under 25k to start, and I’ll tell you why. First, such a portfolio would force you to plan carefully and do every thing right. You would have to pay careful attention to stock picking, position sizing, entry and exit strategies, and all sorts of other things that are very important to successful investing. You would have to ‘not lose money’! And all this with no margin if you start with less than 25k. This would be a ‘stand alone’ portfolio. Plus, such a portfolio might allow even the smallest investors on our board to participate. We have several portfolios running already, but I think one like this would be extremely educational. I would be happy to oversee such a portfolio, but would want stock picks, entry/exit, etc. to be a group function. Discussion (and of course we need to hear from Phil on this).
what do you think about CDXC?
How could we not benefit from such a portfolio? The account size and account limitations would be realistic for starting investors and the techniques we would have to reinforce would help drive a discipline into new traders or old traders that want to be more profitable.
As usual, the "Greek talks" are not going well this weekend. And even if they do, Portugal and Italy wait in the wings. So despite my "paen to bullishness" last evening, it is only fair to point out that I am still seriously hedged against the Euro falling off a cliff.
If the air is let out of the Euro balloon gradually, maybe it's no biggie. But if the levee breaks — if, for example, it is perceived that the U.S. will now see an accelerating recovery on the back of improved employment [a debatable proposition, to be be sure] and it's the right time for European investors to bail out into dollars — then a rocketing dollar will likely take down U.S. equities, despite some hopeful chatter about "decoupling" this week.
Speaking of balloons and bubbles:
My college student son filled out a credit application to buy a car last week. He put on the application that he is currently unemployed, as his last job was part time last summer. They offered him $14,000.
No wonder auto sales have been good.
politics, love it or hate it……… Romney and Coulter – Together Again
Quote from the Thursday Sean Hannity interview, "‘You owe me and you better be as right-wing a president as I’m telling everybody you’re going to be,’” Coulter said (to Romney)
Don't worry… he won't be. And he won't win… but even if he does I'm with George Soros.
Billionaire financier George Soros thinks that, if Mitt Romney wins the presidency, there will be "little difference" between him and Barack Obama in the White House.
peedlew……….i think it is all corrupt regardless of party affiliation, but Coulter is a zealot………a white zealot.
Coulter…….."I'm a Christian first, and a mean-spirited, bigoted conservative second, and don't you ever forget it."
Coulter as Secretary of Labor (Camps) in the Romney Admin……..she did say he owes her. these people are scary.
Charles Biderman is NOT drinking the NFP Kool Aid……….yikes!
Now we have Exec leading us to a knuckle-dragger site. The comments are amazing and most are from Texas, which is, I guess where many kds live.
Winston, I also appreciated very much your take on the lessons learned from this site. When you complete your analysis, please post it.
Thanks for posting Biderman's reality check on the BLS (or is it just BS) numbers.
NFLX is attempting to reduce the bandwidth required to stream HD movies by partnering with eyeIO. They claim the new encoding method won't degrade video quality. Less bandwidth should = more $$ in the company's pockets. Maybe hold off on shorting them for the time being?
sparky……….i think Lee Adler also has doubts about NFP, and speculates in his article that the 'real' tale won't be told until feb and march.
the damage may be done as in the price is right and the market has been propped on possible fumes, but Greece looks slippery into Sunday so Vee shall see as the Germans say.
maybe this all turns out to be a nice cap and some nice selling can ensue. who knows? this article says a Greek default is all but inevitable for the looming 14.5 billion bond maturity due march 20.
in the interim there is the LTRO 2 for feb 29 and then the FED again mar 13 so have to think the 'officials' have calculated and are bracing for a shock, if as the article infers that the "sovereign Lehman weekend has finally arrived".
had to argue the Jan NFP did not buy time, if the numbers do fall apart over the next several prints
the so-called Greek fix is part revolving tragedy and part revolving incompetence joke as far as i can see not to mention it has literally taken almost forever to come to a decision one way or the other
time to sell?………something to ponder.
Thanks for your valuable comments. I have independently come to practically identical conclusions on every single point. In particular I think it is important to closely follow a small number of favorite companies and to know everything about the behavior of their stocks, especially regarding the high and low channel levels. One of the companies I follow is BP and only a few months ago when the overall market was slumping I said to myself "there is no way the BP stock price is going below the level of the darkest days after the Macondo disaster when the dividend funds had dumped the stock and the oil was still flowing with every attempt to stop it failing and the CEO subject to a 2-minute hate daily on all the TV propaganda stations." On this basis I sold BP $30 and $35 2014 puts, a trade that has already paid off massively. I also agree totally that selling premium is absolutely key to a successful strategy. Sometimes, as over the last week, it is slightly distressing to see stocks on which I have sold calls and puts surging higher and higher without fully participating in the upside, but then again, a 20% annual return should always be acceptable, and it is always nice to know that you can stand a substantial downside before any loss kicks in.
from The Wall Street Journal
Mitt Romney won the Nevada caucuses on Saturday, capping a pivotal week that saw him regain his front-runner status on the strength of a hard-fought win in Florida.
The Associated Press called the race for Mr. Romney. Second place remained too close to call, with Newt Gingrich and Ron Paul in contention.
' the real economy lost 2,689,000 jobs, while net of the adjustment, it actually gained 243,000 jobs: a delta of 2,932,000 jobs based solely on statistical assumptions in an excel spreadsheet . . . the end result is that in January, those "not in the labor force" did in fact rise by 1.2 million (whether compared to December or to 2011 – please, go ahead and check as many times as needed), and the labor force participation rate dropped to a new 30 year low of 63.7%, a number which incidentally only has to drop by 5% more percent for the BLS to report zero, or even a negative, unemployment rate.
What can one say, but:
Anyhow, please pass the kool aid or the hopium pipe . . . .
What, are you guys reading the news again? Tisk, tisk, you’ll never get bullish that way….
Great points by Winston, should go in the wiki!
Winston/Jmm: Re: A small, well-known universe of stocks — it makes perfect sense. I have logged lots of hours wandering around in the woods over the years and come to realize over time that animals, neither predators or prey, do much wandering during most of the year. They remain within very limited areas that they know intimately — every sound, every copse of trees, able to detect the slightest change in its rhythm. I always assumed animals just hiked around looking for berries or whatever, but, evidently, that is not a sound survival strategy. Deer, birds, martens, foxes, coyotes,pumas, porcupines and lots of other stuff settle in to a micro-environment — one side of a canyon, for example — and you'll see them there again and again.
Predators must perforce range over a wider area, but even they limit themselves to particular territories. Only in mating season will most animals run the risk of crossing much unfamiliar territory. I could analogize mating season with runaway bull markets in respect of human investor behavior as a time when punters will load up on risks they normally wouldn't think of taking, but Phil has already made that point any number of times on PSW!!
I like that analogy.
What is your short list of equities that you are most comfortable with?
I think humans are the same. After getting a first class degree from a good university, my nephew had an excellent job in London doing postproduction work in the movie industry as a sound engineer (where he was on first name terms with notables like Beatles producer Sir George Martin) and was engaged to a beautiful fashion designer. When the relationship with the girlfriend went south, he quit his job, packed up a rucksack with a few clothes, a Macbook, and a guitar, and set off to travel the world. He climbed most of the way up Mount Everest. In Malaysia he met an oriental girl and fell in love with her. Went back and climbed 3/4 way up Everest again so she could see it too.
Conventional story! But there is a twist. She is a Canadian woman of Vietnamese refugee descent who was on sabbatical from her job in a high level civil service job in Canada, and to cut a long story short, he is now married and living in Manitoba and working as a much-in-demand Web site designer.
I have always thought his story fits very well into your theory of mammalian behavior and roaming when in search of a mate. Of course he would deny all of this, and the fact that he spent over a month in Thailand and 6 weeks in Burma "visiting historic sites and temples" has nothing to do with the romance of the East.