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Friday, March 31, 2023


TGIF – Sell in March and Go Away?

Thanks Mr. Market – it's been a great year

We're up from 1,275 to 1,363 on the S&P and that's 7% and, for those playing the upside since October's 1,074 low – it's been a fantastic 27% run in 4 months so we have nothing to complain about in 2012, do we?  Of course the US markets gained $10Tn in value in 120 days – that kind of stuff happens all the time and is nothing to be concerned about.  I'm sure the net $20Bn that flowed into the markets during that time period had many, many babies to fill up the empty space – or at least that's how Rick Santorum explained it to me.  

Fortunately, with over 80% of the trading in the market being conducted by HFT Bots that bring the average hold time for ALL positions (including your long-term retirement fund) down to an average of 22 seconds – we don't need any actual money – or even human participation to have a nice-looking market rally.  While "Drill Baby, Drill" may be the rallying cry of the GOP, their Super Pac contributors in the Financial Sector prefer "Churn Baby, Churn" as Billions of shares are traded in the stock market every day that are held for less time than it takes you to read the word "held".   

This post is a bookend, in a way, to my September 30th's "TGIF – Closing a 12% Down Quarter," which followed our bullish prediction the previous day's "Thrill-Ride Thursday – Finding Bottom" where my comment on why we were taking bullish positions in the middle of a catastrophic collapse was:  

We only fear missing a rally as we may never get another chance at these lows.  While it’s possible that we get that 25% decline, we don’t fear that either as we will simply scale an and take net entries that are 40% lower than we are now and, if the markets fall that far and never recover – we’ll be a lot more concerned about stocking the shelter up with ammo than we will be about whether or not our XLF trade is performing well! 

At the time, we had been moving into our September's Dozen Portfolio on each dip since the August crash (S&P 1,100) and we did bottom out on October 3rd at 1,074.  Just like our bullish February trade ideas – the plan was to add another trade each day we held our lines and we were quite full in time for the October rally, which took us up to 1,292 at the end of that month.

On October 29th, we closed our out short-term bullish positions as well as our very successful $25,000 Portfolio (all portfolios are virtual) and began an aggressively bullish White Christmas Portfolio that ended up tripling $15,000 by Christmas.  

When we began the New Year, we felt 1,275 was a bit toppy for the S&P (up 16% from 1,100) and our new $25,000 Portfolio was aggressively bearish instead.  This did not change our long-term bullish stance at all – we still think inflation is an unstoppable force that will drive the market to all-time highs this decade BUT (and it's a big but) that doesn't mean we don't expect a correction or two along the way!  

Currently, our $25,000 portfolio is down 40%, to $15,000(ish) as the market has gone up and up and up and up some more for the first two months of the year.  While a pessimist may say that's a bad thing, an optimist (a bearish one) would say that we have A LOT of bearish positions we picked up very cheaply now and we are very well positioned to take full advantage of a market catastrophe.  If there is no catastrophe – in two more months, with a balance of $5,000 – imagine the size and scope of our bearish positions then!   

stock photo : Risk Analysis Concept Word Cloud as BackgroundOf course, if the market continues to roll higher at a pace of 27% every 4 months, our larger, longer-term plays, like our Income Portfolio will be doing ridiculously well and, like any insurance hedge, the cost of our short-term bearish positions should be washed away by the positive performance of our longer positions.  In addition to the $25KP, we also have IWM Money and FAS Money Portfolios as well as our $5KP and Lflan's AAPL Portfolio as short-term bullish virtual portfolios to follow but those are all doing fantastically well so there's no need to worry about them at the moment.  

While I do try to get more bullish – it's very hard.  On Wednesday I listed 10 more bullish trade ideas as we exhausted our first 20 bullish positions of February with the S&P holding 1,297 all month so we reset the bar at the 1,360 line as both the stop line for our first 20 trades as well as the start line for our next 10 but, so far, we haven't had a full day over the line.  That led us to aggressively roll our short-term $25KP bearish bets yesterday and now we will sit and see if this is FINALLY the weekend that reality hits the Global markets.  

SPY 5 MINUTEThis morning, as usual, we were able to make our Egg McMuffin money with quick shorts on the Futures in Member Chat (/TF and /CL this morning) but we have certainly learned to take the bearish money and run early and often as no good sell-off goes unpunished these days.  Yesterday's stunning reversal was a fine example of both how quickly you can make money betting bearish AND how quickly you can lose it – on the whole, it's a Day Trader's paradise – with a day being re-defined to mean about 30 minutes…

CNBC is now (9:06) having their usual morning oil pumping session with Cramer saying $147 is cheap because Maria says Israel is gearing up for war and, of course, Maria MUST know these things because she's in Israel and that makes her the World's foremost authority.  

At the same time, the markets are up as if they haven't got a care in the World.  Does it make sense to you?  Can oil go to $140 on a Gulf War between Israel and Iran with supply disruptions and general chaos and that's going to be GOOD for the Dow and the Russell and the Nasdaq and the S&P?  Corporate margins already suck – they are certainly not going to improve as oil climbs 15% this month and, according to Criminal Narrators Boosting Crude – another 25% next month.  

Yesterday, CNBC lied to our faces, commenting that refiners in the US were operating at capacity despite the fact that anyone could read the very first paragraph of yesterday's EIA report, where it says in plain English: "Refineries operated at 85.5 percent of their operable capacity last week."  So is CNBC lying and purposely misleading the viewing public, fooling people into buying oil on false premises – or are they just pathetically poor fact checkers with little or no editorial oversight as to the veracity of their content?  We report – you decide. 

Another extremely deceiving bit of data is the headline report itself, which showed a 1.6Mb build in crude oil inventories along with a 600Kb drawdown in gasoline and a 200Kb drawdown in distillates for a net 800,000 barrel build on the week.  While that sounds small, you may notice (if you read the report) that last year refineries supplied us with 19,350,000 barrels a day and this year, they cut that back to 18,054,000 per day.  That difference of 9.07Mb per week represents 1.14 days of imports, which have also been cut by 1.15Mbd (8Mb/week) to further create the illusion of tight supply in this country. But why stop at shorting the American people 17Mb a week?  The US energy cartel has also turned last year's imports of 482,000 barrels a day of Petroleum product to an EXPORT of 870,000 barrels a day for a net outflow of 9.5Mb per week.  

That's how the US can consume 19Mb less petroleum per week than we did last year (14%) but the US Energy Cartel can charge us 13% more than they did per gallon consumed.  At 18Mbd and 42 gallons per barrel – just that .41 per gallon increase in the price of oil over last year is costing US consumers $9.3Bn per month and you ain't seen nothing yet if Cramer and Company get their way.  

I don't want you to protest. I don't want you to riot. I don't want you to write to your Congressman, because I wouldn't know what to tell you to write. I don't know what to do about the depression and the inflation and the Russians and the crime in the street.

All I know is that first, you've got to get mad.

You've gotta say, "I'm a human being, goddammit! My life has value!"

And have a great weekend, 

– Phil


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Berkshire Letter/pstas:
Thanks for that link.  Great read as always.  I particularly liked page 7 discussing Buffett's thoughts on share buybacks in relation to stock price. 
Its the same basic message: When it comes to owning investing in a good business, stock buybacks or otherwise, you want the price to go down
'When Berkshire buys stock in a company that is repurchasing shares, we hope for two
events: First, we have the normal hope that earnings of the business will increase at a good clip for a long time to
come; and second, we also hope that the stock underperforms in the market for a long time as well. A corollary to
this second point: “Talking our book” about a stock we own – were that to be effective – would actually be
harmful to Berkshire, not helpful as commentators customarily assume.

"The logic is simple: If you are going to be a net buyer of stocks in the future, either directly with your own
money or indirectly (through your ownership of a company that is repurchasing shares), you are hurt when stocks
rise. You benefit when stocks swoon. Emotions, however, too often complicate the matter: Most people, including
those who will be net buyers in the future, take comfort in seeing stock prices advance. These shareholders resemble a commuter who rejoices after the price of gas increases, simply because his tank contains a day’s supply.
Another great Buffett analogy to add to the collection. 🙂

If you have not read Grantham yet this month – I strongly urge you to do so:
Sounds much like Phil here:

"However, Marx and Engels certainly got the part right about globalization and the supranational company increasing the power of capital at the expense of labor. To interfere with Marx’s apocalyptic vision, we need some enlightened governmental moderation of the new globalized Juggernaut (even slightly enlightened would be encouraging) before capitalism gets so cocky that we have some serious social reaction.

But for me capitalism’s complete fixation on growth at all cost that Marx concentrated on is not as important as the other issues discussed here. Capitalism, by ignoring the finite nature of resources and by neglecting the long-term well-being of the planet and its potentially crucial biodiversity, threatens our existence." 

And one more quote for those of you who do not follow the link:

Damage to the “commons,” known as “externalities” has been discussed for decades, although the most threatening one – loss of our collective ability to feed ourselves, through erosion and fertilizer depletion – has received little or no attention. There have been no useful tricks proposed, however, for how we will collectively impose sensible, survivable, long-term policies over problems of the “commons.” To leave it to capitalism to get us out of this fix by maximizing its short-term profits is dangerously naïve and misses the point: capitalism and corporations have absolutely no mechanism for dealing with these problems, and seen through a corporate discount rate lens, our grandchildren really do have no value.

To move from the problem of long time horizons to the short-term common good, it is quickly apparent that capitalism in general has no sense of ethics or conscience. Whatever the Supreme Court may think, it is not a person. 

doom and gloom/Phil:  I think you're right in the sense that: this site, and Phil, is at its best when markets are crashing.   That seminal video of Phil of doing live trading with Timothy Sykes when the markets was crashing  into a capitulation bottom and Phil was calmly rattling off play after play after play (while Timothy was basically just standing around clueless) still gives me chills when I watch it.  Someone should splice in military band music like they do in those "Great Moments in NFL History" documentaries.
So you see, net-net this site is actually not overly "doom and gloomy", because while Phil is bearish near the highs, he makes up for it by being super-bullish and optimistic at the lows.  Just like a certain other legendary investor mentioned above.

that last post was directed at pstas

kinki – if you have a link to the video, I'd like to see it, thanks

video/deano: Blargh, looks like Sykes put it behind a paywall.  It was the Friday, March 6th, 2009 3-hour special of Livestock.

ZXZ said, "Government is the mechanism by which income is redistributed".  For a less niggardly definition, I again suggest listening to Freud.  He said, simply, that the economic role of government is to assure an equitable distribution of the nation’s assets.  To me, this is self-evident and underscores how badly we have failed.  Also remarkable is the extent to which the right-wing would worsen the situation, as evidenced by the shared platform of the Republican presidential candidates: trash the environment, shred the safety net, keep healthcare unaffordable, bomb Iran, and aid the rich at any cost.

Does Somalia have massive offshore oil reserves?


president?, "Chelsea will be of age by then.  That girl is way cool.  Joe's son Beau Biden is making a good name for himself".
you mean that as a joke right? …………..
certainly not intending to single out democrats but what you described is neofeudalism and it enshrines a political class and its offspring in positions of power…………..
do you really think the Clintons are wanting to re-up and return to sharing a similar lifestyle to the 99% after years of dutiful 'public service' that paid off in Jim and Tammy Faye spades and 100s of millions of dollars in foundation funds (Kazakstan uranium) and personal net worth
in other words it must be more than painfully obvious to the unwashed that influence peddling and corruption and greed are not qualities exclusive to 1 political party
i admire your sense of social responsibility but neofeudalism is all about selling out to and serving the 1% …….. then again when you read stories about 100 riot police called out to quel a mob at an Orlando mall over nike nba designer shoes then there probably is a valid argument for political royalty and a police state too.
which way for the market?…………..i get your point about the VW analogy and agree, BUT the central banks trump technicals, fundamentals, earnings, gdp, employment/unemployment, reality and gravity and it is not like there is not a lot of evidence to support  that premise given the virtual dictionary of MBA acronyms that have been invented since the 2008 financial crisis to describe a plethora of artificial stimulus including QEs and LTROs among many others.
barf…………when it serves the purposes of the PIGMEN to have a sell off that will be arranged too.
Phil,……….you yourself have been saying for months that printing is a necessity and the alternative of austerity is an unthinkable which means the Fed will to have to devalue the dollar so then why are people surprised when the stock market goes up?
in that context people still expect so-called rules (bond subordination is just one) to be applied and it all collapses?
it is simple; if central banks print then nominal prices rise………real value will not.

maybe i am wrong, but i think you have already answered about direction, VW prices or not……….
"I'd sit tight over weekend.  We have $1Tn coming from EU already, maybe US, China and Japan chip in $1Tn each and we have a big party…  S&P held the line today – we have to respect that. "


no doubt the FED looks at the same charts

Bruce Krasting has an OIL post up;
LLS $130……….WTI $110…………

I'm the one who started the "who'll be president in 2032 thing". i hope you all realize I was joking, right?  it was in a context (for which I have been sternly and repeatedly taken to the woodshed) of making a couple posts (that I thought were funny, but upset a lot of people) about an apparently long gone infamous Member who is now Memorialized apparently for all time in the PSW Hall of Fame (in the Wiki thingy).
That article was referenced here earlier, so I went looking for it. I found it hysterical. Maybe it was in poor taste to make a couple posts referencing it. It was my own attempt at fitting in with the "humor" vibe of today's daily thread.
The aforementioned trader apparently caused Phil no end of frustration which increased over time…….actually reading the entire long series of exchanges was quite educational to ME. Helped me examine whether I will have what it takes to become a trader of some ability. That's probably why it is available there.
One of the better aspects of each day's thread here (for me anyway) IS the humor.
Observation: a lot of you know each other, a lot of the humor is "inside humor", and to somebody brand new it can be very dry wit, laden with irony and complex subtleties. So, easily misunderstood.
So I'll try to  not make any more jokes about anybody. Except that yodi guy. He's kinda gettin' on my nerves.
JUST KIDDING yodi !!!!!

Phil / Monkey:  From your response you seem righteously offended by the essence of what I suggest — that we are, to a great extent, programmed to behave the way we do.  Nonetheless that has been my experience.  Our touchstones for religious and moral beliefs are books written at least a thousand years ago.  That we are a sort of advanced ape is indisputable.  But I admit that quantity has a quality all its own, and our intelligence and reasoning ability has created modern medicine, space travel and cybernetics, hence humans have intellects that operate orders of magnitude more effectively than most apes.
But intellect invents the means, it does not determine the ends.  Emotionally and psychologically, we still harbor all of the instincts of the forest, as it were, overlaid with a a variety of moral constructs.  Maintaining stable societies has always been a challenge for mankind, and there is every evidence that we have undergone various extinction events and much war and famine.  I have no quarrel with your evident idealism — as long as you realize that it is "idealism" and don't get too angry or indignant when humans mostly continue to behave the way they traditionally have.  Good leadership have been very important to the various human civilizations, and that's been a hit or miss proposition up to now.
I do have a positivist viewpoint — I think we will, as a race, survive for quite some time and possibly accomplish far more than we already have — but it will always be a near-run thing, as we've accelerated the rate of technological and social change in quite a non-linear way in the last few hundred years.  So you will perhaps forgive me for thinking that the most probable path global societies will take will prove a hard road for another few hundred years,  until mankind's social and psychological development catches up with its intellectual prowess — and that the outcome is far from preordained.
As to  your question "I guess you missed it but we had a period in this country where there were many, many young people who decided they didn't need to play ball with the establishment and they hung out and did drugs and sang songs and played music and created art and some of them even got jobs to pay the bills", I can assure you that I didn't.  In fact I never really stopped doing most of those things, have had shoulder-length hair since I left a WS investment bank at 33, and have improved my musicianship continuously since I joined a band at 14.  Like I said, it's always a mistake to stuff everyone into preconceived categories, as it clouds your vision. 

many thanks for the HG Wells, especially the lessons over false idols………and/or false and manipulated impressions
on that note there is Clinton as a Republican and one last point in the context of you can never tell a book by its cover;
there is a valid argument  that Clinton did more to serve the interests of the 1% than any Democrat or Republican ever did by enabling the demise of Glass Stegal under the Clinton/Rubin-Wall St partnership/financial architecture, and that Greenspan/Summers were equally  effective in the roles of muzzelers of Brooskley Born of the CFTC who was an adamant proponent of strict oversight as a necessity to serve/protect the public interest in the spirit of a 'Roosevelt', all of which really meant that the banks completely won the day and ended up having it all their way with the lucrative derivatives markets and being then allowed to operate in that arena virtually unchecked and unregulated by any form of government oversight whatsoever, and still that way to this very day regardless of recent Democrat majorities in the House, Senate and a Democrat as president.
when it came to unfettered and unchecked capitalism Clinton did more for the 1% than any Republican ever did………and, all of it with a smile and a nice way with with people too.
from that perspective Clinton is more Republican than most Republicans and perhaps more than the most loved Republican hero ever, maybe more the Gipper even, but that is a trojan horse story that will be told one day after the phoney political acrimony has faded away with time and it is realized in story books written for the 1% that the words Democrat and Republican are just words that served the purpose of an illusion and just happen to be convenient labels useful for a less than obvious interest that operated/s in the shadows more or less out of sight and unawares to the public conscious.
so, a quick scan of the G-20 headlines late last night looks like the US, China and Japan are putting the pressure on Germany/Netherlands/Finnland to come up with 'more' of a contribution to the money printing business.
i imagine the Germans are holding out for a better deal (for the Germans) so maybe there will be some volatility return to the market this week until Lagarde gets the official rubber stamp (which probably equates to a green light from the BUBA that the ECB may to proceed to the atomic LTRO) to take back to DC.
i think the 'fix' is in, and probably a lot bigger than the last rounds……….sorting out the remaining details stage maybe?


Another potential problem is that profits have been an unusually large share of GDP – currently almost 13%. If profits revert to a historical norm of about 9.5% of GDP at the same time the 10-year Treasury yield is 5%, fair value would be 13,900 for the Dow and 1460 for the S&P 500. Just to be clear, that would be in a world where profits fall roughly 25% and interest rates more than double from their current levels. In other words, this doesn’t look like a dead cat bounce to us.
Valuations are robust and with the economic recovery re-accelerating, the bull market that started in March 2009 has much further to run.

Phil………..sorry to not make your day, but that did not come from FOX and just for the record i don't watch FOX or CNN or any of the other media bullshit which predominates the airwaves and really needs to be relabeled as propaganda for dummies …………aren't you the one who keeps talking about relocating offshore?
and, who are you to assume or try to label me about what i choose to watch or listen to or read……….do you know me or know about me? have we ever met other than the 3 months i have spent as a paid subscriber here?
i elect NOT to watch or listen to it as it has less than no value, and why revert to the the tactics of smear you always rail against when trying to dismiss a legitimate argument or point of view just because it is not yours.
i get more FOX bullshit at PSW than i ever got from watching television and the truth is it still comes across as bullshit and i really don't get why you waste time rehashing what pablum the masses get fed/ told on a daily basis……….
since you brought it up what part of the above about the demise of Glass Stegal is inaccurate exactly? the Clinton admin played a pivitol role in its demise.
if you dispute the facts that is one thing but to diss it because maybe it does not fit with your personal political bias is another………….politics in the US has become so stupid and pretty much devolved into a kind of lowest common denominator reflexive schoolyard mentality of black versus white or i am different from you so that makes you 'bad'…………sounds like almost religion
as for the smoking gun, i doubt Clinton gives a shit one way or the other given the scale of financial payoff from years of dedicated 'public service'.
Clinton is the 1% whether you label it democrat or republican or by some other name.
and, if you don't want to discuss politics that is fine too. just for the record my views can be described as 'liberal' or 'socially responsible' but  i have no affliliation or affinity for either party as in mho both serve the same interests and it is not the interest of 99%.
if a legitimate point of view makes you indignant then too bad. i really don't care.

Good article about the rising prices of gas, and how Oil affects price.
Here's The REAL Reason Gasoline Prices Have Been Surging In The US

i don't watch FOX or get my information from FOX. it is that simple no matter how hard you try to ascribe it to having shaped my point of view.  like i said i have had MORE of FOX here in the past 3 months than i can remember, and the effect it still the same; it dulls and deadens the brain.
it is really boring.
FOX is so effective at that it makes smart people stupid, and you can turn it off and not watch it for days or weeks or months or years and then one day turn it on again and it is the same story just a different day with a different talking head repeating the same mind numbing bullshit over and over and over and over and over again.
kind of a simple formula………..which is why i don't watch it/listen to it/pay attention to it………you seem to feel it is a necessity day to day , but choose your own poison or kryptonite, however you choose to.
it is your site and you're welcome to keep it.

just one other thought on that Clinton idol thing; the links you posted…….i don't recognize any of them so maybe i got my views from some other undercover FOX affiliate. ……lol………or maybe i am not that well read!
to be honest i formed my opinion and wrote the 'muzzel' reference from conclusions i drew from whatever 'informed' sources i was reading at the time and i think it was probably quite a while back and quite a while before the financial crisis hit so i think 2006 or 2007 and the trail probably starts at Martin Wolf when he was writing stories about the risks that derivatives posed to the US real estate markets and i was trying to put it all into a context that made sense before MBS etc became part of the public lexus………
but, if you look at it from the banks' perspective it made perfect sense to muzzle any regulator, right? kind of hard to argue that point, especially in hindsight.
you can relax about the FOX thing when it comes to me. i don't want to get you all upset that i might be under the influence you know.
you're obviously quite a zealot when it comes to Clinton. that is fine, but i am not one or of the Bush's either so to give it balance.
whether it is right or wrong or somewhere in between the point is that i have formed  the impression (not formed by FOX or you either) that politics is a LOT more about self service than public service and what is important is that is my impression.
i didn't subscribe to your site to get involved in political rancor or get daily briefings as to what FOX is pitching to the already dumbed-down, but it has happened.
i think politics has a place in trading and from my other point of view that place is understanding how/why policy is designed and implemented and how policy impacts the price of equities or commodities or currencies because that is primarily my interest for paying to read your work.

Obama sensation! In a presidential popularity poll Obama garnered more votes that George W. Bush and Thomas Jefferson combined. I guess Reagan's popularity must stem from his courageous stand in selling arms to Iran to fund the Contras in Nicaragua, both of which had specifically been forbidden by Congress, thus striking a blow for smaller government, or at least making government look small. He has also been much lauded for the invasion of Grenada in violation of international law.

HG Wells–A Short History of the World
The book is also available as a free download in Kindle format with or without illustrations from the link below, or if you are long AMZN you may prefer to get a copy there for $10.00
Wells certainly provides a quick and opinionated viewpoint joining up the dots and showing how the human race got from primeval swamps to the American Civil War, or more important from his point of view, World War I. One of the interesting points is that the book was very much a bestseller at the time, but it is hard to imagine a similar volume succeeding in getting a mass readership today.

Phil: Devalued Dollar and stock "prices"
Phew, skipped of few days reading here and there is sure a lot of interesting/entertaining stuff to take in from all parties.  So anyway I'm trying to understand the relationship between the value of the dollar justifying a rise in the price for US equities.  Are not a companies dollar earnings also devalued?  I can see corporate earnings from exports to non dollar denominated markets adding value, but why would a lower dollar lead to a higher stock price for a 100% domestic company?  TIA

jmm1951: thanks for the heads up on the gutenberg website

That was an amazing (best Prez.) Gallup poll. How would you answer that question?
Love the political banter between you and ZZ. I enjoy reading both of you. You both make great points. What did you say to roro!

Phil/What goes up

I’m hearing you….this rally has no support except the full support of the world printing presses, wall streets spin artist, Fed’s monitory policy, sideline money that thinks they’re missing the boat, and extremely low volume that allows the Bots to continually push us higher.

So what’s one to do. I for one can’t see myself buying into these artificially high prices because as you so eloquently pointed out, the drop to reality could be rapid.

I’m sitting here mostly in cash waiting for the inevitable. It sucks watching inflation eat away the dollar, but I happen to believe that sooner or later the lipstick is coming off the pig and fear will once again be the flavor of the day. Like Buffet, I’d prefer to buy when mos are selling.

BTW……I’ve noticed over the last week that the tourist in Hawaii couAreciboare less about American politics, the market, the war, and least of all how much anything costs. It doesn’t matter if it’s $80 eggs, $30 valet, $400 snorkeling, or $1500 helicopter tour, just swipe the card and lets get on with it. Everyone has adopted the mindless spending mentality.

The only true value is the $400 round of golf…. Swipe

US deficit 'accident waiting to happen,' says IIF head
Sharks are looking a new target? But seriously US?  I think they are biting more than what they can chew

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