1. If the Bank of America February 5 puts weren’t so expensive, I’d be buying a few thousand of them. It isn’t if this stock is going to trade on the pink sheets, it is when this stock will trade on the pink sheets.

2. 847 remains the level to watch on the S&P 500. Stronger above weaker below.

3. Existing home sales numbers came out this morning. They were better than expected based on revised downward manipulated estimates. REITs will go lower. They have no choice. Nature’s math will prevail. It always does.

Peace

The Golden Ratio

I challenge you to make your life a masterpiece.
I challenge you to join the ranks of those people who live what they teach,
who walk their talk.
-Tony Robbins

Reading is cool.
-The Fonz

Inside the Savant Mind: Tips for Thinking from an Extraordinary Thinker. Via Mike at uglychart.com

Greatness in Life and Trading by Brett Steenbarger.

Circuit City Collapse Could Hit Real Estate Investors.
COULD hit real estate investors? That is a bit misleading. It should say, WILL hit real estate investors.

Peace

Downtrend

1. I am not short the dollar anymore. While I had expectations that the dollar would break down out of it’s recent consolidation, it broke up. That’s trading. If you are trading because you want to be right all the time, then this is the wrong business for you. Trading is not about being right frequently. It is about the magnitude of your gain when you are right. This concept is illustrated more clearly in The Babe Ruth Effect: Frequency VS Magnitude.

2. I am bullish on Gold. However, in the short term I have re-allocated any interest in gold to short more of the REITs. At some point I will be long the yellow metal again.

3. Why am I so bearish on the REITs? Because that is where the alpha will be. The market will trade lower, but what sector is going to crash lower and outperform to the downside? The commercial REITs. Stay tuned to Stripnomics for the names with the worst fundamentals. If you’d rather look at a chart of the real estate index, just check out symbol (IYR).

Peace

Look Out Below

Inasmuch as we are part of nature we are also perfect; it is our humanity that is imperfect. And, ironically, because of our capacity for imperfection and error we are free beings - a freedom that no stone or animal can enjoy. Without the possibility of error and real indeterminacy implied by the quantum theory, human liberty is meaningless.
The God that plays dice has set us free.

-Heinz R. Pagels

——

It has been a while since I have written. I have so much to tell. So many stories. Some have been written, some are being written, and some will be written.

There are a couple of articles that I find interesting to read:

Malcolm Gladwell’s expose of Sidney Weinberg is an excellent read. Remember, there is no greater gift in the universe than adversity. We have all had our share. Adversity is a guest in my life. I am able to embrace it because I know that the only one that can beat me is me. I feel blessed at the adversity that I have been gifted. It has helped me go places and see things that many have not.

——

Michael Lewis is one of my favorite writers. His piece, The End, hits the nail on the head. As I stated in my post from September 22nd, Investment Banking as we know it is over. Lights out. Game over.

——

As an update to my positions, I have bearish bets on many commercial REIT names. My favorite shorts are Alexandria Real Estate Equities Inc. (ARE) and HCP, Inc. (HCP). Both are houses of cards, just like Prologis (PLD). The cluelessness of everyone involved in these names is amazing and so beautifully opportunistic. NO ONE seems to have a clue as to what is happening in this sector. No one except myself and my collaborator at The Tinker Factory.

——

Where am I bullish? Gold.

In a conversation with some of my collaborators last night, I heard the most prescient comment:
In hard times, people want to own dollars. In harder times people need to own gold. I am very very very bullish on the yellow metal (GLD), and I continue to build my bullish position.

Peace

Click to view larger

Some things are so obvious they are completely, laughably predictable.

Tonight, Bloomberg reports:

“Sept. 22 (Bloomberg) — The Wall Street that shaped the financial world for two decades ended last night, when Goldman Sachs (GS)  and Morgan Stanley (MS) concluded there is no future in remaining investment banks now that investors have determined the model is broken.”

Now that investors have determined the model is broken?

Are you trying to tell me that you are the victim of some self fulfilling prophecy?

You are throwing in the towel because you know that you cannot double down one more time.  The lights are out.  Gambler’s ruin has set in.

At the very least get a new PR agent.  These excuses don’t fly anymore.  You need to take a bit more accountability than that.  Come on.  Let’s get real here boys.  The locker room conversations have yet to get out.  When they do, the blame game will start.  When the blame game gets really hot, you are all going to look completely ridiculously obvious.  Even your most staunch supporters will have to run for cover.

Another thing, I am not gonna write about telling you I told you so, but I might right now.  After all, we are in the early days of this blog.  I do need to establish a bit of a track record if I want people to read me. So I quote from my September 12th post:

“Investment banking as we know it is over.  Lights out.  Game over.”

The next sector that will scream that they are the victim of a conspiracy is the commercial REIT sector.  You know my favorite short there.

Peace