There was a girl I used to know
She dealt my love a savage blow
I was so young, too blind to see
But anyway, that’s history
-Split Enz

Bank of America’s (BAC) news isn’t being accepted well by the markets. I wrote about Bank of America back in September. Nothing has changed. They are still making history, and it still rhymes with Dynegy.

Peace

History

Hindsight

The observer changes the thing observed
-Heisenberg

Let’s have a discussion about the Heisenberg Principle through a current example : Reality TV.

Why has reality TV become so popular? Because the title implies that you are viewing reality. But you are not. You cannot be. Because as Heisenberg says: The observer changes the things observed.

And therein lies the paradox. By definition, reality TV cannot be reality. Yet at times we think it is. And that fascinates all of us.

Peace

Some of You Don't Believe

Ponzi finance is when you declare your dividend and lower your dividend, by diluting your shareholders, all in the same day. The company does not want to come out and say that they can’t pay their dividend. So they declare a diluted dividend. “We are declaring our dividend, and you hereby receive 40% in cash and 60% in shares.”

This is a delay tactic. It delays the inevitable. The more they dilute shareholders, the higher the probability of default. This is another example of The Oldest Trick in the Book. It is exactly what Vornado Realty (VNO) did today.

To refinance or not to refinance

Below is a chart of the rate on the 30 year T-Bond ($TYX). Rates cannot go a lot lower. The question is not IF you should refinance. The question is CAN you refinance? If you can, then you should. This window won’t be open long. If you can, you should.

Peace

30 year yield

Are you hoping when you should fear and fearing when you should hope?  Fear and hope are strangely intertwined emotional states.  Next time you feel either, think about whether you should be thinking about the inverse.

The market did not do too much today.  The S&P 500 ($SPX) is destined to break down through support from December 29th at 857.  I am not sure if it will fall through gradually or suddenly.  Whichever way, nature’s math will prevail.  It has no choice.  It is written.   Stay tuned to Trade the Picture.  You’re on the right channel.

S&P 500

What is nature’s math?  I’d describe it as the circadian rhythm of the universe.  Nature’s math is the foundation of all we are.  The building blocks of everything, from waves in the ocean to biology to fashion and market trends.  Everything beats to the same rhythm.  Strange place.

We live in Hyperspace.

Peace

The Swim

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