Don't be afraid of missing opportunities. Behind every failure is an opportunity somebody wishes they had missed.

Lily Tomlin


Charts and Table Zup!

I'm feeling better about what's going to happen and what I'm gonna do about it regarding the 401a. Of course even if I know to the penny where the market is gonna end up next Feburary, that's like sayin' " It's summer time in the Caribbean and the weather will average 85 degree days with calm and light seas." That is less than clear that there will be some pretty hairy and even deadly days mixed in there and days when the weather is good going to awful and the other way around. Ya need some details lest you founder a number of times along the way. So ya gotta have a strategy and it's gotta have expectations and contingencies. I'll write about mine this weekend. See ya here later, doods and doodettes.

CHARTZ AND TABLE ZUP.

Things are not at all what they seem. Film at eleven and a big bin of ones and zero's sent over the pipes of the interweb to magically appear here as arcane financial 401a blather later on this long weekend.
I'm told that a number of union locals across the country are rumored to be experiencing major issues with their pension funds. Some have frozen contributions/redemptions/withdrawals until it gets figured out. Kinda not surprising given what's going on at this site and in the mortgage market nationally. We aren't faced with that here currently (although that could change) but eternal vigilence is the price of financial freedom.
I've changed my 401a allocation again and again recently because I believe we are in transition between a bull market and a bear market. It won't be neat and discrete. It'll be sloppy and choppy. It'll be more like surfing that like a record run at Bonneville. There'll be a lotta hack and hew as I alternate between making money and not losing it.

BUT WAIT!!! THAT'S NOT ALL.........CLICKONNIT!!!


So anyway, Check It Out an' say....WTF? According to the charts on my website, www.joefacer.com, I'm tallying a 45% return over just about three years time, or about 15% per year and around double what the B/P Fund is doing. Yet when you click on the table above, you see that this year I'm showing a pretty limp return of under 4% and trailing the B/P Fund substantially. Also the funds I prefer to invest in are showning returns pretty much between 9% and 13% YTD. Whatzup?

Well.....You make hay while the sun shines. When the market is going up and I'm feeling good about it, I'm pretty aggressive. I have no problem w/ going 100% invested in the hottest funds available. On the straights, twist the wrist, stretch the throttle cable, and ride way out on the front end to keep the front tire near the ground... if possible. You don't endure the risk and expense of racing to deliberately finish last. Riding as hard as you can is the only sensible thing to do out on the track. But we're talking championship (and retirement) here, and to finish first, first you have to finish (Get the best return you can and hold any losses to the absolute minimum). So you gotta deal with the turns and investment risks differently than the straights and clear sailing. So when things feel risky to me I can go to 100% cash almost as quickly as I can go to 100% stocks. Two sides to the coin and all that.
I've been wrong to get worried and go big time to cash every time I've done it to date. It's cost me significant coin each time. But there is a big difference between making less money than you could have and actually losing money. I'm pretty sure that a big time opportunity to lose money is here and it's made me nervous. As a general rule, you can't short,hedge, or play options with retirement money. There are exceptions, but they're pretty limited. So I answer nervousness and losses by selling stocks and buying cash until I can sleep. Check out the Fundz YTD chart on the Chart page of my site. http://joefacer.com/id10.html and my current allocation http://joefacer.com/id11.html. Down about 4% from the peak of the market during the first week of July and hangin at about fifty percent in cash has me resting comfortably. See ya at the hall.

It requires a great deal of boldness and a great deal of caution to make a great fortune, and when you have it, it requires 10 times as much skill to keep it.

-- Ralph Waldo Emerson

Volatility up. CLICKONNIT




Three percent down in one day and 3% up the next day. Four up days like that is a good year's gain. Four down days like that is a disaster year. You may see that round trip twice a week for a while.... Think roller coaster. Hopefully you end up where you started instead of puking your cash out at the bottom...


The long term direction is down. At the end of the day I went max cash under the rapid trading rules. I may have a few more days of bailing outa stocks to get where I want to go. Buy weakness and sell strength..... Today I sold.

"There are some things which cannot be learned quickly, and time, which is all we have, must be paid heavily for their acquiring."

Ernest Hemingway

Charts and Table Zup!

If you play the game, you will make mistakes. If you stay in the game, you'll get an opportunity to undo your mistakes. If you let small mistakes become large mistakes, it takes you out of the game. If you ain't making mistakes, you ain't playing the game. If you play the game, you will make mistakes. If you stay in the game, you'll get an opportunity to undo your mistakes. If you let small mistakes become large mistakes, it takes you out of the game. If you ain't making mistakes, you ain't playing the game...

SHANGHAI, China -- Chinese banks are just beginning to disclose their exposure to the U.S. subprime mortgage crisis, sending some bank shares plummeting in Hong Kong.

Bank of China saw its Hong Kong stock price fall by as much as 8.1 percent Friday in reaction to the bank's report that it holds $9.65 billion in subprime asset-backed securities and collateralized debt obligations. That's 3.8 percent of its total securities investments.

http://www.washingtonpost.com/wp-dyn/co ... 00735.html

Joe Montana's Firm Says Fund Declined 12% in August (Update4)

By Jenny Strasburg

Aug. 23 (Bloomberg) -- HRJ Capital LLC, the investment firm whose partners include retired football players Joe Montana and Ronnie Lott, said one of its funds lost 12.3 percent in the first two weeks of August, erasing most of its 2007 gain.

HRJ, based in Woodside, California, blamed the decline in its Legends Multi-Strategy Plus Fund on losses as the subprime- mortgage crisis spread to broader credit and equity markets. The investment pool farms out clients' money to hedge-fund managers. HRJ, which also invests in real estate and private-equity funds, oversees $1.75 billion.

http://www.bloomberg.com/apps/news?pid= ... refer=home



I've readjust my allocation slightly. I'm evenly dispersed in my favorite funds with about 20% cash (GIC). You know I don't like bonds except under very special circumstances. Under these circumstances, it's RGVEX only. The rest of the stuff is stuft with MBS's and you know about that from my site. I've pretty much got a feeling for what's comin' down the road onna macro level... and I know how I'm gonna play it. I'm not sure just how to write about it. Stay Tooned....





More To Come, here and on my website in Reforming A Pension Plan From The Outside and COFGBLOG ESSAYS .... Did you expect anything less?

Charts and table Zup.

All is not what it seems. I bailed out of the 401a stock funds bit by bit this week according to the rules as the markets cratered. By the selling panic of Thursday AM, I was almost all the way out. By the time the FED blinked and the buying panic of Friday started, I had orders entered to get back in to about half my usual positions in the 401a. The table on my website is what I held on Friday. What will show on Monday is what was bought on Friday after the market closed.

What you see here is tamed by the rules and structures of the 401a. Friday morning I was way levered to the indices in my trading account and buying mortgage providers hand over fist this morning 'cuz it was the right thing to do. It helps to have roadraced motorcycles. You flick it in to the corner knowing that you can/ have to catch it when the tires touch the ground and hook up because that is the only way you can get to 150 MPH before you stand it on the front wheel going into the 30 MPH corner with the concrete wall.... kinda like buying a mortgage outfit on margin this morning.

Tuesday Aug 21st

What happened?
http://www.time.com/time/magazine/artic ... -3,00.html

What will happen...

Some bad things as the real estate/debt/mortgage thing works itself out. {Don't even THINK it is only about subprime...} There's going to be some serious pain in different areas/sectors. But even in the worst part of the 80's with 12% unemployment and stagflation and 165 car loans from the credit union, life went on
and things eventually got better... So here's what I'm gonna do...

Here's where I am today and I'm thinking I may buy more stocks for the 401a tomorrow....CLICKONNIT...





More To Come, here and on my website in Reforming A Pension Plan From The Outside and COFGBLOG ESSAYS .... Did you expect anything less?

No post last weekend.

Vacation and unscheduled/unannounced "weekend maintenance" by my site provider is to blame.
The financial markets are cratering, on their way to "smoking ruin". Saw that happen in '00 to '03.
Cash doesn't go down. Sell until you can sleep. You can always buy it back and it looks like you will be able to buy it a lot cheaper.

UPDATE 8/16/07

I'M GOING TO 100% CASH.(MET LIFE GIC) AS FAST AS I CAN.

Chartz and table ZUP!!!

Bloody week in the market, Behind the indices and headlines, it's a lot worse than that. I use Stockcharts.com to track some stocks I may be interested in. Here's what part of a page looked like....
Clickit!!!




My plan for the 401a and my other accounts is in place, activated and working. Next time, it will work better. Once taught, these lessons stay learned.

What started me down this road in the first place was the dotcom crash. The destruction of my IRA's and my mutual fund investment set me off on a search for why and how it happened and how to fix it. That set me up to recognize that there were even bigger problems going on in my pension plan and 401a plan. In large part, some things got fixed on the stock side in time to take advantage of the next cycle up and we've sure as hell been on an upcycle since '03. Now it looks like it may be time for the next cycle down; we may be witness to the Mortgage Backed Security (MBS) crash. And the same outfit that screwed things up in stocks in 2000-2002 appears to have has increased our ownership of MBS's right into the teeth of the crash. What is the quality of the CDO's we've bought and paid for? What is the current market price? Why does McMorgan classify FNMA paper under both Government Agency and MBS? How does the model and the marks square with the market? Inquiring minds wanna know.

I read. A lot. Stuff like this...

From the Street.com sites:

Bill O'Connor;
Low grade ABX (asset backed securities) indices all hit new record lows and AHM news came out that they were shutting the doors (7000 employees last week, 700 this week) and i watched as i saw the single biggest one-day drop in AAA MBS bonds i can remember...
One final note : For all you youngsters who weren't around back in the late 80's when Drexel Burnham imploded , it was their inability to place their commercial paper that was the coup d'etat . The bulls yesterday claimed that CFC rumors of CP problems was nonsense and just a little haggling between buyers and sellers over a few basis points that delayed paper getting sold . I don't know about you but i would find it virtually irresponsible of any money markets manager to buy CFC 90 day commercial paper for a mere few bps over LIBOR .
Speaking of which : how many of you out there have had a good look of late as to what your broker is putting your cash in ? You might be shocked at some of the corporate names you are getting paid 5% to give them short term loans . Buying some 3 month riskless T-Bills at 4.75% area (tax free at state level too) sure sounds smarter to me than giving yourr cash to ANY mortgage lender for the next 90 days .

Doug Kass
IndyMac (IMB) in a death spiral.
(IndyMac is a mortgage originator)


Doug Kass
…And so did Bear Stearns' (BSC) CFO tell the truth on the conference call. I just got off.
He said that the fixed-income markets have seized up and are in the worst condition he has seen in over 20 years.

Tom Au
As reported on the Street.com site, Bear Stearns finally 'fesses up and says that certain market conditions "are as bad as I have seen in 22 years." …
"Subprime" was just the thin end of a mortgage industry that had gotten out of hand. Like games of musical chairs, hot potato, and old [person, usually female], subprime was set up to fail, because inevitably someone would be left holding the bag

Some links…..
]pid=20601087&sid=avZr736O8xUw&]
[url=http://www.bloomberg.com/apps/news?pid=20601087&sid=avZr736O8xUw&]http://www.bloomberg.com/apps/news?pid=20601087&sid=avZr736O8xUw&
News about how the subprime mess will ripple through the economy.

http://alephblog.com/2007/07/30/specula ... me-part-3/
Check out #7 ,#8,#10

http://epicureandealmaker.blogspot.com/ ... -sand.html
“That means that on the rare occasions that instruments (CDO’s,MBS’s) are traded, a large gap can suddenly emerge between the market price and its book value. This week Queen’s Walk Fund, a London hedge fund, admitted it had been forced to write down the value of its US subprime securities by almost 50 per cent in just a few months. That was because when it was forced to sell them, the price achieved was far lower than the value created with the models the fund had previously used – which had been supplemented with brokers’ quotes.”

http://www.econbrowser.com/archives/200 ... s_the.html
More primer material on CDO’s

http://www.msnbc.msn.com/id/20079844
London hedge funds AND German Banks? The subslime contagion is NOT contained.

http://www.telegraph.co.uk/money/main.j ... ebt103.xml
The Bear Stearns leveraged subslime hedge funds spreads up into the prime areas of the economy and across the oceans…

http://alamedalearning.com/reality/2007 ... is-moment/
Rats in the crack house cellars in Watts, rats in the wine cellars of Beverly Hills. If subslime melts away a strata of the economy, will the layers above ignore it?

http://www.slate.com/id/2171235/
Subprime loans on million dollar houses? Dude….Way!!

http://www.bloomberg.com/apps/news?pid= ... 1pp7slShC8
Why it's not just a subprime problem....or even just a a housing problem..

dyn/content/article/2007/08/04/AR2007080401418.html?hpid=topnews
http://www.nytimes.com/2007/08/05/weeki ... orris.html
Walking the tightrope. Our pension fund’s commercial paper is industrial properties, retail properties, hotels and resorts, apartment houses and complexes. The economy is what keeps them afloat. Watch where you step….

We've got a lotta money at risk. And it is not unreasonable to ask some questions about it.

But first I'm going to do something research into it. I've got a lawyer I'm working with and I'm communicating directly with some Wall Street and CNBC sources on the matter.

Second, I'm going to keep on doing something with my 401a account. Here's where I stood on Friday evening...CLICKIT!!!!





The Europacific fund is kinda hanging in there and I'm down with it.
The American Growth is down but I'm trimmed pretty tight and watching it closely. We'll see.
The Calamos Growth is also kinda hanging in there and I'm down with it too.
I'm not so sold on the Lord Abbett Funds so I sold them and I'm an interested bystander.
The cash went into the GIC.
I hate the rapid trading terms of the Vanguard, I don't have much there and that's OK. If I was a buy and hold, that'd be different.
US Bonds go up while bonds in general go down. I like the looks of RGVEX

The direction of the US market is down and I've felt the pain and I see more of it. Cash is good. The market HATES uncertainty and I'm irked by it to. It's why if I were to make a move , it would likely be into US Gov bonds.

More To Come, here and on my website in Reforming A Pension Plan From The Outside and COFGBLOG ESSAYS .... Did you expect anything less?

I think forty five percent of our fixed income portfolio in the pension fund, supplemental pension plan, apprenticeship training fund and health and welfare funds is in mortgage backed securities. Check out my website.Clickit!!

Chartz and tablez up. Gotta full plate doing family stuff this weekend. But I got a head full of stuff that needs to see the light of the internet. The markets got CRUSHED this week and it looks like it's gaining steam on the way down. Now what?

Well......I'm fairly sanguine about the whole thing. It's onna counta 'cuz I've seen it before and I've got a plan and I'm ready to act. Here's what I got started on midweek of last week and here's what I'm agonna do on Monday...

Check out the chart....

CLICKONNIT...



What we got here is a chart of the last year and a half with the last two seasonal Spring Hiccups elipsed. The '06 one was 10% and two and a half months long and I got in and out in a timely manner and I did well for the year. The '07 one was about three weeks long and I got out late and got back in late and it cost me half the year's gains.

Now we have a Summer '07 thing goin'. Is it a hiccup or a blowup? If it's a hiccup, it might be too late to get out and getting out will cost me performance. If it is a blowup, it'll be a long way down and IT'S TIME TO GO!! I won't know which it really is until after it's over. So I gotta decide how I'm gonna treat it.

Check out the charts below...
CLICKONEM





First off, for all the hue and cry in the media, the first chart sez that we're down 5%. The second chart sez we've still got half the progress we made this year in hand. But it also sez we've got a breakdown/rollover and the direction is DOWN. If Monday morning is a hard bounce off the bottom and we don't look back, that's one thing. But I trade stocks and I acquire a lot of input and what I've read makes me nervous. This one feels different. And if this is the start of a downtrend and we continue the downtrend with a few dead cat/oversold bounces along the way to where we COULD go, the right thing to do is SELL and SELL BIG and SELL NOW. If it's a mistake, I'll buy it all back and it'll cost me some of the profit I made/coulda made.

Read all the stuff I've written below to understand what and why I'm thinkin'. And when you've done that, realize that the stock market anticipates and sometime it anticipates what will happen and other times it anticipates what doesn't happen. So what we end up with is based on what other people think will happen. Whether news is good news or bad news is determined by the majority of investors and we gotta either guess or react. I'm reactin'. I'm aware of the stories and I read the charts. I've seen enough.

I've gone long and strong when it felt right or a little scary and it worked out. I've also anticipated a few disasters that never happened. Sooner or later, I'm gonna be right. Maybe this is the time I'm right. I'm gonna bail. I'm setting up a big sell order which will execute Monday after the market closes. Depending on what I learn as of lunch on Monday, I'll either let it roll or pull the plug onnit.

UPDATE

The market managed a decent bounce and I canceled the trade.

But the details and rational found below make sense to me as a way to deal with what i think is a possible inflection point in the market. So what you see below is is loaded and waiting. I'm thinking that tomorrow will be end of the month markup and I might pull the trigger on the trade or a junior version of it at the end of the day....


I moved some money around late last week and ended up with much of it in CVGRX and RERFX. That's a problem, but not a terrible one.

There's a ton of US money overseas. When things get hairy, rather than put more money across an ocean, investors'd rather hold cash here. Money coming back home drags down overseas stock prices. Business overseas is still gonna be good. But I own overseas stocks in RERFX, not businesses. I'm outa RERFX bigtime and I can't get back in for 30 days after I do.

It'll cost me 2% penalty to sell the recently bought CVGRX shares 5 days early. CVGRX is down almost 6% in the last 5 days. Safety costs money. Oh well. I think the odds say sell.

I can raise cash from the rest of the funds without triggering trading restrictions. Except from the Vanguard S&P 500 Fund. Those trading rules SUCK bigtime. We gotta ditch that fund and get an ETF. I'll have to think hard about putting money in VFINX again. It's about overowned big cap stocks now. I'm outa there.

If the market is bad at lunch Monday, the trade rolls and I'm big in cash as of that afternoon and I'll still be able to reinvest in 5 funds and three allocation models and I'll be locked out of one fund for 30 days. If I change my mind, my allocation will stay at what I show on my website.

We shall see.....And we did. I pulled the trade. But I very well may reinstitute it. Stay tooned.

To really get a grip on the situation though, ya gotta know how it came to be...
That'll be found on my website in the Reforming A Pension Plan From The Outside page. It's a work in progress. Between there and the COFGBLOG, I'll be covering the why and my strategy as to how to deal with it.
This may be the inflection point we all knew was on the way. Or not. Nuclear meltdown or Business As Usual. The market will tell us. Again, stay tooned....

Charts and Tables Up!

"The art of investment is the art of selling. Buying is a lesser skill and holding requires no skill at all."
-- Harry Schultz


More of the same. The 401a funds are doing very well. Being long and strong the best performing fundz and almost all stocks all the time for most of three years has been very good to me. Check the chartz. But, if I'd let the inner cowboy loose...If I hadn't played around trying to be responsible since I play with an open hand... If I hadn't tried so hard at being diversified all the time... if I hadn't gone to cash when I felt uncertain, to cut the risk down when it got too uncomfortable... If I'd ridden only the two best performing funds... If I'd bumped my contribution to the max back in '05....

But that's all a load of crap. This is a 401a and the real world I'm talkin' about and I'm investing in funds that have trading restrictions in place, and funds whose holdings I'm not privy to in a meaningful way, and where I've got a 24 hour trading lag between data and allocation, and where the risk/reward is less quantifiable etc, etc, etc..

So sometimes being smart exacts a price. Some times being stoopid extracts a price too. What about the containment of the subprime real estate loans, the CDO's,CLO's, and MBS's? What about interest rate policies at the other nation's central banks? What about the Alt A subprime loans, How far does the CDO risk reeeally extend? Is Bears Stearns the ONLY house on the street with serious leverage, I mean, (way too)serious leverage in hedge fundz? Will LBO and PE loans still be available in the near future? How many banks/investment houses will have to eat bonds or bridge loans over the next six months if the PE deals go south? Was Fortress and BX the top? What did the principals of BX and Sam Zell see? Will BX and Fortress be the pattern for the IPO's in the wings? These are some questions making me seriously consider unwinding my margin and option leverage in my trading accounts. You know, going to straight up long on my way to 50% cash while I'm thinking I might be on my way to 100% cash. I've made three years in 6 months and it looks way too uphill from here. So why am I not thinking that it'd be pretty dumb not to entertain the same thoughts and questions when it comes to my 401a? Nah, I AM thinking that it'd be pretty dumb not to entertain the same thoughts and questions when it comes to my 401a....

I've gone to cash a coupla three four times in the last three years, needlessly, it turns out. I may go that way again. I'll let you knowif and when and how it turns out.

It is a mistake to look too far ahead. Only one link in the chain of destiny can be handled at a time."

--Winston Churchill

Charts and tables UP!!!! So's the market. So'm I. YEE HAAA!!!!!

Gotta bank this feelin' to savor it when things don't go this well. It's not like I haven't earned it..... and it'll remind me why I have to fight to stay in the game. I'm relearning the lessons of '03 on making money when I can, and not when I have to.

The bears have hated this rally all the way up. The bulls have only granted it grudging respect, especially since Feb, when we had a hiccup on rates, real estate, and business. I started to mistrust the market in Feb, and I tried to ring the cash register and go into cash preservation mode. But the market bounced hard and started to leave me behind. I have granted it less and less respect, even after I rejoined the party in March. I've been at the door ready to leave numerous times since then, including a couple of time this week.... But damned if the charts didn't keep me hangin' on. Pretty neat. I've made a lot of money and hopefully you did too. Check out the charts and tables on my site. There's more to come on "REFORMING A PENSION PLAN FROM THE OUTSIDE"". Click it.... and share it with your brothers and sisters. It's the right thing to do.

Charts and tables up at joefacer.com. Fund Alarm tables too.....


Here's a BIGCHARTS chart showing the past ten years performance of:

1) A McMorgan stock fund (mcmex) representing the performance of the equity portion of our pension funds from '93 to 2005.

and

2) The different mutual funds which became available to our 401a in 2004.

Clickonnit;





Three sets of questions.

1)What did it cost us to be undiversified with all our equity exposure in both the 401a and the main pension fund limited to one manager and one portfolio?

We can do a quick first order estimate from the charts that our equity return from McMorgan was roughly eight percent over the period of mid 1997 to 2005, or about 1% per year. If we had $60 million in the main pension fund invested in equities in '97, that would have given us about $68 million on our original principal plus earnings after 7-1/2 years .

The worst performing fund of the group of funds now available to our 401a managed about 20% return during that period, and the best performing fund did about 150%. Again assuming $60 million in pension equity funds and a conventional distribution of the pension monies among funds as shown below and the rates of return on the funds as shown above, we would have had roughly $38 million in earnings as shown below. Or stated another way, we would have had a 65% return instead of a 8% return (eight times better) in both the main pension and the 401a Supplemental pension, with much better diversification and safety. It appears to me as though a case could be made that the cost of an undiversified investment strategy and reliance on a single poorly performing investment manager is approximately 25% to 50% of the amount in your 401a and the defined benefit pension fund. This is only an estimate and a rough one at that, but it certainly justifies looking deeper into this.

Clickonnit!



2) Given that the stock funds that the Board of Trust made available to us in 2004 to replace the poorly performing McMorgan Funds were available to us in 1997, why did it take so long to diversify from a single advisor for both stocks and bonds and both the 401a and the main pension? Was this a matter of a single decision being made in 1993 without any subsequent review? Was it consciously and deliberately kept this way? Was this a prudent course of action and fiduciarily responsible? How were these things managed and are they being properly managed now and will they be managed in the future for our interests?

3) What assurance do we have that this is not happening again? As of 2004 we have a new investment arrangement in the 401a Supplemental Pension Plan and as of 2005 we have a new arrangement in the Primary, ie Defined Benefit Pension Plan.

Did we choose two severely underperforming investmemt management firms and an unacceptably high cost index fund manager for the defined benefit? Will the 401a arrangement pass review?

All good questions.

Finally, food for thought; Did the godawful 401a pension performance during the late 90's and early 2000's keep you from allocating more than the minimum amount to the 401a? Did the pension plan's sticking with an underperforming equity manager cost you while they were in place and is it still costing you even after they are long gone from the 401a?


About my current asset allocation in the 401a....it's kinda wheels within wheels right now.... My asset allocation is somewhat idiosyncratic. I'm avowedly and demonstratibly aggressive. I'm up 50% in the 401a in three years and 45% YTD in my trading account. And I've little confidence that it can continue. On the one side is my aggressive nature and some luck and smarts. On the other side is what I see as the start of a radical change in the place of the USA in the world. We've gone from the premier manufacturing nation in the world to a place where it's REALLY REALY hard to find something at the store that's not made in China in less than a decades time. We've had a recession in most of the economy in the late 90's disguised by a tech/fraud bubble in a corner of the economy, historically low short term interest rates at 1% in order to save us from worldwide depression, a jobless recovery off of bigtime unemployment, low life lying statistics on inflation about the part of the economy that does not eat or stay warm or stay cool or drive or get sick, full employment without wage pressure, the start of what happened to the air traffic controllers happening to the UAW at Chrysler, the end of Ford and GM as we have known them,and an off budget sheet war we gave away while we won it. There's more, but that's enough for now. Housing, which drove our economy for 5 years, has fallen off the map. The hope is that it won't matter. I'll have to see it to believe it.
The USA looks to be on it's way to becoming Britain; a one time numero uno economic and military power caught in the historical imperative of the world around it. Want a taste? Crude prices at the world level are higher than in the US. We have all the crude we can use at the oil terminals in TX/OK. We don't have the refineries to process what we have so the bids are weak for crude. Demand continues to grow so we have to import gasoline. At some point we may have to export low margin crude because we have too much while we import high margin gasoline and refined products because we don't have enough.
In the world I knew, the collapse of housing and higher rates would mean lower prices as the word economy chilled 'cuz we cooled. The world goes as the main producer/consumer goes. In this world, China, India , South America, and Eastern Europe could fill in the hole in demand that we leave and prices might not miss a beat. It's called stagflation and I have some very ugly memories of the last time it came around.
I'm concerned and I'm staying long and strong in the 401 for now, mostly cuz' I'm ready and capable of stepping aside at the drop of the hat. i just dunno about the hat, who's it is and what direction it's coming from.

Like so many things in the market, you can embrace the holiday trading phenomena and try to make some money, or try to fight it and hope you don't suffer too much pain while waiting for folks to come to their senses once again.

Rev Shark


It's about reflexivity and being reactionary. There are so many reasons for stocks to mark time or to fall. There are so many reasons to get conservative especially after the big first half, when the many factors that should have sent the market down didn't. There's a lot to fear, especially since what we expected to happen, didn't....yet. BUT


There is what the market does rather than what it should do. Ya gotta watch that if you expect to make some money. I've not got a lot of confidence in the market going up. But the charts don't look bad, liquidity continues to look good and you gotta ask what's the hardest trade? It's to go with what got ya here, to see that for all there is to worry about, not much REALLY bad has happened and to stay long.

And Monday turns out to have been an up day worth 2.4% for my trading account and 1% in the 401a.

The one great certainty about the market is that things will always change. When we lose sight of that fact and dig in our heels on a particular viewpoint or thesis, it can create tremendous stress as we deal with an environment that may not appreciate our great insight.

Reverend Shark


Charts and tables up. If you read the entrys below, you have a laundry list of things that I am concerned about. Regardless, the first half of the year, dispite my misgivings, has been smokin'. I went to cash on the 401a in Feb and that was a mistake. It's one I can afford, because THE VERY MOST IMPORTANT THING IN THE WHOLE WIDE WORLD, IS TO KEEP YOUR SAVINGS AND INVESTMENT INTACT. THOU SHALT NOT PISS AWAY YOUR SAVINGS AND INVESTMENT GAINS!! I've had some great gains since we reworked the 401a investment choices in 9/2004 and standing still when I think the risks are large does not hurt at all....as long as I don't leave too much on the table out of a failure to recognize what's in front of me. By mid/late March, my mistake was obvious to me and I got back in.

It helps that I am working hard to repair the damage done to my IRA's as well as to my 401a. I'm not as restricted in the IRA's as the 401a and I have no restrictions on my trading account so I get a much better sense of the investment markets since I spend a fair amount of time on it. So I have a definite opinion about my going to cash in Feb.

I was either wrong or early..... and I don't now which...

So check this out;


I suspect I was early.... Or I may have been wrong. But if we're on our way to hell in a handbasket, it won't happen over night.

So, as per the Shark up above, I gotta plan on what to do if only good things happen ever after, and I got a plan if it all turns to shit. I've just got to keep my eyes open and recognize what is going on in front of me.

Check this out... it doesn't hurt to be informed.

http://bigpicture.typepad.com/comments/ ... ubpri.html

See ya at the hall...

The first step to making money is not losing it."
-- Ed Easterling


Charts and tables up. More to come, Here and at my wwwebsite, ya know.... There's stuff I gotta think about and I gotta decide what I'm gonna do.....even if I do nothing. Which is a decision and an action , even if it don' look like it. Here's the problem;

The market's looks tough if you only look at certain portions of the 401a.CLICKONNIT!

"

Up 4.3% YTD by parking in the do nothing Balanced/Pooled Fund.
Up .76% YTD in the Conservative (watching your money bleed away while your health, energy, and food costs skyrocket) Model
Up 1.7% YTD in the Moderate (I hope nothing bad happens) Model
Up 3.76% YTD in the Aggressive (let's jump in the deep end) Model.

Four choices. Double the risk and worse results for the Agressive model vs the B/P Fund. A 1.5% projected annual return for 2007 for the conservative model(horrible compared to CD rates). Two moderate allocations (Moderate vs B/P) but with one returning 250% more than the other and neither looking very good compared to CD rates. It looks pretty wacky to me. Especially since we have five funds in the 401 that are showing over 9% return YTD. CLICKONNIT



I know. It's all about the long run and in 20 or 30 years it'll all work out. Sounds good for my grandchildren. Explain to me again why I should wait until I'm 90 for it to work out.....

I'm up 31% YTD on my family IRA's and my trading acct at my broker. How can I not go to cash in all those accounts tomorrow? I could then kick back and cherry pick at only the least risky opportunities for the rest of the year during the traditionally difficult summer and fall and then feel like a genius come winter even if things don't pick up... But IF I go to cash in the IRA's and trading account because of the risk, how can I justify leaving my 401a money on the table in stocks?

I've just taken advantage of a major rally in stocks in my IRA's and trading account. Being conservative and holding a lot of the Met Life GIC has cost me return YTD in the 401. Going all in now to try to catch up feels like totally the wrong thing to do. Kinda like going down the long dark stairs in the old haunted house to find out what that noise is. The kids used to ask why anybody would do anything that stoopid. I'd say, " 'Cuz it's a movie and it's in the script." In real life, anybody with a functioning brain'd be long gone two reels ago.... Stay tooned...

Like we say in the sewer, "Time and tide wait for no man."

-- Ed Norton

Charts and tables up!

I'm of the opinion that the members of our local have been poorly served by the Board of Trust(BOT). I believe that over at least the last fifteen years, the BOT has pursued a particularly risky and ultimately costly to the members investment strategy for the pension plans. After meeting with me in 2003, the BOT instituted sweeping changes in both of the pension plans. However, there remain elements to the pension plans that I deem to be consistent with the prior flawed strategy and in need of change. The BOT disagrees with me, and thinks they have been doing a fine job and continue to do a fine job. I am not comfortable with this situation. I've retained a lawyer who is experienced in ERISA law to help me answer the questions that still concern me. The lawyer has reviewed the material which I've presented here and additional material that I have not made public. He has suggested that there is additional material that needs to be reviewed and we are in the process of obtaining that from the pension plans and will be reviewing that material in the near future. I'll keep you updated here and on my website as to the what, whys, and wherefores of what's goin' on... Stay tooned.


Here's the chart from a coupla weeks ago.

CLICKONNIT!



"It looks at the 10 year performance of the mutual funds available to us now in the 401. This is the kind of data that can be life changing. It's pretty damn obvious that something highly significant is going on and that something needs to be done. It's data like this in this form that got me moving to talk to someone about how BAD the pension situation was, and it was data like this that launched me in the new 401a funds when they became available in 2004. If you can't see the data or can't see the data in a useable format, you stay in the dark.

Check out the 4th quarter of 2001 reports for my 401a below

CLICKONNIT

================================================================
================================================================

//////////////AND/////////////////

================================================================

================================================================

Check out the numbers..... Oh, right, only one report has data in a useable format after my data is stripped out. Again, only one report shows that there is something going on. Thanks to the reforms instituted in 2004 and my website, this issue has gone away for the 401a. Do YOU have all the pension data for the defined benefit plan that you NEED available to you in a useable format? That includes enough data to figure out where you are and how and who got you there?

This week's investment data is pretty much on the web site in the charts and tables. I got a full plate and I'm gonna be busy this weekend. Suffice it to say that I'm carrying significant cash (too much by way of a miskey) in the 401 and my trading account and I'm STILL making significant coin. I'm STILL concerned about everything I've written about below. I'm 33% in energy stocks in my trading account because of the Middle East politcal situation and the possibility of a religious war on the Straits of Hormuz. You gotta make money when you can and in the 401 that is reduced to being long when it's good and out when it is bad. But it was a lot easier being 200% long with money borrowed on a credit card in the trading account in 2003 than it is being 80% long in the 401a here and now. Still......

Charts and tables up. more to come....

I'm standing pat for the moment with money allocated as shown in the table on my site. I've got some exposure, 'n some cash, an the exposure is where I'm more comfortable, if not really actually comfortable... I'm expecting more volatility as stocks start to move two directions instead of just up amd investors get vertigo and whipsawed by the boyz in the pits, da big money, and the hit and run artists. In other word , it's gonna be business as usual. I suspect I'll at least start thinking about making the next change in allocation, whatever that is, in the next coupla days.
More to come on what a 401a particpant could 'n shoulda had in his account if the Board of Trust had moved in '97 instead 0f '04-'05.

I'm still addin' to last week's post. But this needs to get posted here. Check 'em all out...

How Saudi Arabia is running our economy

http://www.thestreet.com/_tscs/newsanal ... 60736.html

AND

Here's why ya gotta be (shoulda been) thinkin' offshore investments. CLICKONNIT!

.

It's great for exporters, it's why we had a greater quarter in the indexes. Our stuff is cheap overseas. The dollar worth o' stuff sent over is sold and if it take 4 months between shipping and payment, the drachmas we get for the merchandise buys more (cheaper dollars)when it comes back to the USA. But it also means that we are buying stuff overseas with constantly depreciating dollars. It makes imports really expensive. Why is oil REALLY at $60 plus and steel so expensive?

It also works for investing. It's why I'm/have been overweight euroasia. there's more....but not here not now...

Wed the 6th I went to 28% GIC (Met Life)and I may go a lot more. I think stocks are going to be in free fall for a while. A day, a week, a month, a little bit all at once, a lot over a long period. Or maybe not. There is a growing awareness that as rates rise in the rest of the world (ROW) and the dollar depreciates (see the charts above), we're screwed (a technical term that condenses too much stuff to cover here). But it means that we might have to pay the piper for the last 6 years of methamphetamine/monetary run. I'm up 50% over 2-1/2 years and there is a feeling of a seasonal turning point on/over the horizon.

There's still the presidential cycle, the inventory cycle, the information revolution, ROW growth etc. But my favorite bright sunny days are in the fall when oncoming winter crispens up the morning and makes for cold clear nights, and it ain't no secret what's on the horizon... Of course I could be wrong and imagining ghosts in the shadows... or not. Heightened caution about whats going on in the other rooms at the party and a heightened awareness of where the door is, is how I'm going to play it.

"This has been a great year for preventive worrying. Seldom in recent history have so many people worried about so many things that haven't happened."
-- James Reston

Charts and tables up; I'm not done.... Like last week, stuff will/may appear now and then over the next one to seven days.....Why? Onna 'counta 'cuz, that's why!!

Here's a chart showing the 10 year performance of the 401a mutual funds that became available to us in late 2004. Also shown is the performance of the McMorgan equity fund for that same period. If we had diversified from the one McMorgan Fund in 1997 to the current basket of funds in the 401a, would it have been a responsible and prudent thing for the Trustees to have done? It would have required initiative and some additional work on the part of the Trustees. Would it have benefited the members of the Local? Could or should your 401a fund REALLY have somewhere between half again or twice as much money in it? Would the dollar amount, if any, have justified the trustees doing the homework? Since McMorgan also managed the defined benefit pension as well as the 401a, would the charts for your "real" pension look better or worse than the 401a charts? Did the Trustees leave a substantial amount of money on the table through inexperience, naivete, or complacency? Answering that would require some more homework and just lead to even more questions. Click onna chart...





Chart courtesy of BIGCHARTS.COM


This market's a real head case and it will make you a head case. Nothing has changed since I went cautious in the 401a in March. If anything, things have gotten even toppier. We've gone beyond the need for a correction. It now appears that we are in overdrive. I'm thinking that we now are looking more like a blowoff top instead of a correction.; Things could get crazy, stock prices could spike up, the last of the bears becoming rugs (we're there now), Time magazine could have the "New Age Of Permanent High Stock Prices" on the cover, everyone in China might quit their job to trade stocks, all the real estate salesmen in CA and Az and FL might become daytraders, the ten year bond might go to 8% and everybody'll be reassuring everyone else that "It's different this time, now it doesn't matter. THEN it'll prolly end and end badly. It always does. Like you could have a kickass party without having an unholy mess to clean up after...

http://articles.moneycentral.msn.com/In ... Hurts.aspx

But there is opportunity risk along with market risk all the way to the peak. And ya can't pretend it doesn't exist. Look at the chart up above. That's what happens when you are oblivious to opportunity risk. You give up the upside and keep the downside. I've had that happen to my pension and I'm NOT happy with the results; You don't make much, but you can still lose a lot. So....

I'm all in again. Check out the worksheet page on joefacer.com. I'm back up over the B/P Fund for the year. I've crossed over the 50% gains mark since the new funds became available for the first time. I'm hoping to see up 100% over the Balanced Pooled fund again. I'm still long the ROW (Rest Of the World) play. The great overseas earnings are what's keeping the US market strong. There's serious growth in housing ,cars, energy, tech, commodities and consumer goods. Just not here. But ya can't have Americans selling over there and not do some good right here. So I'm in domestic stuff too. A lot of the time the hardest play to make is the best one. and having it all hangin'out is hard... It's all about the future, only some of it is about the here and now. It's also all about the different little cycles that are ongoing and the big ones too. So I'm long on fear and trepidation 'cuz ya gotta make the money when the cycles are working, when you can, not when you would be more comfortable or when you have to. I'm just bearly a reluctant bull, and that makes me squirrely. I keep selling outa well-founded fear and that costs me money each time I do it. But I'm limber and practiced at selling 'cuz one of these times, it'll be the right move...

If you're smart and lucky and hard working, the markets can treat your 401a well. If you are not, you depend on the Trustees to do the right thing. Everyone has his own place somewhere between total self reliance and letting others do the job for them. I''ve found my comfort spot in that regard. Ya only get one chance to make it right. Time is NOT very respectful of regrets. It hasn't run backwards yet and it won't if ya run short during your retirement.

Speaking of regrets, Supposedly one of the trustee's was stuck on McMorgan because the costs were low. I think I've identified somewhere around $100,000 a year in fees for which the participants in the plan receive nothing, according to the last Trustee's report I saw. That's worthy of some homework since it appears that this amount doubles as of 4/30/07. I'm going to be reviewing some Plan records soon and I'll let you know what I find...

"Stubbornness does have its helpful features. You always know what you're going to be thinking tomorrow."

-- Glen Bearnan

Charts and tables up.

What do Modern Portfolio Theory, The Modern Jazz Quartet, and Joe Facer have in common? If you've got that answer, you know why I'm approaching a 50% return over 3 years and why I expect there are going to be major changes occurring around and about the 401a and defined benefit pension plans. Stay tooned...

What I’m gonna be doing with my 401a on Tuesday, Wednesday, etc? Now for something completely different. I don’t know what is going to happen and I’m uneasy.

I’ve pontificated, elucidated, and articulated my concerns about the market and the economy for much of this year. See entrys below. I and some of the guys who are following along with me were in cash by March. It seemed to be the smart thing to do.

I tried to do the same thing in a couple of IRA’s and a trading account I have, but I pretty much failed. I expected the market to be a runaway steamroller and I had no desire to try to pick up pennies laying in front of it. I thought I was going to unwind all my leverage and option positions and go heavy to cash and defensive stocks. Instead, what I saw was an opportunity to pick up some serious cash while risking the steamroller. I saw some things I wanted to buy because they were going to go up. So I dialed back the wild eyed cowboy and dialed up the squint eyed card shark. I hit and ran, scalped, and I locked in profits with sales. I got to the other side of the street with a handfulla cash and totally unmashed. I’ve had a good three months and I’ve made my year. Being smart aggressive and lucky, (not necessarily in that order) in combination with the right circumstances makes you feel pretty good about yourself.

Of course as good as I looked in my trading account, I looked just as bad in the 401a. Being in cash caught me on the wrong side of the trade and cost me some money. But earnings season is over. First quarter profits were good for international corporations but forward guidance is lousy for domestic players, the wrong stocks are leading, the economy is slowing, we have a significant case of inflation that we can’t fix without throwing way too many people out of work, and the easy fix is nowhere in sight.

And regardless of how well I did playing in front of the steamroller, it shows more luck, pluck and determination than brains. And now it's raining on the steamroller, the street is slippery and too dark to see if there is money in the puddles on the ground or not....
I don't like the risk reward nearly as well.....

Anyway I got back into the market in the 401A as I started getting ahead in my other accounts and getting left behind by the B/P Fund. It was too late. I don’t have much to show for it other than a handfulla stocks and no catalyst for profits that I can see. And I don’t see the market letting me make it up here and now. Cash is starting to have a real strong attraction again. Makin’ money is fun. Losing money is a bummer. Making it and keeping it is the mostest fun. I'm still nearly fully invested and I'm definitely uncomfortable about it.

Whatever I do, you’ll read about it here…..


Hey!!! My depost into the 401a from last month is about 30 days late....Check your acct....

5/30/07

The market is whacko. I sold some more stuff in my personal accounts today on limit and market orders while I was at work. I left a lot of money on the table, and I STILL did really good. Caution, reasonableness, responsibility, and all things proper and decorious mean nothing in this market. Wanna be an investing hero? Buy everything you can, buy on dips, buy on spikes, sell to get the cash to buy more. The quote below lives taped facin me on my desk. It's from Jim "Reverend Shark" De Porre writing on Real Money...

If you trade stocks in the short term, one of things that you need to be very aware of is that sometimes the action that seems extremely stupid is the best way to make money.

If a lot of people with a lot of money are chasing grossly overvalued stocks, it can feel pretty dumb to throw caution to the wind and join the party.

There are reams of sophisticated fundamental analyses out there that purport to establish what a stock is worth. What you need to realize is that the correlation between a stock's 'value' and the price it is trading at is very loose in the short term.

In fact, there can be a complete disconnect between the two for very long periods of time.

If you are going to trade in the short term, you need to decide whether you are willing to do the dumb things that make money or are you going to stick to the "facts" and stand aside while the idiots run prices up and down.

It's all about sentiment, mood and psychology in the short term ,and it doesn't pay to think too hard about fundamentals if you are playing in the short term."

What's this got to do with investing in my 401a? Not much!! ya see...

"The idiots are running prices up and down."

And we who have 401a accounts ain't among 'em

We've got rules against rapid trading. We've got a small handful of investment choices that are a basket of someone else's ideas. And we aren't allowed to know what we are buying and selling and we've got to wait up to 24 hours after we make the decision to make the buy/sale. That's the way the game is structured, that how we play the game, those are the rules etc.

So be it. Ignore the talking heads. "Things are going down the toobs".... while the idices post record highs.

"Buyout fever is making investors in the right stocks rich!".... But we aren't and can't be there with them.

"It will all end and end badly".... It always does.

But it is wrong to have money at risk and not garner any reward.

It is wrong to miss out on gains and maxize losses by avoiding the market when it is going up and staying in it when it is going down. it's just lazy.

SO..... there's a lotta territory between the year when I made approximately 700 trades in my trading account and ran with the idiot's pushing prices up and down, and making one decision, one time, sticking with it for a lifetime, looking at the statements a coupla times a year and expecting to do really well.

What I've done is to find something that works for me somewhere in that territory. I stay within the rules and work them,trying to maximise return and minimize risk. I know the costs and keep a running tally of the benefits. Hopefully, everyone finds a way to deal with their 401 that works as well for them. See ya at the hall.

Charts and tables up.

Charts and table up. More to come.....

International diversification, which I recommend for the sheer thrill of losing money around the clock in all sorts of different countries for reasons you cannot articulate, inevitably involves currency risk.

Howard Simons

So's here's where I am and how I got here. As noted below, I'm aggressively set up in how I invest my 401a money. My pension is not what I think it should be, my IRA's got dinged in the dotcom meltdown, and I'm intent on doing something about it. So I'm using some readily available stock tools to chose what I feel are the best 401a funds and I'm concentrating my money there.

Risk and reward are the two faces of the same coin. My 401a results have been smokin' to date. That's the reward part. But what goes up like a rocket also comes down like a rocket. That's the risk part. So, as much as I want to be big time in up markets in the best performing funds, I also want to be out of the market when it goes down. So I have gone heavily to cash a handful of times over the last 2-1/2 years. Most of those times have been short term and of a secular bent; like times of political risk like elections and financial scandals, and times of greater risk of terrorist activities, etc. Some of those times, I went to cash because of junior cycles; the end of the holiday season, the end of a particularly good earning season, summer time, when I was looking for a hot market to consolidate etc. Lately I've been looking for a big cycle downturn; like the beginning of a recession or an overall downturn in the economy. Recoverys tend to average about three years in length and the current recovery is about four years old. The downturn looked to be here in February.
Greenspan launched the bubble of 2000 with too much money and he countered its' popping with even more money and way lower rates. This led to the inflation of the real estate bubble and drove the car manufacturers into a lather, making cars and houses cheap in terms of monthly payments. That came to an end last year and we are now seeing it unravel. That led to the subprime, Alt A, securitized mortgage bond bruhaha of Feb-March and major pain in Ford and GM. That combined with the end of the holiday season to start a whosh down in Feb. I got outa Dodge and outa harms way at the end of Feb. It turned out to be unnecessary and cost me some significant money. Check out the charts. Stocks went right back up like a rocket in the face of just horrible news and my 401a returns looked absolutely limp. Why? Well....
Part of it is too much money chasing return. Only heros and fools are putting money in real estate nowadays. But retirement investors amd big money investors have money that they have to do something with and are putting it somewhere and that appears to be in stocks. It's all about hedge funds, private equity and takeovers too. And the dollar has turned to mush over the last quarter. So away from cars and real estate, the economy is doing OK as there is a ton of momentum built in. When company's stocks go down they get bought out at a premium as buyout money litters the landscape, and big corporations who invested a pile of dollars in the world economy last year are getting paid back in cheaper(more) dollars on top of what they made. So corporate earnings, the kind that makes headlines, have been burning up the reports. AND the Republican administration is pumping up a war economy without taxing to pay for it. So I'm almost all the way back in the market as of a week or two ago and making money again.
But I've got no confidence that this can last. We're prolly gonna have a recession and it's prolly gonna be ugly. I just don't know when. As a worshipper at the Church of What's Happenin' Right Now This Very Second, I'm partyin' like it's 1999. But I've seen that movie and I didn't like the ending. So I'm next to the door and listenin' for sirens and footsteps. I thought I heard something in Feb. But I was wrong. I'm still listening....

Yeah? Well I came down w/ a bug early in the week and never got around to doin' the entry here that I wanted to, so I'm gonna do that this week. When ya control the site, do overs happen. So, it goes like this.....

International diversification, which I recommend for the sheer thrill of losing money around the clock in all sorts of different countries for reasons you cannot articulate, inevitably involves currency risk.

Howard Simons

Charts and tables up. More to come....

International diversification, which I recommend for the sheer thrill of losing money around the clock in all sorts of different countries for reasons you cannot articulate, inevitably involves currency risk.

Howard Simons

Charts and tables up. more to come....

Charts and tables up. more to come...

4/25/07

I'm back up to 90% stock/10% cash as of the end of today.

The market keeps teaching a lesson that many market participants don't want to learn. That lesson is that it is not going to go down until it is good and ready to.

It obviously doesn't care too much about the fuss over housing, slowing retail sales, persistent inflation, a weak dollar and cooling economic growth. The market is focused on generally good earnings reports, and it doesn't much matter if you think that is reasonable or not.

The market is so frustrating and so potentially lucrative mainly because it is not easy to understand. I can seldom remember a time when there have been more bears scratching their heads over the persistent strength than we have now. Despite downright compelling logic, we just keep on working higher.

Of course, in the perverse manner that the market works, the fact that so many doubt that we can keep going is probably keeping things going as it ensures a healthy supply of cash on the sidelines to serve as support.

Reverend Shark from Real Money

There's money being made and not by me. That's enough of that! Deal me in... But I might still be late to the party. So I'll hang out by the door and I'll be especially ready to bail out on a moments notice...

Check it out...Clickonnit!

I'm not doing very well so far this year for all my efforts.
So it goes.
There's this housing bubble that's just starting to unwind in some US real estate markets, and there's big time deficit spending by a Republican president that's lookin' like it has the possibility to crater the economy. A lot of the world's manufacturing has long since gone to China and as our economy slows, raw material prices rise because we no longer are the main driver of the world economy. Hell, US housing is feeling the pain and copper prices are up. China's on the come and India has just put it's head down. Yeah, i know, mixed metaphors, and it used to be when the good ol' US of A sneezed, the rest of the world caught a cold. Now when we sneeze, everyone else partys on... Basic materials and energy now have a life without US. Besides, oil is up and the established political and economic order in the US is going to hell big time because we are bogged down in a land war in Southeast Asia and and... Oops! FLASHBACK!!! FLASHBACK!!! Too many drugs for too many years!! Or just maybe it's not a flashback. Maybe it's just this generation's version of living with a stonewalled and holed up Nixon Administration goin' down in flames... I meant to say " the established political and economic order in the US is going to hell big time because we are bogged down in a land war in the Mideast."
Anyway, The price of leaving the party too soon is to be stuck outside watching everyone else party on. My portfolio performance is pretty limp as of April and I got my nose pressed to the window watchin' everyone else party on.... The possible upside of sobering up on the lawn is being able to walk home on your own a little later while everyone else goes to the slammer on their way home... If bad things happen, I'll be able to get back in to the market at much lower prices. There's an election coming and there may be one more pop before we work this out. Or not. I'm pretty much in a holding mode while I wait for clarity. I'm no longer 100% up over the Balanced Pooled Fund and my advantage is bleeding away. But I can live with that because I'm long in the tooth enough to have sat through the earlier version of this movie before and it didn't end well.... The future will tip its hand in the next few weeks. Stay tooned.....

Charts and tables up. Taxes done. So here's what I see....

As per the COFG ESSAYS elsewhere on my site, there was this dotcom bubble and the ensuing dotcom blow up. I was on the periphery of all that. I was working in the southbay and I worked OT hours out the wazoo with a thousand others at wafer fabs, chip tool makers, and server farms. Server farms being built in one of the highest priced real estate areas in the USA and the one area with the most expensive and unreliable electric power systems??!!!? Castles built on sand, ya know... My middle son was a dotcommie at a startup and worked side by side with future dotcom millionaires. It was an amazing once in a lifetime time event.

It was unsustainable and the whole thing crashed. We had the dotcom depression in the Bay Area. The first guys in and out made it away with millions or jail sentences. I met a friend of my son's who looked like a barefoot hippie less the flowers and long hair. He was a millionaire at 26. My son was 9 months late to the party and ended up just an ordinary working guy and the company he worked for melted down. The stock market bottomed in 2003 and there was blood in the streets (Wall Street) and everybody figured ya couldn't even sell the country to the Japanese since they'd crashed the previous decade and it didn't look like they'd ever come back. The Japanese took rates to below zero and they couldn't get anything going even after a decade of that. It was a commonplace worry that the USA was going to that particular hell too. The Fed panicked and drove interest rates down to one percent and started to inflate the national real estate bubble in place of the local internet bubble. In other words, the Fed spiked the punch bowl.

So we had us a real estate party. In 2005 the house next door sold for 80% more than we'd paid for ours five years earlier and 30% more than a nearly identical hose on the next block went for the same week. That was fun bubble time too.

That was about when we had the first fight at the Real Estate party and the first throwing up passed out guest on the couch. Things started to go south early/mid last year, but ya party on cuz it feels so good. Ya gotta job, ya can get a loan, ya can buy a house or three. If ya can't get a loan, ya get a liar's loan. or, someone get's you a loan. Or the builder loans you the money. Over the last 6 months, it's become apparent that we've been listening to sirens and not the band and that ain't more party goers knockin', "Tha's the COPS (hic)!!!!!

So the subprime and alternate A market are throwing off bankruptcies. A sizable portion of the economy (housing) is beset with 8 months of inventory and worst case, we could see three to four times the yearly sustainable demand in housing up for sale at the same time. And there is the matter of an estimated $565 billion of development loans outstanding between the developers and the banks. This could get real bad. At the least, we have a year or two of declining earnings growth in much of the economy and that probably will lead to a lot of future value priced into stocks coming out of the price. Or we could have a bank crisis like the Savings and Loan crisis of the 90's.

The question is, given that the US no longer drives the world economy like it used to because it ain't the same world, has the game changed enough to pull us through this rough spot with just a little turbulence? I dunno.

But I don't trust that forward guidance will be good enough for the companies about to report. So I'm in mostly cash instead of exposed to domestic stocks, until I get clarity. And I'm moderately exposed to foreign equities because there are a lot of people in a lot of places who are hankering for the middle class dream and a lot of already rich and powerful guys are going to get a lot more rich and powerful helping them get there.

Of course, I could be wrong. If so, I'll see that it's not working and change directions before too much damage is done. Or maybe it's just my timing and I'll just need to pull in my horns for a while. Regardless, I gotta plan and the tools to get it realized as well as the ability to turn on a dime if that's the smart move. So for now, i'm waiting and seeing...

"Life is tough, but it's tougher when you're stupid."

-- John Wayne

Charts and tables up. I've been almost exclusively long from 9/04 to 2/07 and I'm up 40% to show for it. Now I'm at 70% cash down from 90% cash to 60%cash back to 70% cash all as of last week. And it's all because I'm concerned about the future...

It's time to think and write about creating a framework of expectations for the near and far future. With the expectations set down on paper, a plan as to what to do will pretty much follow. Then I gotta see what's achually gonna be comin' down. That'll measure how well my expectations are bein' met. And that will be the key as to figgarin'out whether or not executing my plan will cross that fine line between brilliant and stoopid. Stay tooned. Doin' my taxes take priority...

Charts and tables up.

At the end of last week I went from 90% cash to 60% cash. The rapid trading rules locked me out of my preferred funds for another week. But there still was a way for me to get back in the market with effective exposure to the current upside movement.
Here's how it's done....(CLICK IT)

Note that Europacific and LA research have been smokin' hot. I've been big but not exclusive there. Risk and all that. American Growth has been hot but has not been stellar lately. So I've lightened up there recently. Vanguard has lagged overall but has heated up recently. I've not been there because there have been better places to be. So both funds were available for me to invest in when we got the Fed induced updraft last week. So I put 1/3 of my cash into the those funds.

Check out what's been happening this year...(CLICK IT)

We had a whoosh down the last week of February. Was it going to be as big as last year's whoosh? We don't know that yet. Soo... I prepared for the possibility. I went to cash with the ability to immediately get back into the market if it was a false alarm. I'm equivocal about what kind of alarrm it was so I'm 1/3rd back in. Iran, housing, interest rates, credit, White House under siege, etc on the downside. World growth being a runaway locomotive, new technologies, new data distribution paradigms on an industrial and investment level, revolutionary changes in media and politics, on the upside. Whatcha gonna do?
Stay tooned....

"The master in the art of living makes little distinction between his work and his play, his labor and his leisure, his mind and his body, his information and his recreation, his love and his religion. He hardly knows which is which. He simply pursues his vision of excellence at whatever he does, leaving others to decide whether he is working or playing. To him he's always doing both."
James A. Michener


Charts and tables ready.

But this time it's the 3rd party website creation/editor service that I'm usin' with my host site that's down. Bummer, dude, I mean it's all negative downer kinda stuff an' all that an' it's hangin me up...

Chartz and tablez up.
More to come....