Friday, January 2, 2009

Morning Update/ Media and Buffett Rant - 1/2/2009

Good Morning,

Futures for the first trading day of 2009 are about even. That’s actually up quite a bit from where the market left the lockup at the end of the last session.

After mulling over the charts for the past couple days, it does appear to me that we’re getting ready for another move higher in the near future that would be wave ‘c’ up of wave ‘B’, with the same targets discussed many times now – about 1,000+ on the S&P.

In the very short term, the 60 and 20 minute stochastic are overbought and the percent of stocks over their 5 day average is above 90%, so I would expect some pullback in here. Of course I said the same thing for the last session and it managed to hang on until the very end. Those oscillators can remain overbought just as they can remain oversold.

So, I turn on my computer and begin to quickly check the news wires and this is the type of DRIVEL I see:
2009: Nowhere to go but up

NEW YORK (CNNMoney.com) -- As stocks put their worst year ever behind them, 2009 will be the start of a very slow and very painful recovery.

Nowhere to go but up? This type of crap pisses me off, and it’s exactly why I’m writing my “cut the crap” article series. As far as I’m concerned CNN has no business even reporting on the business. This is the exact type of thing that confuses the public and herds them into thinking that markets only go up. We have an entire Baby Boom generation who has bought into this and their retirements are in the process of being destroyed. Those who do not exit here WILL NOT GET THE OPPORTUNITY AGAIN IN THEIR LIFETIMES TO RECOVER. If the Elliott Wave experts are right, and I think they are, and this is a grand supercycle correction, the market will be wiping the slate clean of this type of drivel soon. Remember, it was 1955 before market prices returned to the same level they were at in 1929, and this correction is likely on a higher level than that time frame. If you are a long term investor, missing market crashes is a MUST.

And when it comes to real estate? NO WAY will prices return to previous bubble levels for YEARS.

Just from a demographic perspective, the number of peak earners following the Boomer generation will be way reduced for quite some time, the next growth segment won’t be reaching their peak earnings years until the year 2022. If you are a baby boomer and have to wait until then for sustainable growth to resume, you have no chance of recovering losses greater than 50% in your lifetime.

Real estate and stocks are NOT on sale YET. They will be, but not until the massive debts and derivatives are cleared. Not moved, cleared.

Then I go over to Bloomberg and I think I see what appears to be some common sense:
Berkshire Has ‘Nowhere to Hide’ in Worst Drop in Three Decades

Jan. 2 (Bloomberg) -- Billionaire Warren Buffett’s Berkshire Hathaway Inc. slumped 32 percent last year, the worst performance in more than three decades, as the U.S. recession forced down the value of the firm’s equity holdings and derivative bets.

No where to hide is exactly correct in this situation. Buffett, who has slammed derivatives as being “weapons of mass destruction” placed large derivative bets that the market would not go down and stay down. He was wrong and will continue to be wrong because his adult lifespan was lived almost entirely during the greatest growth phase and credit bubble in the history of mankind. While he did see trouble brewing, he did not recognize the size, scope, and duration of the troubles. There are people who did, he was not one of them.

So, I thought the article was making sense and then we get to hear some complete BS come out of Warren’s mouth. Sorry to be disrespectful, but here’s a guy whose fortunes are tied to pumping up the market. He has recently placed large bets on Goldman Sachs and other institutions that are in real trouble and he is a SALESMAN trying to convince you and everyone else that everything is okay and that you should buy what he’s buying. And he has been trying to convince the government to come in and use your money to bail out the very institutions who he just recently placed large “investments” in. Who benefits from that? This type of pumping is the very definition of “pigman.”
…The stock plunge “doesn’t make any difference,” Buffett told Fox Business Network Nov. 21.
“It’s happened to me three other times,” Buffett said. “It happened when it went from 90 to 40 back in 1974, and it happened in 1987. It went down 50 percent in 1998-to-2000. I mean, I hope I live long enough so it happens a couple more times.”

I note that this timeframe will be NOTHING like those Buffet just mentioned. If you are age 50 or over and follow a “Buffett” buy and hold strategy, I’m going to flat out tell you that you will not recover before you retire, and if you then follow conventional financial advice and get very conservative as you age, you will likely never recover, certainly not to the levels that most financial planners who count on never ending 6 or 8 percent growth will have you believe. It’s not going to happen. Sorry, that’s just the reality and you can thank years of mismanagement on all levels for it.

How could Buffett redeem himself in my eyes? He should be leading the call to reform entitlement programs; he should be leading the call for true financial transparency; he should be leading the charge to create a smaller military and government; he should be leading the call for all Americans to live within their means; he should be leading the call for real, not corporate sponsored, education about money; he should be leading the call for separation of corporation and state; and he should be leading the call to reform our current debt money system.

Is that too much to ask? If he won’t stand up for what’s right, I will, somebody has to. Where are the other adults?

Nate