"Be long. Be strong. And, be a champion..."

The interventionists have introduced about every solution they can possibly offer up to this point. The SEC still has this 'ace in the hole'....I put high odds that they will show their hand eventually, it's just a question of when. Maybe, they're looking to win timer digest's timer of the year award......i.e. a 'signal' to go all-in.

Seeking Alpha article

Mark to market makes zero sense for homeowners who are making mortgage payments on time and not even close to a default. It is absurd rationale at best and causing unnecessary stress on banks.

1. Bundled in securities with many other mortgages that going into default. 2. loan-to-value is well in excess of 100%. 40% of mortgages are at least 120%.

Edited by Data, 14 February 2009 - 10:47 PM.

okay, then all CC debt should be marked to zero. it has NO underlying collateral. the resale value of autos drops much fster than the amount owed, especially the first couple of years. so why not whack that way down, too. and how about large loans to build a new factory with specialized equipment: how much is that worth if put on the market for auction on day2? comments?

Edited by humble1, 15 February 2009 - 01:00 AM.

Mark to market makes zero sense for homeowners who are making mortgage payments on time and not even close
to a default. It is absurd rationale at best and causing unnecessary stress on banks.

MTM on home mortgages is the tiniest of issues. It's all those CDSs which have banks' balance sheets in dire straits.

Gummint wants to "get credit flowing freely" once again. The only way to do that is to put money into the hands of the same people who have been defaulting left and right. Banks are not going to go for that again.

If you are qualified, credit for home mortgages is already/still "flowing freely"...

Edited by HoseB, 15 February 2009 - 01:40 AM.

okay, then all CC debt should be marked to zero. it has NO underlying collateral. the resale value of autos drops much fster than the amount owed, especially the first couple of years. so why not whack that way down, too.

and how about large loans to build a new factory with specialized equipment: how much is that worth if put on the market for auction on day2?

comments?

humble..your points are right on but its ironic that i think it is the only thing that will save the mkt and cause it to go up as rediculous as it is..

IC: i will be shocked if it DOESN'T happen. it costs no money to change it; wall street loves the idea; the banks are howling for it; congress doesn't have to pass on it or even be consulted; it can be done by executive order with the stroke of a pen. so why the delay?: easy! the O folks wanted maximum pressure and focus on congress to get the s-package passed. these people know how to work the levers. tons of stuff can be done by executive decree. hell, we have been in a dictatorship since george washington refused to run for term3 and then the horrid john adams used his "alien and sedition" acts to put newspaper editors in jail.

IC:

i will be shocked if it DOESN'T happen. it costs no money to change it; wall street loves the idea; the banks are howling for it; congress doesn't have to pass on it or even be consulted; it can be done by executive order with the stroke of a pen.

so why the delay?: easy!

the O folks wanted maximum pressure and focus on congress to get the s-package passed. these people know how to work the levers. tons of stuff can be done by executive decree. hell, we have been in a dictatorship since george washington refused to run for term3 and then the horrid john adams used his "alien and sedition" acts to put newspaper editors in jail.

Humble1,


You are a contrarian that's for sure. With all the doom and gloom it seems the stage is being set for a Big Move again and Mark to Market could just start it. I'm not saying we can't go lower here, but any shorts from these levels are just hedges on my longs. (Limited moves in my 401k) If there is some surprise positive news - any rally does have the potential for a break-out. Will it - I'm not sure but I continue to watch the dollar and the pullback of U.S. Treasuries, which is a bigger market than the U.S. equity market. If trillions of dollars start leaving treasures where are they going to be invested?

How about all that cash in money-market funds earning negative returns. I'm not sure if my buy signal will go to a sell next week, but I'm buying indexes for some of my accounts if we head lower next week. Since the Bear started every time we have hit low 800's we have made it back to the 900's so I'll continue with that trade. When the trading range changes so will I. Holding some long positions and will add on weakness in some sectors. I will also hedge some if the market tells me to next week.

I'll be watching the 800 level close next week to put on a hedge. The crooks will not shake me out - S&P 1000 is coming, the question is from what level?


"When the situation changes, I change. What do you do?" --John Maynard Keynes
"There is only one side of the market and it is not the bull side or the bear side, but the right side." --Jesse Livermore


I will continue to play this trading range until it no longer works. Buy the low 800's - Sell the high 800's and occasionally short the low 900's based on signals from my system. This trading range will change, but for now I will continue this strategy. My biggest weakness is buying to soon, but the trading range has held up so I have gotten my money back. If and when we go lower the market will tell us the new trading range. Will it be 600 to 800 - maybe 750 to 950 - how about 800 - 1050... The market will tell us. For the record - I did not have big gains last year as many did here last year shorting the market - but I did have only small loses. Currently up YTD by around 3% - but I'm using 401k's with limited moves.

I currently hold some of the positions listed below.


Take Care and good trading next week!

Robo


Some Comments below from A true contrarian:


In order to buy low and sell high, first you have to buy low. Stock markets worldwide are giving you a prime opportunity to do precisely that right now. --Steven Jon Kaplan
BUY NOW, BEFORE YOUR FRIENDS AND FAMILY JUMP IN (January 19, 2009): The global equity markets have been forming an important bullish pattern of higher lows over the past two months, while indices of implied volatility including VXO and VIX have been forming a pattern of lower highs since they had surged to 21-year peaks in the fourth quarter of 2008. Whenever this has happened in the past, a powerful worldwide stock-market rally has always ensued.

Most analysts have remained relentless in their forecast of a "deflationary depression", which is completely at odds with the facts on the ground.

GDX, a fund of gold mining shares which is my largest holding (see "current asset allocation" below), has nearly doubled from its bottom of October 24, 2008. If we were really going to have deflation, then the sector which responds most strongly to inflationary fears would not have surged so sharply during the past three months.

Insider buying of commodity-related shares in the fourth quarter of 2008 was the most pronounced in many commodity-share subsectors since the early 1990s. If we were really going to have deflation, then top executives of commodity-producing companies would not have been so aggressively purchasing their own shares. Remember that these same executives were aggressively selling in the spring of 2008, when everyone wanted to buy them at all-time peaks.

Exactly 1-1/2 years ago, there was a nearly unanimous consensus that inflation would remain at multi-decade lows--and then we had the strongest inflationary surge in eighteen years. Exactly a half year ago, almost all analysts agreed that inflation would continue to be the world's biggest economic problem--and then we had the greatest year-over-year drop in inflation since 1931. Now deflation is all the rage--and will be proven just as wrong as the previous two consensus opinions on this topic. You can consistently conclude that inflation will do exactly the opposite of whatever is the current trendy outlook.

Even many bearish analysts agree that stock markets worldwide are undervalued, while bullish analysts are afraid to go on record as saying "buy now". They're going to turn bullish as soon as the market surges another 20% or so, which will encourage momentum players, hedge funds, chart slaves, and much of the public to start buying stocks again.

An all-time record amount of money is currently sitting in risk-free time deposits including U.S. Treasuries and money-market funds, while concerted central-bank rate cuts have caused these deposits to continue to lose money relative to inflation. People will not tolerate negative real returns indefinitely. They are just waiting for others to jump in before they do. Financial analysts don't mind being wrong--they could hardly have been more misguided than they were in 2008--as long as they're wrong along with the vast majority of their peers. Misery may not love company, but it helps to avoid lawsuits.

Fear of losing money will transform itself into fear of missing out on the rally that everyone else will be enjoying. Buy now, before hedge funds and the general public realize what is going on.


Bearish analysts are confident about the S&P 500 soon going below 750. Bullish analysts are desperately hoping against hope for 1000. With too many investors gloomy and equity fund flows having been net negative since early October, the markets will surge far above these overly pessimistic forecasts. The S&P 500 will likely regain the 1300 level in the second half of 2009 which it has not touched on an intraday basis since September 2, 2008.

Be bold, especially on any down day. Act early. Profit enormously.


CURRENT ASSET ALLOCATION (fully marked to market on January 19, 2009): My own personal funds are currently allocated as follows: LONG POSITIONS: Gold mining funds GDX, ASA, BGEIX, INIVX, 44.0%; Japanese smallcap funds DFJ, SCJ, JSC, JOF, SPJSX, 10.4%; Global equity fund VIDMX, 10.4%; Coal mining fund KOL, 7.0%; Energy closed-end fund PEO, 7.0%; General-equity closed-end funds ADX, CET, 5.2%; High-yield BB corporate bond fund VWEHX, 1.5%; Russian fund RSX, 0.5%; Natural-gas fund FCG, 0.5%; VINIX, 0.7%; VIEIX, 0.7%; TRBCX, 0.7%; VZ, 0.7%; MYJ, 1.5%; KRE, 0.5%; XRT, 0.3%; TRI, 1.8% (bought at a 15% discount); gold and silver coins and related metals collectibles, 4.7%; other collectibles, 0.4%; Vanguard Municipal Money Market Fund VMSXX, 0.9%; Putnam Stable Value Fund (retirement fund with stable principal paying variable interest), 0.6%; SHORT POSITIONS: None; covered ALL of them in October 2008 which had amounted to just over half of my entire net worth.

http://truecontrarian.com/

robo: that was a very informative post. thank you and best of luck to you, too.

robo: I vote your post as the most thought provoking post of the month. Best luck. p.s. I rarely worry about asset allocation any more. It is much easier to work the major cycles in market. Keep it Simple Stupid rules