Current Thoughts

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20100207 TD Ameritrade Institutional tells me their 2009 tax info will be mailed and available online by 15 Feb, and apologizes for any inconvenience.

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20100204 When the Dow first crossed 10,000 eleven years ago, floor traders wore hats. Here is this year's style. Our large cash positions continue to work well during this move down.

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20100129 Here is a chart of Friday's intraday price movement of the S&P, the US dollar inverted to track correlation, bonds and volatility index. When you click to enlarge it, you will see they moved in lockstep, almost tick for tick. This high degree of correlation means program trading is responsible, and large hedge funds and prop desks are unwinding positions. In other words, elephant tracks in the money jungle. Our response: stay in US dollar cash as long as it continues up and avoid most stocks.

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20100128 Cash is king. Our accounts are out of most stocks, out platinum and palladium until they start behaving themselves -- that is until they resume an uptrend. The new money in these metal ETFs was overwhelmed by the tsunami of selling in all metals, from gold, silver, iron, steel, nickel, to the companies which produce them and supply them equipment. Once again, contrary to many predictions, in the short term the US dollar is the place to be for the moment.

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Last month I put Paul Volcker's picture and article on the old web site, because his solution for financial revamp made sense. Now he has convinced our president, and we have the Volcker Rule: disallowing speculation with taxpayer-guaranteed money. Seems reasonable. So what is our investment response? Buy smaller regional banks, treading carefully as many have already moved. We initiated a small position in Zions Bancorp, a 513-branch regional based in Utah, founded in 1873.

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The world's biggest bond manager rants at length about great literature, the price of politicians, and a Robert Palmer song, but but finally casts a pearl:   He's sold US bonds and bought German bunds. Bill manages a part of our bond portfolio. Read more.

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Our thesis proceeds to unfold, but not without pullbacks.: Platinum and palladium up about +4% then retraced, and the ETFs increased from $10 million seed capital to $100+ million since our mention last week. This is similar to GLD launch a few years ago, a move up, a pullback then a long-term trend upward. One would want to manage risk and pick entry points carefully.

One of our approaches to investing: Identify trends early and participate. So, while this page may look like a coin collector's haven today, it's not. It is a new trend. When I heard of the pending approval of platinum and palladium ETFs, I immediately bought shares of North American Palladium, which proceeded up. The recent launch of platinum and palladium ETFs may cause the price of those two metals to soar, and possibly the price of gold to dip somewhat, as investors liquidate GLD, and participate in this trend. Read more.

Another strong trend may push the price of platinum higher: increased auto sales. Read more.

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Greece is weighed down by debt, and we are short National Bank of Greece, as their debt compounds and financing costs increase.

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Confused when the talking heads advocate "fighting inflation", and then others propose "fighting deflation"? Here's a breath of fresh air. For those who have been financially virtuous, who have saved and invested prudently, deflation is a good thing. After so many years of government-sponsored inflation, we needed deflation, or simply put, cheaper prices. To read an insightful article on the subject by a Senior Fellow on the Council on Foreign Relations, click here.   I first noticed this deflation trend in 2008. Read more.

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