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Albert Edwards On The Market: "I Do Not Really Have One Scintilla Of Doubt That This Will All End In Tears - Again"

Tyler Durden's picture


Sometime we wonder if we are the only ones who are stunned by the ridiculousness coming out of the stock market on what seems a daily basis. Luckily, there is at least one other person out there who, like us, take a bemused approach to the endless insanity. As Albert Edwards says in his latest note: "I’ve been doing this job long enough to recognise when the markets are entering a new phase of madness that leaves me scratching my head with  bemusement. The notion that we are in a sustainable economic recovery is as ludicrous as it was in 2005-2007. But investors are back on the dance floor, waltzing their way towards the next, inevitable implosion – yet another they will no doubt claim in retrospect was totally unpredictable!"

In that vein, it is not surprising that Edwards shares our disdain toward the Chairman:

Very little surprises me anymore in this business. But even I was surprised by Ben Bernanke's comment on CBS's "60 minutes" that he has "100% confidence" that he can act quickly to stop inflation getting out of control. Surely if there is one thing Ben Bernanke should be 100% confident about, it is his own fallibility. Remember this is the man who was not only adamant that US house prices would not decline, but refuted the very notion that there was even a house price bubble in the first place! I realise these guys have to pretend that they know what they are doing, but you would have thought that, having been at the epicentre of the biggest economic and financial crash since the 1930s, he would show a little humility and uncertainty. Apparently not.

But when the entire system, the whole global ponzi pyramid, knows it has no choice but to continue ploughing ahead, as otherwise the consequences would lead to the end of the financial system as we know it, what can one do but join the banks...

In July 2007, the then CEO of Citigroup, Chuck Prince, told the Financial Times that global liquidity was enormous and only a significant disruptive  event could create difficulty in the leveraged buyout market. "As long as the music is playing, you've got to get up and dance," he said. "We're still dancing?. This of course was a variant on the Japanese saying "When the fools are dancing, the greater fools are watching." Well, I suppose if  Bernanke is specifically targeting the equity market with QE, who but the most curmudgeonly bear would not be gyrating their hips in time to the music?

Unlike Ben Bernake, I like to retain some sense of humility. And it?s at times like these that I really start to think I haven?t got a clue what is going on anymore. It really is a mad, mad, mad world. Although on the sell-side I think I remain a lone voice of bearishness, there are other commentators who share my extreme scepticism of the current situation.

You are correct Albert, even though in this case you refer to another Zero Hedge long time favorite, Fred Hickey of the High-Tech Strategist.

In his last missive he makes the very simple point that we have seen the current pattern of behaviour before. We saw it in 2005-2007 and in 1999-2000. In both cases easy money conditions led to asset bubbles and reckless investor behaviour. Now we are seeing it again even more blatantly, egged on openly by the Fed. Without wanting to sound as over-confident as Ben Bernanke, I do not really have one scintilla of doubt that this will all end in tears ?- again.

What is the primary driver of Albert's scepticism? Deleveraging, deleveraging, deleveraging.

We keep making the point that while the private sector de-levers, continual growth disappointments are almost inevitable -? as seen in the wake of the 1991 recession (see chart below). History suggests growth jitters of this autumn will come back again and again.

Far more important is the correlation between bond yields and equity valuations, for the period that Edwards has coined the trademark phrase of "The Ice Age" (i.e., the time over the past 12 or so years in which equities have gone exactly nowhere even as cost of credit has plunged):

In the 1990s, we were still in the midst of a secular equity valuation bull market where equity and bond yields enjoyed a tight positive correlation. In a post-bubble, Ice Age world, lower bond yields go hand in hand with higher equity yields. So, in contrast with the early 1990s, we are locked in a secular bear market for equity valuations.

Edwards also has some amusing observations on the plight of a bears in an environment in which the market spends far more time going up than down... but when it does go down, the move is savage and instantaneous:

Having been underweight equities in our model portfolio now since the end of 1996, I am used to the derision that starts to be heaped upon my dogged views at these times. Since I turned structurally bearish, equities have spent far longer rising than they have falling. Bear markets tend to be quicker and more violent than bull phases so I tend to appear totally wrong most of the time. But let?s put the recent equity rally and bond sell-off into some sort of longer-term context. Can you see any break in the uptrend of government bonds? Not yet, I can?t.

Albert's target for the next equity "challenge point": 4.25% on the 10 Year, which is the upward bound on the historical 10Y channel.

Despite the savagery of the recent rise in yields, again let?s put this into some sort of longer-term, bull market context. Yields would have to rise above 4¼% before the bond bull market was to be seriously challenged. For the moment I remain a structural bond bull. I see yet another attempt from the authorities to levitate the equity markets to boost economic activity as I have always done; as an ultimately fruitless endeavour that merely produces bubble upon bubble and inevitably bust upon bust ? each one bigger and more dangerous than the last.

Since the 10 Year has moved by 100 bps in about a month, this means that should the move continue, we may get an advance look on what stock performance in 2011 will look like just around the corner...


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Thu, 12/16/2010 - 11:41 | 811460 Spitzer
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The real tears will be in the US debt market.

Its the only real bubble in the world right now.

Thu, 12/16/2010 - 11:50 | 811487 SheepDog-One
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Those damned bond traders....just like in Europe, the REAL trouble comes when bonds explode. Empty stock market indexes can be easily manipulated with banksters pets like Apple and NFLX, bond vigilantes are a far tougher bunch though. Let the 10 yr go over 4% and we are in a shitstorm. .5 from here.

Thu, 12/16/2010 - 11:57 | 811521 Spitzer
Spitzer's picture

Yes but the thing is, eventually higher interest rates create margin compression in stocks. Throw in inflation and that is when we will wee the $100 up days in gold.Just like the first depression, bonds and equities will crash and gold will get revalued.

Also, the first world war was known as the great war until world war 2. I suspect that the great depression will be known as world depression one after this is over.

Thu, 12/16/2010 - 12:28 | 811614 Don Birnam
Don Birnam's picture


Thu, 12/16/2010 - 12:54 | 811683 ATG
ATG's picture

Since I turned structurally bearish, equities have spent far longer rising than they have falling

True confession exactly right

SPX went from 666 to 1246 so far, targeting 1590, ouch

Remember, my son, that any man who is a bear on the future of this country will go broke


Thu, 12/16/2010 - 13:02 | 811707 tmosley
tmosley's picture

The rise in the SPX isn't even half the rise of gold, and less than 20% that of silver.

Who is it that is going broke now?  Certainly not this bear.

Thu, 12/16/2010 - 13:31 | 811774 Red Neck Repugnicant
Red Neck Repugnicant's picture


Yesterday, you told everyone that you had virtually no gold positions, and 95% of your money in silver.  

Four questions:

1.  Do you think it's fucking stupid to put 95% of your money into a single investment?

2.  Are you trying to tell everyone here that you put 95% of your money into silver before this parabolic run-up that occurred almost instantaneously? When you're staring into the rectum of a mouse (you do colorectal research on mice), what would have suddenly prompted you to put down the mice butt plugs and run to the silver dealer with 95% of your money?

3.  Why are you so obsessed with telling everyone a bunch of lies regarding your investments?  

4. You brag endlessly about becoming rich from investments that no one believes.  Is there a correlation between the inferiority complex one must have when they stare into the rectum of a mouse for several years, and your need to tell complete strangers how successful you are?  

I know that's several questions, but if you could choose just one or two it would be warmly appreciated. 

Thu, 12/16/2010 - 14:31 | 811922 Bring the Gold
Bring the Gold's picture


Am I to understand that you can't believe that anyone would have invested heavily in silver prior to 09/2010? Perhaps entranced paper bugs such as yourself consider it beyond the realm of possibility.

Some of us posted our trades on various websites (I did) LONG before the most recent run up in price. Those of us that did saw REAL returns. Paper bugs have seen nominal increases that have NOT kept up with tangible assets unless they were nimble enough to get in and out of Chinese Pump and Dump IPO's and the like.

Some of us are aware of monetary and world history and chuckle at American exceptionalism. All empires fall, and when they do many (such as yourself) are impoverished and a small few with vision, are able to catapult ahead of the herd (flock?) by understanding how to leverage systemic failure. I can point to my calls in advance of this run (Back to 2009 in fact when I started posting my calls on another forum).

I don't know about Tmosley, but I believe he has been a metal bug for quite some time if I recall correctly. Regardless, even if Tmosley himself didn't do as he has said, some of us did.


I look forward to seeing you in the title role of Zombie-land II: Fall of the American empire.


Thu, 12/16/2010 - 14:56 | 812013 Red Neck Repugnicant
Red Neck Repugnicant's picture

Am I to understand that you can't believe that anyone would have invested heavily in silver prior to 09/2010? Perhaps entranced paper bugs such as yourself consider it beyond the realm of possibility.

No.  That is NOT what I'm implying.  It is perfectly reasonable for an investor to have invested in gold/silver for many, many years. A diversified portfolio with gold and silver is normal.

It is NOT reasonable to believe that someone would have put 95% of their investments into a single position. And that claim is immeasurably more suspect after that investment suddenly goes parabolic.

In short, that's bullshit. It's like telling a bunch of strangers that you put 95% of your capital into Volkswagen stock right before the mother squeeze. 

I'm just trying to flush out the unabombers, GI Joes wannabes, Gunsmoke dreamers , pending millionaires and douche bags that slither through these pages. That's all.   

Thu, 12/16/2010 - 15:09 | 812054 Bring the Gold
Bring the Gold's picture

A reasonable reply. Sorry for my snarkiness at the end.

As it happens I've put the vast majority of my savings (approximately 80%) into physical gold and silver since 12/2007 as I saw the shitstorm coming. It's not a strategy I reccomend for others (it is not without risk obviously), but it has paid off very well indeed for me. I also bought when there was blood in the streets in 2008 and didn't sell my equities. I had zero doubt of PM's rebounding in a big way when I bought silver in 2008. What was hard was waiting 6 to 8 weeks for delivery as non-commercial sized silver was hard to come by in a timely fashion due to supply chain bottlenecks.

Thanks for your reply sorry for my snarkiness.



Thu, 12/16/2010 - 15:25 | 812112 chopper read
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diversification is a myth.  long PMs, short 30-year T-bonds.  some cash for both working capital and to continue averaging into the two easiest trades of a decade. 

anyone who is not long PMs and short 30-year T-bonds is a fool.  Yes, I'm referring to RNR, a worse trader than Glenn Beck.  our village idiot.

Thu, 12/16/2010 - 15:46 | 812179 Bring the Gold
Bring the Gold's picture

I'm mildly diversified in physical metals, small cash position, PM miners/explorers and various Rare Earth equities (just wait until January more fireworks coming especially for HREE heavy deposits).

I do question shorting treasuries. I agree of course that the 30 year will fall in value due to QE etc. The reason I question shorting it is you are paid back in depreciating currency and not in a leveraged fashion. If you are shorting it on a Canadian exchange and can be paid back in CAD it's a doubly great trade. Likewise, if you are using leveraged short that would work I suppose, but you also have decay then so you lose some there.

I just like PM related investments as a proxy to short T-bills and as being essentially denominated in the only currency (real money) that is appreciating against all others. I also will favor silver until the GSR contracts to around 25 or so to 1. I swapped gold at 66 to 1 and current GSR is in the high 40's. When it narrows more I might swap some silver for gold, we'll see.

Thu, 12/16/2010 - 16:22 | 812208 chopper read
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shorting 30-year Treasury Bond futures contracts offers the profitable leverage to offset the depreciating currency.  Its a case of a favorable return-on-margin-equity.  The mutiples far exceed the captial requirements, especially if the same money is being used to go long paper PMs as a compliment to physical.  In other words, leverage offered by the exchange is our friend when we are right (or until they raise margin requirements to 100%). 

I stalked this 30-year bond trade for months until I got the right position.  If The Fed is listening, my stop is slightly above the 2010 high.  good luck getting it there, especially since the black swan of 2008 eventually sent T-Bonds downward; I highly doubt there will be a 'flight to quality' into lending the U.S. government money for 30 years at 3%.  My point is, I'm short with leverage, its well in my favor, and I ain't getting out until 6am sometime 10 years from now or so.

As for trading back and forth between long gold vs. long silver, I'll leave it to you; although I do like your style.  It seems like a bit of sport for you more than anything else.  The transaction costs can, however, get pricey if you are doing this with physical (which is where I hope the bulk of your PMs are given the risk of currency collapse). 

Me?  I'll begin trading back to fiat when it appears The Fed is raising rates to a point higher than the rate of inflation (and, by doing so, protecting the brand-name of the fiat by making it more scarce).  ...I expect it will be a while, if ever.

Thu, 12/16/2010 - 16:52 | 812356 Bring the Gold
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Thanks for your knowledge. I'm probably in the bottom 1/3rd on this forum for Market experience/expertise. It helps keep me from insider group think, but I also don't know nearly as much as many on here.

I am mostly in physical PM's as far as my liquid assets go for fear of currency crash as you outlined. I also believe in the CB scam you outlined (enslavement via debt, push for world currency). Furthermore, my stock portfolio is primarily a retirment account I cannot break right now. It's primarily PM miners/royalty companies with a fair amount of Rare Earth equities that I plan on selling into the next leg up and then re-assessing. I also manage my mother's estate and have given her roughly a 50% return since June (my retirement account has doubled and then some this year).

I swapped physical gold for physical silver awhile back and even with the premiums I'm ahead 20 free pieces of silver on that trade. I didn't go big, because I wanted to test it and mostly my physical PM's are core holdings that I don't mess with much.

Thanks for your info. I don't know enough I guess about appropriate vehicles for shorting the T-bills and not risking the things I've said. I will stick with what I understand as that has given me excellent returns and I can sleep at night. The bond market (both sides) scares me to be honest.



Thu, 12/16/2010 - 17:15 | 812431 chopper read
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good stuff.  sounds like you're doing great.  stay vigilant.  take care.

Thu, 12/16/2010 - 17:23 | 812452 Red Neck Repugnicant
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especially since the black swan of 2008 eventually sent T-Bonds downward..

You're dumb.

The black swan event of 2008 sent bonds through the fucking roof, which was the exact opposite of what everyone was predicting, including Peter Schiff, Marc Faber and Jim Rogers - all of whom are respected around here.  Just take a look at the three year chart of the TLT, then tape your fucking mouth shut. 

After a little bouncing around, 20+ Treasury bonds returned to a range where they've been for 5 years.  

Basically, the EXACT opposite of what you stated happened.  

I highly doubt there will be a 'flight to quality' into lending the U.S. government money for 30 years at 3%.

If there is one bond theme over the past 3 years, it is that they have held up better than anyone ever predicted. If you can't comprehend the market movements of the past, there is no reason why anyone should lend any credibility to your future outlook.  

The TBT short has been discussed ad nauseam by everyone ever since the fall of 2008 - and everyone has been wrong. While it has reversed since August, there is no chance you timed that perfectly.  None.  Your rationale for shorting the 30-year was to provide profitable leverage to offset the depreciating currency [your words].  If you were looking to hedge that fear, your gold/silver positions would have taken care of it.  The only reason you're mentioning a TBT position is because you're just following current momentum, which anyone can do. 

Don't try to fool me.  

Thu, 12/16/2010 - 17:33 | 812496 chopper read
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ha, ha.  I do not own the TBT.  I'm short the Treasury Bond futures contract.  Its a huge winner.  It will continue to be.  With any luck it will retrace from here on a panic buy and I'll short more.  mate, I do this for a living.  I do not need to prove myself to you.  this is how I pay my bills.  Its been my job since 2003.  I've become a multi-millionaire in the process.  Whether you believe me or not is irrelevant. happy trading.  

Thu, 12/16/2010 - 17:36 | 812511 tmosley
tmosley's picture

RNR does not believe anything he reads on the internet unless believing it gives him the ability to form an insult against someone he doesn't like.

He ignores everything else.

Thu, 12/16/2010 - 17:53 | 812525 chopper read
chopper read's picture

agreed.  he's a hater.

also, i must add the correction: i mispoke about the 30-year bond; it did go 'through the roof' at the end of 2008 on DEFLATIONARY fears, and it came down aggressively in early 2009 with all of the rate cuts.  Importantly, stocks and bond where moving down together when 'diversification' was needed most.  Anyway, The Bernanke has made it clear that he will print away any deflation over and over again, so the thesis still stands.  If i'm wrong, I'll get stopped out and look for another place to short.  no big deal.

Thu, 12/16/2010 - 18:27 | 812658 Red Neck Repugnicant
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also, i must add the correction: i mispoke about the 30-year bond; it did go 'through the roof' at the end of 2008 on DEFLATIONARY fears..

No. No. No. Fuck No. !!

You simply had no fucking idea what you were talking about, and now you're trying to back peddle with some lame synopsis of the 08/09 events, as if trying to show everyone that you know something about this subject.  

To say that bonds collapsed in 2008 is not some innocent misunderstanding.  It's solid, indisputable proof that you truly have no fucking clue what you're saying. 

The fact that you would tell everyone that you're a multi-millionaire from trading (see post above) is out-of-this-cosmos douche baggery.  Go to your wife's cabinet, steal her Summer's Eve and pour it over your head, FORTHWITH!  

Douche Bag!  Douche Bag!  Douche Bag!  

Thu, 12/16/2010 - 18:33 | 812675 tmosley
tmosley's picture

Yes, we know you are a douche bag.  You don't need to remind us.

Thu, 12/16/2010 - 20:47 | 812805 chopper read
chopper read's picture

ha, ha.  i don't need to be right.  i just need to make money.  i'm wrong all the time.  i take my loser and move on.  i'd rather be lucky than good.  i'm sure i make money all the time for the wrong reasons.  what's the difference if its going my way?  

for example, it is my understanding that sometime in the next 6 months the supplies of natural gas will be tightening.  I also understand that The Fed is printing money.  As a result, I am constantly trial-and-error'ing into long natural gas positions.  at some point, it will move in my favor.  As the fundamental news begins to confirm my thesis, then i'll twist the knife and average in further.  Of course, having seen a million chart patterns, I have points on the chart where i feel others may follow me into the trade.  Importantly, these are typically before highs and lows so that i can ignore the noise that surrounds them.

I say this because this is exactly how i got into my long precious metals positions.  now that we are around our highs I can watch idiots like you go back and forth about whether or not you should be in or out.

by the way, futures contracts DO offer leverage.  Importantly, the SAME MONEY can be used with a long position in precious metals futures AND a short position in Treasury Bond futures.  The exchange gives the leverage and simply requires margin equity via a Futures Clearing Merchant.  Nobody "invests" in a futures contract in a way that the notional amount is tied up; we simply enter as a buyer or seller in an agreement with a counterparty as it relates to the underlying asset.  For example, 15 contracts in gold futures gives me control of 1500 ounces of gold, but I do not have to bring in $2.1 mm.  I only have to have a good relationship with my FCM and keep a couple hundred grand for margin capital.  If it moves too far against me then I bring in more money.  If it goes my way then I'm laughing.  Additionally, I can use this SAME MONEY to be short Treasury Bond futures.  It is simply margin capital for the total net-net value of my combined positions.  

Your welcome for the education.  I may not know everything, but I do know how to trade.  its what i do!  :) 

you really are an asshole, RNR, and that is your punishment.  :)

Thu, 12/16/2010 - 20:53 | 812948 akak
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It's a shame that disingenuous idiot trolls such as RedNeckRepugnicant manage to taunt honest and intelligent posters such as yourself into having to take the time to respond to and rebut their nonsense and lies.

Thu, 12/16/2010 - 20:59 | 812967 chopper read
chopper read's picture

i actually respond for the benefit of everyone else here so that we can all learn together.  Helping bring RNR up-to-speed is just an unintended consequence in my efforts to make a contribution back to the ZH community.   

i get a lot out of reading these message boards.

Thu, 12/16/2010 - 17:49 | 812558 Calmyourself
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 Exactly, if he cannot be incredibly smug and insulting he soon todders off to continue looking for Bammys college transcripts.  All this while loudly berating anyone who has more than three cans of tuna and half a loaf of moldy bread in the house as goldamn survivalist wackos.. ha..

Thu, 12/16/2010 - 16:37 | 812326 IQ 145
IQ 145's picture

 This is a very interesting theme; diversification. I once owned a small book, a paper-back actually, called trading secrets of the Swiss Gnomes. It was organized into chapters that each treated one of the important concepts of trading; and one of them was; "put all your eggs in one basket, and then watch that basket carefully". This can be arrived at from logical analysis; there is always one best investment, everything not in the one best investment costs you lost profit. As far as I know diversfication was invented by the american retail brokerage industry in order to churn customer accounts. Now, of course, it's "settled science"; like global warming; in other words, the propaganda worked. Thinking carefully and slowly about the basic issues usually gives a better result than adopting the memes of the mass culture.

Thu, 12/16/2010 - 16:54 | 812364 Bring the Gold
Bring the Gold's picture

I will look into that book. I was able to figure out that diversification (beyond a certain point) will not make you any money. I'm more in PM's then anything else and may increase my position depending on how things look for my other main sector (REE's) after what I expect to be an explosive January month due to Chinese export quotas/taxes.

Thu, 12/16/2010 - 17:49 | 812562 chopper read
chopper read's picture

rule #1:  know exactly where your stop loss is BEFORE applying the trade.  Then be true to yourself by honoring the stop.

...if you take too many losers in a row then lower the amount you place at risk until the money does not matter.  when you experience some consistency again, then dial it up with profits. 

some PhDs cannot figure that one out. 

Thu, 12/16/2010 - 15:36 | 812155 Spitzer
Spitzer's picture



listen to this guy. I have been in more then 100% for 3 years

Thu, 12/16/2010 - 16:46 | 812349 tmosley
tmosley's picture

Yeah right, just like every word that I said about my research was bullshit until I mentioned that we were getting some grant funding, then you suddenly believed everything I said because it meant you could label me as a hypocrite.

Don't you see what you are doing?  Everything you believe is 100% flexible based on personal vendetta.

You serve no purpose here, and your mind is closed to anything that you don't already "know".  Why don't you just get out?

Thu, 12/16/2010 - 15:34 | 812144 Spitzer
Spitzer's picture

hey dumb ass

I have more then 100% invested in basically one sector. I have borrowed money to invest and Im not talking about margin.

You don't get rich by diversifying

Thu, 12/16/2010 - 16:23 | 812283 chopper read
chopper read's picture

thats why RNR is a piker, Spitzer.  ...and he always will be.

Thu, 12/16/2010 - 16:42 | 812335 IQ 145
IQ 145's picture

 "You don't get rich by diversifying"; this is so true; reading biographies of the very successful investor / speculator demonstrates this; and yet it is almost never mentioned; I'm surprised to see it here, actually.

Thu, 12/16/2010 - 17:17 | 812438 chopper read
chopper read's picture

diversification is a sales pitch to America.  it works in a declining interest rate environment (the past 30 years) because everything rises together.  Now, its a knife fight and the wheels are coming of "modern portfolio theory" in an 'absolute return' environment. 

Thu, 12/16/2010 - 19:13 | 812741 delacroix
delacroix's picture

gold and silver, with a few guns, and a lot of food, is that diversification? oh and good friends. a little afraid, but i'm not worried.

Thu, 12/16/2010 - 17:02 | 812391 tmosley
tmosley's picture

No-one ever got rich by diversifying.  Buy the ticket, take the ride.  Diversity is for equities and bonds.  When you are holding metals, it is like holding an index fund, but without the fees.

I went all into metals shortly after QE1 started.  The fake money flowing into the market blew my shorts out of the water, and I took a huge loss.  Prior to QE1 I was 50% in PMs (I don't recall the ratio, but I think it was heavy silver), with the rest in mining stocks and financial shorts.  When QE was announced, and I saw the results, I pulled every penny from the market and went all in metals.  I went heavy silver after reading about the problems that are now coming to light, courtesy of Ted Butler. 

Why are you so obsessed with me?  Mancrush?  I tell people about my investments because my thesis has proven to be mostly correct, and I want good people to make a lot of money so we can free this country.  You, on the other hand, want everyone to be poor, apparently.  You hate people who want to make money, and label them as hypocrites even as you go out for $500 dinners in Las Vegas.

I don't brag about becoming rich.  I simply believe that silver is the trade of the millennium.  Honestly, I am glad you don't believe me.  I want you to lose all purchasing power, because you are a monster.  You should join the ranks of the poverty stricken where you will do the least damage.  Further, you should know by now that I am a chemist, not an animal technician.  I've seen a lot of surgery, but I have never done any myself.

But seriously, why are you so obsessed with me?  I'm just a stupid redneck liar who makes toothpaste for a living.  Why waste your time?  Why don't you just get out, and go someplace where your towering intellect and rapier wit are appreciated?  Why don't you just get out?  Just get out.  Go.  Leave.  It's not that hard.  I've left many forums when I felt I had outgrown them, or when they were invaded by idiots.  You can to, because I'm not leaving this one.

Thu, 12/16/2010 - 17:26 | 812463 chopper read
chopper read's picture

RNR does not own precious metals.  could you imagine?  Even worse, he says he will "buy gold when it gets down to $1000".  ha, ha.  could you imagine?  Its obviously tearing him up inside.  he's lashing out.  You've been long and strong PMs, so he targets you.  ...pathetic.

Thu, 12/16/2010 - 17:38 | 812516 tmosley
tmosley's picture

Apparently Tyler likes the lashing going on here, as he re-stickied the post.


Thu, 12/16/2010 - 13:34 | 811728 SheepDog-One
SheepDog-One's picture

Price SPX rise in gold, its a loss. Gold YTD up 23%, silver up 65%, SPX up 11%, ouch.

Thu, 12/16/2010 - 13:36 | 811786 Strider52
Strider52's picture

I used to be a goldbug. Now I'm a goldsilverbug.

Thu, 12/16/2010 - 16:23 | 812284 chopper read
chopper read's picture

i agree with this level of diversification. :)

Thu, 12/16/2010 - 16:43 | 812340 IQ 145
IQ 145's picture

 Yes. that's about as diversified as I want to be; in the presnt "state of play".

Thu, 12/16/2010 - 18:23 | 812654 High Plains Drifter
High Plains Drifter's picture

I have been a silver/gold bug since 2004. It is a easy thing to do. How many times has Tyler posted the gross profit margins on PM investments on this blog?  Still they laugh and call me a fool. Oh come on plains. This old world will just keep on going. Nothing is ever going to change. The government is not trying to hurt anyone. Come on plains , quit being so negative. I for one have absolutely no faith in the system. It is perpetual war, and that is the only way this system can sustain itself.  With perpetual war, comes chaos and finally financial ruin.

Thu, 12/16/2010 - 14:50 | 812015 Bring the Gold
Bring the Gold's picture

Exactly. REAL returns on the vast majority of equities have been negative when priced in a stable money (eg gold). The leverage one gets from PM stocks against the underlying PM is where you can find real returns. Or you can just enjoy accumulating vastly underpriced physical metal to eliminate counterparty risk. Either one is enjoyable, and profitable. I also like other commodity equities as well. There are some stocks outside of that area that will do well, but they are few and far between by comparison.

Fri, 12/17/2010 - 20:56 | 814484 angela5503
angela5503's picture

Sounds great.!!! In Dec. 2000 spx was at 1300, 10 years later it's at 1246. Now adjust that "return" for inflation. Early retirement here I come.!!!

Thu, 12/16/2010 - 18:19 | 812647 Lucius Corneliu...
Lucius Cornelius Sulla's picture

The real tears will be in the US debt market.

I think this will be true for junk bonds.  High quality debt will probably do okay.

Thu, 12/16/2010 - 11:44 | 811461 hedgeless_horseman
hedgeless_horseman's picture

(Nearly) free shipping just in time for the holidays!!!

BDIY -1.063% VALUE: 2,047.000 USD
Thu, 12/16/2010 - 11:43 | 811463 TexDenim
TexDenim's picture

I love this guy. Get some shorts before the end of the year! This won't be pretty.

Thu, 12/16/2010 - 11:47 | 811478 Max Hunter
Max Hunter's picture

Tic Toc...

Thu, 12/16/2010 - 11:56 | 811511 Ragnarok
Ragnarok's picture

I'd rather buy the Vix around 15.

Thu, 12/16/2010 - 13:15 | 811736 wiskeyrunner
wiskeyrunner's picture

Bear markets are usually start near the end of a presidents term.

Thu, 12/16/2010 - 14:33 | 811946 Larry Darrell
Larry Darrell's picture

Obama already noted himself that if some of these bills going through now don't pass his presidency is already over, so this time going the full term may not be necessary to continue your pattern.

Thu, 12/16/2010 - 11:44 | 811467 RobotTrader
RobotTrader's picture

XRT is still pinned near the highs. Down less than 50 cents from where I sold it last week. The XAU, well, that is another story.....LOL....

Thu, 12/16/2010 - 11:51 | 811490 Al Huxley
Al Huxley's picture

Because gold stocks are predictably volatile.  They've been doing this for going on 10 years now, but so many people (at least the ones I see posting, and the 'money managers'  I talk to) seem compelled to buy the spikes and sell the dips.  Easiest, safest money in the world right now is in the lesser known junior gold explorers and producers. That is, unless the US and Europe suddenly get their act together, reduce spending, reduce money printing, magically resolve all the bad debt, and create strong, production oriented economies again in the next few months. 

Thu, 12/16/2010 - 14:34 | 811951 Bring the Gold
Bring the Gold's picture

You right, in the world of gold/silver (and REE, IMO. Just wait until January) juniors and explorers its truly A Brave New World.

Thu, 12/16/2010 - 16:35 | 812319 Al Huxley
Al Huxley's picture

Agree with you on REE, but they're even more volatile than gold and silver stocks.  Kind of like the uranium sector as well, although again, more volatile than gold/silver.  Just takes discipline, though, and some chart reading skills.

Thu, 12/16/2010 - 12:01 | 811530 Spitzer
Spitzer's picture


have you even looked at the XAU ? It has been holding up fine on these gold down days for a while now.

You are probably just assuming that its way down.

dumb ass

Thu, 12/16/2010 - 12:57 | 811687 ATG
Thu, 12/16/2010 - 13:11 | 811729 SheepDog-One
SheepDog-One's picture

'Targets', blah blah.

Thu, 12/16/2010 - 19:03 | 812583 akak
akak's picture

RobotTrader posted:

XRT is still pinned near the highs. Down less than 50 cents from where I sold it last week. The XAU, well, that is another story.....LOL.... 

RobotSuckMyBalls, you are the epitome of the pathetic ADD-afflicted, short-sighted, short-term-obsessed modern American.  All your posts here are nothing more than meaningless, valueless regurgitations of market churn and cherry-picked data desperately trying to put bullish lipstick on a LONG-TERM pig.

Thu, 12/16/2010 - 11:46 | 811472 besodemuerte
besodemuerte's picture

Tears bitchez.

Thu, 12/16/2010 - 11:47 | 811475 RobotTrader
RobotTrader's picture

Looks like NUE and FDX totally shucked off the earnings warnings today. NEM and ABX, well, that's another story....

Thu, 12/16/2010 - 13:17 | 811740 tahoebumsmith
tahoebumsmith's picture

Just look at these 3 stories on Yahoo... All within 1 hour

Market Snapshot: Stocks waver as FedEx doesn’t deliver 11:02

Market Snapshot: Stocks lifted by data as FedEx doesn’t deliver 11:48

Wall Street gains ground as FedEx rises 11:51

They must have delivered alot of packages in that

What a joke...You are all just chasing a dream. Nothing but a bunch of junkies trying to get your next fix..Good luck when your dealer gets busted and you run out of dope.

Thu, 12/16/2010 - 15:40 | 812165 Spitzer
Spitzer's picture

that's hilarious, Tyler should feature this^

Thu, 12/16/2010 - 13:32 | 811744 tahoebumsmith
tahoebumsmith's picture

looks like the Fed X HFT fat finger had a really big package to deliver....


Thu, 12/16/2010 - 11:49 | 811480 RobotTrader
RobotTrader's picture

MUB looks like it bottomed. TLT and TIP re-testing the lows. Maybe tomorrow they reverse and go higher?

Thu, 12/16/2010 - 11:54 | 811495 SheepDog-One
SheepDog-One's picture

Hey Robo you should start up your own subscriber investor newsletter, you can call it 'Robo's Internal Random Mutterings about where Stocks Closed, Opened, and where they Might go Tomorrow'

Thu, 12/16/2010 - 12:22 | 811586 Raymond K. Hessel
Raymond K. Hessel's picture

"Buy The Dip" newsletter. Catchy...

Thu, 12/16/2010 - 18:44 | 812693 lead salad
lead salad's picture

Ha.  +1.

Thu, 12/16/2010 - 12:39 | 811642 BeeTee
BeeTee's picture

At least he has something to offer instead of your inane put downs.

My two-peneth, gold has decisively broken $1365 and will go on to test £1325 after this mild bounce.

This is bullish for PMs.

Thu, 12/16/2010 - 13:07 | 811717 fe09rt65
fe09rt65's picture

Pay attention to Robo's calls and note what he actually says. Whether you like it or not, he is usually correct.

Thu, 12/16/2010 - 14:37 | 811963 Bring the Gold
Bring the Gold's picture

I don't think it's Robo's calls that get him junked. Rather fascist bootlicking. I don't junk RT's calls (other then ultra bearish PM calls that I think are facetious), but I have read that RT receives auto-junks from some folks. I get a few of those myself. Goes with the territory of taking a stand.

Thu, 12/16/2010 - 18:11 | 812606 akak
akak's picture

Actually, as much as I despise RobotDickWeed's equities-permabullish flyby snark, he only exhibits a casual deference to our corrupt and kleptocratic overlords.  The REAL and far more insidious "fascist bootlicking" here, and much worse, the constant and insistent demand to join in said bootlicking, is the domain of Leo Kolivakis, an utterly cynical and reprehensible monster who I find to be the very personification of moral cowardice and surrender.

Thu, 12/16/2010 - 16:56 | 812372 IQ 145
IQ 145's picture

 Why do you say "he"; when she has a picture of a girl with a really pretty bra ?

Thu, 12/16/2010 - 19:12 | 812735 Bonesetter Brown
Bonesetter Brown's picture

You're new here, aren't you?

Thu, 12/16/2010 - 11:50 | 811485 Payne
Payne's picture

How big a storage space would be required to store all the silver shorted.  Does such a space exist in 1-10 places other than the earth itself.  How about for gold can all the gold even be stored that paper has been sold for.  

Thu, 12/16/2010 - 12:03 | 811533 FrankIvy
FrankIvy's picture

All the gold ever mined can easily fit in a space 100 foot an a side.  So a storage facility having a footprint of 100 foot by 200 foot by 50 foot could easily store all the gold out there.  Really just a big barn.

Figure out how much more paper there is than physical, then you get the size of the storage space.

Silver is a whole nother ball of precious metals.

Thu, 12/16/2010 - 12:31 | 811617 Arius
Arius's picture

yes, but they discovered $1 trillion in gold and silver reserves in Afganistan...remember that?  now, is another excuse...anything to keep sheeps in line...i suppose this part is easy - the difficult part is to sell tungsten to the chinese...

Thu, 12/16/2010 - 11:50 | 811486 Smokey1
Smokey1's picture

The US economy eats shit. The big banks eat shit. The government eats shit. Trouble looming. Game over USA, three to five years.

Thu, 12/16/2010 - 11:51 | 811488 UP4Liberty
UP4Liberty's picture

Beware the "suckers" rally...this is where the scumbags are gonna continue doing serious damage to investors...what a truly sad situation.  How can voters watch this and not rebel?

Thu, 12/16/2010 - 11:51 | 811494 TeMpTeK
TeMpTeK's picture

Buy those Silver dips....before the masses come charging in.

Thu, 12/16/2010 - 12:32 | 811623 Arius
Arius's picture

masses will never come...before the chinese empty the vault - thats the real deal

Thu, 12/16/2010 - 11:51 | 811496 RobotTrader
RobotTrader's picture

My VZ, KO, HD still pinned at the highs. No selling pressure whatsoever. I'm tempted to bail, but I have to stick with my winners and let them ride.

Thu, 12/16/2010 - 11:55 | 811507 SheepDog-One
SheepDog-One's picture

WOW thats great information Robo, THANKS!!

Thu, 12/16/2010 - 12:06 | 811539 hedgeless_horseman
hedgeless_horseman's picture

In similiar news, I had incredible sex with my wife this morning that lasted for 45 minutes, and I still made it on time to my high paying job, mostly due to my fast and expensive sports car.

Thu, 12/16/2010 - 12:49 | 811666 RichardENixon
RichardENixon's picture

Did you have time to stop a Starbucks for a $5 latte?

Thu, 12/16/2010 - 13:06 | 811714 hedgeless_horseman
hedgeless_horseman's picture

No tardiness pressure whatsoever. I'm sometimes tempted to bail, but I have to stick with my Venti Americano and enjoy the ride.

Thu, 12/16/2010 - 16:34 | 812316 merehuman
merehuman's picture

and i realize now i must be insane. Been doing a lot of giving and giving up things. I didnt have to and claim the spot of greatest fool as i am now really friggen poor in your terms. And i did it by choice, not need. I suspect i wont be truly satisfied till i am sleeping outside again.  Strangely enuf i am smiling.

i have preempted the government.  NSA  "FU" .    Lol 

Celente made comments about folks who have nothing left to lose. He was correct

Thu, 12/16/2010 - 18:01 | 812588 Calmyourself
Calmyourself's picture


Thu, 12/16/2010 - 12:05 | 811538 Spitzer
Spitzer's picture

Gold stocks today

ICI-up 6.8%

PEZ-up 5.6%

Kinross, the dog is down a whopping .59% wooow

Thu, 12/16/2010 - 12:59 | 811696 Al Huxley
Al Huxley's picture

MRZ (TSX-V) up 21%, 1.00 to $5.55 (CAD)

Thu, 12/16/2010 - 11:53 | 811499 UP4Liberty
UP4Liberty's picture

The ULTIMATE TOXIC ASSET - The United States.  Sheesh...I never thought we'd see this day coming so close...

Thu, 12/16/2010 - 11:53 | 811500 doomandbloom
doomandbloom's picture

i like that word...'scintilla'...sounds smaller than Higgs Boson ( god particle)

Thu, 12/16/2010 - 11:57 | 811514 downrodeo
downrodeo's picture

and twice as round!

Thu, 12/16/2010 - 17:56 | 812580 Calmyourself
Calmyourself's picture

Ha, any updates on the search for HB?  Billions spent, I want an originating particle.

Thu, 12/16/2010 - 11:53 | 811501 Spalding_Smailes
Spalding_Smailes's picture

Rocket Man ~


Timmay packed my pomo last night, pre-flight

Zero Hedge nine a.m.

And the market gonna be hiiigh as a kite by then

I miss the earth so much I miss timmay

Its lonely out in space

On such a timeless flight

And I think its gonna be a long long time

Till pomo brings me round again to reflate


Thu, 12/16/2010 - 13:05 | 811597 tickhound
tickhound's picture

Honkey Cat-

When I look back, the bubble market green,
tried to pan for gold while they're pissin' in my stream,
lookin for the answers, tryin' to make a dime,
but then I saw those wall street lights, honey they're all blind.

Get back, goldman sack,
gimme back my goods,
cuz we're, quittin' that phase,
and we have, red dow days and ah,
Oh oh oh oh, whoa change is gonna do us good.


Thu, 12/16/2010 - 13:28 | 811759 Spalding_Smailes
Spalding_Smailes's picture

Ben Bernack...."Bears are crazy"


This old trader and me were at the bar and we

Were havin' us some beers and swappin I dont cares

Talkin' industrials, financials and momo'

Old traders and new calls and leverage


We talked about Ben's pomo, and all the stocks that raised

Then I heard the ol' man say

Ben is great, pomo is good and bears are crazy


He said I fought 2 bull markets, been blowtorched out of my shorts

What brings you to finanancials ? I said, Im chasing returns

We talked an hour or two about every gold doomer we knew

What all we put'em through like two old traders will do ...


We pondered pomo or no-pomo, he put another $10,000 on AIG

He said this damn trade will make my year

But Ben is great, pomo is good bears are crazy ....


Billy Currington - People Are Crazy


Thu, 12/16/2010 - 14:27 | 811875 tickhound
tickhound's picture

Weezer - say it ain't so

Somebodys apple, is crowdin my icebox,
Somebodys pimpco, is givin me chills.
Guess ill just close my eyes.

Oh yeah, alright
Feels good, all hype.

Flip on the tele, listen to Benny
Insider trading, behind my back
The bubble is ready to blow...

Say it ain't so-oh-oh
Your dow- ow has funds to flow,
Say it ain't so-oh-oh
Your dow- ow needs your dough

I will just pay you
Since I can't even sue you
My taxes are long due,
So try and be cool, when I say...

This way.. is a waterslide away for me to chase returns ev-eryday- ay... so be cool. Ya

Say it ain't so-oh-oh
Timmay -ay wants your dough
Say it ain't so-oh-oh
We love the ben bernank show.

Dear barry, I write you,
although you love my silence.
You cleaned up, found jesus,
Or maybe allah I hear.
This pomo, sensation
Will bring us mass inflation
Like bush one, and bush two,
Our wealth is drowning in the flood-od, yeah-yeah, yeah-yeah

Thu, 12/16/2010 - 15:35 | 812149 zero-g
zero-g's picture


Thu, 12/16/2010 - 16:14 | 812252 spekulatn
spekulatn's picture

Well done tickhound.

Well done Spalding_Smailes.

Thu, 12/16/2010 - 11:56 | 811508 anony
anony's picture

The earth is--though slowly---decelerating rotating on its axis. One day it will just hurtle off into some other part of the Milky Way and then out into black space. THIS is an absolute certainty, presuming of course that some other errant asteroid of sufficient size doesn't knock it sideways first.

All we don't know is when.


Thu, 12/16/2010 - 12:31 | 811621 theopco
theopco's picture

No, no no.

I am 100% confident that the earth's orbit will decay and it will fall safely into the sun.

Thu, 12/16/2010 - 17:51 | 811825 Terminus C
Terminus C's picture

+ 2 × 1030 kilograms

Thu, 12/16/2010 - 19:02 | 812721 robobbob
robobbob's picture

is that before or after it goes red giant and incinerates the first three or four planets in the system, and then turns into a black cinder?

Thu, 12/16/2010 - 13:25 | 811761 chistletoe
chistletoe's picture



You are half right ... yes, the earth is decelerating on its axis.

Now go back to physics 101 and find out what happens ...

Thu, 12/16/2010 - 18:06 | 812601 almost_have_a_name
almost_have_a_name's picture

The atmosphere will boil off.

Thu, 12/16/2010 - 16:36 | 812324 merehuman
merehuman's picture

wrong. we all go into the black hole. cant escape the suction. Witness Bernanke try it tonite channel 7 at  8:00 pm central


Thu, 12/16/2010 - 11:57 | 811517 RobotTrader
RobotTrader's picture

All the IBD Top 100 names are pretty strong today.  PCLN, LULU, AMZN, etc. simply will not crack.

Thu, 12/16/2010 - 12:01 | 811525 SheepDog-One
SheepDog-One's picture

WOW thanks for that totaly random stock report Robo! Now back to traffic copter eye in the sky...

Thu, 12/16/2010 - 12:07 | 811548 goldmiddelfinger
goldmiddelfinger's picture

All the IBD top 100. All of 'em. Every single one.

Thu, 12/16/2010 - 12:13 | 811568 No Mas
No Mas's picture

You seem to have a tough time confronting reality.  Robo is telling you that the market is not falling apart, that's all.  My guess is he feels the need to comment to insert a degree of rational thought and reality into the constant drone of doomer gloomer sentiment.

You are one of the best of the ZH sheeple, sheep dog.  One may be correct that the markets will fail, I mean come on, don't they always?  But if you miss making a few hundred thousand while waiting for the crash then you have lost that few hundred thousand just as surely as if you were sitting long equities when the bottom falls out.

Robo, Harry and Leo are something you are not ZH Sheeple-Dog;

They are right.

Thu, 12/16/2010 - 12:46 | 811584 tmosley
tmosley's picture

"See everything's fine" he said, as his head slipped below the water, never to be seen again.

People don't seem to understand that all they are doing is looting the Titanic as it is breaking apart.

Leo has lost everything in his solars, and Robo and Harry have seen constant, steady losses in terms of precious metals.  They have NOT been right.  Sorry to burst your credibility bubble.

Edit:  A little data to back that up Gold YTD +23.8%, Silver YTD +69.2%, S&P YTD +11.3%.  Ouch.

Thu, 12/16/2010 - 12:25 | 811606 taraxias
taraxias's picture

You are correct, they are right........for all the wrong reasons. Which leads me to believe than when the moment of truth comes and the mad scramble for the exit begins, those three will still be buying the dip because they haven't a clue what's going on.

Thu, 12/16/2010 - 13:27 | 811765 SheepDog-One
SheepDog-One's picture

Theyll all buy da dip all the way back down! Trained monkeys without a clue. Although I dont for a minute even believe any of those guys actually own what they claim, just fantasy stock playing like fantasy football.

Thu, 12/16/2010 - 12:43 | 811654 SheepDog-One
SheepDog-One's picture

YEA No Mas thats the reason I and others come to Zerohedge, so we can get minute by minute stock reports from Robotrader and a few others about whats going on with the OTHER screen right beside this one streaming the market quotes! Really valuable needed info!
Robo, Harry, and Leo are 'right'? About WHAT? Leo right on his solars? Hey ask Robo for a quote on those haaaa ha ha haaaaa!!
BTW asshat, try to find a claim I made that was wrong! I dare ya!

Thu, 12/16/2010 - 12:54 | 811677 RichardENixon
RichardENixon's picture

The No Mas types were mocking me on various message boards in the fall of 2007 when the Dow was at 14,000 and I was saying I thought the wheels were about to fall off. I stopped listening to them as the Dow plummeted towards 6666. The Dow is still about 20 percent below its peak.

Thu, 12/16/2010 - 13:16 | 811738 SheepDog-One
SheepDog-One's picture

Yep the bulls with peacock tails are all back, strutting about. Even some bears have thrown in the towel and are spouting the line 'oh well if you cant beat em, join em'. The wheels are falling off again.

Thu, 12/16/2010 - 14:08 | 811863 oddjob
oddjob's picture

Robo is the biggest PM bull on here,just read between the lines.

Thu, 12/16/2010 - 19:38 | 812808 delacroix
delacroix's picture

yeah I coulda gotten in on those chinese solars, but I squandered my money on silver, who could have known?

Thu, 12/16/2010 - 18:53 | 812706 TheProphet
TheProphet's picture

Can we get traffic and weather together on the 7's?

Thu, 12/16/2010 - 12:16 | 811572 Hulk
Hulk's picture

Yes indeed, but can they overcome the IDB subscription cost ???

Thu, 12/16/2010 - 11:59 | 811519 SME MOFO
SME MOFO's picture

sorry bad post

Thu, 12/16/2010 - 11:58 | 811522 johny2
johny2's picture

The rising yields on the treasuries is like a light at the end of the tunnel. 

Thu, 12/16/2010 - 12:00 | 811529 SheepDog-One
SheepDog-One's picture

But bonds confuse Erin and Maria, also Miss Hobbs, they all prefer vacuous reporting with glee on green color in markets.

Thu, 12/16/2010 - 12:12 | 811561 johny2
johny2's picture

Yes, The rising yields must be a good sign. Not in case of Greece and Ireland, but they can not print the money, can they?

Thu, 12/16/2010 - 17:09 | 812409 IQ 145
IQ 145's picture

 Oh, you mean the one on the front of the on-coming train?

Thu, 12/16/2010 - 18:16 | 812631 johny2
johny2's picture

The Market apparently believes its the end of the tunnel.

Thu, 12/16/2010 - 12:03 | 811532 SME MOFO
SME MOFO's picture

I’ve been reading ZH since the old seeking alpha days and generally read every post and every comment, refreshing 30 to 50 times a day on the site.  I’ve written credit policy for one of the surviving TBTF banks and spent time as a derivatives pit trader in Chicago after I got out of graduate school.  

I lived through the Internet boom in the Bay Area and watched the parade of pretenders and idiots get rich from business plans written on bar napkins and 27 million dollar second rounds from sand hill road.  Nobody gave a fuck about doing anything useful but oh the money was good and every second pumkinhead a genius about the fruits of the future.  I shorted a hundred lot of yahoo one day and 2 years later I got a margin call for 250k while I was on vacation in Costa Rica.  They raised the margin requirements 2 weeks before the high and skeezed me to buy some back right before it crashed.

After the selection in 2000 I realized that I had no clue what was really happening, Black-Scholes tail risks, default probability assumptions for portfolio analysis and underwriting criteria, recovery rates, disposable income calculations, everything seemed so goddamn half-assed to be making billion dollar bets when the clearest assumption of the system (that the winner is the one who got the most votes) is violated without anyone noticing.  Everything seemed so clean and tidy in the air conditioned rooms where the quiet conversations were had over stacks of spreadsheets and powerpoint presentations that were packed with fairy tales as much as any mother goose compilation.  

In 2003 I bugged out.  I bought PMs and left the country decamping to SE asia.  Back then the dollar still had some juice thanks to the hangover from the crisis and the megacities were filled with half completed skeleton developments.  I was sick of the whole thing and trying to understand why everyone believed memes that had nothing to do with reality.  I started trading the most basic stuff, statues made from bronze (copper, tin, and zinc as inputs).  The price of the inputs doubled, doubled again, and then doubled one more time.  The market was shattered, foundries closed, craftsmen wandered off to work in a Toyota factory or stayed home drinking whisky while sending their daughters into the fifteen story sex factories to fund the family scooter payments.  We got out alive because we were looking for a dollar crash and had over-hedged the whole operation with a supersized Freeport position.  The real people were charred while we skated through it like waterbugs on a pond.

Home décor crashed in 2007 and we switched to trading jewelry and clothes.  All handmade from pure inputs of 99% silver, 96% gold and hand-woven cotton.  We printed millions of catalogs and sent them into the pool of dedicated shoppers in the good old us of a.  Over the last three years the prices of paper ink and shipping climbed a little bit each printing and the metals have undergone steady creep.  We printed the holiday catalog at some ridiculous rip on the paper, and as the season progressed our cost of goods has ramped over 50% as silver and cotton prices screamed higher.  Our suppliers are seeing orders dry up and getting crushed by the slippage between quote and production as inputs jump fast enough to gobble up any profit margin.  They are already starting to close.  We remain unaffected through hedging long term and the occasional twenty minute shank of two dollar rips in the silver future.  

We see real people, with real skills, who know how to make real stuff, shutting down and wandering away as every fucking transaction variable gets ripped apart by price volatility.

Currency games and inflation don’t lead to more goods being produced, it leads to less.  The Fed thinks monetary policy and currency devaluation can support an economy while all I see is closed workshops, busted trades, and rich motherfuckers who own supply monopolies of basic inputs slurping up more gravy then they will every need.  On January 1 we will raise the prices on all of our pure silver jewelry by 50% and then see how much demand is goosed upward by higher prices.  I’m sure half the staff will be let go by Feb 1.  

We will wander into doing something else without a mark on us; protected by clever hedges, a soft fluffy cushion of fortuitous derivative trades, and a huge pile of PM purchased years ago.  No adults are watching out for the system, there is no certainty, and it isn’t going anywhere good.  What a fucking waste of the opportunity offered by antibiotics, cheap energy, and instant communications.  Better luck next planet.

Thu, 12/16/2010 - 12:21 | 811582 slaughterer
slaughterer's picture

SME MOFO, thanks for this beautifully written guest post.  Margin squeeze is real, I concur.

Thu, 12/16/2010 - 12:26 | 811611 TradingJoe
TradingJoe's picture

LOL BUBBA! Its as if you took it right out of my head, clearly though, you are the better writer!

Thu, 12/16/2010 - 12:35 | 811628 Plainview
Plainview's picture

"Better luck next planet".


Ain't that the truth. Great post.

Thu, 12/16/2010 - 12:38 | 811643 Don Birnam
Don Birnam's picture

Fuit Ilium...

Bravo. An outstanding piece.

Thu, 12/16/2010 - 12:47 | 811661 Uncle Remus
Uncle Remus's picture

What a fucking waste of the opportunity offered by antibiotics, cheap energy, and instant communications.

This one-sentence missive, this glorious summary indictment on the post-WWII full-retard consumer frenzy in the El Dorado  of opportunity IS the crux of the biscuit.

Thu, 12/16/2010 - 12:52 | 811673 Atomizer
Atomizer's picture

Excellent write up.


Thu, 12/16/2010 - 12:52 | 811674 ZakuKommander
ZakuKommander's picture

Sic transit gloria mundi.

Nice post.

Thu, 12/16/2010 - 12:57 | 811688 karzai_luver
karzai_luver's picture

a human chimes in.


props to you sir!



Thu, 12/16/2010 - 13:16 | 811739 SME MOFO
SME MOFO's picture

Thanks for the kind comment guys, I just felt like posting it because its been a while since I spoke complicated english!

Thu, 12/16/2010 - 13:40 | 811795 Rusty Shorts
Rusty Shorts's picture

Thanks MOFO !! Great post.

Thu, 12/16/2010 - 13:48 | 811817 Red Neck Repugnicant
Red Neck Repugnicant's picture

Indeed, a fantastic post. 

Thu, 12/16/2010 - 15:42 | 812168 chopper read
chopper read's picture

that was pure gold.

Thu, 12/16/2010 - 19:20 | 812759 tip e. canoe
tip e. canoe's picture

thanks for practicing with us amigo.  sometimes it pays to be ahead of the curve, yes?  when the curve becomes lined with gold & silver but with no oil to lubricate it where does the curve turn?   this is where my mind wanders, curious to know your thoughts.

Thu, 12/16/2010 - 13:51 | 811823 downrodeo
downrodeo's picture

Excellent post.

Golf clap yo!


Thu, 12/16/2010 - 14:26 | 811909 Vergeltung
Vergeltung's picture

one of the best posts on ZH I have ever read. thank you.

Thu, 12/16/2010 - 18:09 | 812611 Calmyourself
Calmyourself's picture

Wow, nicely put..  The antibiotics and instant communications will stay with us, the cheap energy probably not for long.  I hope we can forge a new paradigm that serves as many as well as we have thus far sans the banker squid class..

Thu, 12/16/2010 - 19:13 | 812744 robobbob
robobbob's picture

due to massive misuse, over prescription, incomplete cycles, and even blatant greed, many of man's mortal microscopic enemies have become immune to antbiotics.

Thu, 12/16/2010 - 19:21 | 812763 Calmyourself
Calmyourself's picture

That is true of many of the most misused varieties, more are being developed, we will be okay in this arena.

Thu, 12/16/2010 - 19:36 | 812798 jackpile
jackpile's picture

Wow. I'm speechless. Incredible comment and depressingly true. Every semblance of goodness and normalcy is falling down around us. Fuck. Next planet--exactly. Or maybe 500 years.






Thu, 12/16/2010 - 12:05 | 811540 almost_have_a_name
almost_have_a_name's picture

Check out the photo of Bernanke Ben:

You can tell he was voted 'most likely to screw his fellow man'


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