Monday, August 8, 2011

An example of the ineptitude of the media...

Apparently, Mark DeCampbre went to school with Bernanke, Geithner and Obama...all of whom seem to be highly misinformed (to be optimistic) as to how the financial system operates.

As I indicated in prior posts, the short in energy is a big one and has not disappointed thus far...we may get a small technical bounce sometime soon, but there is MUCH lower to go here. So far, the Oil contract has been performing well - if you are short. Silver and Gold will have their commensurate collapses too rather more quickly than the guys at ZeroHedge seem to think. I am not short gold (though it is increasingly becoming a risk reward trade my systems are attracted to) - I am focusing on Silver and Energy...and the trades in the currencies which are still setting up.

As I indicated the S&P Downgrade was meaningless for the US. In fact, the downgrade works for the US in that everything else that is a higher risk than Treasuries becomes and even higher risk than it previously was - which will be a persistent driver of negative yield and performance of Treasuries as a whole. As I write this, the 30 Treasury sits at its all time highs...coincidence? No...its the way the credit money system works.

This guy Mark DeCampbre pontificates about all sorts of stuff that he has nothing but anecdotal evidence for and gets it all wrong...I think this is similar to the concept that the S&P actually downgraded the US without tacit involvement of the highest levels of our government. If you recall the recent negotiations between the large rating agencies and the ECB regarding the defaults in Europe, you will notice the the ratings agencies worked very closely in all day meetings to redefine their models and adjust the structures and capital reserve accounting for ECB bailout initiatives so that they would not trigger a default. The reality, is that the agencies do not want to lose their biggest clients - so they do what those clients want. S&P is not all of the sudden an altruist that has the sudden urge to be honest. This downgrade is part of an agenda to produce negative yield characteristics for US Treasuries and in my opinion was highly coordinated not to mention cronyist.

In any case, I saw another article by another overly educated nincompoop if you enjoy reading such things. I don't by the way, however, while on the plane and in transit in airports for 20 hours...I found myself paying attention in a sort of stunned silence. This professor has NO IDEA what he is talking about. I do believe that "panic", in this case, is a better course of action than complacency or extrapolating meaningless data forward...there is signficant potential for a quick collapse in the S&P to 1120ish and 1040 or so (especially if 1,120 does not hold. If Russell 2000 does not hold 635...then we have likely 50 more points lower to go) before a bounce and all hell breaking loose.

Here is the link to that rediculous article:

Mr. Malkiel, professor emeritus of economics at Princeton University, is the author of "A Random Walk Down Wall Street" (10th edition, W.W. Norton, 2011).

If ever there is a complete chalatan this guy is is clear and it is obvious that Random Walk theory has no place in investing. Markets are anything but fact they are highly predicable and cyclical and base little of their behavior on fundemantals or ramdomness.
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