Back in April, I wrote the following:

“Earnings are bad, inflation is bad, the credit crisis is bad…. But isn’t it always darkest before the dawn? Are stock market bottoms made when the news is the worst and things look bleakest? Yes and yes.
But how does one know when a bottom is in place? It’s very simple. The price action will tell you. Looking at long term charts of equities, such as the sp500, dow, etc, in my view the dominant trend remains down and rallies should continue to be sold and a long/short portfolio should be more heavily weighted toward the short side. Eventually things will change, probably at the end of 2008 or early 2009 and the dominant trend will turn bullish…. but for now short positions are in order until the fundamental context and price action prove otherwise.” http://exploitthemarket.com/bear-trend-for-equities-remains-dominant/

If I were to write that post again today (which I am), I would not change a thing. –John Bardacino

The EUR has been in a bull market since 2002 but the economic and political fundamentals of Europe are not looking too good these days…and there are some dark clouds on the horizon for this currency when you consider the broader global socioeconomic framework.

Of course, the EUR was a flawed currency from the start (as all fiat monetary systems are) but since its inception the benefits of globalization have masked many of these fundamental flaws. One of the biggest issues is, of course, the one that always causes problems Read the rest of this entry »

A new report from Moody’s Investors Service explains that the biggest systemic risk to the $62 trillion credit-derivatives market is not its size and complexity but the potential failure of a large securities firm or investment bank which is acting as a counterparty. A bank collapse could damage the operational integrity and pricing in the credit-default swap market.

It is always important to keep everything in context. At the present moment the majority of people are focused on the “negatives” in our world, and presently, things are indeed negative both politically and economically. It is also important to be objective and see the world as it truly is — understanding the broader trends over time. In light of that, lets step back and take a look at the big picture - an excerpt from “The Rise of the Rest” by Fareed Zakaria

“”The post-American world is naturally an unsettling prospect for Americans, but it should not be. This will not be a world defined by the decline of America but rather the rise of Read the rest of this entry »

My thoughts: The bottom in housing may not be here yet, and will probably take longer to achieve than most expect. But news like this means we are getting closer….
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You bought at the peak of the market. You put next to nothing down. (Maybe you even took out one of those 105% LTV loans to cover closing costs.) Now prices are falling, falling, falling, and you are underwater on your mortgage.

If it’s any comfort, you are not alone Read the rest of this entry »

Much of modern finance and risk management is built on the concept of efficient markets and the “bell curve” or symmetrical normal distribution. However, out in the real world things are a bit different. Over the years many have treated the so called “black swan” events as something that is an anomaly. But when you consider that the economic and political frameworks that comprise our world are severely flawed Read the rest of this entry »

Foreclosed homes are being damaged at a high rate as homeowners take out their anger on houses before they are forced to move out, increasing the costs for the banks that take back ownership (because they have to sell at a lower price as the new buyer has to pay for repairs.

Is this just another symptom of an increasingly irresponsible society or is it Read the rest of this entry »

It’s probably because he benefits so much from the boom-bust cycles and bailouts that the Fed creates, but Warren Buffet is not bothered by the moral hazard, inflation, and debasement of the dollar Read the rest of this entry »

Berkshire Hathaway Inc. Chairman Warren Buffett, who has used dozens of acquisitions to beat every major U.S. stock index, is poised to extend his lead with more than $40 billion to spend as the credit crunch sidetracks other bidders.

With the U.S. on the brink of recession, investors expect Buffett to deploy Berkshire’s cash to scoop up bargains Read the rest of this entry »

Apparantly they did not learn the first time…. John Meriwether’s Long Term Capital Management hedge fund blew up in the late 1990’s and was bailed out. It looks like he is well on his way to another failure Read the rest of this entry »