5 worries on Wall Street

[Anonymous]

PD, I learned my lesson about gold in the Feb. ’07 hiccup: gold went down with the broad market. Such did not happen in the Oct. ’87 crash nor in the post 9/11 swoon.

When I saw the Feb. ’07 hiccup, when gold went down with the broad market, I moved my money, which was 100% in gold/gold mining stocks, out entirely of gold/gold mining stocks.

The series of smaller hiccups that we have seen in the last two weeks have confirmed, to me, my earlier hunch, that the historical relationship between gold and the market — near zero correlation — no longer held.

I’ve read in passing that the Chinese and American retail investors saw the stellar returns in gold/gold mining stocks over ’01-’06 and have jumped in.

They are now jumping out, here and there, having gotten nervous or having to cover margin calls.

I will move back 100% into gold/gold mining stocks as soon as the market crashes (and gold moves back down, temporarily, to ~$500).

Just my gut sense based on what I’ve seen as of late, compared to what I’ve seen historically.

[Anonymous]

PD, I learned my lesson about gold in the Feb. ’07 hiccup: gold went down with the broad market. Such did not happen in the Oct. ’87 crash nor in the post 9/11 swoon.

When I saw the Feb. ’07 hiccup, when gold went down with the broad market, I moved my money, which was 100% in gold/gold mining stocks, out entirely of gold/gold mining stocks.

The series of smaller hiccups that we have seen in the last two weeks have confirmed, to me, my earlier hunch, that the historical relationship between gold and the market — near zero correlation — no longer held.

I’ve read in passing that the Chinese and American retail investors saw the stellar returns in gold/gold mining stocks over ’01-’06 and have jumped in.

They are now jumping out, here and there, having gotten nervous or having to cover margin calls.

I will move back 100% into gold/gold mining stocks as soon as the market crashes (and gold moves back down, temporarily, to ~$500).

Just my gut sense based on what I’ve seen as of late, compared to what I’ve seen historically.

[Chris Scoreboard Johnston]

PD – I see no reason to be long Gold here at all, and that is the exact words I told one of my clients who was wanting to buy when we were at 680 a short while ago. The short term trend is down, and the longer term trend is flat, so I see no immediate opportunity. I am not a believer in the story of the long term trend of Gold to 3000 or whatever pie in the sky price anyone wants to name. I think the game is over there. The stories always come out after the run has already happened, and the public gets pulled it to the game at the end of the run.

There is no relationship whatsoever between Gold and stock prices that I have found, but there is one between Gold and Bonds.

[Chris Scoreboard Johnston]

PD – I see no reason to be long Gold here at all, and that is the exact words I told one of my clients who was wanting to buy when we were at 680 a short while ago. The short term trend is down, and the longer term trend is flat, so I see no immediate opportunity. I am not a believer in the story of the long term trend of Gold to 3000 or whatever pie in the sky price anyone wants to name. I think the game is over there. The stories always come out after the run has already happened, and the public gets pulled it to the game at the end of the run.

There is no relationship whatsoever between Gold and stock prices that I have found, but there is one between Gold and Bonds.

[HereWeGo]

Chris-
What’s your expectation of the FOMC minutes on Thurs? After the release, will Ben ride to the rescue, as he did back in Feb?

[HereWeGo]

Chris-
What’s your expectation of the FOMC minutes on Thurs? After the release, will Ben ride to the rescue, as he did back in Feb?

[Anonymous]

Wow, George Chamberlin may be right, today: he said that since the market opened down today, that it would close up today, the pattern that we’ve seen on Monday and Tuesday (open up and close down).

Yep, makes perfect sense: durable goods orders down, even after backing out defense and aircraft, and the market goes up.

And, it looks like those day traders made their gains on SDS yesterday, and got out this morning: S&P 500 up 0.6%, SDS down 2.0%.

It is going to be an interesting summer.

[Anonymous]

Wow, George Chamberlin may be right, today: he said that since the market opened down today, that it would close up today, the pattern that we’ve seen on Monday and Tuesday (open up and close down).

Yep, makes perfect sense: durable goods orders down, even after backing out defense and aircraft, and the market goes up.

And, it looks like those day traders made their gains on SDS yesterday, and got out this morning: S&P 500 up 0.6%, SDS down 2.0%.

It is going to be an interesting summer.

[PD]

Chris, thanks for answering!

[PD]

Chris, thanks for answering!

[Chris Scoreboard Johnston]

HWG – not sure about the Fed minutes. It appears to me they are not going to do anything with rates in the near term. However, I do not analyze “the story” as I call it. What that means is that I do not subjectively evaluate my views on things and try to synthesize them into action. This leads to very inconsistent results over time. So, I do have my opinions on things, but I have learned the hard way not to take action based upon them.

Sorry for the non-answer.

[Chris Scoreboard Johnston]

HWG – not sure about the Fed minutes. It appears to me they are not going to do anything with rates in the near term. However, I do not analyze “the story” as I call it. What that means is that I do not subjectively evaluate my views on things and try to synthesize them into action. This leads to very inconsistent results over time. So, I do have my opinions on things, but I have learned the hard way not to take action based upon them.

Sorry for the non-answer.

[Anonymous]

Breaks my heart to see this:

http://wasatchecon.blogspot.com/2007/06/hedge-fund-failometer.html

(found in comments thread at Calculated Risk)

Let’s say a pr—- this evening for these now-on-the-street folks.

[Anonymous]

Breaks my heart to see this:

http://wasatchecon.blogspot.com/2007/06/hedge-fund-failometer.html

(found in comments thread at Calculated Risk)

Let’s say a pr—- this evening for these now-on-the-street folks.

[HereWeGo]

Incomes are up. Employment is up. Rich folks that bet on the long term prospect of indentured servitude are losing a fortune (to the little guy who stole it from them.)

Sounds good to me.

[Author]

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