[lewman]

Ha ha ha I swear if you post this thread in china, people would think that some of the comments (opposing free trade, capitalism, proposing that government should do this and that to protect jobs etc) must have come from those who still enjoy the old days when the chinese government took care of things and citizens just followed.

Essense of capitalism & free trade is frictionless flow of capital to maximize mutual, aggregate benefit. If it’s more cost efficient to mine copper in Australia, then the Aussie shall be mining copper, and if it’s more cost efficient for americans to produce cars then it will happen so. Certain people will lose out because their skills become obsolete but in aggregate standard of living (in financial terms; nobody can calculate the fuzzy stuff like social costs that’s all too subjective) should improve for the masses.

Whether we like it or not, this is just the way the world is going. The US can choose to shut its door and start falling back on protectionism then as a result some will cheer (say auto workers) but ALL people will suffer from a reduced standard of living.

Use me as an example. I graduated with a degree in computer science & engineering but I’ve transitioned to the financial sector where there’s relatively more job security while some of my buddies back in california worry about losing their jobs to indian engineers who could do the job at a fraction of their salaries. Since my first job, I’ve worked in Los Angeles, Cheyene Wyoming, Hong Kong, and now Beijing and by “internationalizing” my career I’m hopefully less affected by one country/city’s demise compared to friends who would and must stay in Los Angeles.

In the 21st century, economic darwinism is alive and well, and whether the US can continue to thrive depends entirely on whether its citizens can adapt to the environment of globalization, or whether it will go the way of so many of the great nations that once ruled the world.

Personally I would not write off the US just yet.

[lewman]

Free trade and globalization do hurt some people and typically they are the ones whose jobs are outsourcable. But there are even more beneficiaries and they’re the ones whose standard of living improve thanks to walmart’s everyday low prices.

But I don’t think the game is necessarily over for the US. A friend works for Nestle’s baby food unit and chinese consumers love the products even though they charge a premium price but Nestle’s got the brand power that implies quality and chinese parents are known to be willing to give their kids the best. Another friend works for a company that makes equipment for biotech firms and thier innovative products again can charge a premium and innovation is not easily compromised by cheap labour.

What it means is that the game is not about the yuan like politicians say. Paulson understands that key is access to the growing chinese market for US companies and that’s what he’s going after. Assuming chinese authority is smart enough (I hope and think they are because they’ve got Japan’s history in front of them for what not to do) they will open up the market, albeit gradually.

[lewman]

I also think that longer term USD will continue to fall due to fundamental reasons so elegantly laid out by many of you.

Shorter term though I just think there’s now a lot of talks about this subject, and almost all newsletter writers I’ve seen think the dollar’s going down the drain and hence caution is required. Technically if you look at the charts (whether it’s USD index, euro, gbp, aud etc) you’ll see that the dollar’s dropped quite a lot against these currencies within a short space of time in november and these currencies are now trading at close to the top of their trading channels. Take AUD as an example, even though it’s moving up in a very nicely formed trend, it’s now at top of the channel and if it does go back to bottom of channel according to script you’re looking at a 4% correction before it resumes its up trend.

I would therefore wait a bit for the dollar to finish its rebound before adding to my foreign currency exposure.

[lewman]

Shorting is difficult as market could go on and on and on even if the bet’s correct. It’s clear to me that shorting is a speculation rather than an investment so the amount of money put in should be small.

How’s everybody else who shorted the market doing ? Have you all got stopped out or still holding on to your positions ?

[lewman]

I still think market’s going to tank next year. When it’s going to begin is beyond me of course.

Quick update on my shorts:

Office Max shorts: stopped out on losses
GM shorts: stopped out on losses
Retail Hldrs Jan08 PUT: small loss, still going
DIA Jan08 PUT: small loss, still going

Will likely gradually put in more shorts as market continues to go up.

As Keynes said “market can stay irrational much longer than you can remain solvent”. Indeed.

[lewman]

i’m waiting for your own blog too; it’ll save me from having to hunt around for articles 🙂

any ETA for those of us waiting ?

[lewman]

thanks; will give it a go next time it acts up on me

[lewman]

Even when I’m logged in, in some threads, it shows “reply” and i can respond. Sometimes even after i’m logged in, it still shows “login to reply” at the bottom and when I tried to login again it gives me a page not found. Very annoying … and of course it’s usually the ones I want to respond to that gives me the problem … any suggested solution ?

[lewman]

I just started my short-the-market program by purchasing PUTs on RTH (retail ETF) and DIA (dow jones industrial ETF). Foundamentally I agree recent rally’s of the sucker type but who knows, rallies of this type could last longer than it should be (or what we bears want it to be) so I’m going to layer in my trades to average it out.

I picked RTH because I believe the negative savings rate coupled with end of the HEW game means consumption has to slow at some point. Technically over the past few years it’s been trying to break $100 but never did in a meaningful way. It’s now at around $98/99 and I’m betting history will repeat itself. For DJI, it’s crafted a nice uptrend since a few months back and it’s currently at top of the channel so if I’m wrong it gives me some degree of protection. Was going to do same for SPY as well but it just didn’t hit my price target.

Next time I PUT more will probably be either 1) up trends’ clearly broken on the downside or 2) rally continues after a small dip and I’ll jump in again at top of the trend line.

Happy shorting my friends.

[lewman]

Well said zk. I think sucker … sorry I meant tucker obviously gets a kick out of insulting others and responses would simply fuel his interest. Let’s not even give this character a second of our time.

powayseller keep posting (but do take it easy on the volume) and thanks for introducing itulip.com I couldn’t stop reading the stuff.

[lewman]

I think it’s really difficult to spot the ultimate peak and to mitigate this risk I’m learning to trade gold both on the way up and down and hopefully I’ll be more often right than wrong, and also hopefully when I’m right the gains would be more (or better yet much more) than the losses when I’m wrong.

[lewman]

“The fan comments is the most ignorant thing said so far. The forum is not a place of worship”

… very interesting response … and a negative one at that … I doubt that anyone “worships” you … some people like myself appreciate your effort, at times agreed with you and at other times don’t. And then of course there are those who are attacking you because they don’t like you the person …. very difficult to separate the person from the facts and opinion I guess

[lewman]

I also don’t think it is a “freedom of post” issue. Rather it’s a practical issue. When I visit the site, I browse thru the active list on the right hand side and look at/respond to the ones I find interesting. If there’s nothing there I leave. And I’m guessing that’s what a lot of people do, rather than searching past the active list on to archived ones. When powayseller makes consecutive posts like 10 in a row, it does make it less likely for others to be heard.

Powayseller, you’ve established a fan base here and judging from this thread your new blog shall have no shortage of participants. Perhaps it’s time for you to go solo !

[lewman]

powayseller I enjoy your posts and appreciate the information you shared; but when you start new threads as often as you do you push others off the active list; I believe you mentioned previously you intended to start a new blog; since you have so much to share, perhaps the best way to do it is to have your own forum. I for one will add your blog to my favorites.

[lewman]

Check out this article: http://www.howestreet.com/articles/index.php?article_id=3110

It theorizes that George W Bush & Co have been pushing oil price down to help his approval ratings and republican’s re-election chances. Check out the chart on how GWB’s rating’s basically an inverse of oil price.

If you watched Farenheit 9/11, you’d know GWB’s well connected with the Texas oil patch as well as the Saudis so his influence (however short term it may be) cannot be dismissed. Also, the white house determines the U.S. (and to a certain extent the world’s) response to the iranian situation.

Interstingly since the 1970s we’re getting close to an energy crisis and it just so happened we now have a president who’s history with the oil industry put him in a position of power and influence in that sector. And we know that power tends to get abused … especially if you’re a politician ?????

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