Actually I thought about going for ‘Stay defensive’ as an alternative headline choice. The stuff I read and watch makes me want to use that famous Shakespeare quote that ‘something is rotten in the State of Denmark’. The evidence that all is not well is overwhelming. Still, and that is a very important distinction to make, when it comes to trading the markets this has to be considered ‘opinions’. What is important is the charts’ message. Put another way, how various markets discount and react to pieces of information.
So, on to the charts. Exactly the same message. Choppy, sideways trading action. No clear and strong trend. If you are not one of the nimblest traders out there or if you aren’t willing to significantly shorten your time-frame it is best to stand aside.
Here’s an excellent interview with Kyle Bass. Having extremely low exposure to the markets has its benefits. It’s a great time to do a lot of research, read and watch plenty of market related videos. For those with short attention spans, this is not for you. For the rest the video is most interesting as Kyle Bass at some point reveals the conversation he had with some guys at the Comex. He then reasoned it was in the best interest of his clients to get delivery of his gold. The MF Global scandal is a picture perfect example of what can happen if you trust futures contracts or any kind of paper gold to offer you any kind of protection or insurance. I’ve been advocating holding physical gold and silver bullion held outside the banking system for the past 3 years. What happened at MF global therefore shouldn’t come as a surprise. Kyle Bass’ favourite macro short play is Japan due to the country’s demographics and at the same time being as what he describes as one of the most xenophobic societies. To make a long story short, most of what he talks about revolves around the following:
“Too much debt.”
The Kyle Bass AmeriCredit 2011 Session is now finally available for viewers in Germany as well. Enjoy!
In the interview Kyle Bass mentions a piece he deems was the best read of the past 2 years. So if you want to know where he’s coming from you can check it on Taleb’s website. The Black Swan of Cairo – How Suppressing Volatility Makes the World Less Predictable and More Dangerous Nassim Nicholas Taleb and Mark Blyth:
http://www.fooledbyrandomness.com/ForeignAffairs.pdf
As I mentioned MF Global as a picture perfect example of what can happen here’s a must read. The “MF Global re-hypothecation scandal explained” if you will.
Thomson Reuters – News and Insight – MF Global
As trading is simple but not easy, tonight you get two quotes as I think the juxtaposition of these two trading quotes is quite interesting.
Fear keeps you from making as much money as you ought to. – Jesse Livermore
Cash is a position.
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