New Years Relief

by John Dalt

01/05/09

2009 rolls in to a great sigh of relief. Investors are looking for normalcy, whatever that is. The news is full of Bernie Madoff and OH! BAMA!, who is to blame for one and how lucky we are to have the other. It is becoming more apparent that Chris Cox as head of the SEC is out of his element. He is a former congressman from California that was promoted beyond his capabilities. After reading his bio, I am impressed, but the SEC allowed naked short selling that sunk or destroyed financials in the last year. Their rule to enforce ‘mark to market’ accounting on the same investment banks leaves us with no investment banks. Bernie Madoff somehow ran a $50 billion hedge fund ponzi scheme and went through at least eight audits by the SEC without a question raised. How could they have audited him and not discovered that he never bought or sold any securities? It has been noted that Bernie ran two separate companies, the hedge fund and a market making service. He was trading in the market making business and supposedly clearing his own trades for the hedge fund through that account. It sounds complicated, but easy to see through, if you look. A pachyderm that weighs $50 billion should not be hard to find!

Investors and traders are looking for market direction. We have interest rates so low that equities look attractive, if they are deemed safe. There seems to be a bias to a bear market rally to draw some of this money in. I will go back to my cautious optimism after Thanksgiving, and continue to sell into this ‘dead cat bounce’. I opened a position in (TBT) Ultra Short 20 year Treasuries. I have written about shorting the TLT since before Christmas, and the fear of the player on the other side. The FED can print as much money as they want to force rates down. That said, the TLT is 8% off its high in the last 10 days. It is close to support, if we go through, the drop should be precipitous.

We had a great month on the Swing Trade service. Fourteen closed trades for an average profit of 4.6 percent! This is without using options or other exotic trading strategies.

I have changed one of the news feeds on the web site from Financial Times to Washington Post. The Financial Times wanted us to log in to read the complete story after accessing it a few times. I thought one source of political news would be appropriate with the new administration coming to town. This page is a great resource throughout the day to keep up with news.   You can access it at News.

WARNING:     The information presented in this newsletter is based on generally available news releases, corporate filings, current events, interviews and the editor’s opinions. It may contain errors and you should not make investment decisions based solely on what you believe you have read here. Do your own research, it is your money. If you lose it, it is your responsibility, not ours or your grandmothers! The editor may or may not have a position in any securities discussed. The editor may have held a position in a security earlier, or in the future. 

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