Wednesday, March 20, 2013

Unintended Success

I did something today that I never do - I watched a bit of Ben Bernanke's speech following the end of the FOMC. Other than being totally crisis-ed out over the government, economy and world, Ben's recounting of the Fed's successes in fixing the economy struck me as almost comical. I say that to not say "sad."

Stay with me for this analogy. I love them!

I don't know about your corner of the world but challenging property tax assessments in the NYC suburbs seems to be big business. I get letters from a half dozen or so companies periodically asking for permission to challenge my assessment on my behalf. For their troubles, I would agree to pay them half of the first year's savings.  Considering property taxes here in a tony Nassau County village easily top $20 grand (you read that right - twenty thousand dollars per year - how else can we pay our school superintendent a half million a year? - giant eyeroll - sad but true) and some of the newer, bigger properties are over $30 grand the savings can be big.

FWIW, I am talking about sizable houses on an acre of land but not true Dynasty or South Fork mansions overlooking the Malibu surf.

One year, I actually hired one of them. My tax assessment went down and I had to pay them a few hundred dollars. Sounds like a good deal. If my taxes did not go down it cost me nothing. And any savings was more savings than I had before so again, a good deal.

Then it dawned on me what had just happened. It was 2008 and house values were plummeting. My own house was down about 20% since I moved in three years earlier and my taxes would have gone down anyway. Keep in mind that the assessment process has a two year lead time so the benefit would not appear until 2010 or so.

But the tax reduction company took full credit - just like the current administration and current Fed.

While I do have strong feelings about economic mismanagement by the current government, let me say that I thought the previous government was lousy in that regard, too. Keep your liberal fireballs to yourself. And conservatives, don't send me any fundraiser requests, either.

Everyone thinks their efforts nursed a recovery while I say it was the never ending spirit of entrepreneurs that refused to quit. Or the natural rebound from an economic calamity that occurs sure as day follows night.

So, Mr. Bernanke, you do not get to pat yourself on the back. If you had taken your trillions and paid it directly to citizens you would have seen a better result. Right now, only banks and investors smart or lucky enough to be in the stock market for the past few years are thriving. And only companies of other types smart or lucky enough to be doing business overseas are making profits that drive their stock prices higher. It is not the domestic economy, that is for sure.

Friday, March 8, 2013

Personal Capitulation

In recent missives, I wrote about what seems to be the silence of the lambs, er, bears. These days, vocal bears do indeed get made into chops, served with a nice mint jelly (and fava beans).

Today, I've got a little soul searching and how  "once bitten, twice shy" applies to your humble technical journalist (that would be me).

Each Friday, I discuss possible topics with my editors for next week's columns. There are some perennial favorites - banks, gold, Apple - and they do get a bit more coverage than say containers and packaging. But I look at international markets, currencies, bonds, commodities, energy and healthcare as interesting patterns arise.

Recently, they asked if gold looked like a good topic. After all, it was falling like an atomically heavier-than-lead balloon and the world was rife with calls of even further losses. I politely declined because a few weeks earlier I was still a raving bull on the sector. The correction was nearing its end, so I thought, and my previous call for a breakout lasted about two days before the downtrend resumed.

A trader can and should shrug off being wrong but as a journalist I can only take being called an idiot for so long.

And what happens if I decide now that gold is going lower, too? It is always a good idea to change at the right time. Better late than never. Don't go down with the ship. Live to trade another day.  Blah, blah, blah.

But what would happen if I throw in the towel, aka - capitulate? If the market keeps going down, well, that would be OK. But what would happen if it doesn't? What if I change my view right at the bottom? The personal downside risk is too huge because unlike a trader where money could care less if you were wrong the last time, readers of financial analysis and news have long memories. Fighting the trend all the way down and changing your mind at exactly the wrong time can not only fire up the flame machine but lose a hefty chunk of readership. It takes a long time to build a following but one (very) bad call to lose it.

So, dear reader, you have a window into the mind of a journalist. There is risk in writing anything and unlike a trader, who can take a day off, journalists have to produce - every day - whether there is something important happening or not.

So, do I think the stock market rally can continue? Absolutely!

Will I recommend backing up the truck? No way.  I am not changing my tune now although I have completely backed off fighting it.

And shorting? Been there, tried that.

A portfolio of puts and calls, along with a vacation, would be nice right about now. And a nice kee-Anne-tee.

Wednesday, March 6, 2013


I won't get into explaining, justifying or denigrating the new high on the Dow. You've seen plenty of pundits do it already so let me talk about what the market "feels" like today.

An analogy:

You are driving on a four-lane highway somewhere in the outer reaches of the local city radio station. There is not much around except for an occasional mulch farm and a billboard saying "turn right in 10 miles for XYZ hotel." Perhaps it is mountainous and your car is struggling on some of the steeper hills but you are chugging along most of the time near 80.

Up ahead is a slower car. You gain on it slowly so it is probably doing about 75 - certainly not that slow but slow enough where you want to pass. It is also fast enough that it takes a lot of time to accomplish. He seems to be speeding up. Your leg is extended, foot forced down on the gas pedal, but you are really only picking up a few yards per minute.

Is this guy racing me? Why?

After what seems like an eternity, you push ahead. Space opens up between you and the other car. And then more space. And more. Soon, the other car is a shrinking dot in your rear view mirror.

What happened? Did the other driver realize he was not going to stave you off and just gave up? Was he toying with you? 

That is what it feels like now that the Dow has finally pushed through resistance. It took forever to break out once the Dow got close but the deed is done. The bears seem to have given up. Capitulation.

Isn't it funny that the cop hiding around the next bend to nail you for speeding is called a bear (smokey the bear) in CB radio lingo?