oldschool account talk

[oldschool]

Well well. Short trading week ahead. Yesterday I read an interesting article suggesting stocks have done less well in the year following the end of a series of Fed interest rate hikes.

See "Investors may be misreading Fed Intentions".

http://biz.yahoo.com/ap/060114/wall_main.html?.v=4

What's that old line - "don't fight the Fed"?

Oil prices seem likely to be higher in the short/mid term as issues with Iran dominate the global political scene. Now is starting to look like a good time to consider the F fund a bit more. Global instability, Fed starting to think they've squeezed the economy down enough, are reasons enough to expect a little of that so-called "flight to quality."

'course the technical indicators are important too. Now if only they'd all align just for a moment!

If there's a move "towards quality" due to concerns about oil/Iran, the dollar seems likely to strengthen as well. This in turn could mean growth of the I fund due to currency valuation effects may be pushed further out into the future than some expect.

 

[Birchtree]

Don't always believe what you read

Oldschool,

During the last Fed tightening cycle in 1994 the rate capped at 6% - by the middle of 1995 they were in the process of lowering rates. The S&P 500 rallied 34% in 1995, and 20% in 1996.

Dealing a heavy blow to Iran is at least a year or two away - that gives us time to further upgrade our infrastructure in both Iraq and Afghanistan.

And when the blow is delivered that will be worth another 3,000 Dow points just like in 2003.

Now there is nothing humble about holding pennies of copper in the G fund - most participants will most likely miss this run to Dow 12,000 because of fear. And actually that is just what the mighty BULL wants to happen.

Dennis - permabull #2

 

[oldschool]

Birchtree,

Not to worry, I don't believe too much of what I read - just trying to track/anticipate some of the shorter term trends and use them to achieve a better than buy and hold result without taking on too much risk....

I don't doubt the multi-year trend will turn out to be up, maybe up big as you suggest. There likely are opportunities for profitable "reallocations" along the way though.

oldschool

 

[oldschool]

Today moved 15 from G to F. Cob today will be holding

10 g

30 f

55 c

5 i

Maybe Oil/Iran worries are hitting the I fund today too? That I decline so far today looks tempting, but I'm guessing it's a new trend, at least for the near term, so will pass on that "opportunity". Following Tom to a bit more F.

 

[oldschool]

Japan/I

Japan closed early in the midst of what sure looks like margin call driven declines. I'll bet the near term bottom there isn't found for a few days. Birchtree had a posting on one of the threads a week or two ago noting that the Japanese regulators were planning to reduce the allowable margin due to their concerns. Now a stock there that was the darling of retail investors is imploding. Some investors in the high-flying stocks there are concerned but can't get out with the market closed. As others on this board may well know, margin calls = brokers selling investor shares into a down market - thus adding to the decline and triggering additional margin calls. So, I'm thinking the dollar will be strengthening as the I fund component prices fall. This seems likely what with some margin related ongoing selling pressure likely there, ongoing oil/iran rumblings, some risk that some investors in the japanese market will need to sell a few foreign holdings for one reason or another in the face of these declines. Tom's move yesterday fully into F is starting to look pretty darn timely. Anyone have anymore info on margin account details in the Japanese markets?

 

[oldschool]

found some Japan margin levels info

Tokyo, Jan. 17 (Jiji Press)--The balance of shares bought on margin in Japan last week jumped to a fresh 14-year high amid persistent optimism over the nation's stock market, a Tokyo Stock Exchange report showed Tuesday.

The balance of long margin positions stood at 5,766,244 million yen as of Friday, up 312,071 million yen from a week earlier and hitting the highest level since June 1991, according to the weekly report covering margin transactions on Japan's three major stock exchanges of Tokyo, Osaka and Nagoya.

"Long margin positions increased as the U.S. stock market's stable performance last week enhanced the outlook of the Japanese stock market," said Tatsuo Kurokawa, equity general manager at Japan Asia Securities Co.

Last week, the 225-issue Nikkei average gained 26.74 points to finish Friday at 16,454.95, marking the highest close since Sept. 20, 2000.

The market tumbled early in the week due to caution about its fast-paced advance and the yen's rapid rise versus the dollar, but later staged a powerful rally as solid gains in the U.S. stock market lifted major Japanese technology shares.

Brokers said the high level of outstanding long margin positions is a major factor behind Tuesday's 2.8 pct plunge in the Nikkei average.

"Strong expectations for higher stock prices ahead had long held margin buyers from cashing in profits on their positions," said Hiroichi Nishi, equity general manager at Nikko Cordial Securities Inc. "But news about prosecutors' raid on livedoor provided a profit- taking opportunity."

The weekly TSE report also showed that the balance of short positions came to 1,593,105 million yen, up 14,096 million yen.

As of Friday, the long-short ratio stood at 3.61 in value, up from 3.45 a week earlier, and at 4.18 in volume, up from 4.04.

Daily turnover on the TSE's first section averaged 3,270.1 billion yen last week, against 2,770.4 billion yen in the previous week, which had a half-day session.END

 

[oldschool]

Adjusting to
20 g
35 f
40 c
5 i

today. maybe tomorrow will tempt me to add a little to the I fund from G, we'll see...

 

[oldschool]

Info on Tokyo Exchange:

Starting today, the exchange will start its afternoon session from 1 p.m. local time, instead of the usual 12:30 p.m.

Trading will be stopped again should the number of processed transactions exceed 4 million a day or orders surpass 8.5 million, the exchange said yesterday. The exchange said the shortened hours will stay in place ``for a while'' and didn't say when it would reinstate regular trading hours.

Today, orders processed by the exchange reached 1.3 million as of 10 a.m. local time, it said.

 

[oldschool]

grouping orders in Tokyo

It seems like the Tokyo Exchange is hoping people will group orders so they don't hit their max capacity. This is not at all good for the TSE - maybe good for other exchanges with plenty of operational capacity though. And... I wonder what kind of quality of execution retail investors will be getting if brokerages do the order "grouping".... Hmmmm. Oh well, when you want in or out badly enough, maybe you just don't care about those details?

 

[oldschool]

What to do, what to do. Opportunity in I? Or is it the shadow of the proverbial "falling knife"? The I fund is still several percent above where it was a couple of weeks ago - but that just confirms how steep/rapid the ramp up (on no major economic developments that I can see) has been over the last 6 weeks. I'll reassess tomorrow a.m., but won't be surprised if there's a bit more down in store for the I, even if tomorrow shows flat/slightly up. If tomorrow looks to likely end down for the I, I'll probably put one more toe in that pool. But not more....

 

[oldschool]

Up or down Monday...

Ouch. Huge selling pressures all day long. Hard to expect much positive monday on such strong downward pressure today. Asia and Euro markets likely will follow down to start their day. Oil up, Iran moving $ from Euro banking system, Tokyo Exchange running on reduced hours, and some big pressures on some margin accounts - first in Asia, but after today, maybe here. I'm not a bear in the intermediate or longer term, just trying to find a point where moving a little from G won't leave me with fewer fingers....

 

[oldschool]

Margin sales lead to more margin sales. In Japan first, but there's some spillover. Margin sales take time - the big players know when margin sales are driving the market and they step back, wait, wait, wait until the pain is beyond severe, then they start picking up the scraps. Margin sales in Japan's markets seems to be the theme of many news stories out of Japan the last week and including today. Japanese investors hold stocks in U.S. too. Spill over pressures can't be ignored as a possibility. Another large decline like last Friday in the US markets, and you'll have some meaningful US based margin issues too for a few folks. Add possible housing slowdown confirming figures that could come out Wed., and this week could end further down. Hmm. I want a positive bounce, but I want pigs to fly too. Not likely , either, in the near term....

 

[oldschool]

Dollar sneaking higher in anticipation of Fed's next move? F fund starting to look tempting again....

 

[oldschool]

Taking on a bit more F after it fell today (wed.). Lightening up on C. Friday new home sales figures will be out. I'm not expecting those numbers to be good.

Here's a link to an article providing some interesting discussion of foreign exchange trading by retail investors in Japan. Focus is on New Zealand Dollar/Yen. http://sg.biz.yahoo.com/060124/15/3y4m8.html

 

[oldschool]

Hmm. Buyers met by sellers, even with today's good news on December big ticket items. Maybe new housing will surprise to the upside tomorrow, but that seems like long odds. I read figures on San Diego housing market for Dec that weren't encouraging. I just revised today's IFT to an even more (for the short term) conservative allocation. Taking on even more G and F, dropping all C at least for today. Still holding 5 I

 

[oldschool]

New home sales up, GDP way below expectations. Builders cutting prices to clear out inventory perhaps? I'm missing out on today's upswings due to caution yesterday. Oh well. Missing some gains and most falls isn't a terrible strategy is it? We'll see....

 

[oldschool]

The F fund is giving me a little indigestion... Maybe I'll just dollar cost average some more over from G (as that seems to cure any declines in C)

 

[oldschool]

F fund probably going down today on fears of wage pressures. I say they're unfounded, 1.1 % GDP last quarter, frantic efforts by builders to cut prices and finish out near term planned construction. Could be though that F in near and mid-term will be hurting... Still, I'm game... so moving a little from G to F at COB..

 

[oldschool]

Sorry to hear of Grandpa Munster's passing.

Wondering if there'll be some clues as to impact of recent employment strength on Fed interest rate views when Federal Reserve Bank of Dallas President Richard Fisher speaks in London on Monday. ECB President to speak Monday as well, maybe some clues on Euro interest rates will slip out? Chicago Fed President Michael Moskow speaks in Chicago on Thursday. The main US data release of the week will be December trade data on Friday. The country’s trade deficit is expected to be $63.5 billion - down from $64.21 billion in November.

German industrial orders data for December to be announced on Monday - expected to confirm a pick up in the country's manufacturing sector.

Finance ministers from the G8 group meet in Moscow on Feb. 10-11. Apparently ministers from India, China, Brazil and South Africa have also been invited.

 

[Birchtree]

Mittelstand

Oldschool,

Finally someone mentioned Germany. They have been undergoing a M&A fest with the deal values to top $96 billion, as the financial sector shines.

While private-equity firms have become an ever-bigger feature in Europe's M&A landscape, nowhere is that more so than in Germany. Private equity hsas accounted for 25% of all German targeted M&A, up from 24% last year and just 4.7% in 2001. This compares with almost 14% in the U.K., Europe's biggest buyout market, and 15% across Europe.

Bankers caution that a steeper climb in M&A volumes is out of reach as long as the government keeps control of hundreds of German savings banks and municipal utilities rather than seeking buyers. Equally, an openung up of Germany's vast, family-run companies, collectively known as the Mittelstand, is need if deal levels are to be sustained.

Dennis