January 10, 2008

Housing has crashed and is gonna get worse. REIC stocks have crashed. Gold has skyrocketed. CD's are earning 5% tops. So where's your money today?


I covered all my REIC shorts yesterday afternoon - hogs get slaughtered right? So sitting on dollars looking for a place to go.

Also have too many dollars again - although HSBC, eLoan and FNBO accounts are all paying 5%+. But with Helicopter Ben (son of a bitch) spouting off again today that he's gonna get to 0% as fast as he can, dollars seem dangerous again (especially when spending Euros - unique situation for me).

I still like commodities (oil, miners, DBA, gold), foreign ETFs (RSX, EWJ, EWZ) and Euros. But I'll be spending the next week trying to figure out the best way to protect equity again, and maybe some new non-REIC shorts.

The big banks all report earnings next week and it should be a roller coaster. Has the market priced in their epic disaster? Or are more surprises on the way?

Tell us where you have your money today, and what you're thinking for 2008 - short and long...

58 comments:

Anonymous said...

BofA to buy Countrywide - why?

Are they just clooking to protect the $2 Billion they made in the company.

Are they really that dumb?

The fix is in.

Gold to the moon, Silver to the sun !

Anonymous said...

DOPES!!!!!!

My money was in CFC! Bought at 4.53 and sold at 8.00!

$50,000 in about a day - Is this a great country OR WHAT?!!!!

Anonymous said...

Buy BEARX

Great hedge against a crashing stock market. Really a great place to be the past few months!

I increased my overall allocation to 15% in this fund and am very happy with the results.

This market is going lower - rate cuts be damned!

Jymkata

eric in vegas said...

Keith, no topic on BofA possibly buying Countrywide?

Anonymous said...

I bought CFC today too at 5.5 and sold at 8.25. I'm not kidding. What a racket, I made about 10k in one day. Horrible company, horrible management but it's worth more than $5 a share. This play today was pure luck though.

I've got some puts on Wells Fargo that I think will do well next week. I think the banks haven't been honest about their losses at all and they will be foreced to fess up when they report earnings.

Over the next year I think you could be short practically anything and make money. My best bet would be to short Mastercard. It's nosedived a little over 10% lately, and it's still waaaaaay overpriced.

The stock market is such a racket.

Anonymous said...

Why is BofA buying CFC?

Word on the street is that Washington basically marched them to the Alter with Countrywide.--They knew CFC couldn't go tits-up without Armageddon unleashing.

Damn--Talk about a shot gun wedding!!

Anonymous said...

Well, that honeymoon will be very short-lived, once BofA figures out how deep in the doo doo CFC is!!

Why would you tank your company over the mistakes of your rival?--It is sort of the ulimate irony, as has been written!!

BondsOfSteel said...

I like the SPDR Lehman International Treasury Bond ETF (BWX).

BondsOfSteel said...

>Why is BofA buying CFC?

There's profit to be made. CFC has some good assets.

The real question is how much will BAC pay for CFC? As a BAC shareholder, I'd rather they just pick-up the assets and let the liblities lie.

mikela said...

my money is in... MONEY!! meaning money market CD

Gold has no guarantees nor insurances, and US Gov is notorious for confiscating it (still maintains it's about $40 an ounce).

Tired of having 2 jobs, one real and other investing

I feel I will lose my money (or some percentage of it more likely) no matter what I do

Dagobaz said...

i am in the es, same as every day. there is no way to project where this market is going to go, so, in this environment, my holding time for a position is about 1 hour, max.

I make nice cash, and i sleep like a baby

:)

james said...

bearx, skf, srs, gld, fxe, and a couple of others. Any suggestions on other shorting ETFs? Im not comfortable that I understand shorts/puts/calls and the like enough to use them.

Anonymous said...

Nice update on CFC posted by Herb Greenberg on Marketwatch.

Predicts the Fed was definitely involved with brokering the deal and there was a LOT of trading activity before the announcement was even made.....shocking isn't it? Just SHOCKING....:)
(Angelo's posse for sure, just going out with a bang).

Wonder what BAC is going to do with that flaming bag of dog doo now?? Rest assured America, ordinary tax paying citizens will be footing the bill for a long time.

Anonymous said...

I see dopes is back. Hey dopes, tell the real story - how you bought CFC last year and rode it all the way down.

Anonymous said...

mikela,

you can buy gold in far less risky countries. The Perth Mint in Australia makes it really easy - both storing your physical gold or a Government (and not the US govt) backed certificate you can exchange for the gold (they are a mint, so they are constantly minting coins, etc, and hence have a huge gold float , they realised they could save money via the certs - basically other people pay for the float while they pay for the storage). The US govt need never know...

money market CDs have the risk that the Chinese decide to dump their US dollars tonight while you're asleep and you wake up with 1/20th of what you had in purchasing power terms. Of course that's not a high probability.

If you think that a hyper-inflation event or a complete dollar collapse are fairy tales then CDs are fine - the stock market is likely to trend down and be very volatile while it does so...

smeegs said...

You should short luxury goods manufacturers like Coach. Stock is down 30% in the last 2-3 months. Probably a lot more room to go down once a majority of America realizes we are in a recession.

Anonymous said...

I'm just fed up with the whole racket. The whole game is rigged, so I won't play it anymore. Buying nothing, selling nothing, paycheck into the 0% checking account and that's it.

I'm just going to stop working as hard. I'm exercising my option to refuse to give a damn. It doesn't matter anymore.

Anonymous said...

I think Capital One is still a good short. (Or PUT play)

Lennar might be an option. I am trying to target some of the ones that still have some meat in them.

Beyond that, I invest in bond funds (mostly foreign) and CDs. Rates are still not bad despite Helicopter Ben continually devaluing my currency.

GenX said...

SILVER.

Anonymous said...

long blue chips,
bearx as a hedge
aussie$$ for savings
coupla AMZN leap puts for speculation
coupla SPX leap puts for speculation

Patriotis said...

Major Long position on Q (QWEST)...trading at 52 week lows, just declared a dividend of now 5.5 percent(!),limited downside, makes money and as the last remaining Baby Bell with a footprint in 13 plus states, just a matter of time before Verizon or AT&T picks them up for no less than 15.

Anonymous said...

60% $US money market earning ~5%

30% variety of corporate bonds with yields in the 6 to 7% range

10% s&p500 index fund

And I too made some nice change on countrywide today. Only wish I had bought more.

Anonymous said...

I bought a bunch of KBH calls this morning. Fuckers were up nicely. Didn't sell yet, I'm greedy and want another 100% return.

Yoski said...

Oil servive companies like Schlumberger or Baker Hughes. Oil/Gas exploration like Chesapeake or Quicksilver. Mining companies. Some financials are cheap now, like Goldman-Sucks, a bunch of fine capitalists. Some homebuilders are at bargain prices if they survive. KB Homes is one of those companies that will pull through. On the other hand Lennar and Beazer are probably going to bite it.
Just do your homework and see how much cash they have on hand and how much liabilities.
Precious metal bullion wil go up as long as interest rates are going down. According to Bernanke that'll be for the foreseeable future.

Anonymous said...

I bought CFC @ $1.00 and sold @ $20.00 DOPES!!!!

Anonymous said...

As I like to say, the only USD I have are the ones in my wallet. This is an easy play, folks. You can buy the gold ETF (GLD), yes, and I do own it. But you can also go to HSBC and open a foreign bank account. Anyone can do it. Open one in France, or open it in China. RMB seems like a great play, you just know it is going up 8% this year.

i've had it said...

i shorted cfc ($29) and fed ($49) in mid-july based on keith's postings (thank you!) last year but covered in august and made a nomimal profit; of course, kicking myself now. i am thinking of shorting fed again since it's down to $34 but i just don't know what their toxic exposure is...couldn't really tell from the 10k filing. maybe keith knows? i think shorting mastercard might be a good idea; or any of the u.s. markets in general.

i know some folks who went long on impact mortgage holdings (imh) last couple of weeks. they have been buying as it went down to 30 cents; up 23% to 84 cents today. i wouldn't buy this for the long term -- they are going bankrupt b/c their loan portfolio is 99% alt-a. yikes! or, perhaps they'll get bought out like cfc.

i have money overseas: a china mutual fund (mchfx), a global materials etf (mxi), and a global energy etf (vde). also, dodfx, fgirx, fsdax, and fidelity contrafund. i owned fxe for a while in august but sold it before the runup -- stupid!

i have been taking money out of my citibank savings/money mkt accounts and putting it in a regional bank that pays 2% interest...i am in capital preservation mode with these particular funds (although ben is destroying them). i don't want to be caught if/when citi goes under. i researched the regional bank's
10k and they have little residential and commercial loan exposure. they pay 2% b/c they don't do subprime! yes, below inflation but they ain't going under or won't reduce their par value...i can live with that for these funds. part of the game now: preserve some of your cash in case our financial system goes to defcon 5!

we live in interesting times...

GreedKills said...

Keith...you surprise me.

Remember when you talked about all the other countries that are having housing crashes and credit crunches?

You know...like yesterday or so?

Think about it. Sure...the dollar theoretically could go lower but give it time and the domino theory that you mentioned will have other currencies going in the toilet also. I believe that within a year or two the dollar will strengthen significantly when all the other countries air their dirty laundry.

So...as the dollar crashes...everyone buys gold and gold goes up. Then...the Pound takes a hit...gold goes up more...then the Euro, the Canadian $ and so on and so on.

Also, haven't you noticed that China hasn't come clean about the toxic crap they are holding from every country.

08-09 will be very interesting.

Peace Frog said...

Let us assume one of the largest mortgage entities, Countrywide, who would have certainly been a significant player in the credit derivative market, has a very major credit derivative position with Bank of America. Lets' assume that Countrywide was the entity that had the obligation to perform, but now clearly can't. If Bank of America was to buy the non-performing other side of the many transactions and Countrywide become one entity with Bank of America, as they would, would the transactions between them not evaporate in the merge? It absolutely would. What would you then have to mark down on those specific transactions? I believe NOTHING would have to be marked down any further as two sides of the transaction became one.

www.jsmineset.com

Anonymous said...

In Philippine Pesos.

Anonymous said...

Plain ole CDs for our downpayment fund. A portfolio of mutual funds that includes 40%+ international holdings for my IRA account.

borkafatty said...

Well Tokyo survived..(inhale).hopefully we can to.. (exhale)..And I here you on the dollars Keith..I am staying cash for a long time....cash is and was king even in the Great Depression...not saying we are there...but cash buys Goods & services...Gold is the Hedge.

Roccman said...

food

Batman said...

I bought EWJ a while back and have had my ass handed to me on that buy. Keep waiting for the carry to unwind and the yen to spike but I could wait all my life for this.

Meanwhile the bullion I bought a while back is outstripping the gold miners (I have YRI and NEM) I bought at the same time. The talk I hear is the miners are going to pull away from the bullion now that the commodity price is having an effect on the profits.

The first big winner was Barrick which surprised me a bit considering how hedged they were a while back. The junior miners are still holding back and have the most upside potential if you can handle the ride.

Also have SLW which kept me waiting a while for good profits but I'm worried silver has more base metal flavour and will get hit by the recession where gold is just pretty yellow stuff that there is very little of.

I'm 10% bullion, 30% PM equities and 60% cash.

Anonymous said...

The Federal Nazis will march in and confiscate your gold just like FDR did in 1933. Notice that was also the year Hitler came to power in Germany. Do you think they will let a bunch of schmucks like you get rich while the banks fail?

Anonymous said...

$25K in student loans fixed 4.25%
$14K in CC debt fixed 3.99%
$35K in auto loans at fixed 5.9%
$380K mortgage fixed 5.75%

Who would be the biggest losers if inflation were to take off? If I have a job, those loans shrink. If I get laid off, I can file bankruptcy since I have no income. I'll probably just pick up and leave the country. Fuck the bagholding lenders.

Anonymous said...

Hi,

I have a great investment for us all, lol. This is from Realtor.com's market conditions section from a broker/owner:

Reported by Nancy Schumacher, Broker, CRS, GRI, CRB, ABR

As of January 1, 2008.

As we enter 2008, he who hesitates could lose. It is "The Buyer's Time"... the best period in a near-decade to purchase a home. The plentiful inventory is making sellers eager to help prospective buyers become new homeowners and the near record low Interest rates combine to provide an opportunity for leveraged investment. A 10% down payment on a home can bring as much as 80-100% return in a 5 year period. When you combine that with the tax advantages, it is a real win for the buyers who can qualify for a mortgage in the tight money market.

So, um, we can put like 10% down on a home and make that much of a return? I think these market condition things are great, so if you want me to post some more, then I will. She's under NJ, then Cherry Hill, if you want to confirm it.

Chris in NC, who sold NJ home in 06

Anonymous said...

Search for "Paradox of Choice" on video.google.com. He gave a talk at Google.

Anonymous said...

Asset allocation is still the way to go. I have a mix of US, international, and emerging market ETFs, large and small cap, and recently held my nose and bought some US and international REIT funds. Still holding long-dated futures contracts and bullion coins. Keeping all fixed income under 6 years to minimize the inflation risk. Most is in FDIC-insured CDs, some is in cherry-picked munis, all laddered out to keep earning a good return no matter what happens to short-term rates. A small amount is in BWX. A big slug of cash is in a 6-month treasury note, the rest in a treasury-only MM fund. Hoping to add a 3-year oil contract if the price pulls back. Will add bullion only on a pullback. Will add to the REITs only on further weakness. Hoping to pick up more of the energy indexes on further weakness. Keeping my tech and utility indexes, hedged either way the economy goes. Waiting to add to Russell 2000 index and international small-cap. Oh yeah, and I still have the house and the fixed-rate 5.25% mortgage. If long rates drop (unlikely) I'll refi out 30 years at the lowest rate possible. If long rates finally adjust upward due to inflation, I'll just let my debt be inflated away with all the other debt.

Anonymous said...

New shorts: not investment advice, but for entertainment purposes only check out last year's momentum names. Start with any tech stock recommended by Jim Cramer last year, particularly in the photovoltaic power sector.

Anonymous said...

Gotta go with High Growth which will not be hurt by recession - AAPL

And Biotech - ELN

Give yourself some upside with ETFC in case credit crunch subsides.

Some emerging market debt for safety and income - ESD, AWF

And keep some CASH, dollar will outperform IMO as we are much more ahead of the curve with regards to housing crash than Europe/UK

Careful with the shorts. Look too tricky here.

Anonymous said...

james - nice selection of ETFs.

Regarding puts/calls, consider SRS, ultrashort (2X) real estate bear fund. A call option with SRS is actually a 2X put on real estate. On Dec 11, SRS was at 92, less than a month later it hit 140+. A 50+ percent gain in less than a month is good, but the jan 100 SRS call was up about 20X in less than a month.

The dollar is toast. The banking cartel won't hesitate to sacrifice it and the middle class.

The Chinese built factories and we built houses and tried to consume our way to prosperity with debt. This is not good.

Karlito said...

long gold, silver, short the 30 year treasury (since one percent ago unfortunately, but that's a LONG term hedge).

mayor mcmansion said...

Keith, be careful with those commodities, the Baltic Dry Index is falling hard and fast.

Anonymous said...

saw a house today at half the expected price,by comparision of what was being previously asked. still although the fair location, and the community reno and modernization, i remember better at half its todays asking when in distress before the boomings............and nearer to a quality supermarket....

Anonymous said...

money at???? im bent over and spread over waiTing for bernanke to screw the savers again, and again......someday?????????????????

Anonymous said...

no money left, screwed to deep, to much............?????????????????//

bought_high said...

shoot - i finally listened to keith yesterday and shorted 18,000 shares of CFC...

and he just happened to close all his shorts yesterday.

Good timing keith - you are really good at picking the bottom the day after!

borkafatty said...

The Federal Nazis will march in and confiscate your gold just like FDR did in 1933. Notice that was also the year Hitler came to power in Germany. Do you think they will let a bunch of schmucks like you get rich while the banks fail?
-------------

Well anonpiss the first suit through the door gets the first round...then its nothing but spray there after...nuff said!

i've had it said...

any thoughts on the board here about shorting mastercard and american express? MC looks high...from may 2006 it has gone from $50 to $200...perhaps because folks took out helocs, which are now gone? big insiders sold yesterday. today it opened down $10or 5% from yesterday's close.

any thoughts on other financials?

Anonymous said...

Here's a radical idea: get a CD at...wait for it...Countrywide Bank! For the next few days they may still be offering their "please we need money" rates, and in short order you'll then be with a strong institution (BofA). FDIC insured all the way, of course.

Anonymous said...

This may sounds stupid, but I don't trust Stocks & Bonds. I have, 105K in B of A, 105K in Wells Fargo, 105K in Navy Federal Credit Union, 105k in Pacific Marine Credit Union. I think "Gold" is the next Bubble.

Anonymous said...

You should short luxury goods manufacturers like Coach.

I said here that I was short COH 3 months ago. Couldn't be happier.

Anonymous said...

The Federal Nazis will march in and confiscate your gold just like FDR did in 1933.

Confiscate my gold in Switzerland and Uruguay? Dream on.

Ruprecht said...

I put all my money in;
"A Company for carrying on an undertaking of great advantage, but no one to know what it is"

Just kidding, it was a company that people invested in during the South Sea Bubble.

Ruprecht said...

From what I've read, the stock market bottom is considered to be when it gives a yield of approx. 19%.
Crazy to think that even if the market was yielding, say 12% it would still be on the way down and too risky.

Deep_Downer said...

Have been in DODFX and PGVFX for the last few years. I think they will be an even stronger hedge in the next 12-18 months.

I normally run for the hills from OTC stocks, but I really like DPDW. It is a real company with a real business. They service the oil rigs in the Gulf among other things. Great management team and great innovative products with uses outside the oil industry.

Anonymous said...

Guns, ammo and freeze dried food.