Portfolio Update - 12/4/2009

Well, I've been managing a portfolio for a couple of weeks now. Sorry the updates haven't been posted like I had hoped, but now that I have a little more time I can start posting more consistently. Here is the link to see my portfolio:

http://www.kaching.com/portfolio/83948/holdings

There you can see my portfolio holdings and my performance against the S&P 500.

Currently we are still betting on a sudden change in the market's intermediate term trend. I still very strongly believe that the U.S. Dollar is going to see a massive rally and with that the stock market will take a tremendous hit, eventually seeing new lows.

I am positioned with a large portion of my portfolio long the U.S. dollar and long-term U.S. treasuries. I also am short a few financial and commodity related companies that I feel will be hurt in a deflationary environment.

I am, however, going to maintain a large portion of my portfolio in cash. If I sense a continuation of the current market rally I can use this cash to buy a position in the S&P 500 to hedge my short exposure and minimize losses.

Money as Debt 2!!!

If you like the earlier post of Money as Debt here is Money as Debt 2....

Don't Fear Speaking Out Against The Government

"There is no nation on earth powerful enough to accomplish our overthrow. Our destruction, should it come at all, will be from another quarter. From the inattention of the people to the concerns of their government, from their carelessness and negligence. I must confess that I do apprehend some danger. I fear that they may place too implicit a confidence in their public servants and fail properly to scrutinize their conduct; that in this way they may be made the dupes of designing men and become the instruments of their own undoing."

-Daniel Webster

Maybe we, Americans, should take a cue from Representative Joe Wilson. We need to speak out against our government. There is something clearly wrong in the country. The monetary system is by far the greatest fraud perpetrated upon the American people in history. As evidenced by this video:





We need to stand up and demand change. A reform of the monetary system could make it possible for everyone to have a chance in life. It could end our national debt. It could potentially end poverty in the United States (without paying taxes for welfare). It could also end the needs for 40% tax rates. No longer would we have to lose our wealth through both taxes and inflation. Let's return to the sound money of the Constitution.

There is a reason the Founding Fathers set up our money system the way they did.

Here is where it says in the Constitution that the powers the Federal Reserve exercises are unconstitutional and downright illegal:

Article 1. Section. 8. The Congress shall have Power To lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the common Defence and general Welfare of the United States; but all Duties, Imposts and Excises shall be uniform throughout the United States;

• To borrow Money on the credit of the United States; (Congress does this, but so does the Federal Reserve...a PRIVATE banking institution)

• To coin Money, regulate the Value thereof, and of foreign Coin, and fix the Standard of Weights and Measures; (Congress does not have the power to coin our money anymore...The Federal Reserve does...a PRIVATE banking institution, and they charge us interest to use our OWN money!!!)

• To raise and support Armies, but no Appropriation of Money to that Use shall be for a longer Term than two Years; (How long have we been in Afghanistan and Iraq? 6 years going on 7? Wow!!)

Article 1. Section . 9. No Money shall be drawn from the Treasury, but in Consequence of Appropriations made by Law; and a regular Statement and Account of the Receipts and Expenditures of all public Money shall be published from time to time. (First of all, The Federal Reserve has NEVER been audited. The Federal Reserve, on a daily basis, prints and distributes U.S. dollars all over the world. In one instance, detailed by the video below, The Federal Rerserve gave $3,000 dollars for every man, woman, and child in New Zealand to the Central Bank of New Zealand.)





Article 1. Section 10. No State Shall...coin Money; emit Bills of Credit; make anything but gold and silver Coin a Tender in Payment of Debts.... (Granted, carrying gold and silver is a hassle, but a dollar bill can easily be back by gold or silver. President Kennedy tried it in 1963, check out executive order 11110, dollar bills today are not backed by anything, they are debt created out of thin air by a bank, watch the video if you do not understand this.)

Our Founding Fathers warned us about always protecting the control of our money. They hated central banking with a passion and feared it. Were their fears founded? Did they have a reason to hate the banks? I think so. As evidence I give you these quotes to consider:

"And I sincerely believe, with you, that banking establishments are more dangerous than standing armies; and that the principle of spending money to be paid by posterity, under the name of funding, is but swindling futurity on a large scale."

-Thomas Jefferson

"The refusal of King George III to allow the colonies to operate an honest money system, which freed the ordinary man from the clutches of the money manipulators was probably the prime cause of the revolution."

-Benjamin Franklin

"The bold effort the present (central) bank had made to control the government ... are but premonitions of the fate that await the American people should they be deluded into a perpetuation of this institution or the establishment of another like it."

-Andrew Jackson

"If Congress has the right under the Constitution to issue paper money, it was given to be used by themselves, not to be delegated to individuals or corporations."

-Andrew Jackson

"Most Americans have no real understanding of the operation of the international money lenders. The accounts of the Federal Reserve System have never been audited. It operates outside the control of Congress and manipulates the credit of the United States"

-Sen. Barry Goldwater (Rep. AR)

"This [Federal Reserve Act] establishes the most gigantic trust on earth. When the President [Wilson} signs this bill, the invisible government of the monetary power will be legalized....the worst legislative crime of the ages is perpetrated by this banking and currency bill."

-Congressman Charles A. Lingbergh Sr., 1913

"We have, in this country, one of the most corrupt institutions the world has ever known. I refer to the Federal Reserve Board. This evil institution has impoverished the people of the United States and has practically bankrupted our government. It has done this through the corrupt practices of the moneyed vultures who control it".

-Congressman Louis T. McFadden, 1932

"We are completely dependent on the commercial banks. Someone has to borrow every dollar we have in circulation, cash or credit. If the banks create ample synthetic money we are prosperous; if not, we starve. We are absolutely without a permanent money system.... It is the most important subject intelligent persons can investigate and reflect upon. It is so important that our present civilization may collapse unless it becomes widely understood and the defects remedied very soon."

-Robert A. Hamphill, Atlanta Federal Reserve Bank

"The regional Federal Reserve banks are not government agencies. ...but are independent, privately owned and locally controlled corporations."

-Lewis vs. United States, 680 F. 2nd 1239 9th Circuit 1982

Let's stand up and do something about this diabolical institution!! Vote for Ron Paul in 2012!!

We need to End The Fed!!!

http://endthefedusa.ning.com/ - End The Fed website

http://www.govtrack.us/congress/bill.xpd?bill=h111-1207 - Support Ron Paul's Audit The Fed Bill, call your congressman and demand cosponsorship!!!

Portfolio Update - 11/13/2009 - Think Housing Has Bottomed? Guess Again!!

Portfolio Update: Sorry for the slow updates. However, nothing has changed. We are still in cash and awaiting a final bottom in the dollar and a final high in the stock market. In times of transition, like this. It is prudent to stay in cash and listen to what the market has to say, rather than making any rash decisions to "chase the market higher". No new positions will be taken today. Let's wait and see what comes our way next week.

Check out the graph and paragraph about the housing market at the bottom of this post.

Allocation: 100% Cash


Trades I'm pondering:

1) Long U.S. Dollar (UUP)

2) Short Gold (GLD)

3) Short Macy's (M)

4) Short Mylan (MYL)

5) Short Freeport McMoran (FCX)

Monthly Mortgage Rate Resets

The second wave of the housing crisis is upon us. Notice in the graph how the current stock market rally has taken place as monthly mortgage rate resets have been steadily falling. As of right now we have settled into a bottom in the reset market and mortgage resets will steadily start rising from here. Subprime is over. However the option adjustable rate and alt-a mortgages are going to start resetting to higher rates (reflecting the increased risk of default by most borrowers). This could send the housing market into another tailspin, much like 2007-2008. In my opinion this will be the catalyst for the coming start market crash I have been predicting.

Here is what James J. Saccacio, chief executive officer of RealtyTrac, had to say:

“Rising unemployment and a new variety of mortgage resets continued to gradually shift the nation's foreclosure epicenters in the third quarter away from the hot spots of the last two years and toward some metro areas that had avoided the brunt of the first foreclosure wave. While toxic subprime mortgages drove much of that first wave of foreclosures, high unemployment and exotic Alt-A and Option ARMs are spreading the foreclosure flood to more metro areas in 2009”

This news of a shift in the character of foreclosure activity comes precisely in tandem with the beginning of the predictable second wave of the housing market decline. The pleasant lull in the reset schedule is decidedly behind us. As always do your own due diligence on any investment you may make.

Ratigan's Four Simple, Yet Brilliant Proposals On How To Fix The System

Courtesy of Tyler Durden over at ZeroHedge

This must have been one of those "so simple it would never occur to any politician" epiphanies. Four great points by Dylan Ratigan that should immediately be taken up by pro-reform politicians. If Barney Frank deems these are unenforceable or not worthy of his attention, replace Barney Frank immediately.

Dylan's four (shockingly logical) proposals on how to fix the broken financial system:

• Inject transparency, primarily to bring almost $500 trillion in swaps to the forefront.

• Capital to back Wall Street's gambling. It is a guarantee that very few firms will have Goldman's trading pattern each and every quarter.

• Enact a tax-code to discourage short-term profits. "Fortunes should not be made in minutes but over years through the creation of value to society."

• Break up the Too Big To Fail banking institutions. Start with Goldman Sachs. Right Now. Christine Varney, we are still looking at you.

Visit msnbc.com for Breaking News, World News, and News about the Economy

So the stimulus created jobs? That makes me laugh......

I'm sure you saw on Friday that the Obama administration announced that the government's fiscal stimulus program has helped to create of save 650,000 jobs so far. Here is an excerpt from an article on UPI.com:

• "A federal report compiling data from all 50 states is due Friday, USA Today reported Wednesday. In the meantime, the figure from states already reporting -- meant to be an actual count, not an estimate -- appears to back up the claim from President Barack Obama's Council of Economic Advisers that 600,000 to 1.1 million jobs have been created or saved, the newspaper said."

Vice President Joe Biden had this to say:

• "We're moving in the right direction. We're starting to make real progress on the road to recovery. Quite simply, the Recovery Act is performing as advertised."

Are these claims by the government accurate? Probably not, but it doesn't really matter.

Government may create jobs that didn't exist before, but the net effect on the economy is negative. Jobs don't matter, production does. Government stimulus jobs are mostly temporary and they allocate resources to some of the least productive parts of the economy. This misuse of resources further sours an already ailing economy. To quote Casey's Research:

• "Consider the Obama administration's claim that 640,000 jobs were created from $159 billion of stimulus spending (a cost of almost $250,000 per job, most of which are temporary, and may last for just weeks).

S0 we spent $250,000 per job to create a few jobs that pay a few workers a one time salary of a few thousand dollars? How is that productive? How will that create more jobs in the future? How will that pull us out of our new depression? The answer is that it won't. Government stimulus has never been the primary driver the any economy to pull out of any recession in history.

One question you may ask yourself is, "where did that $159 billion dollars come from?" It came from you and me....the taxpayers. What would we have used that $159 billion for had it not been taken from us to be redistributed so inefficiently? Casey's research answers:

• "Some of us would have spent it on food, some shelter, some luxury goods, and some may have saved and invested the money. Indeed, if that $159 billion had not been taken from us, then every business we would have purchased from or invested in would be better off. They would have received more revenue and produced more goods, and potentially would have hired more people to make and sell those goods."

Jobs created in this fashion are normally permanent. That is how an economy grows.

• "But it doesn't stop there. If that $159 billion had been left in our hands, we would have spent and allocated it on things that are the highest priority for us. This action would have sent a series of signals through the market of what to produce more of and what to invest more in. It would have encouraged competition among suppliers of the various items being purchased, driving them to find more efficient and effective ways to create superior, more innovative products for less. This is how the market creates wealth. Competition spurs innovation and creative destruction, which increases productivity.

Sounds like the government needs to take a lesson in economics 101. The only effective government stimulus I can think of is tax cuts. However, to do that the government must reign in it's deficits (like that's going to happen). The Feds are too busy bailing out the automakers and misallocating our tax dollars to "stimulus" to let the free market fix the problem the government created in the first place.

• So, instead of the $159 billion, higher employment, more goods and services, and more innovative businesses producing what society values more, we have 640,000 (mostly temporary) jobs producing what society values less....and that's assuming the administration's claim is accurate.

Which scenario do you prefer?


Source: Casey's Research