Monday, October 27, 2008

Do these Golden Ebay Bids Signal a Preliminary Market Bottom?

DJ Gold Bars Fetch Ebay Bids Far Above Spot Prices . SYDNEY (Dow Jones)--Gold bars are trading far above current spot prices for one troy ounce of bullion on the internet auction portal eBay, highlighting current strong demand for safe-haven assets among retail investors, traders said Monday. One Credit Suisse 24 karat pure one ounce bar had attracted 12 bids, the highest at $835 with the auction open for another 10 hours and 20 minutes. This is in sharp contrast to gold's spot prices, currently trading at $728.60/oz. Heavy selling from hedge funds and other investors in need of cash to meet client redemptions and margin calls have clipped gold from around $930/oz just over two weeks ago to a one-year low of $681.75/oz Friday, before a strong bounce lifted prices back above the $700/oz level. Another Credit Suisse one ounce bar, with 15 hours to go, had attracted 13 bids, topping $880. Retail investors seeking physical gold have forced coin and bar producers such as the U.S. Mint to ration supplies. "It's an anecdotal story, but the high bids on eBay illustrate the high level of retail demand. For that reason we believe gold will go up again once hedge fund redemptions wane, which should happen at the end of October," said one Sydney-based trader. -By Elisabeth Behrmann, Dow Jones Newswires; 61-2-8235-2965; Click here to go to Dow Jones NewsPlus, a web front page of today's most important business and market news, analysis and commentary: You can use this link on the day this article is published and the following day. (END) Dow Jones Newswires October 27, 2008 02:17 ET (06:17 GMT) Copyright (c) 2008 Dow Jones & Company, Inc.- - 02 17 AM EDT 10-27-08

Sunday, October 19, 2008

Psychology of the Upcoming Week's Earnings and Economic Data

May this mail reach you in good health & good spirits! The churning in the markets continues to wash out most professional money managers. The only sure fire method to use today is what Dennis Gartman describes as "getting smaller", and it's still not too late to get small into any 3%-5% rallies. Two weeks ago, the Psychology of the Call team (POTC) recommended selling all rallies greater than 3%, and that advice has worked well. We are concerned with the temporary and limp market blip Friday, after the semi-bullish sentiment expressed by legendary investing guru Warren Buffett ( was quoted and quoted time and again. And yet equities sold off violently from their afternoon highs. We are also very concerned with many respected professionals like Dennis Gartman and Warren Buffett piling into the banking sector and espousing its merits publicly. Could their behavior be construed as desperate? Giants can afford to be wrong a lot longer than the individual investor, as their liquidity is wider and deeper. Anais Nin once wrote: "If a person continues to see only giants, it means he is still looking at the world through the eyes of a child". Of course POTC respects the legendary minds of investment finance, yet we must not forget that they’re mere mortals. Gartman's and Buffett's decision to overweight banks today could turn out to be the biggest paradoxical blunder come early to mid 2009, as unemployment rises north of 7%. Moreover, IF it happens to be an Obama/Biden administration, their policy of raising taxes on individuals and businesses making more than $250K/year will further cripple the economy and trickle into the banking sector, extending the pain to all sectors. Anytime the government has regulated any sector.... --------------------------------- If you would like to receive this and future posts and market analysis, please send an e-mail to and make sure that your e-mail client will not consider messages from that address as spam.

Sunday, October 12, 2008

Shattered Psychology, Bloodied Charts, Politics, & Earnings Reports will Whipsaw Market

Sunday Greetings from the entire Psychology of the Call team (POTC).
Our goal is to keep you at least five paces ahead of both angry herds, with a focus on exposing the many irresponsible talking heads. Perhaps having one go-to cable channel isn’t a good thing and shows like Jim Cramer's Mad Money aren’t helping anyone. Granted, Cramer is in a very difficult situation as the bear market evolves, and we don’t believe he’s inherently bad, but we would prefer it if he had more competition. His mantra "there's always a bull market somewhere" has been proven wrong of late, but he won't admit it. The aura built up around his "genius" fooled more people than a David Copperfield magic show, still GE's parent CNBC allows his circus of errors to continue on-air. POTC's ambition of offering you the most educational go-to portal on the internet is only two weeks from fruition. We feel for everyone still reading this, and we thank you for being patient during these market dislocations; dislocations caused by the virtual overnight failure of all five U.S. investment banks. The reality of their charters being changed to Bank Holding Company status means that trillions of dollars of stocks, bonds, and commodities had to be sold or bought back, thus the anomalous moves, especially with falling stocks in the face of falling bonds.
The long term buy & hold investor has suffered incredible emotional and financial loss. Only the...
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Thursday, October 9, 2008

G7, G20, .... Are We Heading Toward One World Order?

=DJ G7 Makes Room At Table To Brainstorm On Spreading Crisis. By Tom Barkley Of DOW JONES NEWSWIRES WASHINGTON (Dow Jones)--Group of Seven leading industrial nations are making room at the table for other countries as they battle a fast-spreading financial wildfire that defies containment. The spirit of collaboration was displayed Wednesday when the U.S. Federal Reserve, European Central Bank, Bank of England and Canada were joined by central banks from non-G7 countries such as Sweden, Switzerland and China to conduct a joint rate cut unprecedented in scope. When the G7 meets Friday, it will try to present a unified front in the struggle against a crisis that in the past year has ballooned from a small sector of the U.S. mortgage market to envelop Europe and an increasing number of developing countries. Acknowledging the viral nature of the credit freeze, U.S. Treasury Secretary Henry Paulson called for an emergency meeting of G20 finance ministers and central bankers. Such a gathering, set for the day after the G7 meeting, will "discuss how we might coordinate to lessen the effects of the global market turmoil and the economic slowdown on all of our countries," Paulson said Wednesday. The G7 has been criticized for being slow to recognize the depth of the financial system problems and even slower to come up with a coordinated response. Infighting was on display last weekend as European officials failed to come up with a common approach to protect their intertwined financial sectors. Since then, the U.K., Spain and Italy announced their own financial sector rescue programs, though officials in France and Germany have indicated they see no need to set up similar bank recapitalization plans. French President Nicolas Sarkozy said later Wednesday that German Chancellor Angela Merkel agreed that the two countries responses to the turmoil would be "totally coordinated." Sarkozy has taken a lead in pushing for a pan-European approach and has also called for a special G7 heads of state meeting, which some media reports have suggested could be held as early as this weekend. Paulson said it doesn't make sense to have "identical" policies. "You're going to have different policies, but the key thing is that we continue to work closely together," he said, adding that he sees more signs of coordination and "very helpful statements" coming out of Europe. Edwin Truman, senior fellow at the Peterson Institute, who has worked at the Treasury and Federal Reserve, said he doubts the G7 meeting will result in any major new measures, especially with upcoming elections in the U.S. and Canada. "I suspect you're not going to have a lot of concrete initiatives," he said. "I mean, they will commit themselves, like here, to seek multilateral solutions and work together." In addition to European officials not being on the same page, there will also be an undercurrent at the meetings that Paulson "will have to eat a little bit of humble pie," he said, since the global crisis began in the U.S. World Bank President Robert Zoellick, who previously worked at Treasury, earlier this week called for a doubling in the size of the G7, which he said "is not working." While he also criticized the G20 as too unwieldy, the quickly assembled meeting of that larger group of major advanced and developing countries suggests that his idea for a "new multilateralism" to include rising powers is shared by others. The G20 includes the G7 countries of the U.S., U.K., France, Germany, Italy, Japan and Canada - as well as Russia, Australia, Brazil, China, India, Argentina, Indonesia, Mexico, Saudi Arabia, South Africa, South Korea, and Turkey. The European Union also has a separate representative. By involving developing countries, the G7 is acknowledging that an effective response to the crisis requires more players, said Michael Monderer, managing director of Washington-based advisory firm G7 Group and a former Treasury official. "The G7 is not the sole actor in the world," he said. While Monderer doesn't entirely agree with Zoellick's idea of a flexible steering committee, he said, "I think that it's clear that there are other large actors in the world, such as the Chinese and the Indians and the Brazilians and the Mexicans and the Russians, that need to be part of the process." He doesn't expect any coordinated measures at the G20 level, seeing the meeting more as making sure everyone's on the same page. David McCormick, Treasury undersecretary for international affairs, said the G20 meeting will be mostly about exchanging viewpoints on the crisis. "If nothing else, what hopefully the last six-to-12 months has shown is how interdependent our financial markets are, as well as our global economy," he said. Still, Monderer said that even if no major announcements are expected out of this week's meetings, he gives the G7 some points for starting to show leadership. He expects Friday's communique to convey the sense that they are in charge. "If there were ever a time for the G7 to show its relevance, this is it," he said. "And I think they've gone a long way in that regard, actually." -By Tom Barkley, Dow Jones Newswires; 202-862-9275; (END) Dow Jones Newswires October 09, 2008 09:02 ET (13:02 GMT) Copyright (c) 2008 Dow Jones & Company, Inc.- - 09 02 AM EDT 10-09-08

Saturday, October 4, 2008

Past, Present and Future Psychology

Good Saturday to all! The Psychology of the Call team (POTC) begins with an important quote during this ongoing crisis: "If we get involved in fears about the future, we shall miss the chances that the present offers us".
'It could always be worse for the living' is our way of describing the horrific financial meltdown. Money is important to all, but respecting yourself and others during these unprecedented times is where POTC believes the solution rests.
Looking back, there have been world wars, plagues, and market crashes of unimaginable severity, yet within a decade after these events, human life actually improved as a result. Although we are not happy to see the market fall, we do take credit for our expression of negativity back in February and March based on what we perceived to be the "foundational crack" in banking. We were able to use that theory and profit, and we know through emails many of you have too, so congratulations.
The Eighth Commandment of Trading stresses the two sided market,
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Friday, October 3, 2008

Friday afternoon

It has been a wild and wooly week on Wall Street and we suspect that next week may not be a whole lot different. The much heralded bailout was approved by Congress today and signed into law by President G.W. Bush. The market dropped shortly thereafter. We hope most sincerely that you are adhering to the 11 Commandments of Trading. To not do so is to invite disaster.
We wish you a wonderful weekend and we'll be in touch soon. The Psychology of the Call Team.
The Eleven Commandments of Trading
1. Never trade more than 10% of your total capital/account value in any one position.
2. Cash is King, and we recommend keeping 20% liquid to take advantage of dislocations and volatility.
3. Cut losses to 15% maximum whenever possible. If your psyche is shaken, step away and don't trade for 1 week.
4. Take and enjoy profits of 30% or more.
5. Never fall in love with a stock and never force trades or over trade; remember commandment #2.
6. Never accept excuses from management, period.
7. Use technical and fundamental data & psychology/sentiment from the conference call to select trades.
8. There are two sides to the market, long & short; take advantage of that leverage.
9. Understand the significance of the macro geo-political economic environment.
10. Unforeseen events/shocks will happen, inverting the market upside down (remember commandments #1 & #2)
11. All of the above are void without reading the Psychology of the Call.