Monday, January 21, 2008

Leverage (part deux)

There'll be some stiff-scotches poured tonight! Indeed, leverage is like:

- a cute smiling weepy-eyed dachsund WITH RAGING RABID DISTEMPER!

- a melodious Frank Sinatra song HEAVY METALLICIZED AND PERFORMED BY THE SCORPIONS!

- Sesame's Street's COOKIE MONSTER!

- Luxurious satiating sex FROM WHICH ONE EMERGES WITH CRAB LICE!

- changing your adorable giggling newborn's diaper BEFORE HE SPRAYS ONE IN THE FACE WITH HIS WEE!!

- an IRS tax-refund checque ACCOMPANIED BY AN AUDIT NOTICE!

- a tastefully-done warm-weather country-club wedding TO DISCOVER COURTNEY LOVE IS OPPOSITE ONE UNDER THE VEIL!!

- a sunny summer drive in a DB6 on a Wiltshire country lane BROADSIDED BY A DRUNK FARMER IN A VERY GREEN IMPOSSIBLY-LARGE JOHN DEERE COMBINE!!

- a romantic meal with one's honey at Tom Aitken's place CAUSING ONE TO SPEND 3 HOURS VOMITING WITH YOUR HEAD IN A TOILET FROM SALMONELLA POSIONING!

- a nice night out with friends AND A BUNCH OF RUSSIANS AT A VODKA BAR!!

- the warm fuzzy-feeling of sitting by a roaring fire in the fireplace WHILE ONE'S ENTIRE HOUSE IS BEING CONSUMED AROUND YOU BY FLAMES!

11 comments:

Berlioz said...

FLASH ; Benefit Performance- Trichet and Bernanke to perform "pas de deux" from Sleeping Beauty. For Tickets go to abanknearyou.com

Anonymous said...

And the sign of the apocalypse is?

-pi

OldVet said...

Eliciting a smile from Bart Simpson then having to EAT YOUR SHORTS.

"Cassandra" said...

Well the trade that hasn't blown up completely, yet, that, according to all HF performance data, is CROWDED beyond belief, is the long oil, long commodities, long infrastructure trades expressed in all manners (Got any Ospraie?!?!?.)

Using one's imagination can you see:
Oil....$55 to 65bbl.??
TIPS....Ouch!
Gold...bottom @ $450- 500 ??
With it comes the agric inflation, the bio-fuel crap..

The thing about a sentiment pendulum is that a pendulum doesn't, cannot, yield staccato-like changes. I would be surprised to see a specualtive risk-asset wipeout (like the one unfolding) without carrying the rest of the leveraged speculative complex out with it.

Charles Butler said...

Infrastucture, lead galleon of the invincible etcetera, got lambasted today. Short oil looks good. Gold, I dunno, but I have taken prior note of Newmont's timing of the refloat of FNV.

Gotta say I'm mighty impressed with the conviction of equity sellers. RSI 10 lower (although its well into the zone of reciprocity failure) in European indexes than 9/11, 1998, 2002. Less so with newspapers' attribution to the threat of US recession. Don't think that's it somehow. Much uglier and much further up/down the food chain.

Anonymous said...

I'll give credit where credit is due. Cassandra was right, as expected, but year too early. Or was that several years too early . . . Now about starting that investment newsletter . . .

-pi

"Cassandra" said...

Charles....errrr how far up the food chain were you thinking? Do you mean...She-The-Supreme-Deity-Who-Must-Not-Be-Named?

Charles Butler said...

I said 'up/down the food chain', not able to decide if it's the termites or Godzilla downsizing the residence.

'Course, if Cass thinks it's a repeat of 1990, she was digging for lint Tuesday morning.

"Cassandra" said...

Actually, Charles, I think the markets have discounted quite enough for one month. They, of course, are playing catch-up from a delusional Q4-07, but they will need some time to let the fundamentals actually catch up with prices (a bit at least). What one should be thinking now is: what will one do with money when o/n USD & Euro rates are 1% and long rates are 3%, and equity earnings continue negative bias. THAT will require a strong constitution to be contrarian...

RK said...

Re: Momentum inventing
An interesting study appearing in March/April issue of Financial Analysts Journal: "Causes and seasonality of momentum profits" by Richard Sias of Washington State University.

"Cassandra" said...

RK -Dr Sias is being polite.

"window dressing" is academic speak for outright manipulation, and it doesn;t merely contribute to it, it causes it, quite primarily, both on the long side and the short side. Tax-loss selling , perhaps one quarter , is an issue, but its far more about game theory, and the fact that as a large active investor, the more pummel something else that someone else has an active over-weight in but that you have an active underweight, the greater the chance that you can manipulate your performance rank visa-vis your competitors. Thanks for pointing it out all the same.