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Thread: weekend commentary - for girls whose stock investments have taken lumps lately ...

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    Default weekend commentary - for girls whose stock investments have taken lumps lately ...

    20-20 hindsight now shows that the US stock markets have been down 3 out of the past 4 weeks, and that many European and Asian stock markets have been down for all 4 of the past 4 weeks, and that monday morning futures are showing a sub 15,000 opening for the Dow. So it's probably worth asking the question whether this is a temporary downward 'blip' which will soon be erased, or the beginning of a new downward trend that will bring even more losses in the near future.

    If you believe this is only a 'blip', then no worries. But if you believe, as many pundits now speculate, that May 23rd marked a 'turning point', then the question arises as to what else to do with your stock investment money if you choose to sell.


    One very safe option is to simply withdraw the proceeds of your stock sales and transfer it into an FDIC insured bank CD. This option is guaranteed to stop future losses, but returns next to nothing in the way of interest earnings. And since most brokerage accounts cannot offer an FDIC insured CD, this option is also likely to cost you wire transfer fees between your brokerage account and your bank account.

    Another safe option is to transfer the proceeds of your stock sales into a money market mutual fund offered by your brokerage account. This option will be free of fees, but does pose a remote risk of principal loss should the short term corporate 'paper' held by such mutual funds suffer significant price declines. But, as with a bank CD, while it will avoid potential additional future losses when stock markets are declining, the money market mutual fund option provides near zero opportunity for additional earnings.


    It IS possible to profit from declining stock ( and bond ) markets. Serious investors can make short sales, can purchase put options, can purchase futures contracts etc. But 'small time' investors typically do not have the ability to take advantage of these instruments via their basic brokerage account. However there is now the alternative of 'inverse' Exchange Traded Funds'. These inverse ETF's trade in exactly the same way as stock shares. These inverse ETF's consist of options contracts, futures contracts, short sales and other financial instruments ... which attempt to provide an 'inverse' price change versus the index they track. Or, to cite a specific example, if the Dow declines 1%, inverse Dow ETF DOG will increase by 1%. There are also more highly leveraged inverse ETF's that attempt to produce a 2x and 3x price gain versus a decline in the underlying index.

    You might want to have a look at ... and particularly some of the informational ETF links at the bottom of the page.

    Obviously, if stock markets do continue to decline, owning inverse ETF's presents a way to MAKE money ... as opposed to just limiting potential future losses via CD's or money market funds/
    Last edited by Melonie; 06-16-2013 at 07:23 AM.

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    Default Re: weekend commentary - for girls whose stock investments have taken lumps lately ..

    Applying more 20-20 hindsight a week later, those who hung onto their 'long' stock investments experienced an additional loss, while anybody who moved to 'inverse' stock index ETF's experienced a nice gain. And again the question must be asked as to whether this is just a 'blip' in the stock market's uptrend, versus being a 'turning point' toward a new downtrend.


    One opinion of what's actually going on with stock ( and bond and commodity and real estate ) markets, for what it's worth, is offered by financial strategist Dr. Chris Martensen ... see

    (snip)"The Dash for Cash

    The early stage of any liquidity crisis is a mad dash for cash, especially by all of the leveraged speculators. Anything that can be sold is sold. As I scan the various markets, all I can find is selling. Stocks, commodities, and equities are all being shed at a rapid pace, and that's the first clue that we are not experiencing sector rotation or other artful portfolio-dodging designed to move out of one asset class into another (say, from equities into bonds).

    Here's the data. Let's begin with the place that the most trouble potentially lurks – bonds – and here we have to start with the U.S. Treasury 10-year note, as that is the benchmark for so many other interest-rate-sensitive items, such as mortgage bonds.

    Here there's been a very interesting story that predates the recent Fed announcement by nearly two months. This chart of the price of 10-year Treasurys tells us much (remember, price and yield are exact opposites for bonds; as one moves up, the other moves down):



    The first take-away is that the current price of 10-year Treasurys is now lower that at any time since late 2011. The second take-away is that this has happened despite both Operation Twist and QE3.

    That is, after all the hundreds and hundreds of billions of dollars of thin-air money-printing and bond-buying, Treasurys are now lower in price than when the Fed initiated Operation Twist and QE3.

    And it's not just 10-year rates; the entire yield curve from 5-year to 30-year debt is now higher than it was a month ago

    This is very, very important. On the one hand, it tells us that the Fed may not be omnipotent after all, because you can bet your bottom dollar that the Fed simply does not want long rates to rise and that this was an unplanned and unwelcome move. On the other hand, rising rates will do much to a fragile economy and over-leveraged speculators and institutions.

    I may need more hands here, because there are other undesirable effects of rising rates, including falling equities (we'll get to that in a minute), fiscal difficulties for heavy borrowers (many sovereign entities belong to this club), and mortgages becoming increasingly expensive.

    An early casualty of rising U.S. interest rates, of course, was mortgage rates, which have climbed approximately 40 basis points (0.40%) over the past month: ***


    Okay, so what we can say at this point is that bonds are being sold off around the world. This is very bad for equities, because there's a connection between falling yields and rising equities. As yields fall, the risk-appetite of investors climbs because they need returns, and so they put more money into equities and real estate. This is especially true when interest rates are negative, meaning that they yield less than the rate of inflation, and that is precisely what the Fed engineered. On purpose.

    However, this coin has two sides, and the less virtuous face combines rising bond yields with falling equities. It is simply the reverse of the Fed's desired and manufactured outcome of the prior several years.

    If we look at the U.S. stock market, as typified by the S&P 500, we see that it peaked in May (to no one's surprise, I hope) and has been steadily falling over the same period that interest rates have been rising.



    1600 is now the magic 'round number' for the market to break through if it is heading lower, which I think it is [ note market closed last week at 1592 - sic ]. We'll also note that the 50-day moving average (the rising blue line) has been critical support for the S&P 500 throughout the entire advance (green circles), and that it has been soundly violated on this drop.

    Commodities have been heading down, too, but seemingly as a part of a larger move that's been underway for a couple of years:

    Note that commodities are now beneath their 200-week moving average, which is a very bearish indicator (green circle).

    Collectively, the move away from commodities, bonds, and equities in all markets globally tells us that there's nowhere to hide and that this is a 2008-style dash for cash. Everything is being sold, as it must, to meet margin calls, pay down leverage, and get out of positions; all are signs of the end of a speculative phase.

    I know it's a lot to claim that we are at that turning point, but the evidence that we are there is now more than a month old, and it's time to consider that we are entering the next phase of our date with destiny
    . (snip)


    For 'serious' dancers and camgirls, I feel obliged to make an additional point. Conventional investment advice often given by professionals says that 'regular workers' are better off hanging on to investments despite short term declines, as everything will average out positive over the course of their 30-45 year working careers. However, where dancers and camgirls are concerned, peak earnings years are usually limited to 10-15 years at most. This of course means that, unlike 'regular workers' who can ride out several up and down economic cycles with their earnings usually rising over time, dancers and camgirls are likely to experience peak earnings potential over just one or two economic cycles, with earnings falling abruptly after they 'retire' from dancing or camming. As such, it's much more important for dancers and camgirls to 'preserve' the value of their present investments, since they aren't likely to have the same opportunity as 'regular workers' to make up for losses later.


    DISCLAIMER : the above comments are simply the personal opinion of a 'dumb blond with big boobs', and should not be construed as investment advice. As always, do your own due diligence.
    Last edited by Melonie; 06-22-2013 at 04:08 AM.

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    Default Re: weekend commentary - for girls whose stock investments have taken lumps lately ..

    Yet another follow-up based on today's market reactions to the release of the FED's Open Market Committee minutes ... which were ambiguous as hell.


    S&P 500 -40 points, 10Y US T Bond Yield +17bps, US Dollar Index -0.75%, WTI Crude Oil -0.9%, and Gold +$60

    Also, the Dow has broken below the psychologically important 15,000 level.





    I won't reference any of the 'gloom and doom' professional commentary that is beginning to appear. However, today's market actions do tend to support the earlier posts in this thread. Thus dancers and camgirls who are still heavily invested in stocks and/or bonds may want to re-evaluate their positions.
    Last edited by Melonie; 08-21-2013 at 12:33 PM.

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    Default food for ( investor ) thought - Paul Krugman re Tesla Motors

    Tesla Motors recently held a 'recognition party' regarding their California plant's reaching full production of the new Model S electric sedan.

    see video at ( essentially shows full robotic automation assembly line )


    this also led to some afterthoughts by Paul Krugman and others ...

    (snip)"Technology Overtakes Demographics

    Watching that video should explain many things. The key point that should be easy to spot is technology has surpassed demographics.

    Krugman's Mea Culpa

    Paul Krugman was let to the recognition party as evidenced by his article Is Growth Over?

    "Smart machines may make higher GDP possible, but also reduce the demand for people — including smart people. So we could be looking at a society that grows ever richer, but in which all the gains in wealth accrue to whoever owns the robots."

    Robots, Demographics, the Fed

    Amusingly, Krugman admitted in December of 2012 that he did not understand what was happening (let alone what to do about it).

    In Human Versus Physical Capital Krugman stated ...

    So the story has totally shifted; if you want to understand what’s happening to income distribution in the 21st century economy, you need to stop talking so much about skills, and start talking much more about profits and who owns the capital. Mea culpa: I myself didn’t grasp this until recently. But it’s really crucial.

    Robots, Demographics, the Fed

    Not only was Krugman was late to the problem, he also missed the central cause of the problem, who is to blame, and what to do about it.

    As noted above, technology has overtaken demographics. Before that happened, the Fed (central banks in general) could inflate at will, waiting for wages to rise with inflation.

    However, the natural state of affairs as a result of productivity increases is falling prices (not rising nominal wages). One look at computer prices (where there is no government or union interference) should suffice to prove the point.

    Yet the Fed is hell bent on preventing price deflation. The Fed succeeded but it has been a Pyrrhic victory.

    Prices are going up, but wages have not kept up. It is as simple as that.

    In the absence of Fed policies, wages would be stable to declining, but prices would fall more, and thus real wages would rise.

    Instead, and as a direct result of Fed inflationary policies, profits have gone to those with first access to money, notably banks and the already wealthy."(snip)

    from


    as Tesla's production of the Model S has ramped up, so has it's stock price ...




    The moral of this story, of course, is that the vast majority of Tesla's 'productivity' profits are going to stockholders not auto workers ! And Tesla is certainly not alone in implementing a business plan that 'automates away' as many human US jobs as possible.

    For dancers and camgirls, this certainly raises an interesting question regarding future investment strategy ... whether it is better to invest a significant share of your earnings toward obtaining a college degree ( thus trying to take advantage of increased future demand for higher skill level human labor which may or may not actually materialize ), versus instead investing the same amount in companies such as Tesla ( thus trying to take advantage of profits generated by 'fractional' ownership of robotic 'labor' that is already materializing ).
    Last edited by Melonie; 08-26-2013 at 03:44 AM.

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