The last time I posted I was all cheerful and happy as everything seemed to be falling into place for the long awaited meltdown in the stock market. I was confident enough that I took a position in the ETF fund DXD which is a short of the Dow. I got in at 18.55 a share and was flying high wide and handsome till last Friday. The market was down about 250 points and I thought I had the proverbial slam dunk when it turned on a dime and went up 400 points in the last hour to finish up 150 points. I dumped my shares first thing Monday morning. I got out at 20.71 so I still made a profit of 2.16 a share or, in terms of percentage I picked up 11.6% on a short trade of only a couple of weeks. I also had a quick in and out on the dollar account but only managed a couple of percent on that one. The market is very volatile right now and it is hard to take a position without getting stopped out the next day. Ok, here is my take on the situation.
STOCKS: I think there is more to come on the downside but apparently we are going to have a little rally before turning back down. I'll wait this one out.
BONDS: It think the price of bonds are in some sort of bubble and when they tank they are going to be the trade of a lifetime. For now they seem to want to keep going up. I'm going to watch them for any signs of weakness and short them all the way down.
GOLD: I think gold has, for the most part corrected. It is off some 300 dollars an oz from it's high. I think it will flop around a little before going back up. When the next buy signal comes I'll take a sizable position in Gold.
THE RANT: This whole situation we, as a nation, find ourselves in stems from the election process. Our politicians are bought and paid for by the banks and the corporations. A politician has two goals in his life. The first is to get elected. The second is to get reelected. The average voter contributes nothing to election and reelection campaigns so he has no clout. The banks and the corporations have the funds to donate vast sums of money to the election campaigns and they also have the funds to pay out vast sums of money to lobbyists. The middle class guy has neither and therefore his needs are of no concern to the politician. The whole ugly mess we are in is all about " Free Trade ". The large corporations topped out years ago and the only way they could increase sales was to take it from someone else. That is hard work. Much easier to expand the market. You do that by the so called " Free Trade ". As a point of interest GM sells more Buicks in China than they do the US so it's easy to see why GM would be in favor of " Free Trade ". Combine that with outsourcing of production to cheap labor countries and shipping the good back to the US markets you can see why the large corporations are so enamored of " Free Trade ". The bottom line is until we can figure out a way of separating corporate money from the election process nothing will be changed. There is about as much chance of Congress passing the necessary legislation to do that as there is of Congress passing term limits. The only hope we, as voters, have is voting out the incumbents regardless of party and hope that at least they will do less damage by only serving one term. Eventually the whole rotten system will collapse and we may get a chance to go back to the drawing board but, until then, nothing will change for the better. As usual, I'll keep you posted.
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