CheetahhhhhhhBlog Mark III

First of all, I have said many times that I think the European crisis is overblown. I’m starting to reassess this opinion, indeed the collapse of the Eurozone seems a possibility. Nevertheless I still think that ultimately the Germans will bail out Europe. However I think this will be a very rocky year for Europe, and a few members may eve withdraw from the Eurozone, such as Greece, primarily so that they can devalue their currency (and thus their debt). One indication of impending trouble is that people are shifting their money into the Swiss franc. I am actually probably going to do the same, my savings in Euro and sterling are losing value.

Silver is on a big run and has made me a nice bit of money. Because of currency devaluation and political problems, I expect the run on precious metals to continue. It makes me nervous however and I watch my metals all day long, ready to sell at any moment.

For several technical and historical reasons, I have reassessed my prospects for the new year. I expect a bear market. I will not go into reasons why except to say that historically in previous depressions, the real low did not hit initially, but rather after the first relief rally. For example the real low of the Great Depression was 1933, not 1929. I am inclined to think the market is topping and we’re going to see about a 20% retreat, if not more. Hope I’m wrong but I’m basing this assessment on history, which tends to repeat itself. Indeed I’m buying puts on the SPX.

I still have minor investments in Ireland. I own 400 shares of Allied Irish. Not a lot but enough to not want to see it collapse. I am really unsure about what to do. I would think that as the Irish government takes control of the bank, prices will rise. So I am inclined to hold. However the safe route would be just to sell and get rid of the worrry.

I like George Soros’s quote: “Markets are constantly in a state f uncertainty and money is made by discounting the obvious and betting on the unexpected.” Love that quote.

Now I am no brain bank. However I am profitable on the stock market. More profitable than most hedge funds and money managers. Again, no brain bank. I just discount the obvious. Indeed before I make a trade, I actually think to myself, “What would Martha in Omaha think about this?” Martha is just Mrs. America. And I’d generally do the opposite of what she thinks.

Now Stock Sage presents a list of black and grey swans that I love enough to reproduce (http://www.robertsinn.com/2010/12/21/a-list-of-grey-swans-and-a-few-black-ones-for-2011/):

Greece leaves the Eurozone as political pressure mounts and austerity strikes paralyze the country- Probability of occurring in 2011- 25%

The US Federal Reserve embarks on QE3 (another round of quantitative easing) despite political pressure not to- Probability of occurring in 2011- 40%

Gold reaches $2000/ounce and silver trades above $40/ounce as loose monetary policy in the EU and US causes market participants to flee to something that cannot be made out of thin air- Probability of occurring in 2011- 20%

The S&P 500 suffers a 15-20% correction from year-end 2010 levels- Probability of occurring in 2011- 30%

The US Treasury 10-year note yields over 4% as inflation picks up faster than expected in the 2nd half of 2011- Probability of occurring in 2011- 30%

Israel/US bomb Iranian nuclear infrastructure- Probability of occurring in 2011- 20%

The Eurozone moves towards adopting a ‘super-sovereign’ approach (central fiscal strategy) in an attempt to stave off a breakup of the Eurozone- Probability of occurring in 2011- 35%

A dissolution of the Eurozone in its current form as austerity protests and strikes create political chaos for EU leaders- Probability of occurring in 2011- 10%

Oil retests its 2008 highs as loose central bank monetary policy and a stronger than expected world economic recovery create strong demand for black gold- Probability of occurring in 2011- 15%

The SEC lands some big fish (Yes, I mean BIG FISH) in its insider trading investigation- Probability of occurring in 2011- 40%

The state of California will seek assistance from the federal government in dealing with their debt- Probability of occurring in 2011- 30%

The Federal Reserve raises rates in Q4 2011 due to a sharp unexpected rise in core CPI- Probability of occurring in 2011- 25%

The probability of the S&P 500 reaching the 1373 average target of Barron’s 10 strategists and investment managers – 15%

It’s fashionable these days to give “disclosure” about your positions so I will give disclosure. I’m short an RUT iron condor on January. I’m long silver. I’m long AIB.

We’re in Bora. Bug is a home boy and wants to go home. Yit-yit is enjoying himself except for a red and attack. The red ants here are viscous and appear to have some kind of poison in their bite. Surprising how developed the island is getting. I remember, there wasn’t much at all to the left of the Blue Mango Inn. Now it’s all developed with bars and hotels and boutiques.

I was bragging to the guys in Kabul that I would be surrounded by beautiful little Asian girls in bikinis. So far all I’ve seen are fat old German women in bikinis. A bit disappointing, that.

I’m a bit of a connoisseur of fine watches and as you know I own a Breitling Navitimer. My next acquisition will br a Panerai Marina, which are the watches made for the Italian SAS, or else a Rolex Submariner, the classic James Bond route. Well the thing is, the with the fakes they’re making in China these days, it’s pretty hard to tell the difference. I bought a Marin and a Submariner today for P2000 on the beach and I know what I’m looking at. These are watches I admire and covet. And it’s pretty frakkin hard to tell the difference. The dial clasp on the Marina is a little flimsy, but otherwise it’s automatic (we’ll see if it actually keeps time) and visibly indistinguishable. Now the Submariner. It actually has a waterproof valve now. The Chinese are copying everything. I doubt the valve is good for more than a few feet under water but I had the guy test it in the surf before I bought it. Sure enough. 5 minutes in the water, it’s OK.

The Blue Mango is everything we remember and we love it here, except they have a problem with the internet. Only complaint. Looooooooove the mango pancakes in the morning.

There was a charity sale on campus for the 10,000 Women project, which is an initiative by the university to get Afghan women into business. Bought a kilim rug which I’m very pleased with. Hand made by the women in the project. about 10×8 feet, $200. Apparently on the street I could have haggled for less but this was charity.

Well ladies and gentlemen, Kabul entered the 21st century today. Finest Supermarket now takes credit cards. Yes, you heard me correctly. First store in Afghanistan to take plastic.

Less than a week before I go. Have a lot of grading and paperwork. Our grading system is unnecessarily complex and so stressful. Also I am not one who likes time pressure. Some people deal with time pressure just fine but me, it stresses me out. So while I’m on the home stretch, I’m a little stressed right now.

So as I mentioned, I was elected a faculty senator. We had our first faculty senate meeting today. Took about 1-1/2 hours but we took a picture, agreed not to elect a president of the faculty senate yet, and agreed to hold the next meeting on Jan 26 at 3PM. Quality of life issues were discussed. At AUAF maintaining quality of life in a difficult environment is an issue. There are a growing number of people with spouses and children and I am actually the advocate for this hitherto ignored group. Indeed it was my election platform. I pointed out the need for green spaces for children to play, that it would be good to have a family house so children and spouses would be together, etc.

And this is how Chris “C”s it:

1. I have two leading indicators, copper and the Shanghai Composite. Of course no leading indicator is perfect. The Shanghai Composite is in a holding pattern and sending no clear signal. Copper is however poised to breach its 08 highs which is very bullish. It may not breach them however, N.B., this is a wait and see situation.
2. Gold is clearly in a bull market but appears overextended. With all the currency and inflation worries I would expect gold to rise. I would, however, agree with Goldman Sach’s recent assessment. They advise their clients to hedge gold and prepare for an end of the gold bull market in 2012. I don’t think we can time this precisely. I say hedge your gold and keep an eye out for signs of a market top. But in the meantime don’t fight the trend.
3. If the SPX makes a clear breakout above 1225, then I’d say we’re in for a nice bull market next year. Again there is a big IF here.
4. The eurozone problems are in my view overblown. I have discussed my reasons for this below.

So first of all, in reference to my previous post “Shots Fired”… apparently a car nearby an AUAF vehicle was shot at, not the AUAF vehicle itself.

I just got elected to the faculty senate. I don’t know whether this will be a toothless dog or not, but I do have an agenda or two. Stepped up on my soapbox for a minute and outlined my agenda and apparently it was well received, because I got the votes.

Surprised to discover that Obama was or still is in Kabul. I only read the financials and so am not too up on whatever else is happening in the world. Apparently security has been ramped up of course, to the point where an AUAF transport vehicle (which would be an unmarked minivan or Toyota Land Cruiser) got too close to a NATO (or whomever) military convoy and got shot at. Just a warning shot apparently but yes it pierced the AUAF vehicle. What is odd here is that AUAF vehicles avoid NATO/UN/etc military convoys like the plague. I am not sure how or why an AUAF vehicle accidentally got so close to a NATO convoy that they’d fire a warning shot. I’d say the NATO boys are all hyper because Obama is in town.

The fact that Obama is in town says a lot that’s positive about the security situation, I’d say.

I leave for home (Manila) in less than 2 weeks and thank God, I’m exhausted. On the 18th we’ll be in Bora and double thank God for that.

The amount of money I spend on insurance and airfare is really irritating. And you’d think with all the money I spend on air tickets, I’d have a million frequent flier miles. Actually no. The thing is, I buy the absolute cheapest tickets, and so my frequent flier miles are mish-mashed all over the place.