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Wednesday, September 1, 2010

Money, Money, Money, Muuuuuuuuunnneeeeee

Frequent commenter Suek (thanks!) put a link in one of her comments about a group of stocks they're calling a, "Bunker Portfolio"  -
Amid the market tumult, a handful of stocks have seen their share prices ratchet up to record highs in recent weeks. And many of them are connected by a curious, if disconcerting, thread: Between them, they provide an investor with essentials for any respectable fallout shelter—makers of bottled water, canned goods, dehydrated broth, gas masks and auxiliary generators.
Kinda cool.  These stocks are up 24 percent, compared to a 4.5 percent decline for the entire market this year.  Here's who's on the list (click to enlarge) -

I wonder if the Green Shoots Administration would care to comment...

One of the companies on the list caught my eye:  Teradata.  Way back in 1985 or 1986, I worked for The Stagecoach Bank.  I was in charge of a department that basically needed access to all of the bank's records for research purposes.  Big data storage needs.

Our computers were inadequate, even back then.  We were looking for a new database company and ran across Teradata.  Their market niche was that they were the first company to come up with a one terabyte storage system.

It could be ours for a cool $20 million!  That didn't include the dedicated air conditioned room that was required for its installation.

I'm looking at my office desk right now, and I have two, 1 TB external drives for my PC, each of which cost me slightly more than $100 a piece.


Speaking about the stock market, did you see what it did today?  The Dow was up 255 points.

As the Wall Street Journal noted -
Investors dumped Treasurys and snapped up commodities and other riskier assets.
I wonder if any of these investors has ever heard the phrase, "Out of the frying pan; into the fire."

The most interesting thing to me was that volumes continue to be light.  Big bucks, low volume.
Despite the breadth of Wednesday's bump, which saw 96% of share volume advancing, many remained unconvinced amid limp trading volumes.
It's got Plunge Protection Team written all over it.  No sane individuals are buying stocks, but someone has got to keep up appearances.

Gold and silver are both up nicely over the past month.  During the past 30 days, gold is up from $1178 to $1244 per ounce, and silver is up from $17.88 to $19.35 per ounce today.  Both were slightly down today, even though most commodities were up.

As I've said before, I've given up trying to time the market or to figure it out.  When either of them dip, I look at it as an opportunity to buy.

About a month ago, I started looking into the Technical Charts for PMs, trying to figure out what they mean.  I'm not having a lot of success (!) understanding how they get their data, but I've been watching the "support" and "resistance" numbers on these charts.

The support number is taking data from Comex on futures contracts, and it plots what can be thought of as the lower limit of the PM.  The resistance number plots the current upper limit.

Over the last two weeks, both of these have been rising.  They tend to be fairly static for a period of time, then seem to jump or drop quickly.  For instance, yesterday the resistance (upper) number for gold was $1250.  Today, it moved up to $1270.  The support number went from $1211 to $1233.  This tells me the big gold buyers think the price of gold will continue to rise, and that $1233 is the furthest it will fall.

A big "YMMV"!  We're talking commodities here.  Some sheik in the Middle East may pass gas and the whole thing could come tumbling down.  Still, it's been interesting to follow these numbers and see their "predictions" pan out.

One more arrow for the "knowledge quiver".

Comcast and AT&T both suck.  On a personal basis, you'd think Comcast would fall all over itself trying to keep my home internet and TV business.  DishTV and DirectTV have guys camping out on my front porch.  Instead, they shoot themselves in the foot.  Repeatedly.

On a business basis, you'd think AT&T would want to make the New Small Business feel welcome and to display their "core competency" in delivering phone and internet service.

I had to spend 5 hours or so in total trying to get them to take my money to start our business service.  They act like we are their very first customers, and they're still working out the kinks.

If some kid were to show up at our offices with two cans and a really long string, we'd consider him as our new voice and data provider.

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Copyright 2010 Bison Risk Management Associates. All rights reserved. Please note that in addition to owning Bison Risk Management, Chief Instructor is also a partner in a precious metals business. You are encouraged to repost this information so long as it is credited to Bison Risk Management Associates.


suek said...

If you liked that one...! I've been following a couple of economic/market blogs for the last couple of years - since the meltdown - trying to figure out what's going on. I've found out that my ignorance and inability to understand the financial market is almost without limits, but this particular blog (link below) has convinced me that the biggest problem is that there is out and out fraud taking place, and the government is doing absolutely nothing to prosecute it. People keep yelling that we need more regulations - and maybe we do - but laws and regulations are absolutely worthless if they're not enforced. And apparently - they're not being enforced. I'm not sure why not - is it corruption? could be. It could also be that the Prosecutors who are supposed to be doing this stuff just don't understand it either. Lawyers study the law - not economics or the market. I can't even imagine how you'd get a jury to understand the particulars of the case - I watched the OJ case, and the impossibility of explaining the value of the DNA results to a jury that apparently had _no_ biology basics in their education made me aware of how difficult it would be to present a case claiming wrongdoing in a financial market to a jury.

Either market-ticker or had a post during the last week or so on someone who has published a graph showing the electronic testing by financial groups. I don't really understand this either - but it is a means of testing the bid/accept limits of a stock, which allows them to get a better price than you or I could. I don't know if it's illegal, but apparently there are those who think it should be.

I have no idea if these "tricks" are likely to be used in the PM markets, but it's probably good to be aware of them.

Chief Instructor said...

Sue, Denninger is great. He pulls no punches.

Regarding regulation, I don't know that much about the SEC, other than they like to surf porn and had Bernie Madoff placed in their laps, and they looked the other way.

For banks, it could truly be very simple. Reinstate the Glass-Steagall act (dropped in the late 1990s) which would again separate regular lending banks from mortgage bankers. Deposits from stock trading. Stocks are legalized gambling - which I have no problem with whatsoever - but an institution that holds deposits which are guaranteed by the federal government should not have money that is at the worlds biggest craps table.

Then, drop the Community Reinvestment Act which forces banks to either "donate" money to local charities or make loans to people that cannot pay them back. We know which route the banks took. They at least had a chance to get some money back by making the loans.

Lastly, scrap Freddie Mac and Fannie Mae. If a bank will not make a loan unless it's guaranteed by the federal government, well, the loan should not be made.

All of this will initially hurt and cause market turmoil. Then, sound banking practices can once again be introduced into the marketplace, and some sanity can return.

Oh, and audit the Federal Reserve Bank. The US financial market would collapse, but at least we'd know exactly where our country stands.

suek said...

Agreed on all points.

I don't understand the Glass-Steagal that as I understand it, the Dems wanted the expansion of the CRA in '98, and won the vote of the GOP by modifying/eliminating the G-S. But I don't understand why the GOP would want to bargain for that. The answer is probably in some individual background thing I'm not aware of - but it just seems incomprehensible to me.

suek said...

And an 'oh yeah'...

I heard there's a movement afoot to demand the physical audit of the Fort Knox gold supply.

Which is interesting - would they have to test each and every bar for actual purity? I understand that London discovered some that were actually laced with titanium (?) that has virtually the same mass as gold...

Who would do the actual audit? How would something like that be done...very interesting, once you start thinking about it.

Aaaahhhh. The things we _don't_ know!!!!

Chief Instructor said...

Sue, what Glass-Steagal did was to prohibit the merging of banks with stock brokers. In exchange for the Repubs getting this for their banker special interests, they had to support the expansion of CRA for the Dems socialist special interests.

And we got the bill.

Yeah, there have been calls to audit Fort Knox for a while. I don't think it will ever happen. I don't think there's much if anything left. Really, it's of no use to a fiat currency. The whole, full faith and credit deal. In reality, most American's think the dollar is still backed by the gold. If it were discovered that the gold was gone or significantly reduced, people would freak out. Bank runs, stock market crash, etc.

They can't risk an audit. Same reason we'll never see a true audit of the Federal Reserve. There's no "there" there.

The titanium deal seems to be growing. It's a titanium brick that is plated in gold, like a necklace.

Some old smelter in Germany saw something that didn't seem quite right, and they pulled a core sample to perform an assay. Oops!