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I Like Paul Farrell, America Is Going To Hell & Taking Value Investors Down With It!

Posted by timothysykes on Thu 24th of Jul, 2008 12:05:07 PM
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Wait, there’s a good article on Marketwatch?!?!?!? At first, I couldn’t believe it myself. Other than TH’s trading war stories, I haven’t seen anything useful on that site since the Nixon era. But now Paul B. Farell has got my attention, and my respect, for writing THIS article entitled “11 reasons America’s a new socialist economy”.

After all, it doesn’t really matter what you believe politics- or investment-wise, the fact of the matter is our country stopped being great and now everyone’s scrambling around to figure out where we went wrong.

The incompetent SEC is trying to skapegoat short sellers (FYI prohibiting a free stock market and trying to save suicide kings like Federal National Mortgage Association (NYSE: FNM) — Fannie Mae — and Federal Home Loan Mortgage Corporation (NYSE: FRE) — Freddie Mac — screams socialism.

And investors, specifically sissy value investors, aren’t helping as their flawed ideaology is losing sheep-like, marketing-gullible investors prey billions as their “long-term investments” in bumbling behemoths like General Electric Company (GE) & American Express Company (AXP) goes straight to ____________ (fill in with the derogatory word of your choice).

Blah blah blah, enough of me whining, see some of the article’s snippets below to see how much better of a whiner Farrell is:

2. Where did all the leaders go with their moral character?

Friedman’s economics requires leaders of moral character. Did it run into Lord Acton’s warning: “Power corrupts, absolute power corrupts absolutely?” Former Ford and Chrysler CEO Lee Iacocca said yes in “Where Have All the Leaders Gone?”

Friedman’s great conservative principles have been commandeered by myopic ideologues whose idea of leadership is balancing the demands of self-interest lobbyists with the need for campaign donations. Unfortunately, a new “change” president won’t be enough; there are 537 elected officials in Washington controlled by 42,000 special interest lobbyists.

4. Deregulation creating new socialist housing system

Back in 1999 a Democratic president and Republican Congress were in love with a fantasy called the “new economics.” Enthusiastic lobbyists invented the brilliant idea of dismantling the wall between commercial and investment banking: They killed the Glass-Steagall Act that was keeping the sleazy hands of short-term hustlers out of the pockets of long-term lenders.

Flash forward: We lost 85-year-old Bear Sterns and $32 billion IndyMac. Lehman’s iffy. And 90 banks. With the virtual takeover of Freddie and Fanny, Wall Street’s grand experiment with free-market ideology is backfiring, having socialized the housing market. They have nobody to blame but their self-centered greed.

8. Warning, the market’s under 2000 peak, losing money

Imagine you’re on Jeff Foxworthy’s fabulous show competing to see if you really are smarter than a fifth grader. Question: “If you put $10,000 in the market in March of 2000 when the Dow peaked at 11,722, how much money would you have today if the market’s 10% under 11,722?” So you guess $9,000.

But then two fifth graders raise their hands: One asks if the CPI inflation rate should be considered? If so, maybe $5,000 is closer to the right answer. The other kid wants to know if you’re buying stuff in Chicago or Singapore.

The truth is, the best answer for most adults is: “You’ve lost a hell of a lot of money in the market under the grand conservative ideology the past eight years.”

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  • can u guys see this?
  • WaynoMD
    Yup
  • The Chad
    A good article on Marketwatch - not a chance...
  • beinggreat
    I can see it
  • eb
    I have a Sony laptop and its great Tim. Besides a Sony, Id go with a Hewlett Packard...I know several people with those and they'd get another HP if they were in the market.
  • TommyTim
    Congress Pursues $80 Oil With Trading Limits, Rules (Update1)

    http://www.bloomberg.com/apps/news?pid=newsarch...


    That's from yesterday. An oil trader today said this would be a big mistake. Picture oil being a low float stock if these rules go through. You could see $200 a barrel.

    1.3 trillion needed to bail banking industry. We'll be talking about monster inflation to go along with double digit interest rates in the next 2 years to make up for a worthless dollar. Oil will superspike starting from today. Iran has till next week to stop nuclear enrichment which they vowed never to do. Look for $10 a barrel to be added to oil within 2 weeks.

    Corrupt country we live in is going down for the count. Lobbyists and special interests need to be banned.

    Fake rally had no legs or support. You know something is wrong when banks are doubling in 3 days on losses of 11 billion for the quarter. WTF.
  • noobtrader.08
    move to Canada... not that it's much better, but the beer is!!
  • TommyTim
    Buying up ROYL and PDO. These should double in the next month on $140 oil.
  • younggunz
    I recommend an IBM/Lenovo like another poster mentioned in the previous blog. Especially if you're using your laptop like a laptop is meant to be used; traveling with it and using it where ever you go. If it sits on the same table 90% of the time you'd be fine with the cheapest POS you could find.

    You can easily tell how much better a thinkpad is made compared to a sony or dell. HPs would be my second choice but they usually come with a ass load of unnecessary software pre-installed. Thinkpads have a lot of safety features since they're basically made for the traveling businessman. You're using your laptop for business so I would seriously consider one. The new thinkpad t61 line is really nice.
  • younggunz
    America isn't going to hell...You've just been hanging around wallstreet too long :)
  • gil
    I had a pc and it crashed to eventually they all do
    solution: macbook pro
    hard to use at the begining but they never dissapoint
  • Jake
    Tim-- can you add a timezone setting to our profiles? Sometimes the post times mix me up because I'm on the west coast (damn 5am mornings).
  • TommyTim
    Fannie And Freddie's Bailout Cost

    It's going to be a mind-popping $25 billion over fiscal 2009 and 2010, according to the Congressional Budget Office (CBO). Let's put that in perspective: $25 billion for two financial institutions compared with $125 billion for the entire S&L industry in 1989-1991? Ouch

    But, this being Washington, there's a catch. CBO Director Peter Orszag told reporters Tuesday that the plan could also cost nothing--or as much as $100 billion.

    Zero to $100 billion. Nice range.
    http://www.forbes.com/business/2008/07/22/fanni...

    FNM and FRE will be penny stocks soon which is why the top fund managers didn't care they were squeezed 50% last week. These are going to 0 at whatever price you short them at. That naked shorting rule worked for a good 2 weeks.
  • younggunz
    All COMPUTERS crash...mac's are just overpriced slow computers you get a lot of eye candy and a lot of the apple proprietary programs play nice together but thats about it. Don't give the spiel about how you don't need anti-virus when all its going to take is a few asshole hackers to decide its worth the time to make a mac virus and you're all fucked.
  • The Chad
    Anyone like GTN?? Looking to short this..Boring chart - but the chart almost repeats itself... Thoughts?
  • TommyTim
    http://biz.yahoo.com/rb/080724/wallstreet_lawsu...

    CHICAGO (Reuters) - The city of Los Angeles sued more than 30 municipal bond insurers and Wall Street investment banks, accusing them of fraud and antitrust that it said cost taxpayers millions of dollars.

    LMAO...The shit is hitting the fan.

    Yesterday it was announced City of San Diego was suing Bank of America.
  • TommyTim
    New York State sues UBS, alleges auction-rate fraud

    NEW YORK (Reuters) - New York Attorney General Andrew Cuomo filed a civil lawsuit on Thursday against UBS AG (VTX:UBSN.VX - News), accusing the Swiss bank of deceptively steering customers into auction-rate securities that this year became impossible to sell amid the credit crunch.

    http://biz.yahoo.com/rb/080724/auctionrates_pro...

    LMAO... You couldn't make this stuff up and it's a reality.
  • getshorty
    Yes, we can see.

    I am happy with my mac, but since you are not that cool yet get a Lenovo, I did a case study about it and the amount of testing this do to this machines is really breathtaking, they even put them into a machine that opens and closes the screen continuosuly for hours.

    If I had no chance but to go for a pc, i'll go for a Lenovo.

    I was taking breakfast thismorning when an alarm set days ago went off in my computer. it was UBHI breaking support, since I had 500 "self-reserved" shares (long on 1 broker and short in the other) I shorted 500 shares at 2.65, currently trading at 2.30 and doing nothing, will leave it open unless it starts crawling up, in which case I won't let it go over 2.40 without closing, but long can pretty much be bored of it and may be a good afternoon fade, $ 165 up on this one so far.
  • getshorty
    Don't want to start a pc vs mac discussion forum here (plenty of those around) but the reason for apple being more stable is that they make both the hardware and the Operating system as opposed to open architecture pcs.

    Will not reply more on the pc mac subject just because I don;t knoe much more than what I just said and that I have had pcs for 10 years and mac for 1 and pcs always slowed down and crush, while my mac hasn't.
  • getshorty
    TommyTim, weren't you the one guessing that aapl price will spike up after earnings. let the guess game for the casino, we are trying to learn stuff that works here. $200 oil my ass
  • Zoltran
    Can someone please tell me what the normal criteria is for having to reserve shares to short? Is it just average volume?
  • younggunz
    $200 oil? yeah someday. shoot even the boy who cried wolf was right eventually. Don't want ot start an oil discussion either but oil is way overvalued but I think it is a good thing as long as it gets a correction. I think it is a good thing that it is overvalued and its scarcity over exaggerated so that the big 3 and other major players in the energy industry get off their duffs and actually put serious attention into alternative sources.
  • gil
    somone on the comments mentioned about a month ago that cmg is a short
    since their pe is 34, i looked to short it and didnt because i couldnt get shares. who was it?
    it was a good suggestion.
  • TommyTim
    T-Boone pickens called for $400 oil in the next decade. Oil isn't about supply and demand anymore it's a hedge against a weakening dollar. Based on supply and demand oil should trade at $80 as the government figures have shown. The U.S can't dictate what something should be priced at.

    Yes, I was off on my Apple call. They did blow away the number however as I called. I also said they might lowball guidance which they always do. Just like FBI profile people stocks can be profiled. Apple regained all its losses and then some the following day. As a daytrader I do suck as it's not my thing. Everyone has their strengths and weaknesses. My strong point is guessing where the market will be on a monthly level.

    $150 oil by end of year.
    Dow at 10K by end of year.

    The market is all one big casino to begin with. FRE loses 70% of its value in a week then goes up 200% the following week from its lows.

    Tims style of trading is very efficent and basic. He doesn't follow a million stocks on a daily level trying to time peaks and valleys. That is way too time consuming and stressful.

    JRCC, SWN, GMXR, POT, AGU, SKF....buy those up today and in another month get back to me where they are trading. This is my strength.

    Short FNM, HOV, LEH, FRE, and tell me where they are in another month.

    Where they close today or tomorrow I have no clue. As I said my strong suit isn't daytrading.

    Apple, yes, was a casino style guess. The logic behind everything else I talk about is from knowledge and experience.
  • MARC
    Will UVSE ever get started going higher? Damn it just go already.
  • Read that article yesterday, was a great read; couldn't have said it better myself, it also shows me there's no better time to be a short term trader
  • getshorty
    Left for lunch leaving my UBHI open, 1 hour before mkt close, was trading at 2.30-2.32, put a tight stop at 2.35 Went back from lunch, the stop didn't went through and the stock closed at 2.05. Seating in $300 gains now, looks like it may keep on falling, but will close in a split second if it starts to crawl up.

    Change of heart, just checked the graph one more time before posting, will close it tomorrow morning no matter what, not much downside compared to the potential upside. Not good risk reward.
  • longshort28
    Which broker allow you to short otcbb stock? Scottrade doesnt allow to short any stock which is trading less than 5.
  • Bob (VC)
    YoungGunz, you kill me boss.. Macs are slow and overpriced.. Last time I checked, they ran the same Core 2 Duo processors as XYZ PC maker at the same speeds (current top out at 2.6Ghz, with an update coming soon). And although the Nvidia 8600GT isn't the fastest laptop graphics card out there, it is no slouch..

    The OS is cleaner, FASTER, and more secure (you're right, it's not virus proof, but it's much more secure and is light years ahead of MS in security features). Some day someone may write/release a virus that can affect one, but today is not that day.

    As for over priced, config a HP/Dell/XYZ with the same specs and see how overpriced they really are, I think you'd be surprised, and the quality is much better.
  • mrgreenlust
    Telling users to short FNM or FRE?!?!?! Listening to that is a good way to get yourself in the poor house. Has anyone noticed that the market has an itchy trigger finger on the financial stocks? They rally on shit news... It takes days of bad news and bearish profit taking on top of psycho shorts to bring them down. If the slightest hint of turning the corner shows up on the radar FNM and FRE are going to shoot up another 100%. There has not been solid good news yet, anywhere that I have heard of (in finacials). FNM and FRE are guaranteed, they aren't going under, EVER. 20-35 by the end of Aug depending on the general economy.

    All it takes is a few people to look around and say, man, some of these homes are cheap.

    Things can change fast, one minute its doomsday and the next thing you know the last train to margaritaville just rolled by.
  • Keep an eye on MITI tomorrow... broke past $4 resistance today on heavy volume, and made a new closing high... cheap biotech stock with a good cancer pipeline. Lots of potential catalysts coming up.
  • It is getting bad and I think this is just the start. There are always opportunities though, especially when everyone is preaching gloom and doom.
  • longshort
    I have started trading last week and almost 1800 down. Not a big player and started with 5K. Two big bets went wrong. First shorted Wells Fargo and had to cover 8 dollars up next day and same thing happened with shorting of Merrill. Lost most of the money in these two stocks.

    Today I am almost down 400 $ coz of FRE and FNM but havent sold that. I will keep it till monday as house might pass the bill and I can get my money back on these two dogs.


    Now I have to be careful in buying and shorting stock. I dont understand this f market as companies are writing off billions and market is buying that company's stock.
  • Longshort, sorry to hear but its a good lesosnf or u...there sa big thing nobody can ever quanitfy= bad news priced in...stick to pump and dumps, the hype is all just lies aka much easier
  • YngvaiMalmsteve
    Yeah, longshort, listen to Tim. I know myself personally I wouldn't ever short or long a big company overnight...there's too much that can happen overnight that can screw you (which is another reason why the PDT hurts traders rather than helps them).

    Microcraps are a completely different ballgame, however.
  • longshort
    thanks for your advise Tim and Steve. I will try to stick to Tim's reco and our everyday's discussion on this website.

    Steve, I missed your STSA's reco about shorting. It did go 90 cents down.
  • mrgreenlust
    FNM or FRE pennystocks soon?? Fat chance.

    "First, as a liquidity backstop, the plan includes a temporary increase in the line of credit the GSEs have with Treasury. Treasury would determine the terms and conditions for accessing the line of credit and the amount to be drawn.

    Second, to ensure the GSEs have access to sufficient capital to continue to serve their mission, the plan includes temporary authority for Treasury to purchase equity in either of the two GSEs if needed."

    Its the shorts vs. the US Treasury. Who do you think is going to win?
  • Tony Ellis
    I'd put my money on the shorts...Treasury can't keep manufacturing dollars out of thin air and expect foreign central banks to keep purchasing our debt.
  • johnnyvento
    haha yes they can Tony

    that was a cynical political comment, not a comment about your analysis

    you are a great trader
  • yaktipper
    I'll keep my money out of the financials bet. Nothing predictable about the situation. Tim keeps trying to hammer home the low odds with large caps and I keep trying to listen.
  • mrgreenlust
    US spent 3 Trillion on Iraq and yet people seem convinced that a paltry (by comparison) 25 billion for Fannie and Freddy is going to crush the Treasury.

    The max national debt was increased from 9.8 to 10.6 billion so really how much worse off are we?

    Housing data shows down trends but slowing down trends. It will get worse, and its so easy to be scared of that thought, but getting worse at a slower rate is also getting better.
  • yaktipper
    10.6 trillion isn't too bad when the US will be facing 40 trillion in Social Security and Medicare unfunded obligations.

    I say let inflation run wild for a decade, then Tim can hand the cabbie a $100 trillion bill and pay off the national debt with the change.
  • mrgreenlust
    Its easy to be scared by such numbers when you fail to mention that said debt will be due over a period of time and not instantaneously.
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See Tim's full bio HERE. Tim turned a few thousand dollars into a few million by taking small gains time after time on hundreds of volatile penny stocks, discovering that his trading strategy, while consistently successful, works best for those with smaller accounts.

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Hard work to learn how the greatly misunderstood niche of penny stocks provides opportunities every now and then on which you should pounce.

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Long story short, wait for stocks that are extremely volatile - for whatever reason - and then aim to take small profits (between 10 and 50% within a few hours, days or weeks) here and there, either from betting on higher or lower prices (yes, you can make $ betting on lower prices, it's called Shortstocking (learn more HERE).

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TIM Trades

View All
Date Stock Buy Sell Net
Nov 6 QXM $4.31 $4.80 $1936
Nov 4 COT $8.66 $8.88 $642
Nov 4 QXM $4.61 $4.89 $822
Oct 30 DDRX $25.70 $26.53 $812
Oct 29 CTDC $4.00 $4.42 $781
Oct 26 AWSL $3.24 $4.10 $2516
Oct 23 RODM $5.27 $5.23 $301
Oct 22 AMLM $2.69 $2.97 $820
Oct 22 USEG $6.12 $6.09 $85
Oct 20 CBOU $8.93 $9.06 $243
Oct 16 VRMLQ $16.79 $18.65 $2773
Oct 13 YONG $11.05 $11.66 $1202
Oct 13 NPHC $0.59 $0.71 $583
Oct 12 IMGG $0.60 $0.70 $682
Oct 9 ZAGG $5.50 $6.10 $2380
Oct 7 GVBP $0.03 $0.27 $702
Oct 1 NPHC $0.70 $0.85 $1482

Total: $92,304 (644%)