|
PureBytes Links
Trading Reference Links
|
I've been away in Europe for 3 weeks and just returned this weekend ... had
a great vacation but it's really great to be back home. I had a number of
private emails inquiring about my current market outlook since I hadn't
posted anything.
My current thinking remains generally in line with my last post on the
subject on September 9 ... especially the last 4 paragraphs - I note that
the Wall Street selling machine is still hard at work. The one new fly in
the ointment is the effect of the tremendous fiscal and monetary stimulus
(and government deficit) arising from the September 11 terrorist attack
which could make for some rough sailing in bond positions and could bring a
major (but temporary) equity rally later this year. In short, I still
believe that the long term strategy indicated is sound with some rough
sailing in the near term.
Earl
----- Original Message -----
From: "Earl Adamy" <eadamy@xxxxxxxxxx>
To: <realtraders@xxxxxxxxxxxxxxx>
Sent: Sunday, September 09, 2001 11:47 AM
Subject: Re: [RT] Markets: Stock Index Futures and regulation
> Rakesh,
>
> As a trader I use technical analysis exclusively. My bias toward technical
> analysis carries into longer term investing except when I believe there
are
> extreme conditions in the market. I also have long had an interest in long
> term market history because I do believe that there are lessons to be
> learned from history and that markets move from one extreme to another and
> back. However first and foremost in trading and investing is capital
> preservation. Thus I was a couple of years early in starting to ease out
of
> equity investments and I may be a couple of years late in easing back in.
>
> I believe that there are many similarities between the current US market
and
> both the Japanese and post-crash (29) US market. There are also many
> differences ... one is the dependency of the US economy on services (the
> Japanese and 29 economies were manufacturing based) and another is the
more
> homogeneous social makeup of the Japanese society. The later is
significant
> because the Japanese (and to a lesser degree European) social orders are
> less driven by free wheeling capitalism which I believe has been carried
to
> an extreme in the US and (particularly in Japan) the homogeneous society
has
> eased the financial pain of depression. Never-the-less there is a creative
> and free wheeling spirit here which should not be underestimated because
it
> has proven itself capable of adapting to (and leading) tremendous
challenge
> and change for several centuries.
>
> Still, in my mind, the excesses have been carried so far over a period of
> decades that there must be a long/steep corrective period. The pain will
> happen ... it is up to those attempting to manage the economy whether the
> correction will be long or will be deep. In the US I would add that there
> has been a general preference for the public rather than business to take
> the brunt of economic pain e.g. the banks are profiting handsomely on rate
> spreads while the public is paying relatively high rates for credit.
>
> All selling machines are always in gear and Wall Street is no exception.
> When sales slow and inventories pile up at car dealers you don't hear them
> running negative advertising, neither does Wall Street. The astute
investor
> will take some independent measures and reach conclusions independent of
the
> hype.
>
> As for investing in a major turn in the markets, on technical basis I will
> need to see weekly charts with well established bullish trends
(particularly
> good looking, bullish linear regression channels) and on a fundamental
basis
> I want to see companies with strong market positions, honest accounting
and
> good values in the stocks in which I invest ... this requires a major mind
> shift from investing in markets which are already in a steadily rising
bull
> market.
>
> What I really expect to see is the time come when absolutely no one wants
to
> own stocks (this last happened in the 30's and 40's) and that is when I
> expect to start shopping for real bargains with real earnings and real
> dividends. In the interim, I continue to like bonds and believe they are
> probably a double over the next 5-10 years (look at the history of
interest
> rates in the 30's and modern Japan). I remain undecided on currency issues
> because I think the issues are more degrees of pain rather than a safe
> haven. If world economic woes bring a rise in nationalism and
> political/social dislocation (I think this is a good possibility), arms
> makers may lead an economic rebound.
>
> More than anything else, one must continuously observe (independently of
the
> media), think, and adapt to conditions as they unfold.
>
> Earl
>
>
> ----- Original Message -----
> From: "Rakesh Sahgal" <rsahgal@xxxxxxxx>
> To: <realtraders@xxxxxxxxxxxxxxx>
> Sent: Sunday, September 09, 2001 8:08 AM
> Subject: Re: [RT] Markets: Stock Index Futures and regulation
>
>
> > Earl,
> >
> > In your write up on the prospects for the economy in your country you
have
> > primarily relied upon fundamental concerns(if I understand you
correctly)
> > which are coming to the fore now, rather being touted by the salesmen of
> > Wall St. now when the markets have already tanked.
> > These factors were not being cited by Wall St. gurus and their
underlings
> > globally earlier on, when the markets were touching the skies.
> > Cant one infer from these shenanigans that "they" have exhausted
> > inventories and and are now re-stocking or is this assumption
erroneous?
> > This I ask in light of the fact that sooner than later the easing
> > liiquidity conditions will make themselves felt in the economy. Also how
> > relevant are the comparisons of the U.S economy with the Japanese
economy
> > with their structural differences( or am I again ignorant of the
> similarities)?
> >
> > Once Ira had posted that the Wall St. selling machine always finds
> > stories/concepts to tout after the current rage is dead and buried. Are
> you
> > saying that the conditions are going to be so dire that the markets are
> not
> > going to reward performance and/or the prospects of performance of the
> next
> > great "find"?
> >
> > You further state in your message below, that you are willing to change
> > your analysis contingent upon contrary evidence emerging. Given your
very
> > strong views what would you term conclusive evidence keeping in view
the
> > fact the charts will essentially lead the economy and corporate
> > performance? Would you wait for confirmatory economic data and enter the
> > markets on pull backs in the new trend or trade major support
> > points/projections with stop losses?
> >
> > Look forward to your comments.
> > Regards.
> >
> >
> > Rakesh
> >
> >
> > At 08:06 AM 9/8/01 -0600, you wrote:
> > >Yes, that was a typo, I was referring to the introduction of single
stock
> > >futures. I do not disagree with your observations as they relate to
> current
> > >market conditions. My comments are directed toward conditions existing
in
> a
> > >major cyclical bear market of the type and scope we have not seen for
> nearly
> > >a century. Should those conditions emerge, I believe that the
enthusiasm
> > >for, and regulation of, derivatives will change markedly.
> > >
> > >I should, perhaps, add a few caveats regarding my opinions. I am
> personally
> > >extremely bearish in my view of the equity markets for the next decade.
> This
> > >is reflected in the fact that my investments have been 100% in long
term
> > >treasuries and bond funds for well over a year now and I am even now
> > >completing the process of switching bond funds (most of which contain
> GSE's
> > >and corporates) for treasuries. Futures trading is another matter, I
> don't
> > >care if the market goes up or down as long as it does one or the other,
> > >preferably in a trending manner. Finally, my investment hat is in no
way
> > >married to the bear case should strong evidence emerge to the contrary,
> > >however I am in no way interested in trying to time my investments to
> catch
> > >the absolute bottom in this market.
> > >
> > >Earl
> > >
> > >----- Original Message -----
> > >From: <I4Lothian@xxxxxxx>
> > >To: <realtraders@xxxxxxxxxxxxxxx>
> > >Sent: Saturday, September 08, 2001 7:32 AM
> > >Subject: Re: [RT] Markets: Stock Index Futures and regulation
> > >
> > >
> > > > Earl:
> > > >
> > > > With all due respect, stock "index" futures have been a huge
success.
> I
> > > > believe you wish to be skeptical of single stock futures. And given
> then
> > > > attendance and interest shown by the futures and securities industry
> this
> > > > week at a seminar in Chicago by the Futures Industry Association, I
> beg to
> > > > differ with your conclusion.
> > > >
> > > > Single Stock Futures, in my opinion, will be the single largest new
> > >product
> > > > we have ever seen introduced. There will be three exchanges in the
> U.S.
> > > > offering them, a very aggressive and with it Nasdaq-LIFFE, the yet
to
> be
> > > > named but formidable Chicago Joint Venture of the CBOE/CME/CBOT and
> the
> > >just
> > > > announced AMEX. What product have we had launched by three
exchanges
> all
> > >at
> > > > the same time?
> > > >
> > > > Keep in mind that the banks wanted nothing to do with the CBOT when
> they
> > > > launched the bonds. Six months later they were knocking down the
> doors
> > >for
> > > > memberships and floor space. Look at the influence of stock volumes
> from
> > > > tine introduction of options trading in the 1970s and stock index
> futures
> > >in
> > > > the 1980s. Volume took off and never looked back. Nearly 1/3 of
the
> > >weekly
> > > > NYSE volume comes from program trading alone.
> > > >
> > > > The new single stock futures will offer tremendous capital and
> operational
> > > > efficiencies to some of the largest players in the industry. No
more
> > >waiting
> > > > t+3 for stocks to settle. Same day settlement. Marked to the
market
> at
> > >the
> > > > same clearing house, the OCC, for all the single stock futures and
> options
> > > > trading. Same clearing house for settlement and delivery of options
> and
> > > > futures contracts.
> > > >
> > > > Take then that the biggest corporate names in the world are U.S.
> companies
> > > > that can be traded as SSF. Take then that the U.S. capital markets
> are
> > >the
> > > > best in the world in terms of legal certainty, regulation and
> fairness.
> > > >
> > > > These are all parts of the equation why single stock futures will
> work.
> > >Will
> > > > they take volume from stocks? Yes and no. That same argument was
> made
> > >when
> > > > options and indexes were introduced and they only added to the
> liquidity
> > >of
> > > > the market. With the movement of time we have been able to
introduce
> > >better
> > > > and better contracts to specifically meet the needs of traders,
> hedgers
> > >and
> > > > investors. We no longer need to run into gold or soybeans to hedge
> our
> > > > inflation or deflation risk. These tools will only make what people
> want
> > >to
> > > > do, and do, more efficient.
> > > >
> > > > And I for one and going to do my best to make sure they will be
> > >successful.
> > > > Part of the reason I write my daily industry newsletter is to help
> people
> > >in
> > > > the futures and securities industry manage the changes all around
us.
> Just
> > >in
> > > > the last week I have had a President and CEO of a U.S. exchange sign
> up
> > >for
> > > > the letter. A Senior Vice President of one of the Chicago exchanges
> > >signed
> > > > up. A large division of a clearing FCM will shortly be announcing
> they
> > >are
> > > > going to license my letter to offer to their clients and to attract
> new
> > > > clients. They will be offering it at a single stock futures
> newsletter.
> > > >
> > > > So, all the signs I see say that these new products are going to
work.
> > >And
> > > > as the Nasdaq-LIFFE said, they are going to "make" them work. I
have
> > >never
> > > > seen an exchange so confident, so focused on the good of the
customer,
> so
> > > > focused on offering a level playing field for all participants as
the
> > > > Nasdaq-LIFFE. And I believe them.
> > > >
> > > > Regards,
> > > >
> > > > John J. Lothian
> > > >
> > > > Disclosure: Futures trading involves financial risk, lots of it!
John
> J.
> > > > Lothian is the President of the Electronic Trading Division of The
> Price
> > > > Futures Group, Inc., an Introducing Broker clearing Man Financial
Inc.
> > > >
> > > >
> > > >
> > > >
> > > > In a message dated 9/8/01 7:17:41 AM Central Daylight Time,
> > >eadamy@xxxxxxxxxx
> > > > writes:
> > > >
> > > > << I doubt that stock index futures are going to get very far off
the
> > >ground.
> > > > Essentially, stock index futures (low margin and high leverage) are
> the
> > >last
> > > > nail in the coffin of post-29 market regulation. I believe that we
> are in
> > > > the early stages of a major cyclical bear market and I expect to
see
> > >stock
> > > > market volumes diminish to levels not seen in decades as a
byproduct
> of
> > > > severe price declines ... the pendulum always swings from one
extreme
> to
> > >the
> > > > other. I further expect that liquidity in the futures and options
> markets
> > > > will suffer.
> > > >
> > > > I find it especially ironic that the post-29 market and banking
> > >regulations
> > > > were removed just as the markets moved to such excess. The fact
that
> > >these
> > > > regulations were seen to be inhibiting the upward move of the
markets
> > >should
> > > > have been a warning rather than a reason to remove the regulations.
> > > >
> > > > Earl >>
> > > >
> > > >
> > > > To unsubscribe from this group, send an email to:
> > > > realtraders-unsubscribe@xxxxxxxxxxxxxxx
> > > >
> > > >
> > > >
> > > > Your use of Yahoo! Groups is subject to
> http://docs.yahoo.com/info/terms/
> > > >
> > > >
> > > >
> > >
> > >
> > >
> > >To unsubscribe from this group, send an email to:
> > >realtraders-unsubscribe@xxxxxxxxxxxxxxx
> > >
> > >
> > >
> > >Your use of Yahoo! Groups is subject to
http://docs.yahoo.com/info/terms/
> >
> Rakesh
> > Sahgal
> >
C
> > -165(1st Floor), Greater Kailash - I,
> >
> New
> > Delhi - 110 048
> >
> India.
> >
> Tel.:
> > 91-11-647-6462,91-11-643-0010
> >
> eMail:
> > rakeshsahgal@xxxxxxx
> >
> rsahgal@xxxxxxxx
> >
> >
> > Rakesh Sahgal
> > Online Status:
> >
>
<http://eudora.voicecontact.com/vc3/index.html?rakeshsahgal%40eth.net><http:
>
//eudora.voicecontact.com/vc3/index.html?rakeshsahgal%40eth.net><http://www.
> eudora.com/products/voicecontact/>
> >
> >
>
>
>
> To unsubscribe from this group, send an email to:
> realtraders-unsubscribe@xxxxxxxxxxxxxxx
>
>
>
> Your use of Yahoo! Groups is subject to http://docs.yahoo.com/info/terms/
>
>
>
------------------------ Yahoo! Groups Sponsor ---------------------~-->
Protect your servers with 128-bit SSL encryption! Grab your copy of VeriSign's FREE guide: "Securing Your Website for business" Get it Now!
http://us.click.yahoo.com/M.WTOC/m1FDAA/cosFAA/zMEolB/TM
---------------------------------------------------------------------~->
To unsubscribe from this group, send an email to:
realtraders-unsubscribe@xxxxxxxxxxxxxxx
Your use of Yahoo! Groups is subject to http://docs.yahoo.com/info/terms/
|