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Great to have you back Earl
Earl Adamy wrote:
> 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/
> >
> >
> >
>
>
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>
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