Jim Hawthorne
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Latest Comments86 Comments
Lundin Mining: Unearthing Big Gains from the Commodity 'Supercycle'
1. How do you reconcile your recent bullish stance on the US dollar with your apparent hope for a re-inflation of the commodities cycle?
2. LMC has been about the hardest hit of all the miners, losing more than 95% of its October 2007 price of $14.00+ in a fall to its recent dismal low of $0.65 the other day! Lundin's earnings are so horrid, losing about $1.70/share at current estimates. Where exactly is the value??? By any standard???
While I can and do see the speculative potential of junior mining stocks (and make no mistake, Lundin is now a very junior miner), this is based on speculation pure and simple; based on historical pricing and high hopes for future returns.
When the Baltic Dry Index enters a sustainable uptrend of higher highs and higher lows, the US dollar returns to its inevitable decline, and there is some light at the end of the tunnel for American, European and other homebuilders, we just might see some strengthening in commodities.
Until then, let's leave valuation out of the discussion, okay? Mining stocks may very well be great SPECULATION plays for a little judicious nibbling, but there is not the slightest sign of any improvement in the VALUATION side of the equation! Let's call a spade a spade, okay?
Disclosure: recent SPECULATIVE nibbles of NXG, TGB, FCX and AUY.
Last Thursday Was the Bottom - It's Time to Get Back in
Something here has hit bottom, that's a fact, but it may not be the market!
If you've been long the stocks you're recommending (BAC, C, HERO and DRYS) for more than a week or so, then your post is most disingenuous. Either way, your investment strategy appears to revolve around HOPE and little else.
Market bottoms are processes more than they are singular events. This is a time for nibbles rather than big bites, and nimble, disciplined trading with a very watchful eye on risk management and capital preservation!
Jeremy Siegel's BUY & HOLD strategy and the research that supports it belong to the last bull market that came to an end with the 1998-2000 topping processes. You'll have a very tough time convincing many folks here that BUY & HOLD in a post 1999 investing world is much of an investing strategy. Even your friend Jeremy has begun to backtrack!
Four Commonsense Clues to a Genuine Market Bottom
At least, you have put some effort and discipline into your approach!
That said, it is my opinion that we make a mistake when we attempt to view a true bear market bottom as a singular event rather than a PROCESS of price/time.
The so-called bottom of 2002-2003 spanned the better part of 5 months as I recollect!
Four Reasons Stock Market Hope Will Overcome Despair
I'm sure that there are special places in both investing heaven and investing hell for unbridled optimists such as yourself! In a period when pessimism has not only finally become respectable, but has become the norm, you still manage to search for the half-full glass hiding amongst the sea of empties.
However; none of the bailouts will work; Paulson is looking more and more like a fool; the consumer will do no better at saving our collective ass than will governments; massive hedge fund redemptions will spawn massive selling at every opportune rally from now til December 31st, and maybe beyond.
Nevertheless, I can still applaud your lonely cheerleading. I assume your patron Saint goes by the name of Jude. If our paths ever cross, I will buy you a beer, just for your efforts.
Hope is a lousy investment strategy...
Anvil Mining: Rorschach Test for Investors
Spot copper prices have lately become my little canary in the mine. As a quick indicator of market mood, spot copper is more reliable LATELY than index futures.
President-Elect Obama and the U.S. Dollar
To say we are worried about an Obama administration at this point is like worrying about a helmsman change on board the Titanic. We continue to be far more worried about the fallout from the antics of the current administration to be overly concerned about the next.
How Will Obama's Victory Affect the Dollar?
Kathy is calling for a possible $ rally vis a vis other major currencies.
Do a little nuance!
Some Good News for Investors
The current state of the markets is due to NEITHER a highly excitable media nor a 'mob mentality'.
Don't hold your breath for a sustainable upturn in equities, either. The great FOREX unwind is just beginning!
The Dangers of Timing the Market
In addition, there is a HUGE distinction between "market timing" (attempting to anticipate or predict major market movements) and "trend following" (recognizing major uptrends and downtrends and acting accordingly).
While PREDICTING market moves in advance is very tough, spotting TRENDS is not!
The author uses mutual funds as a benchmark. There is not one, NOT ONE mutual fund manager who does not engage in trend following!
The most successful traders do likewise!
Three Positive Developments for Equities
With all humility, let me suggest that the last thing you should be doing is offering predictions based on real or imagined "valuation" at the current time!
By all means, be humble. If not, this market will surely do it for you!
This Bear Market is Worse Than I Thought
Today, the Fed's stated mission and mandate is: "The purpose of the Federal Reserve System originally focused on lending banks money to ensure that they would have sufficient cash in times of seasonal shortages and incipient panics as well as to provide currency to the banking system. The Fed also was to supervise state-chartered banks to maintain their stability and compliance with the federal banking laws. But, as the financial industry and the economy evolved and developed, the scope of the Federal Reserve's mission also expanded. Today, the Federal Reserve System has three distinct functions: supervising banks, including bank holding companies, many state-chartered banks, and international banks; running huge payments systems that involve processing checks and transferring funds electronically; and monitoring and adjusting monetary policy to guard the economy against high inflation and recession."
It is true that the policies of the Greenspan Fed encouraged us to feed the bubble that has just burst like a super nova through the cheap supply of money coupled with loose lending standards, shoddy oversight of the banks and keeping interest rates too low for too long. It is not true that the Fed has a mandate to save us from ourselves.
What is happening is the deflation of a truly financialised system built on paper debt with precious little real support, and we were all too willing to belly up to the bar and play the game.
While historical looks backward at the 2000 through 2002 bear market are useful (see the bottoming process that went of from July 2002 through March 2003, for example), conditions then were quite different in terms of inflation, consumption, overvaluation and growth.
While we will see series of "pop and drop" rallies, these will be opportunities for only the most disciplined, flexible and nimble traders. We are witnessing the destruction of markets, and I agree that the consolidation, healing and recovery of those markets will be a long, slow bottoming process, and that there is still more pain to come.
IBM's Quarter Can Lead the Equity Market Recovery
I have always had the most profound respect for your opinions and analysis.
This time around, I feel that there was more opinion than analysis.
Last night, i dredged up a daily chart running from mid-May, 2002 through March 31, 2003.
The "false bottom" that formed in mid-July, 2002 bears a stunning similarity to the point we are at as of today, and then as now, there were lots of pundits that called that "false bottom" the real McCoy.
Bear market bottoms are NOT dates on a calendar!
Bear market bottoms are in fact a process that takes months of consolidation and re-building to complete.
We will have some typical "pop & drop" rallies that will be profitable for the flexible and nimble trader, but we are far from any long term "recovery", Bill.
The Glass Is Half Full
I have no problem recognizing and understanding the witch's brew of greedy financial blunders, poor economic policies and sheer denial that have emptied the glass!
I have much more difficulty recognizing the elements that will assist in the refilling of the glass!
Perhaps they're just too far over the horizon?
Five Energy Companies That Spell Opportunity
Yes, let's take a look at New Zealand.... The NZ50 index has risen about 28% over the last 5 years as compared to the S&P500's 12% over the same time period!
Want to try Canada? Okay, the S&P/TSX is up a whopping 57% over the past 5 years!
Want to try Sweden? Okay, the Stockholm OMXS All Share is up 48% over the last 5 years...
Both New Zealand and Canada instituted "emergency" goods and services taxation 15-20 years ago to tackle what they perceived as a HUGE National Debt problem. At the time, this measure was met with doom and gloom prognostications that it would sink their respective economies. Today, the Canadian National Debt is just over $800Bln or about $18,000 per person, and they're still worried! The USA National debt is running between $33,000 and $37,000 per person depending on just when you choose to cut off the numbers.
I'm not blaming him for the entire problem, but on the day President Bush took office, the national debt stood at $5.727 trillion. The latest number from the Treasury Department (if you choose to believe it) shows the national debt now stands at more than $9.849 trillion. That’s a 71.9 percent increase over the last 71/2 years.
Amazing! It would at least appear on the surface that New Zealand, Sweden and Canada, all countries of "Big Government" are reducing their debt while enjoying eye-popping stock market returns because they actually produce and export more "things" than they import. (Yes, they enjoy a trade surplus).
Our major export appears to have been Treasuries, and it looks like there will be fewer and fewer buyers of our debt.
If we're good traders, we'll make good trades; regardless of who is in the White House!
I would dearly love to be proven wrong here, but I'm having a real hard time understanding your arguments, finmah!
Five Energy Companies That Spell Opportunity
The S&P500 fell about 47.5% after September 1st 2000 (from 1520 pts. to 800pts.) to finally bottom early October, 2002.
The path downward was littered with failed "opportunities for long-term investors" that have not recovered to this day!
So far, we have dropped about 29.5% since last October's top. Those fantastic "opportunities for long-term investors" advocated back in May, 1998 that have survived the past decade are once again breaking even based on the indexes.
Rather than advocating yet another package of "opportunities for long-term investors", why not advocate the characteristics that will produce successful investors and traders in the current environment?
Chief among these are flexibility, quick reactions to changes in the markets, lowered profit thresholds and a patient focus on short-term set-ups with tight stops.
Anyone advocating a long-term, buy and hold investment strategy in this high-risk environment is either a masochist or has far, far more wealth that they can afford to watch dissolve than they deserve!
There may well be short-term opportunities in some of the stocks you recommend. Only the flexible and nimble trader will profit from them.