The Contrarian's View s published 11 times per year on a mostly-irregular schedule, and the views expressed are those of the author and editor, Nick Chase. Because nobody can predict the future, results of past suggestions or recommendations are no guarantee of future results. My own material in this publication may be freely quoted provided proper attribution is given to its source; quotes from other people are subject to fair-use copyright restrictions. Subscription rate: Free on the Internet. Using your favorite Web-browsing program, open URL http://onashi.org. Former paid subscribers to the printed version are now receiving LIFETIME subscriptions, and subscriptions to the printed version are no longer being accepted. Unsolicited material sent to us by UPS or by courier other than the postal service is refused and returned to sender! ISSN 1536-4429 Phone: (508) 757-2881
The setting for the play was perfect, as it was a dark and stormy night. In the play, radiation emitted by the explosion of a returning Mars probe causes the immediately-deceased who were irradiated to return to "life" as zombies, whereupon they attack, infect, kill and partially-devour the still-living, who in turn are zombified. However, at the beginning of the play we weren't privy to that information; it unfolded only slowly as the play progressed and the actors revealed it.
The play's setting is a rural (and therefore cut-off) Pennsylvania farmhouse. The occupants-by-chance (the farmer and his wife having already been killed and zombified), looking for refuge, include two normal males, one angry young man and one middle-aged Grade A male jerk; three normal (if somewhat submissive) women, and a zombie-infected young girl who, late in the play, dies, rises as a zombie, and kills and devours her mother. (OK, I know, really cheerful play.... as I said, it is a horror show.)
The fascinating aspect of the play is the way in which humans react to the very serious threat to their existence that they face. At first, they suffer from a lack of information and therefore do not understand how serious the zombie threat is; later, they have come to fully comprehend the seriousness of their situation (the brain believes), but still disbelieve it (the heart does not believe). After all, the zombies are not very strong or very bright; they are dangerous because they propagate the zombie disease, because they cannot be "killed" (they are already dead and can be stopped only blowing out their brains) and because they grow more numerous in geometric progression.
Since I was watching this play the evening of the day the Dow had dropped 366 points, I naturally started noticing parallels between the zombie threat in the play and the way that defaulting subprime debt has impacted the credit markets. At first, the dangerous nature of slicing and dicing subprime debt into derivatives spread around the globe was understood by only a relatively small number of people.... though some of these people, like Warren Buffett, who spoke up are very knowledgeable and others should have paid attention.
Then, as the problem became recognized we were assured that it was "contained", when it clearly is not. Similar to the geometric growth of zombies in the play, the subprime zombie debt has already geometrically.... actually, exponentially.... spread, via derivatives, into the credit markets; but the extent of the infected credit is currently still unknown. For this we must blame the unwillingness of financiers and investors to admit to the seriousness of the situation and deal appropriately with it.
In the play, in the end, the zombies win. They are so numerous that they simply overwhelm the inadequate counterattack launched by the rapidly-dwindling number of humans left.
It remains to be seen if the zombie debt will win out, bringing down the fiat-money system we currently endure. There must be a defaulted-debt equilibrium point we eventually will reach; but, instead of bringing this zombie debt to market, thereby exposing it to the light of day, correctly pricing it and forthrightly dealing with it, the powers that be seem determined to go to great lengths to hide it and avoid determining its true value.
That keeps the "fear factor" alive, and the great majority of people, including "casual" investors such as 401(k) participants, completely in the dark.
In the end, I suspect the equilibrium point will be
much lower and the economic damage will be much
worse that it needed to be because of this unwillingness to correctly assess and cope with the still-multiplying zombie debt. Human nature at work, but
not to our benefit this time, I'm afraid.
Like credit inflation, credit deflation is in fact an intricate, interwoven process, whose initial impetus is a change in social mood from optimism toward pessimism. If you are still on the fence about this idea, ask yourself: What changed in the so-called "fundamentals" between June and August? The answer is: absolutely nothing. Interest rates did not budge; there were no indications of recession; there were no changes in bank lending policies; there were no chilling government edicts. The only thing that changed was people's minds. One day sub-prime mortgages were a fine investment, and the next day they were toxic waste. - Bob Prechter
By slashing the federal funds rate, the Federal Reserve chief robbed from the country's future to give a gift to Wall Street. And a lot of ordinary Americans will end up getting hurt. - Bill Fleckenstein
It is now clear that all the intellectual advances in central banking of the last 300 years have disappeared. Gone with the wind are the concept of "moral hazard", the idea that central banks should be independent of political control, the idea that lowering interest rates might cause inflation and the knowledge that widespread deposit guarantees and bank bailouts impose huge long-run costs on taxpayers and the economy. In 1720 when the financial world was young and innocent this would have been forgivable; today as then it is likely to bring economic chaos in its wake. - Martin Hutchinson
Times have changed. Now, central banks rescue everyone. Part of the reason for this is that they think they have gotten better at it. Another part of the reason is that people expect it of them. And finally, not doing rescues got a bad name during the Hoover administration. We will leave it to practicing economists and people with nothing better to do to argue these points, we only wish to point out that the Fed is a strange rescuer. It is like a fireman who comes with a bucket of gasoline...or a St. Bernard that arrives at an avalanche with a barrel full of snow around his neck. - Bill Bonner
The financial wizards of Wall Street and The City are hoping this summer's credit crisis is a bad cold at worst, that perhaps a slight fever and time will heal the illness and they can return once again to the task of carving out billion-dollar bonuses from capitalism's rotting carcass (sic capitalism, any economic system based on central bank issuance of debt-based paper money). But the wizards of Wall Street and The City will be wrong this fall. This summer's credit contraction looks increasingly less like a cold and more like cancer, which has metastasized and made its way into the lymph nodes of our global economy...FATAL. We wait as the inevitable end of a debt-based paper money system approaches. But have faith, for after the fall a resurrection will occur; albeit, at the end of a long and very hard winter. - Darryl Robert Schoon
I was a trader and risk manager for almost 20 years (before experiencing battle fatigue). There is no way my and my colleagues' accumulated knowledge of market risks can be passed on to the next generation. Business schools block the transmission of our practical know-how and empirical tricks and the knowledge dies with us. We learn from crisis to crisis that MPT [Modern Portfolio Theory] has the empirical and scientific validity of astrology (without the aesthetics), yet the lessons are ignored in what is taught to 150,000 business school students worldwide.... The environment in financial economics is reminiscent of medieval medicine, which refused to incorporate the observations and experiences of the plebeian barbers and surgeons. Medicine used to kill more patients than it saved - just as financial economics endangers the system by creating, not reducing, risk. - Nassim Nicholas Taleb [author, The Black Swan: The Impact of the Highly Improbable]
With digidollars of M3 now approaching 15%, proving the Fed knew in advance it would need to bury those numbers, which is why they disappeared in March a year ago, we can see the hyperinflation in paper assets on the way. Nevertheless, it will be statistically invisible in terms of the cost of living, because to admit to it would COLA the government out of declining deficit la-la land. Better they suck out your standard of living. So sorry. - George Ure
I certainly thought this credit bubble would have ended by now. When it does happen, it will hit businesses like a brick wall. Many signs suggest the credit bubble is now popping but we have been down this path before, only to have some other aspect keep the bubble inflating. No one can put a date on it, but what we do know is that credit bubbles end in deflation. We also know the Fed will be powerless to stop deflation when it comes.... Economic and credit contraction are both coming as the inability to service debt spreads from housing, to commercial real estate, to consumer credit. At the leading edge of this tsunami is a massive change in debt psychology by all the key players. Those who ignore the warnings are likely to drown. - Mike Shedlock
Welcome to "Bail-Out Nation." The Land of the Free is quickly becoming the "Land of the Freebie," especially for members of the millionaire corporate elite who make multi-billion dollar mistakes...with someone else's money. This unfortunate state of affairs is jeopardizing the dollar's value, as well as its hard won reserve-currency status. - Eric J. Fry
While Citibank and others are planning to pony up as much as $80-billion dollars for an SIV [Structured Investment Vehicles] bailout, I'm sitting back aghast that fat cats who were piling in the dough suddenly can't handle a little risk - so they deserve to be bailed out. Isn't that why some investments carry more return than others? Contrast this egregious generosity with the handling of a middle American family of five, who are being forced out of their home in (fill in your city) because the husband and wife have suffered one job loss, and their mortgage has reset at a rate far higher than was ever disclosed in the predatory lending which precedes financial slaughter. Slight difference? So, pardon me for being a stick-in-the-mud here, but how is it that serial bubbles, begetting serial bailouts, is a good thing in a nominally "free" economy? - George Ure
The latest "Super-SIV" emergency financing scheme is an effort to enable the continuation of the credit binge. Some of the world's biggest banks plan to put about $100 billion in a fund that will be used to replace the investors who have stopped buying SIV-affiliated commercial paper.... if investors don't want the stuff, banks have to put it on their balance sheets and take the loss unless they can find another buyer, which it appears they intend to create.... This effort looks eerily similar to 1929, when the Rockefellers and William C. Durant pooled capital to buy large quantities of stocks to demonstrate their confidence in the markets to the public.... Many people enable their alcoholic relative because both are in denial. It's fascinating to watch society and the government enabling credit addiction... because both are in denial. The fortunate few recognize the disease it for what it is. - Alan Hall
Of course you can sell to the Master-Liquidity Enhancement Conduit at market prices, but market prices are not set by selling assets to yourself or by agreements to buy assets a back at a guaranteed price.... Let's go back to the beginning. This problem was caused by loose monetary policy in conjunction with rules that allowed garbage to be kept off bank balance sheets. The proposed solution is another scheme to keep garbage off bank balance sheets. Logically the solution and the problem cannot be the same. All indications are the Super-SIV bailout is nothing but a delay tactic that simply cannot work. Furthermore, there is another crisis waiting in the wings: Commercial real estate. There is also a looming consumer-led recession that is coming no matter what the Fed does. For those reasons, attempts to delay will only exacerbate the problem. - Mike Shedlock
But.... the establishment of the MLEC [Master Liquidity Enhancement Conduit] does not seem to do much in terms of addressing the key underlying issue - rising mortgage defaults and falling residential real estate prices.... Many of these mortgages were issued in 2005 and 2006, the nadir of underwriting standards. Many of the borrowers made no or very low downpayments on the homes they purchased. Given price declines on homes of late, many of these borrowers have negative equity in their homes and will not be able to afford the higher interest rates they face after resets. In other words, lenders will not receive the principal and interest rates they were promised when they purchased the securities backed by these mortgages. Wall Street can value these securities at any price it chooses. But the fact is that holders of some of these mortgage-backed securities are not going to receive the cash flow they expected. Wall Street can value these securities at any price it chooses, but the fact remains that house prices are going to fall and that fall in house prices will have real negative effects on economic activity. Unless I am missing something, which is entirely possible, it looks to me as though the establishment of the MLEC is another attempt to turn a sow's ear into a silk purse. - Paul L. Kasriel
Imagine walking into a hospital with chest pains and the doctor telling you that he will do his best to treat you in a few months. Such is the latest development on the U.S. bailout/bust front.... the MLEC in question is not expected to be up and running for at least 90-days. Moreover, the assets that the MLEC will be permitted to purchase are not of the subprime variety.... Paulson and company should be embarrassed that their secretive meetings have resulted in such a toothless effort.... While the structure, investment scope, and overall purpose of the proposed MLEC could change, as it stands it looks like another desperate attempt by Wall Street institutions to share some of their pain with others. - Brady Willett
After last Friday's meeting in Washington of the Group of Seven nations, U.S. Treasury Secretary Henry Paulson said that the market's "fundamentals are sound." History suggests, however, that is one phrase you don't want to hear any politician, fund manager, or corporate leader say in response to a worrying situation. More often than not, the person uttering that particular cliché 1) doesn't have a clue about what is going on; or, 2) knows that the so-called "fundamentals" are bad, but figures that he (or she) might as well engage in some meaningless cheerleading because it makes for a great sound bite. Still, it's probably not fair to single out Mr. Paulson, because a number of public officials have been uttering similar reassurances for many months now about the state of the U.S. economy. Despite clear signs that the fallout from the collapsing housing and credit bubbles is spreading by the day, and polls that indicate more and more Americans see a recession on the horizon, our leaders in Washington keep suggesting that "the fundamentals are sound." - Michael Panzner
Are more disclosures coming? I think we can count on that. In addition, many hedge funds have executed the same fatal strategies as Citigroup (borrowing short and lending long) on mortgage-related assets outside of SIVs and banking relationships.... That lends the question: How many hedge funds have held off marking these assets to market? Potentially massive future writeoffs are hidden by both banks and hedge funds playing shell games, or Don't Ask - Don't Sell strategies which are nothing more than fraudulent attempts at concealment. Is the total amount of money bet on such strategies double, triple, or quadruple what has been disclosed? No one knows. No one wants us to know either. - Mike Shedlock
Neither Wall Street nor Washington is willing to confront the real commitment of risk. Risk marries the hope of profit with the threat of loss. Profit increases our wealth. Loss increases our wisdom. A bailout is a lost opportunity to learn. It encourages market players to go on repeating their errors and making the situation worse than it was before. Unfortunately for us, the preceding generations decided they didn't want to learn the lessons of taking risks. Government economists convinced us that they could prevent severe contractions like that one from the 1930s. The actual result has been even greater potential consequences and we're running out of options to pass them on to the next generation. - Marc Porlier
Since repeal of Glass Steagall in 1999, after more than a decade of de facto inroads, super-banks have been able to re-enact the same kinds of structural conflicts of interest that were endemic in the 1920s -- lending to speculators, packaging and securitizing credits and then selling them off, wholesale or retail, and extracting fees at every step along the way. And, much of this paper is even more opaque to bank examiners than its counterparts were in the 1920s. Much of it isn't paper at all, and the whole process is supercharged by computers and automated formulas. An independent source of instability is that while these credit derivatives are said to increase liquidity and serve as shock absorbers, in fact their bets are often in the same direction -- assuming perpetually rising asset prices -- so in a credit crisis they can act as net de-stabilizers. - Robert Kuttner
It is now more than clear that Bernanke will talk out of one side of his mouth, but act in an opposite manner literally days later. Please forget the rhetoric and spin from the Fed and their brethren. The actions are clear. Reflation is again the order of the day. Problems.... resulting from the misallocation of cheap credit over prior years will be addressed by the Fed with more of the same - cheap credit. As I have maintained for years, the Fed is a one-trick pony. There are no other tricks. So, ....expect more of the same - more rate cuts and accelerated open-market operations.... The US economy that is running largely on a credit cycle needs to accelerate credit expansion in order to maintain stability and move forward. Please remember, I'm referring to the real economy here, not the world of financial markets (specifically equities). For that to happen, the credit production engine needs to be restarted and accelerated.... I'll leave you with one last table of numbers that really says it all for an economy running on a credit cycle. It's either ever faster...or else. Capiche? - Brian Pretti
Still, the intoxicating effects that inflation has on nominal asset prices and GDP figures will eventually fade. When this happens Wall Street will sober up to the reality that the U.S. economy has actually been mired in recession for years, and that U.S. stocks have been in a stealth bear market all along. Priced in gold, euros, or Canadian dollars, (which are more accurate ways to adjust for inflation than phony government numbers) both the U.S. stock market and U.S. GDP have declined by approximately 58 %, 17 % and 21% respectively since January 2000. No wonder the government and Wall Street hang their hats on official inflation measures. Like a student allowed to grade his own report card, he can ditch his classes, not do his homework, flunk his exams, yet still bring home straight As. As long as Wall Street and the media continue to represent government inflation numbers as if they had any validity whatsoever, inflation is only going to get worse. - Peter Schiff
For the Fed, the most likely course of action is a long series of 1/4% rate reductions, punctuated with 1/2% rate reductions as secondary credit crises emerge. Yet, the so-called 'shock therapy' of additional 1/2 point Fed rate reductions is unlikely to stem the larger tide, which is one of a still building domino-style collapse, courtesy of Wall Street Structured Finance and the broad securitization of risk. In fact, unlike past credit problems where the problem was mercifully isolated to one or two offending overindulgent parties, this problem has been packaged and exported worldwide and now resides in countless portfolios. Bottom line: It is simply a long way from over. So what do investors do while trying to make an honest buck? The answer is to expect more turmoil and periodic severe bouts of selling pressure rippling through the financial markets. We are looking at the battle between monetary reflation and debt deflation playing out on the grand stage. - Frank Barbera
Presently, the price/peak earnings multiple of the S&P 500 is at 18.4 even without normalizing the level of profit margins. The S&P 500 is at a record high, is clearly overbought, and is pushing the upper Bollinger band at every horizon (daily, weekly, and monthly). Treasury yields provide no assistance, with the 10-year yield about the same level as 6 months ago and well off of its lows, while Treasury bill yields are also well off their lows. Sentiment readings from Investors Intelligence indicate 60.2% bulls and just 18.3% bears. Finally, we have what has historically been a sharply negative additional feature: our measures of market action are unfavorable (this is in contrast to points earlier this year, when we could infer the risk of abrupt corrections despite constructive internals). There are only a handful of historical periods that fall into this syndrome of conditions: December 1972, August 1987, July 1998, July 1999, December 1999, March 2000, and October 2007. All of the prior instances were followed by steep market losses. When the declines were not abrupt, they were protracted. There is not a single counter-example. This is clearly a small sample of events, but it is some sample.... Could October 2007 be the first exception? Sure. But for investors to ignore present risks, they would need very strong "prior beliefs" that reduce the weight that they place on this set of observed evidence. - John Hussman
Last night I had the opportunity to visit a popular eating franchise with my family. One of those places where you go and there are a hundred different TVs, all with some insipid game on mute. The tables have striped laminate tops, are way too small and patrons unfortunate enough to have to sit in the aisle spend their time dodging waiters, other patrons and flying silverware. For this honor, you pay about nine dollars for a hamburger and fries. But not just any hamburger and certainly not just any fries. I hadn't eaten at this particular establishment in a few years and was shocked at how the portions had decreased despite a healthy increase in the price of the meals. Of the two of us that ordered cheeseburgers, one of us had all of 18 tiny French fries on his plate and the "beef" patty in the burger was almost totally obscured by the fluffy roll. The platters reminded me of kid's meals from yesteryear. I was half-expecting to receive a coloring book and a pack of crayons with my dinner.... The bill for last night's venture for 4 adults' and one kid's meal was well over fifty dollars. Closer to sixty when you figure in a modest tip. Sixty dollars for anemic portions, an appetizer and watered down iced tea.... I guess the take-home message should be "keep printing, Ben". Maybe the next time I venture out, I'll pay $12 for a smaller burger and even fewer fries. But I will rest easy knowing that the DOW is at another record high. Not likely. - Andy Sutton
I look up from my notes and I realize that.... the stupid Congress - as un-freaking-believable as it sounds - wants to impose tariff sanctions on Chinese imports to "punish" them for not allowing the dollar to fall in buying power, ignoring the fact that higher prices punishes us, too! Hahaha! It would be more entertaining to burn our money and wear signs around our necks that say, "Take our buying power! We're freaking morons!" - Richard Daughty
A home may seem to have some investment advantages, but all of them are artificial, having been created by government: (1) you get a tax break, and (2) prices tend to rise through inflation. But any purchase or investment that the government supports artificially will eventually hurt the intended beneficiaries. Thanks to government subsidies and inflation, the housing market grew disproportionately, and now too many people are stuck in homes they cannot afford. - Bob Prechter
I think that we could easily see 2 to 3 million people lose their homes and go back to renting, basically. - Bill Wheaton [MIT Center for Real Estate Studies]
Unless a person has tried to secure a new mortgage or refinance an existing mortgage in the past two months, they probably have no idea how things have changed in the mortgage market. It will take time for consumers to be affected by all these events. This is one reason we are seeing weakness in the financials first before the broader market. But we can be confident about two things: 1) the broader market will have a hard time continuing higher if the financials, representing 20% of the market, head lower; and 2) the financials are the "canary in the coal mine" when it comes to the collateral damage of the housing downturn. Where the financials go, the broader market will likely follow. - Mike Shedlock
Homeowners have lenders over a barrel, and soon all will know it. Once the government exempts forgiven mortgage debt from being treated as taxable income, defaults will become a national trend. Under normal circumstances, lenders have all the power, as 20% down payments and an ample supply of qualified buyers makes foreclosure a real threat. However, under current circumstances, it's completely empty. Lenders can not foreclose as there are no buyers and no equity. If homeowners choose not to pay, lenders really have no choice but to renegotiate the loans. Once homeowners understand this no one will make a mortgage payment until their loan is reduced to an amount more consistent with the actual value of their home. - Peter Schiff
As equity extraction becomes a thing of the past, a recession seems inevitable. I predict there will be continued credit surprises - mostly on the downside - as employment weakens, jobs are lost, and bills go unpaid. As a consumer-led recession unfolds, personal income and corporate revenues won't cover many debts, and the game of always being able to refinance has ended. So, for many borrowers the game is already over; they just don't know it yet. - Richard Benson
The horrid condition of our financial house is a national disgrace. It is scary to realize individuals that call themselves professionals have allowed this to happen. Such reprehensible and irresponsible behavior is irreparable without a complete overhaul of the monetary and financial systems - or a cleansing by a severe deflationary or hyperinflationary bloodbath that wipes the slate clean. - Douglas V. Gnazzo
The gap between future US receipts and future US government obligations now totals $65.9 trillion, a sum
that is impossible for the US to reconcile, which means the US is now technically bankrupt. - Laurence
Kotlikoff [St. Louis Federal Reserve Review, July/August 2006]
The third week of October also saw several Hindenburg omens, so despite the almost universal late-October bullishness, I expect these warning signals tell us that for the next two months the stock market will have a bearish cast, in spite of the usual and expected holiday optimism. (What? No blowout holiday gift-giving this year? Bah, humbug!)
Even without the Hindenburg omens, in a technical sense the US stock markets are weak, with many smaller indexes underperforming the Dow Industrials and S&P 500, with a Dow Theory failure.... the Transports and Utilities are not confirming the highs in the Industrials...., with the advance/decline lines rolling over, and with underlying "distribution" of stocks by the "smart money".
Thus caution is warranted, with a 10% or more decline in stock prices likely (75% odds) and the possibility of a crash.... yes, even as the holidays approach (25% odds).... per Hindenburg omen.
As for what I expect, I expect the stock averages to mostly decline in November, be essentially flat in December, achieve another peak by mid-January, then head into a major decline, with a crash, if any, more likely to occur in 2008 than 2007. (Many prior bull markets finally topped out in January.) The six-month window for a crash (25% odds) for the July Hindenburg omens expires in January 2008; for the October Hindenburgs, in April 2008.
The risk of another major systemic failure remains
high.... about 95% to about Thanksgiving, then about
60% to mid-January 2008. After that, we'll see.
A. "Inheritance" - real (normalized) "dividend and interest distribution" portfolio:
SUMMARY - "Inheritance":
Original cost: $100,000.00 (normalized)
Present value: $118,322.59 (see below)
Increase: $18,322.59 [+18.32%]
COMMENT on "Inheritance": Since it was unlikely that I woud realize any long-term capital gain from the buyout of PrimeWest, I elected to sell those shares and redeploy the funds into other Canadian royalty trusts to assure an uninterrupted dividend stream. As replacements I selected Canetic Resources, Harvest Energy Trust and Penn West Energy Trust, all of which I already held in my Roth IRAs.
The sale of PrimeWest left me with a healthy short-term capital gain which, in Massachusetts, is taxed at a rate of 12%, on top of the Federal ordinary tax rate. (Massachusetts long-term capital gains are taxed at a rate of 5.3%.) Not wanting to surrender a large chunk of my gain to governments, I decided to sell all of my Proshares QQQ Ultrashort, which at the time was showing a substantial loss, and redeploy that money into "subsector" ETFs to maintain my position of a "neutralized" portfolio (that is, a portfolio whose value is unlikely to either advance or decline greatly). I also hoped I would be able to get further away from the bigger averages, which tend to be propped up by a weakening dollar and hedge-fund activity, and into areas showing more softness. So far, that seems to have worked well.... Technology Ultrashort tends to (inversely) track with 2x QQQ, the Russell Midcap average is weaker than QQQ, and Real Estate is in its own crash-landing pattern (along with Financials, whose Ultrashort I bought a month earlier).
The portfolio cost (normalized) is $108,223.42 with $17,100.50 currently in cash or near-cash.
B. "Professors' Investment Group (PIG)" - investment club portfolio.
SUMMARY - "PIG":
Original cost: $10,699.00
Present value: $24,191.81
Increase: $13,492.81 [+126.11%]
COMMENT on "PIG": I continue to "roll over" 3-monthT-bills, one per month (except when I forget).
C. Roth IRAs - real portfolio:
SUMMARY - Roth IRAs:
Original cost: $30,046.19
Present value: $38,549.16
Increase: $ 8,502.97 [+28.30%]
COMMENT on Roth IRAs: As T-bill yields decline I have used the proceeds of maturing 6-month bills to add more shares of Precision Drilling. Yes, this is becoming an "energy portfolio".
D. TIAA/CREF 403(b) and (non-Roth) IRA retirement plans: My TIAA-CREF and Fidelity non-individual-stocks retirement investments, both the part from which I am making monthly withdrawals and the parts that are "resting", are invested as follows: TIAA traditional, 76.80%; T-bills and money-markets, 0.35%; inflation-indexed bonds, 15.01%; TIAA real estate, 2.62%; MLPs, 5.17%; TIAA-CREF High-Yield II, 0.05%.
TIAA-CREF values, 31Oct2007: stock, 276.38; equity-index, 105.07; MM, 24.71; bond, 82.79; inflation-indexed bond, 49.72; real estate, 306.95; TIAA current yield in SRA, about 4.8%. COMMENT on NYSE "Timer's Trend": We are currently on a BUY signal of Octoberber 26, 2007 (but probably negated by the November 1 selloff).
____________________________ NYSE TIMER'S TREND _______________________________
Mon 2 Jul 07 . | . # }|13535.43 |+. *
Tue 3 Jul 07 . | . # |13577.30 | .+ *
Thu 5 Jul 07 . | .# |13565.84 | . + *
Fri 6 Jul 07 . | . # |13611.68 | . + *
Mon 9 Jul 07 . | .# |13649.97 | . + *
Tue 10 Jul 07 .# | . |13501.70 | .+ *
Wed 11 Jul 07 . | #. |13577.87 | + *
Thu 12 Jul 07 . | . # |13861.73 |~.+~~~~~~~~~~~~~~~~~~~~~~~~~~~~~*
Fri 13 Jul 07 . | . # |13907.25 | .+ *
Mon 16 Jul 07 . |# . |13950.98 | + *
Tue 17 Jul 07 . |# . |13971.55 | .+ *
Wed 18 Jul 07 .# I . |13918.22 | + *
Thu 19 Jul 07 . | .# |14000.41 |+. *
Fri 20 Jul 07 #. I . {|13851.08 + . *
Mon 23 Jul 07 . I# . |13943.42 + . *
Tue 24 Jul 07 # . I . |13716.95 | - *
Wed 25 Jul 07 # . I . |13785.07 | .- *
Thu 26 Jul 07 # . I . |13473.57 | . -*
Fri 27 Jul 07 # . I . |13265.47 @|*-~~~~~~~~~~~~~~~~~~~~~~~~~~
Mon 30 Jul 07 .# I . |13358.51 @| . - *
Tue 31 Jul 07 # . I . |13211.99 @| . - *
Wed 1 Aug 07 #. I . |13362.37 @| . - *
Thu 2 Aug 07 .# I . |13463.33 | . - *
Fri 3 Aug 07 # . I . |13181.91 | . - *
Mon 6 Aug 07 .# I . |13468.78 | . - *
Tue 7 Aug 07 .# I . |13504.30 | . - *
Wed 8 Aug 07 . I #. |13657.86 | .- *
Thu 9 Aug 07 # . I . |13270.68 | . - *
Fri 10 Aug 07 # . I . |13239.54 | .- *
Mon 13 Aug 07 #. I . |13236.53 | . - *
Tue 14 Aug 07 # . I . |13028.92 | . - *
Wed 15 Aug 07 # . I . |12861.47 @|~.*-~~~~~~~~~~~~~~~~~~~~~~~~
Thu 16 Aug 07 # . I . |12845.78 @| . - *
Fri 17 Aug 07 . I# . |13079.08 @| . - *
Mon 20 Aug 07 # I . |13121.35 @| . - *
Tue 21 Aug 07 .# I . |13090.86 | . - *
Wed 22 Aug 07 . | # |13236.13 | - *
Thu 23 Aug 07 . #| . |13235.88 |-. *
Fri 24 Aug 07 . | .# |13378.87 + . *
Mon 27 Aug 07 . #| . |13322.13 + . *
Tue 28 Aug 07 # . I . |13401.85 |-. *
Wed 29 Aug 07 . | #. |13289.29 |-. *
Thu 30 Aug 07 # I . |13238.73 | - *
Fri 31 Aug 07 . | . # |13357.74 |-. *
Tue 4 Sep 07 . | . # |13448.85 +~.~~~~~~~~~~~~~~~~~~~~~~~~~~~~~*
Wed 5 Sep 07 #. | . |13305.47 |+. *
Thu 6 Sep 07 . | #. |13363.35 |+. *
Fri 7 Sep 07 # . I . |13113.38 + . *
Mon 10 Sep 07 #. I . |13127.85 | - *
Tue 11 Sep 07 . | .# |13308.39 | - *
Wed 12 Sep 07 . #I . |13291.65 | - *
Thu 13 Sep 07 . | #. |13424.88 | - *
Fri 14 Sep 07 . # . |13442.52 + . *
Mon 17 Sep 07 # I . |13403.42 + . *
Tue 18 Sep 07 . | . # }|13739.39 |+. *
Wed 19 Sep 07 . | . # |13815.56 | + *
Thu 20 Sep 07 . |# . |13766.70 | + *
Fri 21 Sep 07 . | . # |13820.19 | .+ *
Mon 24 Sep 07 . |# . |13759.06 | . + *
Tue 25 Sep 07 . #| . [|13778.65 | + *
Wed 26 Sep 07 . | .# ]|13878.15 | + *
Thu 27 Sep 07 . | . # |13912.94 | + *
Fri 28 Sep 07 . | #. |13895.63 | + *
Mon 1 Oct 07 . | . # |14087.55 |~.+~~~~~~~~~~~~~~~~~~~~~~~~~~~~~*
Tue 2 Oct 07 . | . # |14047.31 | . + *
Wed 3 Oct 07 . | #. |13968.05 | . + *
Thu 4 Oct 07 . | .# |13974.31 | . + *
Fri 5 Oct 07 . | . # |14066.01 | . + *
Mon 8 Oct 07 . | #. |14043.73 | . + *
Tue 9 Oct 07 . | . # |14164.53 | . + *
Wed 10 Oct 07 . | .# |14078.69 | . + *
Thu 11 Oct 07 . | # |14015.12 | . + *
Fri 12 Oct 07 . | .# |14093.08 | . + *
Mon 15 Oct 07 . # . |13984.80 | .+ *
Tue 16 Oct 07 # I . |13912.94 |+. *
Wed 17 Oct 07 . I# . |13892.54 |+. *
Thu 18 Oct 07 . & . |13888.96 + . *
Fri 19 Oct 07 # . I . {|13522.02 |*-~~~~~~~~~~~~~~~~~~~~~~~~~~
Mon 22 Oct 07 # I . |13566.97 | .- *
Tue 23 Oct 07 . I #. ]|13676.23 | - *
Wed 24 Oct 07 # I . [|13675.25 | - *
Thu 25 Oct 07 . I# . |13671.92 | - *
Fri 26 Oct 07 . | . # }|13806.70 + . *
Mon 29 Oct 07 . | . # |13870.26 | + *
Tue 30 Oct 07 . & . |13792.47 |+. *
Wed 31 Oct 07 . | . # |13930.01 | .+ *
--------------------------------------------------------------------------------
COMMENT on NASDAQ "Timer's Trend": We're on a SELL signal of October 15, 2007.
____________________________ NASDAQ TIMER'S TREND _____________________________
Mon 2 Jul 07 . | . # | 2632.30 | + *
Tue 3 Jul 07 . | . # | 2644.95 | .+ *
Thu 5 Jul 07 . | .# | 2656.65 | .+ *
Fri 6 Jul 07 . | .# }| 2666.51 | .+ *
Mon 9 Jul 07 . | # | 2670.02 | . + *
Tue 10 Jul 07 .# I . {| 2639.16 | + *
Wed 11 Jul 07 . I# . | 2651.79 | + *
Thu 12 Jul 07 . | . # }| 2701.73 | + *
Fri 13 Jul 07 . | # | 2707.00 | + *
Mon 16 Jul 07 . I# . {| 2697.33 |+. *
Tue 17 Jul 07 . I # | 2712.29 | + *
Wed 18 Jul 07 #. I . | 2699.49 |+. *
Thu 19 Jul 07 . I .# | 2720.04 |+. *
Fri 20 Jul 07 # . I . | 2687.60 |-. *
Mon 23 Jul 07 . & . | 2690.58 |-. *
Tue 24 Jul 07 # . I . | 2639.86 | .- *
Wed 25 Jul 07 # I . | 2648.17 | .- *
Thu 26 Jul 07 # . I . | 2599.34 | . - *
Fri 27 Jul 07 # . I . | 2562.24 | . - *
Mon 30 Jul 07 .# I . | 2582.57 @| . - *
Tue 31 Jul 07 # . I . | 2545.57 | . - *
Wed 1 Aug 07 #. I . | 2553.87 @| . - *
Thu 2 Aug 07 . #I . | 2575.98 | . - *
Fri 3 Aug 07 # . I . | 2511.25 | . - *
Mon 6 Aug 07 # I . | 2547.33 | . - *
Tue 7 Aug 07 .# I . | 2561.60 | . - *
Wed 8 Aug 07 . I # | 2612.98 | .- *
Thu 9 Aug 07 # . I . | 2556.49 | .- *
Fri 10 Aug 07 # . I . | 2544.89 | .- *
Mon 13 Aug 07 # I . | 2542.24 | .- *
Tue 14 Aug 07 # . I . | 2499.12 | . - *
Wed 15 Aug 07 # . I . | 2458.83 @| . - *
Thu 16 Aug 07 # . I . | 2451.07 @| . - *
Fri 17 Aug 07 . I #. | 2505.03 | . - *
Mon 20 Aug 07 .# I . | 2508.59 | . - *
Tue 21 Aug 07 .# I . | 2521.30 | . - *
Wed 22 Aug 07 . I # | 2552.80 |-. *
Thu 23 Aug 07 .# I . | 2541.70 |-. *
Fri 24 Aug 07 . I # | 2576.69 + . *
Mon 27 Aug 07 . #I . | 2561.25 + . *
Tue 28 Aug 07 # . I . | 2500.64 |-. *
Wed 29 Aug 07 . I# . | 2563.16 | - *
Thu 30 Aug 07 . I# . | 2565.30 |-. *
Fri 31 Aug 07 . | . # | 2596.36 |-. *
Tue 4 Sep 07 . | . # | 2630.24 |+. *
Wed 5 Sep 07 .# I . | 2605.95 | + *
Thu 6 Sep 07 . | #. | 2614.32 | + *
Fri 7 Sep 07 # . I . | 2565.70 + . *
Mon 10 Sep 07 # I . | 2559.11 |-. *
Tue 11 Sep 07 . I #. | 2597.47 | - *
Wed 12 Sep 07 . #I . | 2592.07 | - *
Thu 13 Sep 07 . I# . | 2601.05 | - *
Fri 14 Sep 07 . #I . | 2602.18 |-. *
Mon 17 Sep 07 #. I . | 2581.66 |-. *
Tue 18 Sep 07 . | . # | 2651.66 + . *
Wed 19 Sep 07 . | . # | 2666.48 |+. *
Thu 20 Sep 07 . |# . | 2654.29 |+. *
Fri 21 Sep 07 . | . # | 2671.22 | + *
Mon 24 Sep 07 . I# . | 2667.95 | .+ *
Tue 25 Sep 07 . I# . | 2683.45 | + *
Wed 26 Sep 07 . | # | 2699.03 | + *
Thu 27 Sep 07 . | # | 2709.59 | + *
Fri 28 Sep 07 . I# . | 2701.50 |+. *
Mon 1 Oct 07 . | . # | 2740.99 | + *
Tue 2 Oct 07 . | . # }| 2747.11 | .+ *
Wed 3 Oct 07 . |# . [| 2729.43 | .+ *
Thu 4 Oct 07 . | #. | 2733.57 | + *
Fri 5 Oct 07 . | . # ]| 2780.32 | . + *
Mon 8 Oct 07 . | .# | 2787.37 | .+ *
Tue 9 Oct 07 . | . # | 2803.91 | .+ *
Wed 10 Oct 07 . | .# | 2811.61 | . + *
Thu 11 Oct 07 . # . [| 2772.20 | . + *
Fri 12 Oct 07 . | .# ]| 2805.68 | .+ *
Mon 15 Oct 07 .# I . {| 2780.05 | + *
Tue 16 Oct 07 # I . | 2763.91 + . *
Wed 17 Oct 07 . I #. | 2792.67 + . *
Thu 18 Oct 07 . & . | 2799.31 + . *
Fri 19 Oct 07 # . I . | 2725.16 | - *
Mon 22 Oct 07 . #I . | 2753.93 | - *
Tue 23 Oct 07 . I #. | 2799.26 |-. *
Wed 24 Oct 07 # . I . | 2774.76 | .- *
Thu 25 Oct 07 #. I . | 2750.86 | .- *
Fri 26 Oct 07 . I #. | 2804.19 | - *
Mon 29 Oct 07 . I #. | 2817.44 |-. *
Tue 30 Oct 07 . #I . | 2816.71 | - *
Wed 31 Oct 07 . I # | 2859.12 + . *
--------------------------------------------------------------------------------
"Timer's Trend" is based on 4% and 10% exponential moving averages of the New York Stock Exchange or NASDAQ advance/decline
lines (that is, the ratio of advancing to declining stocks). There are many symbols shown above, but the ones that count are the braces:NEXT ISSUE - is scheduled to appear in November 2007.