Friday, November 21, 2008

I hate to say I told you so....Bris Connections

The 7.30 report has a great story about the great Brisbane highway robbery carried out by MacBank. Seriously the mispricing carried out by Macquarie on this deal should be a criminal offence. Awful

Tuesday, October 14, 2008

Time to Take Stock

Phew, it's all over....or is it? Central Banks around the world have conspired to pump some liquidity back into a market that had completely dried up. These facilities, most of which are swapping arrangements, swapping government debt of mortgage backed securities are design to rid the market of the 'toxic' MBS and CDOs and everything else that has been clogging up the system. It's a good idea and it needs to be done, but does it put the debt and equity markets back on track? In my opinion no. It is necessary, but it doesn't change the fact that the world is/was massively over leveraged and needs to de-leverage. It will takes months to get the liquidity and confidence back in the markets. Equity markets may rally for a week right now, but that doesn't mean it's time to dust of the margin lending account and get straight back to it. It's time to identify strong macro economic themes that will drive the global economy forward. What goods are people going to need in the future? Which goods will they need more of and who is best placed to benefit from this?

Wednesday, October 8, 2008

What's Going On?

Banks aren't lending to each other. LIBOR is a farce set to minimise derivative exposure, cash rates are not reflective of reality and the DOW on 5 times earnings is about Half of where it is currently. The best things to own right now are tins of food and weapons.

So what to do?
Sell everything that has a large debt component that needs funding. Purchase Woolworths (maybe) and convert the rest of your assets into gold and or non perishable food. It's all over folks. It seriously is.

Wednesday, October 1, 2008

Monday, September 22, 2008

Holy F****** S***, You Idiots.

ASIC are idiots. Plain and simple.

If they think a ban on short selling will lower volatility and stop those 'nasty' hedge funds from profiteering from a bear market they're wrong. It's like they set their fiscal policy from whatever David Koch is saying on Sunrise.

Let's say you run a conservative little portfolio and you're long a few RIO.AX calls and you want to hedge your position by shorting some stock. You'd be doing the low risk, conservative thing, but now that those geniuses at ASIC have banned short selling, they prevent you from hedging your position, thereby increasing your risk, potentially forcing you to exit your position or even worse to sustain massive preventable loses.

How does ASIC decide what price level in the market is low enough that they can ban short selling? How do they know what represents fair values? They don't. What if the market is overpriced? (which it is)

If you run a super fund and you're getting smashed on your long market position and you want to buy a few index puts, are ASIC going to ban that too?

Seriously, the petty jealousy from the grubby little sneaks at ASIC has gone way too far and they have massively overstepped the mark. Their stupid over reaction caused a massive bounce in the market today (up more than 4%) and clearly didn't lower volatility.

We used to have a relatively free market Krudd and Co. The only other place they banned all forms of shorting was in Russia.
Next thing we'll be standing in line for soup and Brain surgeons will be paid the same as Ditch Diggers.

Why doesn't ASIC ban long only trading because a nasty hedge fund might buy up all the stock, artificially forcing it higher? That's just not fair, profiting from a rising market. They've got to start thinking.

Thursday, September 18, 2008

Pack up, Go Home

It's all over, if you haven't shorted MQG.AX it's not too late, it's going to <$10. BNB.AX to zero. BCSCA.AX to -$2.

Wednesday, September 10, 2008

OPEC 1: World 0, Kevin Rudd -1

The oil price has been in steady decline for a number of weeks now, and this is not due to Kevin Rudd 'Applying the Blowtorch' to OPEC over high oil prices, this is because of a decline in the marginal demand for oil (and the recent powering up of the USD). People like Kevin Rudd have no influence over the price of oil (surprising, i know) despite implementing some sort of overly complicated, expense bureaucratic nonsense website.
Anyhow, OPEC got sick of the declining price, so what do they do? They do what any rationale cartel would do, they reduced the production of oil to drive up the price. The International Herald Tribute has a good article about it here.
Despite all the bleating, domestic politicians have less influence on Global Markets than they'd like to think. Why don't the ever get called up on their blatant misrepresentations of the facts, or their chronic over-statement of their usefulness.

Thursday, September 4, 2008

What becomes of the broken Tollroad? BCSCA.AX

Brisconnections (BCSCA.AX) was a scam and is a scam and while the CEO and Maccas (MQG.AX) are desperately trying to tell you that it's fine and that it's a good deal, the market are voting with their feet and getting the hell out of this train (or should it be car) wreak before they have to throw away another $2 of their hard earned. This thing could well go to zero, and if it were possible, it should be trading for a negative value because once you own the partially paid share you are obligated to pay the extra $2. There is no reason to purchase equity in this transaction. Debt holders should be nervous, equity holders should be hitting the sell button. Funny how when you rob the 7-11 of $200 they throw you in jail, but when you rob the public of hundreds of millions of dollars via a terrible deal and shonky prospectus you get away with it.

Saturday, August 23, 2008

Human Behaviour

What determines the price of something? Is it the intrinsic value of that item? What is the intrinsic price? In a world where currencies aren't backed by anything other than the word of the person who printed them, then I'd argue the value of something is the price you can get for it. It's what you can exchange it for. If you can exchange a handful of promissory notes from the Australian government for a little box of electronics from Japan/USA, then he value of the currency you handed over is one Xbox/Playstation.
And why is all this relevant? Well, in Global markets, the value of something is the price that someone is willing to pay for it, and that price is what they think the intrinsic value is. It's what they think they can exchange it for in the future. And the value that they attribute to it, isn't necessarily a mathematically derived formula. It is based on a belief that the item they are purchasing has value.
Where and How they find value for it, is determined by the individual, and the individual is not acting alone. They are driven by themselves, their peers and the ideas that are hard wired into their brain. As a trader you have to learn to take advantage of this. I highly recommend read Bob Cialdini's book, Influence: The Psychology of Persuasion that spells out clearly the different, yet predictable types of responses people have to certain situations.

Wednesday, July 16, 2008

I'm Short Climate Change

If there was a way to get short the mass hysteria that is climate change I would jump on board with both hands. It is a massive con job. Here's some questions that everyone should be asking.

1) If it is getting hotter is it a bad thing?
-Plants grow better in high CO2, high temperature environments.
2) If it is getting hotter doesn't that mean it will rain more?
3) Won't higher temperatures mean more arable land? (get out a map people, and look at the frozen tundra of Siberia, Canada and Greenland)
4) Is it getting hotter?
5) Can we control the temperature like some sort of James Bond Villian (the answer is no, unless you have a method of altering the Earth's orbit of varying the intensity of the sun)
6) Why isn't water vapor considered a greenhouse gas?
7) If it gets hotter, doesn't that mean more water evaporation and won't this repel as much heat as it traps (therefore no change in temperature)
8)If higher temperatures are bad, does that mean colder temperatures are good? If so, why aren't we trying to make it colder?

Think before you start repeating the words of Lord Garnaut verbatim.

Saturday, May 17, 2008

Why So Long?

The bull market is back baby. If you don't own Iron Ore, Coal, Oil and Phosphate you're a clown. BHP Billiton is well on it's way to becoming a $100 stock this year. And if it does, and if the Aussie banks want to keep trying to buy each other, then the ASX is well on its way back up to 6500+. In the short term the Aussie economy doesn't really care what is happening in America, higher interest rates haven't really started to bite and our Chinese speaking turnip elect hasn't done anything to put the brakes on inflation.

Monday, February 25, 2008

Told you they were rubbish

Biofuels are a waste of time, money and resources. See here. You've got to look at the big picture people.

Wednesday, January 30, 2008


America is Broken and the World Economy will suffer. The Federal Reserve in their infinite wisdom (these guys are almost as smart as the monoline insurance* companies) dropped the cash rate 75bps on Black Tuesday (22nd Jan) and that didn't even stop the rot. Now that they have telegraphed another 50bps cut, we're going to see what happens when the cash rate is less than inflation. There's no incentive to save money because money in the bank is devaluing quicker than any yield you're getting on it. So the Fed is betting that once again America will be able to spend their way out of trouble. This sounds good, but when people are pessimistic from years of war (I can't even remember a time before Bush War Snr and Bush War Jnr) and falling asset prices (Houses, Shares and Money) then they're not going to be in a spending mood. This is going to sting for a while. The fed should have done what we all did on Tuesday, sucked it up. You can't keep shielding people from being hurt or they'll never learn Bernanke you Goose.

*these guys are insurance only in the sense that they're happy to receive your premium payments while the sun is shining but as soon as the storm clouds gather they are downgraded and aren't good for their AAA rating.

Friday, January 18, 2008

How Brave are you? Paladin Minis

I am still bullish Uranium, there are a lot of reactors being built and not a lot of extra Uranium being dug up. PDN.AX has been getting hammered as has the rest of the Aussie Market. There's potentially a blockbuster trade out there for the brave investor. PDNKZC (listed mini) has a $5.22 stop loss and a $4.96 strike. PDN is trading around 5.35 at the moment, if you get long here and don't get stopped out, you'll be laughing when PDN bounces back above $7. At $7, this mini is about $2, so you'll make 5 times your money with only about 10% if you get stopped brave are you?

Thursday, January 17, 2008

House of Brown, Now Sit Down

With CitiGroup writing down anything they can get their hands on, the long predicted fallout of the 'Sub Prime' Meltdown is starting to be felt. Is this the end of the world? No, but it does mean that the Dow is much more likely to see sub 12,000 levels than back at 14,000 any time soon. It seems to me that Bernanke will be quick on the draw should the American economy start turning further south and this should give us a little bit of short term relief from the sky falling in. I wouldn't want to be long the market with the current irrational selling. There is however a good opportunity for long term Aussie investors to get long at these levels. Quality companies like NAB, at $35 is a bargain, Zinifex at $10 is cheap as chips and I also like Iron Ore in the short term with price negotiations currently taking place. MMX looks really good at less than $3.