Jim Chanos thinks he may not be bearish enough on Chinese real estate

http://www.arabianmoney.net/us-stocks/2011/05/25/jim-chanos-thinks-he-may-not-be-bearish-enough-on-chinese-real-estate/

Jim has a great grasp on the world economy. He is one of the few elite analysts that I think is worth listening to.
While playing something short you want to have the Patience of a saint and most of the best are typically early. Jim has been preaching this idea for a while now in spite of the bubble continuing to run, but if right it can pay off spectacularly.

1999 Part Deux

It is 1999 Part Deux coming to a social networking IPO near you! 

Let's just say...

...For anyone that happened to slip on a banana peel in 1999, forcing them to tumble down a stairwell, that then resulted in them landing on a single 4-wheel roller-skate, which sent them flying out of an front open door, which through some sort of master-balance-technique shot them down the driveway and across a busy street just barely missing many speeding cars, to be shot over a ledge, to be bounced around on a giant pine tree, to be attacked by eagles that pecked at their head as they broke branches on the way down, to land on the left side of a board that is supported by a giant rock in the middle, only to have a heavy branch fall on the other side of the board, which shot them into the air, soaring them over the town below, to be hit by a commercial airplane as they are in the air, to be taken hundreds of miles accost the earth, to be flung from the plane down towards a city, to land on a trampoline, to be bounced into a moving tour bus by owned by Britney Spears, who then got hit in the head by Spear's body guard, who became unconscious, who slipped into a coma until 9:30EST today... 

For that person, and only that person, the IPO of LinkedIn today should make sense. 

Why?

Because for that person's view on reality should be fairly distorted.

For the rest of the world that has not endured life as a Tom and Jerry episode, the manic IPO of LinkedIn should send the 1999 Tech-bubble chills up their backs (and through their portfolio!).

It's not different this time.  If you are playing with fire you will get burned!  LinkedIn reminds me too much of pets.com...  Junk Junk Junk

LinkedIn was the first Manic IPO, but soon to be followed by twitter, Groupon, Facebook, Zillow and many others I am sure. 

Markets

Markets are showing some weakness that should be taken notice of right now.
Watch the dollar as it has gotten off its death bed and is starting to make some noise.

Parchment Paper Thin Walls

In the new world of investing, nothing is as it seems to the naked eye. 

This is hard to understand, as we have parchment paper thin walls in today's world.  Information is about as easy to come by as fried chicken gizzards on the streets of Beijing.  Unfortunately, knowing the quality of that information is about as reliable as knowing the quality of your fried gizzards...

INSIDER SELLING DUMP CONTINUES:  I have mentioned the site http://www.j3sg.com/ in a previous post, but I highly recommend joinging for daily email updates.  Today's insider selling was manic in comparison to the buying.  This is pathetic at best when the 24 year-old actress/bathing suit model/Bieber dance extra/analyst 'guest' on Forbes/Cavuto/Beck this weekend told everyone that stocks were going to double in a week after she shook her magic 8-ball in front of the camera. 

Here is the Buying:  Pac Sun making a big splash!  They must have watched Forbes! That or 14 year-old girls are buying bathing suits (Mind out of the gutter people...).

And the Selling... 

That's right-- those top nine sells are 8 digit numbers-- Just Like Jay-Z's yearly salary.  Those are 8 digit numbers before the decimal point and all these sells happened today. 

If you are investing in stocks wouldn't you be suspect of a few but-zillion dollars of funny money being pulled out of the market daily when you are about to invest your life savings in sliver index funds, Priceline.com and Netflix... Here that little voice in your head:  '...Must listen to Cramer...'  You need to tell that little voice to STFU and look at the data!

Getting hit in the face by a bowling ball... twice

I grew up in a small community that had one bowling alley.  I happened to be in the same class as the guy who's dad owned the establishment.  The family would have all the kids from his class over a few times a year and let us loose on the lanes.  While I cannot recall a single frame bowled, I can recall the story of the ball return. 

For non-bowlers out there (or anyone who has only gone bowling on their i-phone) the ball return takes the bowling ball after it strikes the pins and sends it back to the bowler at the head of the lane.  Simple really. 

The story goes like this:  A kid was bowling with his family one day.  It was not the family's first time bowling, nor was it the kids.  On this fine day however, this kid (probably a snot faced husky boy) decided to stick his face in the ball return.  His parents, knowing their kid understood the basic mechanics of the ball return, didn't say anything.  Well, the kid had his face in the machine and a freekin' bowling ball was shot down the luge and popped him in the face, breaking his nose.

The kicker to the story is that the kid didn't fully pull his head out when the ball slammed him in the face.  Instead, he tightened his grip on the outside of the ball return, probably in shock, and pulled his head out about six inches.  The same bowling ball fell back a bit in the ball return, but soon got back on the track and shot out of the ball return, slamming the kid in the face... again.  This time the old snot face fell backwards and went down for the count.  All in, the kid had a fractured cheek bone, a broken nose, two black eyes and the reputation as the single stupidest kid to ever enter a bowling alley.

How does this story relate to today's financial markets?  Simple really-- Sometimes you have to be hit hard twice before you learn your lesson.  Investors were popped pretty hard in the face in 2008, but many still have their faces in the ball return holding on for more.  It is not different this time.  In 2007 the DOW was going to 18,000 before a correction.  This year it is the same mumbo-jumbo about seeing 20-30% returns... again.

Insider trading gives us an opportunity to really look at what is going in the financial minds of many corporate executives and major investors.  It may not be a 'sure thing' like the advice you get from your brother who bought XYZ stock due to a tip in a biker bar in 2009, nor is there a guarantee that it will give you the 'upside potential of the century' as stated by the CNBC analyst that has to disclose that no one in 500 sq. miles of his house owns the security he is pimping.  

Insider trading gives you a chance to logically pull your head out of the ball return before the same ball breaks your cheek bone.  Sometimes leaving the bowling alley with only a broken nose and a black eye is a victory!   

Insider selling has been manic over the last few weeks.  There is no reason to believe that everyone is buying stocks when CEO's of companies are cashing out 10X their yearly salary on a weekly basis. 

Maybe Pac Sun has some magic board shorts that sing Katy Perry songs?  Maybe the buying today by Pac Sun makes about as much sense as a donkey begging for waffles...

Use only the best tools at your disposal to see through the parchment paper thin walls!

And don't feed that donkey!

 



Hangovers

Credit buying is much like being drunk. The buzz happens immediately and gives you a lift... The hangover comes the day after. - Dr. Joyce Brothers.

The above is a famous quote by a famous radio host and psychologist.

If you have ever been really hungover-- I mean drunk out of your mind, trashed without pants on and singing Journey's Don't Stop Believing at 3am in an elevator full of Mexican immigrants who have nicknamed you the 'loco gringo,' hungover.    If you have been that hungover you have probably learned one thing:  You NEVER want to be that hungover again!!!

Here is the U.S., we have failed to learn that lesson.  The hangover from the great recession has now been wiped away from our memories and we are again pounding the hard stuff with reckless disregard for the outcome, which will be harsh.  Guessing the exact Monday that the hangover hits is impossible, however I think it will be in June.  

Ain't No Dollar Bounce Back Girl!  

Greenbacks look to be pausing from their recent punishing decent.  We are hovering right above the 2008 lows.  While this may be a pause before one final collapse, the most important thing to notice is the intensity and speed of the bounce back from the 2008 lows.  I anticipate the hangover will create a very similar effect this time around.  

Strong Bond the Long Bond

There was more rubbish today about China selling treasuries and the debt ceiling signaling the death of bonds, but long bonds have been strengthening in the last two weeks and look to have bottomed.  TLT looks to have bottomed near 90 and has strong support at this level as well.  While the fun-employment numbers later this week may be a set-back for TLT, bonds are firming at these levels.  With QEII ending I would not be surprised for TLT to make another accent to triple digits. 

Silver Lining?

Silver is getting crushed over the last two days-- is this a true Sell in May scenario or a head-fake on the way to $60? 

Insiders Tell the Truth.

Please take the time to visit http://www.j3sg.com/.  They offer FREE information on insider trading.  Today's volume on insider selling to insider buying will BLOW YOUR MIND.  There are massive amounts of money being pulled off the table daily while hardly any inside money is being reinvested into the market.  I don't need to be a wizard to know what this means. 

The buzz from QEII will wane soon, but there is probably one or two more jolts of tequila left in this drunk market before everyone passes out from exhaustion. 

Drink Up! 

Trading Quotes

"Ninety-percent of any great trader is going to be the risk control." - Paul Tudor Jones


“First, do not be invested in the market all the time. There are many times when I have been completely in cash, especially when I was unsure of the direction of the market and waiting for a confirmation of the next move….Second, it is the change in the major trend that hurts most speculators.” - Jesse Livermore


"When a falling stock becomes a screaming buy because it cannot conceivably drop further, try to buy it thirty percent lower." - Al Rizzo


"I have learned through the years that after a good run of profits in the markets, it`s very important to take a few days off as a reward. The natural tendency is to keep pushing until the streak ends. But experience has taught me that a rest in the middle of the streak can often extend it."- Martin Schwartz