New Thesis - Expect Overall Sector Correlations to Lessen in the Coming Year While Focusing More on Section Star Stock

I think this strange correlation that has been driven by the proliferation of Index Funds and ETFs to start ending.    All stocks are not equal and there should be larger focus on those outperformers in the coming years. 

How to Profit from the Upcoming Rise in Interest Rates? TBT?

I have put a limit order to purchase a call on TBT.    This strategy will work if there is a coming spike in interest rates.    As always with options the when is just as important as the how much.   With QEII ongoing rates could theoretically still drop some and there TBT which is an inverse correlated interest instrument.  Given that this instrument is traded daily it has a tendency to drop even if the index stays the same.   TBT is meant for day-traders and will continue to decrease even if interest rates only rise slowing.   So be carefull!

I would like to thank Rob for this interest rate rising thesis. 

 Other Options besides the ProShares UltraShort Lehman 20:

1. VAW - Commodities ETF should rise as the dollar sinks

2. Real Estate - Prices should climb, but slowly as demand and the future realization that you can not build for that price starts to set in.   This will be a long strategy to control inflation.

 

 Do you know any other ways to profit from rising rates?   

Mortgagegate - The Bears Have One Now - Lawyers, Judges, States Hungry for Money, and Bad Bank Mortgage Paperwork

BAC, C, WFC, and others will all be stung as lawyers on varied levels step into to fix this problem.   Additionally, I am not sure there is much interest in the federal government to fix a problem that is occuring on many different governmental levels.    This little problem is complicated.

To provide a counterpoint to this mess going into the future.    I would assume this might take months to resolve existing issues, however I do not think the final decision to go into forclosure will change on these foreclosed properties.    I believe the underlying reason the foreclosure happened happened in the first place is homeowners have not payed their mortgage in months.    All the lawsuits in the world can not change that.    Still there will be a legal friction the banks will have to pay to get out of this.    The feds might want to consider creating a clearinghouse to analyses these cases in a more reasonable time frame.   My two cents anyways.   


I sold 200 shares of 900 shares of BAC in anticipation of lower prices to come.    I still believe in BAC as a viable company with great long term growth prospects.  

Let me know your thoughts.    I suspect I will need to update this blog a number of times as new information provides some clarity. 

How High will the DOW Go?

Analysts have been thoughing out lots of numbers.    I think there is still the possibility this could go to 12000.   After that one would want to check valuations and movements of money.   As long as there is movement from the bond bugs things could really bet bullish.    What are your thoughts?

Which Way Does the DOW GO!

Bears:
Running out of ammunition. 
Israel and Iran are unusually quite
California, New Jersey and populous states still are running unsustainable deficits
European pop-up from the banking issues.    Moody's or S&P downgrades possible.
Currency Wars to deflate currencies.   How will China, Brazil, and Japan continue to lower the Dollar?
Market is at a 5 month high.   Risk of a correction is real from a technical standpoint.

Bulls:
EU will just spend its way out of Banking issues.
Bernanke will spend his way out of the Recession.    He has wisdom about depressions.
QEII - Stimulative Spending II bill is up for approval.
More elected republicans will make DC more business friendly (less effective politicians)
Earnings are likely to push further higher on continued cutting and trimming of budgets
Europe risk has calmed down and become background noise only.

Let me know your opinions?

Dow Up 200ish Today - Will We See the DOW Below This Point In The Coming Months

Starting to get nervous holding onto 17% cash.    Stocks that seem to not have taken place in the upsurge are: BAC WFC DIS MSFT NAT NBR NUE.    These can still be bought at a relatively low price.    The real question is whether they can still rise from here.?