snippets - week ending 11/12/09, page-5

it's the surprises that cause markets to move .. when participants realize that their perception does not match reality.
at moment the DOW is pushing up, the USD looks to have reversed and is pushing up, the FED looks to have contained things, and the God is in his heaven smiling down on it all.
God give me a break!

so what is the flaw in most people's thinking? it is i think that US govt debt is a safe place to be.
i think the 30 year bonds are a sell and i will try and build a position. if the USD is to go into free fall and the DOW to reenter a bear market, then there must be a catalyst. and i think that catalyst will be a repricing of govt debt. it has happened in Dubai and Greece and i fancy the contagion will spread. in 1987 the DOW collapse was preceded by a collapse in the T-bond market earlier that year ..not many people know that, and i think history can repeat.

if a falling bond market gets into a positive feedback loop with a falling USD, then fortunes will be made by those who don't dither in postioning correctly, and who take to the falling dominoes with a big stick.

i am currently long on equities because i believe that is the correct way to be positioned.
last year was a stellar one for me because i spent many months following markets around the clock and shorting the SP500 futures. the strain of it all nearly killed me and i've been glad of the rest since.
believe me .. nothing would give me greater pleasure than selling that contract again in a short market. and i look forward to reentering the fray. but timing is everything.
so "patience" is my watchword.. and history suggests that the bonds will be a sell before the equities are.