Mid Week Pit Stop #23

Well, lets talk a bit about the market. I feel that looking at the market now, learning from it, is a very good experience after all, most people have not really been through a true bear market (me too). As always, my stand is clear. Short this whole market.

Short Selling

Let's talk about about short selling. I really like this article - "Long on Stupidity, Short on Common Sense".

The title is so... true (you can revise the title and say that to me actually =D). Seriously speaking, those people just don't really that short sellers have to be in the market. Most people will say that they punish prices, distort the facts, the values and so on. But they don't realise one thing. Usually it is the short sellers who bring in the rally. It is not the "value investors" that are soley at work when it comes to rallying. Short sellers play a huge part in rallies as well.

I remember watching cnbc on tues and someone was saying that banning short selling is good and the SEC should move on to ban buying oil. OMG. What the hell is that person talking on cnbc, earning big bucks for saying something as stupid as that? He was arguing that oil prices are too high because of pure speculation and manipulation and a lot more (actually I never really listen but I was turned off by his first sentence).

Banning short selling is as good as saying banning long term buying. It just doesn't work out. As much as I am on the short side, wanting the market to plunge, I don't agree with banning long term buying as well (if the SEC does comtemplate this, that is). For goodness sake, what are those people thinking. I like the example used on China.

Whenever some "smart" people out there who think that they should do something and indeed try something new, there will be disastrous effect. Just look what happened to oil and gold in history. It is proven.

The Bailout

Well, it also applies to the bailout. I like Jim Rogers in this video here. There is one more on bloomberg but it is similar. Again, he enlightens me a lot with Korea and Russia this time round. Again, the classic example will be Japan.


I don't remember putting this graph up. Anyway, to illustrate Jim Rogers view, Japan peaked at 39000 in late 1989 and took 13 yearS to bottom at 8000 in 2003!!! (YES, 13 years of bear market, don't go about and say there is some mini bulls in between)

5 years down the road, the market is only at 11000 and is no where near half of where it was.

Yes, Japan bails out lots of zombie companies back then. If you are a long term investor and you cheer for the bail out. Think about it.

Do think through what I say.

Last Words: I think the house will not pass the bill. Black Friday? =)