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Thursday, November 17, 2011

Interview

Interview with Tekoa Da Silva of the Contrary Investor Cafe.

76 comments:

  1. Funny that the day we sell GDX is the day the interview is published. Suffice it to say I have no desire to buy miners until I'm convinced the stock market has bottomed.

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  2. This has to be a record 3 post in one day...

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  3. I think we need to take a step back and remember that we follow Cycle Analysis. Yes, we are trying to protect our capital, but we should not forget that we were expecting a price decline. There has not been a daily cycle violation.

    I had always thought that we should exit our position when a daily cycle low gets violated.

    Sure, other areas of the market are giving us possible warning signs, but the reality is that we are in the middle of a regular cycle decline. Everyone please take a deep breath and count to ten.

    I believe that there is a better chance that this is a normal daily cycle than one that will be a failed cycle.

    1,2,3,4........

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  4. Strike 2 on the miner 'breakout' (in the past few months anyway, who knows how many total strikes). The only equity worth buying/holding in this mess is rgld. Everything else is just trying to steal quarters out of the gumball machine while waiting for the probable/impending breakout!!!!!!
    Just stick with straight metals and rgld and disable the realtime quotes app on your iPhone/pad. Do that and I'll wager you'll beat most 'fund managers' over the next two years.....

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  5. We're already outperforming virtually every hedge fund in the world.

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  6. The European crisis is getting close to a tipping point so I would argue that these are not typical conditions.

    If Germany sticks to their guns we will have another financial breakdown similar but much more serious than Lehman.

    Berskanke isn't the only variable that can disrupt normal cycles activity.

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  7. Can't disagree with that (I'm sure your performance is great) just saying there is probably no need for constant daily/weekly portfolio changes for the sake of trading/picking up nickels in front of the proverbial bulldozer. Why bother?

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  8. High 5,

    That is a possibility but will you base your trades on that possibility or on cycle analysis?

    What if Europe implodes and because we are in the middle of an IT cycle in gold, all metals go higher instead of lower?

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  9. The obvious answer is that because we are in a bear market that's the only way to make money.

    There is no buy and hold strategy that works in a bear market. I think everyone learned that on in 2008/09. What a painful lesson that was for the buy and hold crowd.

    Even gold is likely to just trade sideways for the next year if stocks resume their downward spiral.

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  10. If Europe implodes the chances are probably pretty good we will see a major deflationary event and gold will tank as it is sold off in order to cover immediate cash needs.

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  11. Well said high. I for one don't think there's much of a chance that Germany will allow the ezone to go down without easing. And if they don't 'allow' it, the bernank will step in. There's simply too much at stake to let the house of cards start to collapse already.

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  12. You know with the way the metals were down I really think the HUI held up well. What concerns me is that some of my favorite miners SLW EXK were among the ones down very heavy.

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  13. I thought gold was in a bull market? Why would I care if stocks are in a bear market...unless I'm waiting for miners to breakout?

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  14. I'll tell you why because you can and probably will just watch your gold trade sideways for a year or more just like it did in 2006 & 2007.

    Plus there will be plenty of volatility has each leg down of the bear market climaxes. Those selling events will bleed into the precious metal market and your emotions may make you sell at bottoms.

    If you can just sit with your positions and weather all the ups and downs then that's certainly an option, but my experience is that virtually everyone that says they can survive that kind of whipsawing mess for that period of time are just kidding themselves. They all end up getting spooked out during a severe draw down or the sheer boredom of going nowhere month after month eventually knocks them out of the trade.

    The only people who can do that are usually just in physical.

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  15. Physical gold is up about 21% for 2011 isn't it?

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  16. Excellent response--thank you! I hope some of your subscribers learn from it! I find it hard to believe that gold will trade sideways for two years from here but if it does, it will still be sitting in my safe awaiting dow:gold 1:1!

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  17. "Physical gold will outsell ETFs by 500 per cent this year, Standard Bank’s Walter de Wet told the 8th Dubai City of Gold Conference today. Two years ago the position was completely reversed with physical gold sales running at only 20 per cent of ETFs."

    http://www.arabianmoney.net/gold-silver/2011/11/13/physical-gold-to-trump-etfs-by-500-in-2011-hears-dubai-conference/

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  18. I'll just add that I was quite surprised by the HEAVIER selling in the GDX.

    We had a nice normal , controlled pullback...waiting for the DCL (and HOW MANY TIMES have we been ready to break to new highs)?? WHEW!

    Here's what makes it UGLY-

    http://www.screencast.com/t/BD3MQqfU

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  19. If anyone cares for my UGLY possibility...includes the Daily Cycle low & a bounce--
    here it is . If it turns and TAKES OFF UPWARD tomorrow and never looks back, however...I WONT BE SAD!! ; ]

    http://www.screencast.com/t/KQsj3gIDbuix

    ITs just the UGLY possibility....that we are in that trading range still. May not even Happen,
    --BUT IF we get a reversal and a Bounce UP next wk ...ON LIGHT VOLUME , and you see this chart form--consider lightening up : ]

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  20. Oh-

    and I know most of you lightened up with the new post...if you were alerted to it, but any who missed it , with a heavy core or individual miners...is who I was addressing with the above post.

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  21. still bullish on gold *and* stocks (75 weekly (377 day) MA anyone?) but remain in "buy the dips" mode instead of old turkey. tomorrow morning might be decent buying op in both, /es around 1195, /gc around 1700+/-20 god willing.

    in the meantime patiently waiting for US paper to catch a bid then promptly crap out once the nice people of europe realize that ten years at 1.6% isn't such a grand bargain, in dollars no less.

    that's the problem with my being bearish here long or even medium term- where is the money going to go? yes it will kneejerk into paper initially.. but then it will go into whatever assets are cheapest.

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  22. I made a miscalculation and it cost me today.

    The problem wasn't the leverage per se. Or my approach.

    What I did was miscalculate what my losses would be when/if gold came back down to this zone. The mistake was based on how I keep my records on a weekly basis and how I didn't factor in some losing trades when I figured "I can hold to 1680 or so, exit there, and lose a percent or two."

    I took a look after today's slide because totals were not looking right and realized I was off by almost 10% on the loss calculation.

    So instead of losing maybe 2% (from where got on this train a few weeks ago if stopped out), I'd drop 10% net worth at 1680ish instead. Ugh.

    So the problem became that I had a stop loss point that I was NOT willing to 'take'. You can NEVER have a stop that you are unwilling (or unable) to take. (or no stop). Cause sooner or later the mkt will FORCE you to take it.

    My decision was to sell 1/3 tonight (around 1713; crappy price; no choice). Then I've moved the stop up on the rest near the lows tonight.

    It isn't an ideal stop cause it means I have a stop which originally I thought was too high, but there IS a good chance the lows are in as of now. So maybe that works out. I'm playing on some luck at this point cause I screwed up the trade. If I sell now I lock in only about $10 higher than my stop, but I give up the odds that the low is in - which I think are pretty good.

    If we go lower (and I stop out of the current holding above) I'm gonna do another "1% loss" type buy around 1700 with a small stop cause I think the 1680-1690 spot holds.

    If not, then I'm at mostly cash with the rest of you guys as we head lower and slightly worse for the wear.

    I really think there are pretty good odds we have a viable low here, Or one just a bit lower. So that is my play for now unless I change it.

    I'm bummed I messed that up, but all I can do now is work it from here.

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  23. The money I had on monday that I don't have now is very sad. You guys that cleared out a few days ago won that one.

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  24. This comment has been removed by the author.

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  25. Hey TZ: That royally sucks, sorry to hear it...

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  26. ...We're already outperforming virtually every hedge fund in the world.....

    sorry Gary not even close !

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  27. TZ,

    Thanks for sharing.

    I can feel your pain :-(

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  28. what about dollar do you still think it will make a move down soon to the daily cycle low or its possible that it will bottom close to current levels which would be nothing more than consolidation before next upside move

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  29. TZ,

    sorry to hear your ordeal... It happens to the best traders, just regroup and you will make it back slowly but surely

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  30. To those asking about Kyle Bass’ position in the prior post,
    Hayman’s strategy is considered global macro so the composition of his fund varies over time, but he is currently focused on credit at the moment. His fund is roughly 90% in short duration fixed income securities including bank debt and corporate bonds including a mix of investment grade, high yield and distressed. With the remaining 10% tail of his fund, Bass makes large asymmetric trades (sub-prime, Greece, JGBs), and he is currently focused on interest rate bets. Bass did use CDS for his Greece exposure, but I believe that his JGB position consists of interest rate derivatives. I can’t confirm the exact numbers, but it has been speculated that he purchased protection on about $12B in Japanese Bonds at a cost of around $6 million. The asymmetric payout on his $6M investment would be close to $125M if Japanese yields rose to 4% (currently at about 1.3%). This investment would then likely return an additional $125M for every subsequent percentage point increase in yields above 4%. Despite what some may claim, he’s not losing much money on this bet relative to the size of his fund, other than the cost of the derivative. These bets are meant purely as enhancements to his core fund’s returns.
    As an average investor, you can’t replicate his trade exactly without considerable capital and a prime brokerage relationship. If you want similar exposure (without the same payout potential), you can short Japanese government bond futures through someone like Interactive Brokers. As an indirect method, you can also short an international sovereign debt fund that has a large percentage of its holdings in JGBs (something like SPDR Barclays Cap Intl. Treasury Bonds - BWX). Personally, I don’t recommend doing either of these though because this trade will likely take considerable time to play out and bond traders have been betting against Japanese government debt for years without success

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  31. My gold futures system sell stop has now risen to 1711.

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  32. Gold and silver looking decent this morning, I hope his holds.

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  33. Hey TZ

    Knowing that you didnt have to tell anyone about that loss, but chose to is quite admirable.

    As you know , it's just a slip up and knowing how you trade (4x to 6x at times , with stops in place) ...I know you'll make it back and then some sooner or later!

    Thanks for sharing and sorry to hear it!

    ALEX

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  34. Swing high on the dollar
    Gold still has a way to go before there is a swing low

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  35. "We're already outperforming virtually every hedge fund in the world.

    Not even close.

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  36. UUP did close its upper gap. And now a roll over to close the lower gap and a tag of trend line support around 74.50? Then a rocket ship ride to 90? That's one scenario I can see happening. Gaps represent unnatural or unsustainable price action. That's why they are frequently (but not always) filled. Although UUP is not $USD gaps on UUP still represent unnatural $USD moves.

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  37. Brutus,
    Just since July the model portfolio is up 20%. How many hedge funds were able to do that during that period?

    If you include the run from when silver began last fall most people are up 100% or more.

    How many hedge funds did that?

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  38. Plus don't forget the model portfolio uses no leverage and never invests more than 75% of capital. I'm pretty confident that almost no hedge funds in the world can match that risk/reward performance.

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  39. about the "wedge" in SPY that everyone has been discussing-

    PERFECT opportunity for large funds. shove price down out of it, run all the stops since "everyone knows it's a continuation pattern", and now it is "failed" while neglecting price is still above support, then in the morning as everyone is shorting the "backtest of the wedge" load up.

    not saying it's going to happen, but definitely watching for a strong bull day today. 1230+ and i think we've seen our swing low.

    meanwhile USTs still having trouble breaking out. sellers coming consistently every time we see a sub 2% print.

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  40. I googled it. For one year return, one hedge fund has matched the returns of the SMT.

    Unleveraged I doubt any of them are even close.

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  41. ST DELUISE

    I was having a similar thought, but I am 50/50 Neutral.

    I really thought we could POP today, leave shorts that added short yesterday worried , and then they have to cover.

    OR

    --The old POP & Drop-we gap open, retest the triangle...Longs take new positions, and they sell off.

    Here is my 50/50 chart. Its Bulls vs Bears after that Tri Angle break : ]

    http://www.screencast.com/t/0QmIV74e72sV

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  42. 32 days is still early in the daily cycle. They usually bottom on about day 37-40 and they usually generate a lot more fear than just one down day.

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  43. ALEX - thank you for your charts. The miner chart you posted scared me.

    Poly - thank you for posting your thoughts, I lighten up last week and took profits on some.

    Has anybody heard from WW? I hope he is just resting and nothing happening to his heart.

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  44. Metals up a little and miners not, so I'm going to wait.

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  45. Hey ,

    Ur right about W W...he didnt post anything all last night or this morning. Not like him, even when he's in the hospital.

    Anyone on here Email him from time to time ?? And Have you heard from him?

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  46. Nice interview, thanks for posting the link.

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  47. Alex - no I haven't heard from WW, and don't have his email. Hmm... hope he is just resting. Last time he went back to the hospital, gold was also down. Perhaps it is just coincidental.

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  48. Who remembers this?
    http://www.kitco.com/hist_charts/gold/24_hours/2008/au09172008.gif

    I have a feeling a similar move is coming. I have no idea if or when, except things (bad news) seem so similar to then. Gold had been doing horribly, and it is worth noting it did quite bad soon after, but a similar move now percentage wise would be about $200.

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  49. Isn't WW pretty young? Hope he's ok.

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  50. GOP grills Steven Chu keeps Solyndra affair burning..It is really painful to watch those Grand Old Party on TV.

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  51. Michael,

    If I recall correctly, WW is 36 years old.

    I hope he is doing okay too.

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  52. The S&P will most likely close below the 75wma this week, and I believe the move down into a 4 year low has began, putting my short back on the market today.

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  53. Really don't see them killing Christmas this year. The USA has too much to gain from being the best bet (even if only for a little while). Doubt $SPX will fall too far here. That means the dollar will pull back and the S&P 500 will rise. PMs too. January or late December is another story. IMO

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  54. OH

    I take it William has just been "working" ? Examining the recent change in mkts?

    Glad to see/ hear ya , William! Worried for a moment.

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  55. Danno,

    I agree with you...And also with all the bad news after bad news, I think that DAX and S&P are holding pretty well relative to August

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  56. Alex,

    Thanks for making me laugh brother :) Im ok guys...sorry I missed the earlier posts. Just had my eyeballs glued to some charts all morning...I must say, what I thought was the stubborness of gold to drop into a DCL looks to have been what I initially thought - double top at 1800 and the slanted head and shoulders forming that we see now on the daily that may break down hard, and although this daily cycle is right translated it may fail (Gary what do you think?) The 50sma is holding for now, but I think if gold loses the 50 this daily cycle may fail. Alex, im sorry to hear about your charts being deleted, definitely painful...I just got done telling you how I love all of them :(

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  57. I'm going to go with the odds and say it won't fail. Plus it's now so late in the daily cycle that it is running out of time.

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  58. Danno

    I believe we could drift higher now...then will drop next week (hopefully) in a light holiday volume sell...and then set up for a Christmas rally. So I pretty much agree with your last post...

    But how do you reconcile that with your first post ( at timestamp 5.01 a.m. today )where you said the Dollar is going to rocket to .90 ?

    I'm not picking on you, just wondering...Together?? I doubt it...did you mean different time frames?

    Thx

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  59. Gold found support a few times on the 120dma during the last daily cycle(1675 basically the bottom of the range). Looks like the 50 is holding strong but I would assume if the market breaks lower next week gold is going to drop further, and if a selling climax does take place the 120 most likely wont hold, and support on the 150 (1644) seems likely and the DC wont fail.

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  60. A Santa Claus rally may be in danger.

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  61. I always said that out of the OCT 4th low the market blasted off too hard to fast and that I thought it would cause the market to rollover sooner then later, and give us a left translated cycle...turned out to be the case. Now that the market is rolling over, we know markets go down much harder and faster than they rise, this could get sickening.

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  62. If the opposite of what I was hoping for happens...I agree.

    If we drift higher on light volume all next week (holiday buying volume is usually light ) then Start selling off after vacation...dropping heavily? We could retest recent lows a month ago ...ugh.

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  63. The 5/8/02 and the 7/16/08 IC's in the S&P were left translated, they turned out to be nasty.

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  64. well looks like the bears might have it today, at least in terms of not screwing it up again.

    keeping focus on the US 10 year yields in lieu of the dollar. all time low is 1.699%, hovering around 2 now. it gets down there again with a volume divergence on /ZN and i am buying anything not nailed down- preferably after some sort of minipanic.

    until then it's trapped in this range. very well may continue through next week while everyone is gorging themselves.

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  65. Alex,
    Maybe I've been looking at the 10 year dollar chart too much. My statements were longer term I guess.

    If the dollar falls to the point where that big gap in UUP is filled it could take several weeks to get there. And then more weeks (or months) for the dollar to rally to 85 or 90.

    That's where I've been coming from. Longer term. When Gary called the dollar bottom, he called it spot on. Later I was shocked when the meteoric dollar rally 'died' so suddenly. I was disappointed because I thought the dollar was going much higher.

    But now, looking back, I see that I had not really given it much time. Years of trading have beaten it into me that some of this stuff has the audacity to take many more weeks or months to unfold than I would prefer. Especially a historic (and possibly the last) dollar rally and its setup.

    When the recently brief dollar rally ended, I thought, "That was the end of the rally already?" Now I feel maybe that 'rally' was just the end of the initial setup for the rally to come.

    But who knows. I certainly don't have a black 1999 Diablo parked outside. derp!

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  66. DANNO

    Thanks- got it...longer term dollar .90

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  67. great info, and definitely beneficial advice... but, i think it's obviously wiser to invest in gold instead, since it's untouchable when looking at inflationary currencies across the globe, and also since, gold is what all currencies are valued and based upon... and with that, there are plenty of people who are out there searching for a good source for information on mining, gold, and precious metal stocks, as those who have read this article would be asking me at this point... the best source that i've personally found states that it's free stock alerts, "scour the Mining and Precious Metal universe to find stocks that are on the verge of breaking out or that are undervalued"... check them out at http://www.MiningStockAlerts.com if you happen to be one of those people out there searching for truly profit-gaining results in the mining stock field. :)

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