09/20/2012 premarket, "The Scream Machine"

Small Portfolio	XLF & IAU	19.21%
Position	Date	Return	Days
DECK	6/15/2012	-13.92%	96
CVX	7/5/2012	9.46%	76
RIMM	7/16/2012	-0.55%	65
UEIC	7/30/2012	30.92%	51
QSII	8/6/2012	11.78%	44
SWM	8/23/2012	3.94%	27
FCX	8/27/2012	14.97%	23
DWA	9/4/2012	3.65%	15
CAJ	9/5/2012	10.65%	14
DVN	9/7/2012	4.72%	12
S&P	Annualized	6.59%
Small Portfolio	Annualized	14.71%
Large Portfolio	Annualized	18.32%

 

Scheduled rotation: selling CAJ; buying NPK.

The market is wildly overbought right now, so any new position is liable to get hammered in the beginning.  DECK had a significant drop off this week after an analyst noted that some of its shoes were on sale 3 months before Christmas.

Merry Christmas to me…

Speaking of Christmas gifts… all of this free money from the central banks is just a new version of the old trade wars they had in the 1930s.  If we devalue our currency by 10%, that’s the equivalent of a 10% tariff on every product developed in the context of another currency.

If the Euro is devalued, that deflates the dollar.  If the dollar is devalued, that deflates the Euro.  If the Yen is devalued, that deflates both the Euro and the dollar.

If every currency is devalued at once, though, no one gets even a temporary reprieve.

The ECRI sees us as already in a recession.  Europe clearly has been in recession for a while.

The market may be on a sugar high, but it isn’t pulling the rest of the economy along.

Clearly the best investment right now is a good job – but that’s just as risky as DECK, and with currency devaluations it’s not very much more profitable.

I said the other day, “Enjoy the ride.”  This ride, of course, may very well turn into something like that old roller coaster from Six Flags called “The Scream Machine.”

Tim