Wednesday, May 02, 2007


I guess I first noticed it about a month ago.

I took my family to North Lake Tahoe, where we've got a place, so we could enjoy the last days of skiing. I saw an issue of the Robb Report, which is basically a magazine for wannabe zillionaires. It is full of ads for Rolls Royces, exotic vacation destinations, and the like. In a nutshell, the essence of tacky.

I used to actually subscribe to this thing when I was a teenaged twirp, dreaming of having a fortune some day. I suspect that I had the same idea that many readers of this magazine have, which is that somehow wealth would rub off on me if I read about it and coveted it enough.

Well, I hadn't seen this magazine in over twenty years, so I thumbed through it. What struck me the most was a single word that kept appearing again and again - bespoke. It had to be the most frequently used adjective in every ad and article. Everything was bespoke this, and bespoke that.

It actually got kind of comic after a while. The actual definition of "bespoke" has a lot more to do with tailoring clothes than wealth, but I guess the idea is that if you throw money at products, you will get something specifically suited to you and you alone, as opposed to the unwashed masses beneath you.

People often look to the 1980s as the decade of greed, but frankly the symbols of greed from the 80s appear quaint today. For one thing, the Dow topped out at about 2,700 before it crashed, which is a small fraction of its current value. Obviously the asset bubble in real estate, stocks, and just about everything under the sun has made a lot of people far more fabulously wealthy than at any prior point in human history. Even house porn has become a favorite fixation, particularly in the SF Bay Area where I live.

Because of this wealth, the symbols of greed and covetousness abound. Since I'm pretty well past my adolescent craving for "stuff", I generally find the whole Gimme Gimme Society as a mix of interesting and stomach-churning. But it reached a new low yesterday when I thumbed through my personal mail.......I got this:

I stared at the cover in disbelief thinking, "You have got to be kidding me." I get the fact that Trump will whore himself out for just about anything with his name on it. But putting your name on hotels, condominiums, houses, and even a TV show is one thing. But - - - meat? A grocery item? What's next, toilet paper? ("Now you can wipe your ass with the same quality paper product that I do....")

If you believe - and I hope you don't - that money equals class, you are sadly mistaken. There are plenty of billionaires that don't have an ounce of class, and there are plenty of thousandaires with gobs of it. For a superb perspective on this subject, read Paul Fussell's Class. It is many years old, but it is absolutely on the mark.


Well, the asset bubble kept expanding today, although it moved away from its highs. I watched the Dow cross the 13,250 mark, and at one point I think it was up something like another 130 points. The "melt up" started to simmer, however, and it closed "only" about 75 points higher, yet another all-time-high.

My portfolio has been doing an admirable job of holding its own. In fact, it closed the day virtually unchanged. This is very encouraging to me. If I have constructed a bearish portfolio that can weather this kind of abuse, then I know any weakness will be richly profitable.

Here is an intraday graph of the red-hot Chinese market (which is basically a verbatim repeat of the NASDAQ bubble of 1999). I've drawn a neckline here on what seems to me to be a nicely formed head and shoulders pattern.

The Dow 30 has obviously been the strongest index of late, although its lurches forward seem to be getting more spasmodic. But it certainly has not broken its upward pattern yet.

My concern yesterday about the candlestick formation of the Russell 2000 was well-founded. I am glad I closed those puts - - and at a very handsome profit, I might add. But I was aggressively re-entering the position today when the Dow was in the +100 points zone.

The Dow Transports have not been sharing in the glory, and this looks toppy to me:

As for the $XAU (gold and silver index), I hate for you to think I see an H&S pattern everywhere I turn, but there's really no doubt in my mind as to what we're looking at here.

Now, it's confession time. As you may recall, I was short BankRate (RATE). I had a stop in place. And, first thing this morning, I overrode it and closed out the position.

That was stupid, it was a mistake, and it was against my rules (in particular, "Never do an ad hoc close.") The stock closed up for the day, but substantially below its highs, and the chart is still a reasonable bearish play. So this is a bit of public flagellation for jumping the gun. I don't do it often, but when I do an ad hoc close, I almost always regret it.


sam said...

Tim, this from Captian Kirk's Report web site:
What a coincidence?

I think were topping this week and should make a high by friday. Then drop to 12500-12700 dow then up to a new recovery high. Should all take place by June-July. Just my thoughts. Sammy

wshhmm德州牌手 said...

I think it is time to load puts.

Market top for me today.

wincity said...

Too bad you closed RATE puts. It was on my watch list today. I would have shorted it if not for its sky high short interest.

I was worried for you in the early going but felt much better when it sold off. For it to close almost down in such a frothy market, after going up so much earlier, with such a massive short interest, I feel the toad is going down a lot, soon.

It's just a website publishing loan rates. Only in this crazy market.

NewEquity said...

stop deleting me tim, is your account taking that big of a hit.



I have joined the BEAR ranks and have done nothing but lose PAPER money !!!! I know , it is just part of the game ...I agree ..and we are ready to go forward and usually these things end with an event ..the China market or Hedge fund debacle or options activity in Dow Jones !!! I am short term bearish and long term bullish so we are 40% short now Thanks for all the charts and hard work and keeping this blog for great ideas.



tradertime said...

Let us know when you decide to stop losing money, tim.

Also, what do you have against capitalism, wealth, and making money? What doesn't make sense is how your opposed to wealthy people spending their money on material possessions while it is morally defensible to piss away lots of money on bad stock trades. Doesn't that make you a hypocrite?

Liberals such as yourself are known as 'conservative hippies or social liberals'. While your socially liberal your are economically conservative. However spending 30K on a wimpy prius or $4 on a mini-late are somehow exceptions to this rule.

I suggest your put down the communist rags you get delivered to your mailbox or read on the internet and got back in touch with reality.

Of all liberals, bay area liberals have to be the most annoying and hypocritical.

Tim Knight said...

Nothing about my post has anything anti-capitalistic.

Indeed, I'm probably considered a right-wing lunatic in this area. I was, for a while, a raving libertarian.

My rant was against crass tackiness. I guess you didn't grasp that.

Lauriston said...


I thought your post today was the funniest! I was just discussing El Trump last weekend and how he has permeated into everything and every corner. What's next? Trump salami? Trump cheese? or maybe Trump Acne Cream? I guess make money any which way, no height is too high and no abyss too low... I borrowed the picture for my blog. Trump for President!

JakeGint said...

I got it Tim. I'm the farthest thing from a liberal you'd ever imagine, and Trump (who actually grew up across the street from my Dad in a modest middle class house, even though his own dad was a centimillionaire) makes my skin crawl.

Capitalism's great, being a creep is being a creep, no matter how much dough you've (allegedly) got.

BTW -- My Dad gave me a book by a Flussel (I think) when I was about fourteen, but it was, ironically, about "what to wear," with regard to gentlemen's clothing, business attire, etc. Is this the same guy, by any chance?

tradertime said...

I sense a lot of people here are jealous of trump's success.

Tim Knight said...

You sense wrong.

I am surrounded in this area by multi-millionaires and billionaires. Most of them creative and technology geniuses. I know a few of them personally.

If I were going to look up to anyone, it would be someone like a Larry Page or an Andy Bechtolsheim. Not a blowhard like Mr. T.

Tim Knight said...


Fussell has done many books; perhaps this is the one you mean

Anyway, "Class" is a fantastic (and light) read.

Tim Knight said...

"stop deleting me tim, is your account taking that big of a hit."

No. And is your Shift key broken?

I delete posts which are hostile and valueless. Yours often fit that definition, hence the deletions.

I am considering opening up the door in tomorrow's post to content from guests, including you, NewEquity. Since you seem convinced of your superiority, I'd like my readers to benefit from your insights.

Of course, the failure to submit such content will be telling in itself.

Brett said...


I find it humorous that you actually find yourself under attack for many of your ideas. Given that the vast majority of investors know only bullishness, I find your site and your ideas very refreshing. I am a an options trader, and investools grad, and i consider myself neither a bull nor a bear. I am an opportunist. Your site has presented me with some wonderful bearish trade ideas, if nothing else, to diversify the many bullish plays in my portfolio.

Thank you for taking the time and effort to manage this site. It's become a staple in my daily regimen.

Deric O. Cadora said...

Tim, you are not crazy. There are H&S patterns everywhere. In fact, I firmly believe the U.S. markets are in the process of forming the mother of all of them, with the late Feb decline leaving behind the left shoulder. I posted this theory in comments 2-3 weeks ago, and still believe it.

By the way, tradertime, your rant makes no sense whatsoever. What does morality have to do with losing stock trades? Making such attempts, whether productive or not, is PURE capitalism. At least make an effort to be cohesive in your criticisms.

JakeGint said...

Another thing that seems counterproductive. Trying to sell edible product with the fat fingered vulgarian (remember "Spy" magazine, anyone?) threatening to drop combover detritus into the mix.

"Yeeeerch!" Doesn't quite seem to capture it.

cantdrive55 said...

Whats with constantly dropping bits of info that you live near San Fran in the neighborhoods of tech millionaires and billionaires ? Who cares if you drive by Steve Jobs place,...I know he does'nt.
So what. You are obviously not in their league anyway.
It's tacky !
I used to live 3 blocks from Buffett in Omaha...and he almost has more net worth than all of theSilicon Valley million/billionares put together.

There...see how worthless and tacky that sounds.

liz & grant said...


You have seriously one of the craziest blogs. Even though I stopped reading a lot of the commentary awhile ago because people were getting so mean and hostile I couldn't help but sneak a peak at what people were saying after the very disturbing picture you posted. I get chills every time I look at it.
Anyway, I have to agree with the comment made by Brett. I'm neither a bear nor a bull though sometimes filled with the later but your very insighful look at the market has helped me re-evaluate how I diversify my portfolio. So, thank you for that. I appreciate all the hard work you put into your blog along with all the randomness.

pasadena, ca

Brett said...


Your $XAU chart looks ominous the way you have it drawn. However, that's only a VERY short-term chart. If you back out to a 2-year to get a grasp of the big picture, and the story's a little different. The REAL head and shoulders would have been around September/October, but that breakdown never materialized, and $XAU has been in a perfect sideways channel ever since.

In fact, the only reversal i'd call on $XAU is if it closes below about the $120 area. Otherwise, this thing could just as easily break north of $150 and run up to old highs around $170.

What say you?

BOOMER said...

tim - just a quick note to tell you i am having a lot of probs loading your blog. it seems the ads or stats package take a really long time to load, usually timing out. this morning i had to force quit firefox three times to get your page up. i am running mac osx and firefox. not sure if others are having this prob, but you should know. that;s it. have a good day. boomer

Tim Knight said...

"tim - just a quick note to tell you i am having a lot of probs loading your blog. "

I'm afraid I can't help you. I'm just the writer here. The tech stuff is Blogger (owned by Google). Maybe you want to use a news reader instead? Check out - perhaps that's a better approach to read blog content without the headaches.

beanie11111 said...

die permabears die!

The real bear market starts in 5 years!

You've been warned!!!! (again and again)

beanie11111 said...

The bulls are gonna be like this for 5 years:

Lots of profits

Tim Knight said...

"You've been warned!!!! (again and again)"

Ah! Another potential guest editor. Excellent.

Glancing over at the screen, I see the Dow is up 12. Not sure why this merits such exultation, but - - so be it.

Tim Knight said...

"The bulls are gonna be like this for 5 years:"

A piglet stricken with facial palsy? Hmm. OK.

NewEquity said...

The Dow will hit 15k by the end of the year. I know this because my crystal ball tells me and no one in my family is selling anything here near a long term bottom.

Tim Knight said...

Fair enough. If your family's decisions with respect to what they are doing with their portfolio is your basis for stock market prognostications, that is of course your business.

beanie11111 said...

Bear charts are useless in a bull market!

The ISM and productivity numbers were huge!!!

beanie11111 said...

Like i've been sayin, do not fight Secretary Paulson!!!

yogi said...

Bulls are not known for having brain cells.

beanie11111 said...

my condolensces to the bears:

beanie11111 said...

BRLC is the mother of all short squeezes!

beanie11111 said...

HNSN is now a great investment a la ISRG!

NewEquity said...

The market is ripping the nuts of the bears and feeding them to the bull. I know that Tim will again say his portfolio help up well but we all know the truth about those index puts..

cantdrive55 said...

Hey Yogi "BEAR"

Isn't it a little late to say that the bulls have no brain cells after the market goes up 2500 pts in the last 9 months.Now if the market was at 8000,I might agree with you.But you know what they say ,'Brains are no good without any Balls' !!

Tim Knight said...

"I know that Tim will again say his portfolio help up well"

He's right. Here I go..........

My portfolio help up well!

There, I said it.

beanie11111 said...

I personally think that Secretary Paulson wants to rip a big hole for the shorts. He certainly knows which numbers the market really likes to see improvement in. Holy smokes, ISM up 55%!

Kool Kat said...

To all the Bulls out there, Give me a trade on the SnP500, buy where, stop and target.

I cant a decent "bull entry" with a reasonable RR. - HELP

A certified bull not a bear.

PS. Looks at 1503 and grins ..

beanie11111 said...

BRLC - the Mother of All Short Squeezes - is flyin!!!! What ya waitin for? An invitation?

Get on board!!!!