Poetry in Motion

I've got a riddle for you.

What well-known Jewish personality made a bundle of money on Wall Street today and needs to have their back hair waxed? If your answer is Abby Joseph Cohen, you are technically correct, but the answer I was seeking was Stephen A. Schwarzman of Blackstone.

OK, here's the second part of the riddle (isn't this fun, kids?)

What percentage of public investors have profits on newly-minted Blackstone Group (BX) today, now that the trading day is through? The answer: basically zero. Oh, I'm not talking about the midget founder of the place. He's doing just fine with his billions, thanks for asking.

I'm talking about the poor schlubs who thought they could get inside the club by buying into this stock. Virtually every single share bought is in a losing position. Nice going, folks.


Yesterday, if you'll recall, I wrote:

But tomorrow is - at last - the big day. That's right - it's Blackstone day. Apparently the demand for shares in BX is about seven-fold oversubscribed. Nothing would be more poetic than the market taking a fall tomorrow.

Well. Down 189 more points. Nice.

I actually had a great day, making money both on the short side and - for the brief bounce of the day - on the long as well. I remain cautious and humble in the face of a massively moronic and gullible public that could be coaxed into buying again. Thus I tighten my stops every day.


The Russell has been stronger (relatively) than I'd like to see. But it remains attractive to me largely due to its reasonable bid/ask spread on the options. I remain dumbfounded at the complete rip-off represented by the S&P 500 options market. It's just criminal.


Oh, speaking of the S&P - - - in spite of the recent fall in equities, we remain absolutely sky-high. Dare I even say grotesquely overvalued. Oh, well. It'll take years to sort out. Long story short, don't be fooled with the tiny inching down we've been doing. It's nothing compared to the radical overvaluation still present. Trillions of dollars of equity need to be destroyed before we are at interesting values again. Whether the top has passed it totally unknown. And it doesn't matter to me, as long as I manage and maintain these stops responsibly.


Symbol ALB bounced up to a perfect retracement, thus permitting me to re-enter the position which I closed profitably just a couple of days ago.


Symbol CAH isn't doing badly for me either. I own puts on this.


Although Cigna (CI) is too big to simply collapse, it's got a cute little H and S pattern whose neckline was broken today.


A new short I think I'll enter next week is - again - Malaysia (EWM).


I've got to hand it to Google (on which I have not had a position in a while) - - they seem to be doing everything right. This is a gorgeous bullish pattern - just beautiful - particularly in light of today's market action. Poor old Yahoo is just a mess. Why anyone ever used Yahoo in the first place - - I thought they sucked in 1996 when I first tried them - - is beyond me.


Goldman Sachs (GS) suffered some today, so my puts prospered. This isn't a big fall by any stretch. I guess maybe the lame-o BX reaction hurt them? I don't know.


I continue to hold my JC Penney (JCP) puts, which push a little higher into the green each day. This is a dynamite pattern. Never has polyester clothing been so good to me!


I haven't shown Meritage (MTH) in a long time, but I just want to use this to illustrate the kind of slow grinding death equities can go through. I think this is a good proxy for just about the entire stock market, although housing got a head start on the rest of us.


It's been a good week. Particularly since the detractors are too sheepish to show their faces around here during down days. So let's celebrate:

Yeah, We Do.........

I've been mixed up with computers a long time - - since 1979, actually. And I've been involved in electronic communities since 1981. Yes, you read right. I've been doing this a while. And I've learned a few things along the way.

One thing I've learned is that there tends to be an inverse correlation between how a person presents themselves (when they can hide behind a facade) and how they really are. This applies particularly to personal appearance. A shining example of this appeared in last Sunday's New York Times, which profiled a number of serious electronic gamers with their avatars. Here's a particularly painful, poignant example:


So the enormous mass of protoplasm on the left is the human. And the svelte, strong, serious warrior on the right is his representation of himself in the virtual world of Everquest.

Now, if you read this blog at all regularly, you really have no reason not to do the free sign-up for BlogLog, since it's a kick to see who your fellow readers are (savvy, witty folks, by and large; with at least enough good sense to swing by here once a day). But I am highly confident that no one reading my blog looks like this.


My caution yesterday was very well founded. In fact, it was spot-on. The market opened. It farted around a bit, then it fell hard. And I closed out my DIA and RUT puts at huge profits.

Then I bought calls. But........because I'm an idiot......I sold them shortly thereafter for breakeven. Then they spent the day going up 20%, so that was about $8,000 down the toilet. Like I said: an idiot.


But tomorrow is - at last - the big day. That's right - it's Blackstone day. Apparently the demand for shares in BX is about seven-fold oversubscribed. Nothing would be more poetic than the market taking a fall tomorrow. As for BX, I guess it's almost certainly going to close well above its offering price. I guess. But there's something about this offering that I think is rather pivotal in the world of investor psychology.

Anyhoo, my intuition is that tomorrow is that we're going to resume the fall. Perhaps even taking out Wednesday's lows.


One of my favorite real estate shorts now is Kilroy (KRC). If this stock can break its neckline, this is a honey of a pattern. Quite large.


If the market is on the weak side after the opening bell tomorrow, I think some 3M (MMM) puts are probably one of the best places to take advantage of any downside action.


I've mentioned Micron (MU) as a long a number of times. This is a great little pattern, with a volume swell to boot.


It's been quite a week. Let's see how Blackstone day treats us. See you after the close. Oh, and this is me. For real.