Thursday, October 9, 2008

Another Shoe Falls! - IFCN Wk 44 – Thu- Equity: $1,458.23

These are momentous times.

It is nice for those of us who are liquid and in the forex market, taking only the trades where we have an edge, instead of being at the mercy of fund managers who were in grade school when the “crash of '87” took place. These sad creatures have only known bull markets and don't realize that serious drops can take place. Like what we see now.

Everyone should read Nassim Taleb's books- Fooled by Randomness and Black Swan if they haven't already. And even if they have. It helps get perspective on the current panic of the unwitting.

Here is the status of this week's final FirstStrike trade:
  • Usd/Jpy: Short @ 102.18, stop 103.38. Still going-- last check: ~350 pips profit.
FirstStrike trades not stopped out before Friday-- exit on Friday just before 15:00 CST.

Yesterday I mentioned that there were very few shoes left to fall. We got a huge one today, via the stock market(s). Around the world, the stock markets fell tremendously. The chart below is what the Dow did this week at the time of writing.

So many people are afraid just when they should have been waiting in cash for the greatest bargains of the next decade.

Of course, I like values like silver, which inflation and high energy prices make extremely expensive to mine. But there are hundreds of stocks like McDonalds, for a quick example; which are unlikely to go out of business or suffer any slowdown whatsoever.

Panics come in cycles. A big cycle bottom in the stock market is due right now. That doesn't mean that the stock market is going to stop on a dime, but it indicates to me that the panic in the market will get a little less severe and probably help the currencies stabilize soon.

The gross domestic product (GDP) is a measure of a country's income and output. Usually it is defined by the total market value of all goods and services produced within the country in a given calendar year. The USA has gone through wars and depressions and terrible crises before. They all seemed terrible and frightening at the time. But still the GDP of this country increased steadily despite the problems, likely because of the spirit of the people who live here.

They think, they create, they add value. Not all of them, to be sure. But enough of them. Check the chart below for the GDP from 1900 to present. We had 2 world wars, a major worldwide depression, high interest rates, low interest rates, and even Jimmy Carter. And still the GDP has risen.

The end is not here yet. We have too many bull markets to ride before that happens. The new bull markets created from this panic will make everyone forget the troubles now just like no one remembers the “panic of 73”.

Have a good evening.

Current trade equity is: $1,235.23.
Silver position equity: $223.00.
(Current XAG price: $11.99 – 200 unit position average: 10.87)
TOTAL Equity: $1,458.23

Joel Rensink

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