By now we have all heard of the "flations"

Is it inflation with all the monies pumped into the economy, or is it deflation as economic growth goes south for a season.

Given the choice between the 2, govs of course prefer the inflation. Tax revenue, business models, retirement planning etc all hinge on being able to have a higher valuation down the road.

I think everyone is as confused. We see gold taking off the last few days like no tomorrow, yet on the other hand, we witness the lowest fed rates in history. Gold screaming inflation while fed funds screaming deflation. What is an investor to do?

Well, I think both scenarios are not good for equities. That should be a given. I supposed that deflation has not run the course yet. I would be on that side of the aisle until proven otherwise. But if after writing this I see inflation getting the upper hand, would it be wrong to switch opinions? Isn't that what trading is about?

As some one commented about 30 year bonds and a 30 year cycle, we are on the edge of yet another bubble. The treasury bubble. If inflation takes hold, these thing are certain to come tumbling down. Since I am not a good timer, I will sit on the sidelines of this show until I feel confident of the bubble popping. Then I expect to get in.

Didnt we see this movie before?

If I remember the plot, we watch as lending rates go to zero and we have a horror of a lost 2 decades. It must be a rerun, because certainly we cant be witnessing the same movie twice?

I am referring to Japan for those unaware. I think they tried the same things. They Had the same lies spread about their banks that we do. I remember reading about all the same gimmicks used before.

I guess we can sit back and watch the sequel. As in sequels, we all know what happens. We just watch to see the twist and turns to get us there.

Those that do not learn from history are doomed to repeat the same mistakes.

Fed rates

It is no surprise that the feds will cut the rate. The only question is by how much. If they take the lead from last weeks zero return for t-bills, then it will be 3/4 cut. I personally expect 1/2. They will want to have some left over for the next meeting.

At this time it does not matter much. They will most certainly go to zero before this is all through. Then what? The next great bubble? Treasuries?

Interesting read last night from a respected analyst (respected by me at least) if we are to work the numbers (I wont bore you with the analysis) the projected mean for this recession based on previous recessions that have been as severe, he is expecting a 500 S&P. That tells you the downside potential.

Now we will not go there over night and if this turmoil is anything like the '30's, we still have about 2 years of pain to go and another 20% or so of house prices to fall.

You will need to change your habits of buying on the dips we have done so long and start (or continue) to sell on the rallies.

You all should know my preference. Buy the long month puts and sell the short months. If we get large rallies, buy back the short month wait for the drop and then sell again. Either that or wait for the drop, get out of the entire position, wait for the run up and place the trade again.

For the bold...Buy puts. You will need to have some pepto on hand because the swings will make the most iron stomach wretch as we go down and come screaming back up again.

Madoff

Excuse me for posting twice in one day, but the news just keeps talking about this guy.

My input. I am so conservative that any one that talks to me cringes at what comes out of my mouth. Anyways, Roosevelt over 40 years ago set up the SEC. Where is this agency? Isn't this what the SEC is supposed to find and stop? I have a neighbor friend that works for the SEC. We spoke about this and the usual blame game is transferred to not my department etc.

Wake up people!!!!

These agencies are setup to hold you in check while the fox raids the hen house. It never has and never will be a level playing field. The sooner you realize this the sooner you can get on with your retirement plans. Do not act surprised or disgusted. This corruption goes on and on and on.

As Warren Buffet is supposed to have said "it isn't until the tide goes out that you can see who is swimming naked"

Now that the tide is out, we are seeing all the cracks of the last 70 years. Best of luck to everyone, you will need it. If you like what you are seeing here and it has helped, let others know because we are a little minority now and the masses are getting fleeced like no tomorrow. They need help and the typical financial advice is unqualified to help.