Stocks and Trading Thread - Channeling your inner Mono

[citizen k]

Marc Faber: We Are in `QE Unlimited'
http://bloom.bg/18zIe7j

[Tamas]

Explain this to me guys.

At the end of the day, QE is about "printing" money to create demand which otherwise would not be there, right? And considering all the angst over turning it off, I suppose there is no real demand to replace it. What is the endgame with this then? How is this different from the situation that caused the crisis?

[The Minsky Moment]

So that's a confirmation that a bubble is forming and plenty of people are going to make a good deal of money for quite some time as it inflates ? 

No I do not think there is a bubble forming.
US stocks do appear to be somewhat overvalued on traditional measures but I would not characterize that as a bubble.
The Feds job is to promote price stability and employment, not target the S&P.

[mongers]

So that's a confirmation that a bubble is forming and plenty of people are going to make a good deal of money for quite some time as it inflates ? 

No I do not think there is a bubble forming.
US stocks do appear to be somewhat overvalued on traditional measures but I would not characterize that as a bubble.
The Feds job is to promote price stability and employment, not target the S&P.

[The Minsky Moment]

Explain this to me guys.

At the end of the day, QE is about "printing" money to create demand which otherwise would not be there, right? And considering all the angst over turning it off, I suppose there is no real demand to replace it. What is the endgame with this then? How is this different from the situation that caused the crisis?

QE involves swapping one liquid asset (fed reserves) for another slightly less liquid asset (treasury or agency bonds).
The theory is that how it works is through direct effects on the yield of the purchased debt, but more important by influencing expectations of future inflation and output.
The endgame is to try to restore the economy to an "equilibrium path" back to full employment and to normal levels of nominal income growth.  So there would be "real demand" again if it works.

[The Minsky Moment]

Marc Faber: We Are in `QE Unlimited'
http://bloom.bg/18zIe7j

There is a whole class of hedge fund types that hate Bernanke because they got burned fighting the Fed while trying to short Treasuries.  Faber is one of them.

In December 2008, Faber advised that the big trade for 2009 was to "go short Treasuries massively"  (http://www.cnbc.com/id/28418476/site/14081545)
Anyone who did that trade would have been killed.
In early 2010, he warned that inflation would "explode" and again advised shorting Treasuries.  Once again, no inflation manifested and the Treasury short was a widowmaker trade.

Faber is a bit more sophisticated than some of these guys but I would still take what he says with a grain of salt.

[Admiral Yi]

My PBI has climbed back into the green.

[Ed Anger]

I've adjusted my sell orders. I've placed Ed's finances on yellow alert. Raise the shields.

[Admiral Yi]

Heard on NPR that trading was suspended on shares of Tweeter after it rose 1,400% in one day, as people thought they were buying Twitter. 

[DGuller]

  Hopefully someone was fast enough on the trigger to sell.

[Ed Anger]

MAH SHAREHOLDER VALUE 

[Admiral Yi]

Amen. 

[MadImmortalMan]

We trade on sideshows now. 

I lightened up on some positions today. Thanks, Boehner and Obama.

[Ed Anger]

I've adjusted my sell orders. I've placed Ed's finances on yellow alert. Raise the shields.

Moving to red alert. Raise the shields. MAH SHAREHOLDER VALUE

[Ed Anger]

Time to start taking profits out. SELL MORTIMER, SELL!