Superfund, like the Turtles, like Winton Capital, etc. are opportunistic trend traders. While this video clip talks of where markets might be going, Superfund (like other trend traders) will go wherever the price direction takes them – for profit. My opinion? Not really. The performance data of trend traders speaks volumes.

Banning short sales? What next? I especially like this excerpt

Cox and the SEC are taking away profit — and creating new problems. First among those, is this any kind of a list that a bank wants to be on? Even if it does, the new rules unfairly protect a limited number of financial firms and leave others — Washington Mutual Inc. and Wachovia Corp. , to name a couple — exposed. “This naked short selling has been a pervasive problem for a number of years,” said Jane Storero, a partner and securities attorney at Blank Rome. The move to curb naked shorts for a limited group of firms “raises the question [of whether the move is] going to protect them or hurt them? Or is it going to hurt the next tier of banks?”

Here are the securities identified in the Commission’s order:

BNP Paribas Securities Corp. BNPQF or BNPQY
Bank of America Corporation BAC
Barclays PLC BCS
Citigroup Inc. C
Credit Suisse Group CS
Daiwa Securities Group Inc. DSECY
Deutsche Bank Group AG DB
Allianz SE AZ
Goldman, Sachs Group Inc GS
Royal Bank ADS RBS
HSBC Holdings PLC ADS HBC and HSI
J. P. Morgan Chase & Co. JPM
Lehman Brothers Holdings Inc. LEH
Merrill Lynch & Co., Inc. MER
Mizuho Financial Group, Inc. MFG
Morgan Stanley MS
UBS AG UBS
Freddie Mac FRE
Fannie Mae FNM

People wonder sometimes why trend traders have drawdowns? Well, this is a great example. When the rules of the game are changed midstream by a government seeking to protect some one group for squishy reasons, trends can change.

Feedback in:

Dear Mr. Covel, My name is xxx, and I am reading with much interest your book about [the] Turtle Traders. I was Pillsbury’s wheat trader in the pits from 1980 to 1983, and traded size with C&D many times. Dennis, Willis, the O’Briens, etc. You are correct – we (Pillsbury) were huge traders, and we had vast amounts of info at our disposal. Pillsbury was deadly when compared to the Cargills of the world in those days because we all had our own profit center trading accounts in addition to working the enormous commercial hedge balances. Cargill and the others had employees, but Pillsbury had traders. They did not stand a chance. At any rate, I went out on my own [and] remained a Chicago Board of Trade member, and traded wheat until 1999, but I wanted to say that you got the pits in those days right…Good job with the book.

Thanks!

From a reader today:

While listening to NPR on my way to school today, I heard that Southwest airlines was the only airline that has not had fuel prices effect their bottom line because they decided to use future contracts to hedge their fuel expense! It’s hard to imagine that only the CEO of Southwest airlines knew about oil futures contracts.

I was at an Indymac location in Orange County, California today. To see the fear in people’s eyes that they might lose their deposits was eye-opening. Next bank?

I am jealous of the writing in this post. Great stuff.

From Yahoo Finance today comes this excerpt:

And Wall Street remains uncertain about the economy and specifically the financial sector. This week has brought fresh attention to potential trouble spots in the mortgage market. Fannie Mae and Freddie Mac, the government-chartered mortgage financiers, are still a concern, as are regional banks that could have bad mortgage debt on their books. But, for the moment, investors were pleased by the drop in oil from record levels. “I think the pullback in oil is significant. The market and the market participants clearly had digested what the impact was going to be if oil prices had stayed at that level,” said Dan Genter, president and chief investment officer of RNC Genter in Los Angeles.

Fill air time. Say anything. You don’t have to even make sense (see bold). Will people read it? I guess. I did. Will people act on it or use it? I hope not, but I suspect this type of information does indeed impress people enough to act.

We like to think all we do in America is the best, but doesn’t the notion of bank runs smash the illusion?

An email sent to me tonight by a reader follows. It was signed by the CEOs of all major airlines:

Our country is facing a possible sharp economic downturn because of skyrocketing oil and fuel prices, but by pulling together, we can all do something to help now. For airlines, ultra-expensive fuel means thousands of lost jobs and severe reductions in air service to both large and small communities. To the broader economy, oil prices mean slower activity and widespread economic pain. This pain can be alleviated, and that is why we are taking the extraordinary step of writing this joint letter to our customers. Since high oil prices are partly a response to normal market forces, the nation needs to focus on increased energy supplies and conservation. However, there is another side to this story because normal market forces are being dangerously amplified by poorly regulated market speculation. Twenty years ago, 21 percent of oil contracts were purchased by speculators who trade oil on paper with no intention of ever taking delivery. Today, oil speculators purchase 66 percent of all oil futures contracts, and that reflects just the transactions that are known. Speculators buy up large amounts of oil and then sell it to each other again and again. A barrel of oil may trade 20-plus times before it is delivered and used; the price goes up with each trade and consumers pick up the final tab. Some market experts estimate that current prices reflect as much as $30 to $60 per barrel in unnecessary speculative costs. Over seventy years ago, Congress established regulations to control excessive, largely unchecked market speculation and manipulation. However, over the past two decades, these regulatory limits have been weakened or removed. We believe that restoring and enforcing these limits, along with several other modest measures, will provide more disclosure, transparency and sound market oversight. Together, these reforms will help cool the over-heated oil market and permit the economy to prosper. The nation needs to pull together to reform the oil markets and solve this growing problem. We need your help. Get more information and contact Congress by visiting www.StopOilSpeculationNow.com.

I am at a loss for words. Pure manipulation. Gross.

The SEC wants to ban false information spread about companies. What a great idea! I am sure they will have great success….not:

SEC Chairman Christopher Cox said the investigation is aimed at “ensuring that investors continue to get reliable, accurate information about public companies in the marketplace.

Chris, guess what? We already have that – it is called the market price. You can’t fake that. This is just another plan to increase the size of government. It will result in absolutely nothing except wasted tax dollars, but I am sure someone will feel better now.

Note: If some knucklehead wants to write misleading information on a chat board (and how do we define “misleading”?) and some bigger knucklehead wants to believe it and then act on it, I say that is a marriage made in heaven, not an opportunity for the government to step in.

If you live in the San Diego area and want to speak on camera about a foreclosure horror story drop me a line. We are shooting there Tuesday and Wednesday.

I can’t predict fundamentally when gas prices will drop – no one can. But high prices do change behavior.