Lessons

1. If VIX is under 26, buy the dip. If VIX is over 26, sell the rip.

2. Always trade in the direction of the larger trend. Find the strongest trend in your time period.

3. Nothing as bearish as a failed breakout. Nothing as bullish as a failed break down.

4. Don't worry about the last dollar. Take your money and go to the beach!

5. No more than four positions at a time. Preferably 2-4. Scope out others. Pick the strongest.

6. Buy the strongest; sell (short) the weakest.

7. Nothing is guaranteed. Nothing.

Sunday, July 17, 2011

'Response to John Mauldin's Most Recent "Thoughts from the Frontline"

This is a response to an article that can be found here:
http://www.johnmauldin.com/frontlinethoughts/back-to-the-basics/

Sir, you say: "The following graph is from today’s Wall Street Journal editorial page. They use it to show how much Democrats allowed the budget in terms of GDP to rise and spin out of control.// I would point out that in the 8 previous years, under Bush/Hastert/Delay et al., there was also a rise in the growth of government, as the chart shows. While it was not as large, it was clearly there."

This clearly shows your partisan bias. If you had taken a moment to question the WSJ's graph, you would have realized that the Obama-Pelosi congress had nothing to do with the budget increase until late 2009, well into the parabolic phase of that graph. There were two fiscal stimuli in 2008 under the Bush Administration: the $168 billion tax cut and $700 Billion TARP in October 2008. The funds for the latter bailout were disbursed in 2009. The Obama-Pelosi administration did pass further budgetary stimulus in 2009 (The American Recovery and Reinvestment Act) totaling about $880 billion, and funds were disbursed in 2009-10, but that was about half of that parabolic climb. That second stimulus is responsible for the little (and much needed) road reconstruction we have seen in the DC area. Thank god for that!

Further, please examine how your data about government investment verses growth rate functions when analyzed properly, with a lag of 3-5 years in GDP growth. How do you think China has achieved its stunning growth rates over the past 20 years -- from private investment? Really? How do you think America was able to boom from the 50s to the 80s. Hint: The answer has something to do with infrastructure. Government investment has been responsible for highways, education investment, and military and space technology, all of which led to subsequent massive growth in the private sector. As you perhaps know, sir, the internet was not discovered by Al Gore. It was jointly discovered and developed in the military, the National Science Foundation (NSF), and several universities including MIT, Stanford, UCLA, and Harvard. University research is subsidized by... you guessed it ... Government Spending!

3 comments:

sherman sawhney said...

Yep, agree in total.

Go Nate go.

sherman sawhney said...

Yay man

Agree

go nate go

Win said...

Thanks, chach!