I know it’s tough on all your soft, little tummies to hear this, but I’m going to say it anyway: I’m tired of hearing about all the bad economic news; I’m sick of your emails and your doubts, and I don’t want to know the excuse-making, and the quoting of some of the stupidest analysts ever to open their mouths, and I have to get this off my chest before I blow a gasket.

You are losing money.  That’s the bottom line here.  You have lost money, and you will continue to lose money until you block out all the noise and do what has to be done: open your ears, close your eyes and buy what I am recommending today.

Sure, you can have your doubts – but let them be worthwhile doubts.  You can even have your fears.  I don’t care for them, but since you’re so bloody controlled by them – fine, have them, too.  But save your skin – and, at the very least, that of your children.  Give them something to hope for!

O.K.  Let’s move on.

When Investors Get Cheated by Words

I’m awarding two Asinine Fool’s Howash Investment Awards for 2008; I’m doing it early because I’ll jump out of my skin if people keep reading these twits with a straight face.  The first goes to an absolute clown who takes himself seriously.  And the second to a serious imp who’s prognostications are downright clownish.

Let’s start with Jim Willie.  I’m not sure who created this financial markets monstrosity, or if he’s even a real person.  He may well be some high school kid who’s taking a wing at playing market commentator, but either way I’m tired of his face and I want him gone, banished, disappear-o from the pages of serious websites, or I’m going to start hacking.

Jim Willie announces himself on his website as “Jim Willie CB.”  And since he regularly refers elsewhere in his writings (I use that term loosely) to Central Bankers, we’re guessing that he’d like us to view him as the same.  But we won’t.  Because any Central Banker worth his salt wouldn’t spew pet-retch like the following (all caps in original):

“THE FRANCHISE OF CENTRAL BANKING HAS FAILED, AND GRAND RATE CUTS CONFIRM THIS NOTION EMPHATICALLY!!! THE COLLECTION OF CONCLUSIONS ADDS UP TO ONE POWERFUL FORECAST: GOLD & SILVER PRICES WILL RISE 10-FOLD IN THE NEXT FEW YEARS. SOON THE CLUTCH WILL BE RELEASED AND THE 10000 RPMS ENGAGE THE ECONOMIC TRANSMISSION TO PRODUCE PRICE SKIDMARKS.”

We can do no better than Mr. Jim Willie CB (certified brainless?): skid marks are precisely what this writing smells of.

This, too, is what passes for financial analysis in Mr. Willie’s world:

“A VERY QUEER ANOMALY:  We are working toward a nasty climax of historic proportions. Notice that the US Treasury Bill has an artificially high price, with staggering huge volume, which is backwards. This condition defies Mother Economic Nature. Notice that gold has an artificially low price on the paper contracts, with staggering huge demand for physical metal, which is also backwards. This condition defies Mother Economic Nature.”

There are people who pay for this.  And to their great and lasting shame, the Kitco gold site – an otherwise reputable outfit – agrees to play host to it. 

Does the investment world contain a greater aggregation of morons spewing senseless tripe than the gold writers?  Does one find the same inane gibberish and blatherskite among tech writers?  Why such imbecilic froth in this field?  Why such a load of literary hoark?

With apologies to the illustrious Mr. Willie, gold doesn’t appear to want to rally.  The technicals are thus:

Therefore: look for (at least) one more frightening downleg in the months ahead.  We’ll take stock again at that point.

Another one?

The second of our Asinine Fool awards goes to the refined and ever so clever Rakesh Saxena for a piece he designed on Seeking Alpha, November 25, 2008.  In said piece, Mr. Saxena recommends shorting high yield bond ETF’s, claiming

“the bulk of the high-yield spectrum continues to trade on yields which reflect, comparatively, near-investment-grade ratings which, in turn, have already proven to be inadequate and misleading.”

Whatever the hell that means.  And then he continues:

“Secondly, even the 1550bps level does not fully incorporate the real prospect of additional negativity in default risk perceptions…”

Wait a second; let’s get this straight: doesn’t “fully incorporate” the “prospect” of “negativity” in “perceptions.”

What an ass.

If Mr. Saxena were honest he wouldn’t hide behind the gobbledygook.  He’d say spreads are going to widen further.  But he’s pathetic.  And he’s wrong.  And no amount of academic obfuscation can hide the fact that this investing pygmy hasn’t taken a look at this:

The bleeding spreads are unprecedented, overshot and downright immoral!

BUYING these ETFs, Saxena – buying them – is what you want to do!  It may be the buying opportunity of your lifetime, you squid!

Ah, the pity of it all…

This clown touts himself as “part of a network of international risk buying and arbitrage pools.” 

Did you get that?  A network of pools.  We say forget the pools and go jump in a lake.  You’re the hands down winner of the Asinine Investment Fool of the Year award, Rakesh.

“Buy Wide and Sell Tight”

Bond Trading 101 teaches us to buy debt when its spread to a given government benchmark is wide, and to sell when the yield is relatively low or “tight” – hence the adage in the subtitle above.  Mr. Saxena says he’s a risk expert.  He’s no such thing.  He’s just a bad bond trader.

Take another look, pal.  This is what is called wide:

Can you believe this guy?

What to do?

The best trade in the game was outlined last week and will be reiterated again here:

Short the treasuries and go long the corps – better still the high yielders.  Use the longest dated options you can find.  Why?  Just ask the fool below:

Matt McAbby
Analyst, Oxbury Research