The TLFs INSIDER TRADER!

[Guest]

(azza33 @ Jun. 12 2009,17:54) Funny some folks are bagging Mr Cramer - I think if we all had achieved the success that he did as a hedge fund manager, then you would have the right to perhaps some cred. & would be sitting on a beach in LOS drinking a pina colada.

I for one wouldn't be drinking no Pina colada or getting caught in the rain. However i would be banging every Miss Patong 2009 contestant I could get my hands on and money too.


How you like my Rio Tinto now?

[Torurot]

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From Money Morning, today

The Baltic Dry Index acts as a monitor of industrial activity

Despite its name, the Baltic Dry Index (BDI) isn't just about Scandinavia. It's published by London's Baltic Exchange, the global marketplace for buying and selling shipping contracts.

The BDI measures the demand for space on so-called 'dry bulk carriers', which carry cargoes such as coal, grain, timber, steel and iron ore. That makes it a 'leading' economic indicator. Manufacturers, of course, need to buy in supplies of raw materials before they can churn out finished products. So a pick-up in industrial activity will show up in the BDI, as producers stock up on raw materials, before it appears in the official production statistics.

And as the supply of shipping capacity tends to stay relatively unchanged over the short-term €“ it takes up to two years to build a new ship, and most carrier operators are reluctant to scrap their vessels unless they have to €“ it doesn't take a big increase in demand for transport space to push the BDI higher.

This is exactly what we've been seeing recently. Last year, as the global recession took hold, the index fell some 90% as trade dried up almost overnight. But in 2009, with the Chinese buying huge quantities of industrial commodities and metals prices rising fast €“ the S&P GCSI global commodity index is up 37% this year €“ the BDI has taken off. From mid-April until the middle of last week, it soared 180%.

After taking off earlier this year, the BDI has now run aground

That's got the economic optimists cheering from the top of the mast that global trade, and thus economic growth, was staging a major comeback. Supposedly the end of the recession was in sight. But on the 3 June, the BDI ran aground. It has since lost 20% in a week.

So what's gone wrong?

All that buying from China may have got the shipbrokers excited, but the Chinese were being very smart. They were cashing in on massive drops in the prices of many commodities over the previous year or so, and have stockpiled the stuff. For example, they picked up record amounts of iron ore €“ which had halved in price - between February and April, loading up 50m tonnes in the latter month alone.

They've also snapped up loads of aluminium, copper, nickel, tin, zinc... and lashings of crude oil too. And there's no doubt these stockpiles will prove very handy one day.

But not yet. Indeed, right now, the Chinese have binge-bought so much, they've almost bitten off more than they can chew. They're running out of room to store their swag. "At least 90 large freighters full of iron ore are idling off Chinese ports, where they face waits of up to two weeks to unload because port storage operations are overflowing", says Keith Bradshaw in the New York Times. Here's the key bit. "Yet actual steel production from that iron ore is recovering much more slowly in China, and Chinese steel exports remain weak".

In a nutshell, that global economic recovery the bulls think they can see just isn't happening at the moment. And as the Chinese stop stockpiling, commodity prices will drop again and demand for ships will sink. That's what the BDI is now telling us.

How far will it fall? Ship owners are charging $58,000/day now but just $24,000/day for next year, indicating more ships than cargoes ahead, says Bradshaw. "That's the real market for ships", say Richard Elman of Asian commodity trader Noble Group.

The shipping index could "crash down as far as it has advanced", says carrier operator Precious Shipping. "The fundamentals still overwhelmingly point to a world economic recession with tremendous job losses, and we suspect that will put a real dampener on the current burning hot BDI".

What this means for share prices

This all points to share prices around the world being hit in two ways.

Firstly, the BDI has become a good forward indicator not just of economies, but of stock markets too. A major plunge in the shipping index spells trouble for Wall Street and London. Share indices look ripe for a fall.

Secondly, a big BDI drop is likely to squash the big bounce in 'cyclical' shares that has driven the stock market rally over the last four months, amid hopes that a China€“driven global economic recovery was just around the corner.

Shares in basic resources, machinery and information technology companies have rebounded so much, they're now over 30% more expensive than 'defensive' stocks which don't depend on rampant economic growth for their profits, say Charles Dautresme and Franz Wenzel at Axa Investment Management. That's the highest ratio since Axa's data started in 1995.

"Cyclicals rebound when investors anticipate increases in profit, but we're still in a period of downgrades", says Dautresme. "The move has been too early". And the BDI is hinting that those cyclical stocks will also return to base just as quickly as they left it.

But it could be time for defensives to play catch up. Telecommunications, media and healthcare stocks have been the worst performers in the rally, say Axa. These are among the areas we like €“ for some specific tips, see our recent cover story False signs
http://www.moneyweek.com/investm....Morning

[azza33]

(Boarhog @ Jun. 12 2009,18:17)

(azza33 @ Jun. 12 2009,17:54) Funny some folks are bagging Mr Cramer - I think if we all had achieved the success that he did as a hedge fund manager, then you would have the right to perhaps some cred. & would be sitting on a beach in LOS drinking a pina colada.

I for one wouldn't be drinking no Pina colada or getting caught in the rain. However i would be banging every Miss Patong 2009 contestant I could get my hands on and money too.


How you like my Rio Tinto now?

Rio is going nicely BH - but not even close to the returns on all the small caps i went after earlier this year.

I haven't timed many exits well in the past month and a half and have left a lot of profit on the table... but i can look back fairly happy in 2008/9 FY being up 40% on my portfolio.... now i just gotta work out where to invest my $1.40

[Dieter]

Me have MS since 95.... so
Right now bank or steel companies are fine..

Dieter

[PanzerPorn]

Krupp steel? Swiss Banks?

[Stogie]

Up up and away in my beautiful, my beautiful ballooooooooooooon!

[azza33]

Sometimes we need to review our great fuck-ups when trading.... i sold out only 5 days back at 16.5c      

[pacman]

    You sold & took a profit. Well done. It is not helpful to be suggesting to anyone to hang onto a stock in the fanciful notion that you will make more money.

Sometimes you will, sometimes you won't. It is a symptom of our natural greed that we convince ourselves that holding on to stocks will make us more money.

The market is way too volatile these days to be certain of anything. I wasn't surprised to read where the professional traders never go more than 5 minutes without checking stock prices, volumes & market trends.

The small guys are the pawns in the game. We hope to catch the upswing in price & to get out at a profit. That is always the plan but I have no faith in the strength of this rally. Some are calling it a bull market, I don't know.

Azza, you will never go broke selling at a profit. When the top traders in the country are writing articles in the newspaper saying that this is no time to be buying stock to put away for the future, I think you did the right thing.

It sucks that you missed a tidy extra profit but what would you have done with it? Pissed it up in Pattaya while getting your cock sucked by the finest talent on the face of the earth? Hardly worth it. And what would you have to complain about then?...      

[Stogie]

Bloody hell.... The NasDaq is in freefall!

[SamplerDoc]

One can not micro manage stocks.
It will drive you batty

[Stogie]

My buys today (if I had any money) would be...

Tate & Lyle (316.5),

Pennon Group (486.00),

Tescos (356.1)

Good luck all you investors...

[SamplerDoc]

Keep F (Ford) long and buy more on any dips below 5.
Not sure, then look at the charts.... up to over 6 from 1 just a few months ago

[mirimark]

(Snick @ Jun. 02 2009,06:16) Problem is when the "bad time" ends, gold could collapse
Most of the value of gold is psychological, Gold is valuable because people think gold is valuable.

Makes perfect sense to me. Never thought of that. I have noticed over the years Gold does bounce around alot in Value. So your analogy makes good sense.

[neogzim24]

I know this forum is full of wise and great money crunchers. Any good tips for the New Year (tip on stocks, funds, and etc..) I know im leaving the door open to comments so, again related to making and building wealth. We all dream of staying in LOS more than what we do, so are truly making moves to make it a real life deal!!

neo

oh look into a stock symbol BGEM! could take off big in earily 2010!!

[lemontree26]

Buy shares in C & D.