A Changing of the Guard
Gary Kaltbaum is an investment advisor with
over 18 years experience, and a Fox News Channel Business Contributor. Gary
is the author of
>The Investors Edge. Mr. Kaltbaum is also the host of the nationally
syndicated radio show “Investors Edge” on over 50 radio stations. Gary is also
editor and publisher of “Gary Kaltbaum’s Trendwatch”…a weekly and monthly
technical analysis research report for the institutional investor. If you
would like a free trial to Gary’s Daily Market Alerts
click here
or call 888.484.8220 ext. 1.
Greetings from the beautiful island of Kauai…2 weeks of my family’s annual
pilgrimage to the Hawaiian Islands. Heading to the Big Island today and Maui on
Sunday. It doesn’t suck. Wish you could be here.
I do have a few things on my mind.
If the media spent more time on talking about the people that really
matter…the people that do for others like Mother Theresa, Archbishop Tutu,
Oprah, Simon Weisenthal, Bill Gates’ and Warren Buffett’s philanthropy, our
heroic firemen, our heroic police officers and our over the top heroic military,
then they would not have to spend time on a yutzbag, do-nothing-for-nobody with
the last name Hilton. What the hell is going on with this world?
Back to business!
BEAR STEARNS…HEDGE FUNDS…LEVERAGE: In case you did not know, many funds
are using ridiculous amounts of leverage. In some areas of the mortgage market,
many are using 90% margin. I thought this type of margin went out in the 30s.
Let me be clear. I believe that if rates continue upwards, there is going to be
more blow-ups like the BEAR STEARNS funds. It is amazing that the Wall Street
cops let this go on. 90% margin! As usual, the cops are asleep and say
nothing…until it becomes a big problem.
There is no doubt there is less sleep and sweated brows watching over what
could be a powderkeg.
The bigger problem is that Bernanke and Greenspan said subprime mortgages were
not a problem? Once again, I believe these imbeciles are eventually going to
cause a severe dislocation as they are letting the inmates run the asylum. I
watch things carefully and are amazed at what people can get away with when no
one says anything. And in Greenspan’s and Bernanke’s case…see no evil…hear
no evil…speak no evil!
HOUSING IS BOTTOMING! Take a look at the charts of LEN,CTX,HOV. If I hear
Hank Paulson lie and call for another bottom in housing, I will puke.
 Charts courtesy of Stockcharts.com
 Charts courtesy of Stockcharts.com
 Charts courtesy of Stockcharts.com
The BLACKSTONE IPO is now in the negative after a lot of fanfare. This is
just one man’s opinion but this IPO is in the top ten of hypocritical moves as
these are the same people who take companies private to get away from the public
markets. We will look back on this and see that they went public because they
needed to cash out as they saw easy money was going by the wayside. Who did they
sell to? The dumb investing public. Hey…these guys aren’t idiots. Keep in
mind…they buy companies…load them up with debt…pay themselves exorbitant
fees…and buy yachts, planes and trains. What happens if rates go up and the
economy slows? I hope these dudes used a good cushion to pay all that debt.
As I have told you, COMMERCIAL REAL ESTATE stocks are now in a bear market.
We will soon find out how bad many of the loans are in this part of the market.
Again, lax lending and easy money will always eventually cause problems. And oh
yeah…many of the REIT buyouts occurred in what I believe is a major top for
the group…after a 5 year run…CLASSIC! Where were the buyouts 5 years ago?
I am seeing a changing of the guard. OILS,COMMODITIES look to be topping.
This includes STEEL, COPPER, ALUMINUM and others. Time to underweight as they
are coming in. I believe they are in a longer term bull market but need to
correct. And SILVER breaks down BADLY…with GOLD breaking support. SILVER looks
to be a major top with GOLD getting close. And oh yeah…many of the STEEL
buyouts occurred to what I believe is a decent top in the group.
There is a chance that DEFENSIVE issues are now going to get some money
flows. This includes DRUGS, FOODS, BEVERAGES and the like as the market starts
to become a little more DEFENSIVE.
BROKERS, S&LS, REGIONAL BANKS, MONEY-CENTER BANKS, REITS, HOUSING, UTILITIES
are now in bear phases…all interest-rate sensitive areas. Names like BSC and
even the almighty GS have broken. There has to be a question about how much
farther markets can rally if they continue to not participate.
Notice I have not mentioned the major indices as I am talking less about them
more about individual groups.. Many areas are getting in more and more trouble.
Many areas and many stocks are now breaking the important moving averages I have
been harping about for months. Be on your guard! ALOHA!
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