Dollar Decline in Full Swing in Risk-On Environment

http://www.cnbc.com/id/45070916

The U.S. dollar’s thrashing on Thursday after a last-minute European deal to contain the debt crisis may have sealed the currency’s fate.

He made several million dollars being short stock during the “Panic of 1907”, only to lose it all on a bad cotton trade a few months later which forced him to file for bankruptcy. When he got back on his feet again, he paid back every penny he owed his creditors at the time of his bankruptcy even though he had been legally discharged from the debts. This reputation for always honoring his debts enabled him to find financiers willing to stake him to get back in the game whenever he went broke on bad trades.

He made another huge fortune during the crash of ’29. Once again he was short stock using a massive amount of leverage (there was no Reg T back then and some brokerages allowed him to borrow up to 10x his equity). He supposedly made over $100 million on that trade. But he was flat broke again by the mid 1930s. Ironically, he despised being called a gambler.

During one of his big upswings, he was smart enough to establish irrevocable trusts for his wife and kids. At the time of his death (by suicide), he was penniless except for those trusts which were worth about $5 million.

Someone created a PDF version of the popular book about his life, “Reminiscences of a Stock Operator”, and put it on the internet. It has a few typos but it’s still a fascinating read.

http://www.trading-naked.com/library/jesse_livermore.pdf

The world stock markets have all gone wildly up in the last day or two because of the EU deal. Even though that deal simply avoids the immediate catastrophe, and gives the EU time and does nothing else. They still have immense differences between various countries that they “promise” they will deal with; the banks now have a little time to raise capital to cover their grotesque over-leveraged situation; though Merkel promised “monitors” for Greece, there’s no agreement in place to prevent Greece from continuing the policies that have gotten them into dire straits. Even if they accomplished their goals, Greece in 2020 would still have debt at 120% of GDP. But Italy, Spain, Portugal, Ireland, and even Great Britain are headed the same way as Greece. But the fact that catastrophe was averted for merely awhile was enough to send markets soaring.

Don’t assume they will still be even at their current heights three or six months from now. A short-term gains game is being played, and trying to play that short-term game with the experts is usually a losing proposition for the day trader.

Right now at the grocery store, gas station, or commodity market near you.

Mr. Frank says, “A friend is always suggesting I invest in gold, silver, canned goods and ammo.”

Not sure about the wisdom of gold; but food & water stores are a form of insurance, and there is no such thing as too much ammo.

…is a complete mystery to me: “Dow headed for best October ever.

It’s also a complete mystery to not a few of those, professional and amateur, who pontificate about it.

2. On this day when the market rose sharply, the Intrade chances of Obama’s reelection moved above 50%, barely. I code too laboriously to check whether there is a long-term correlation.

http://www.multpl.com/

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In a dark blue jacket reflecting the mood in and about the eurozone, Merkel abandoned her usual cautious rhetoric warned outright of a war.

“Nobody should take for granted another 50 years of peace and prosperity in Europe. They are not for granted. That’s why I say: If the euro fails, Europe fails,” Merkel said, followed by a long applause from all political groups.