Commentary for the Week of March 8

[Our friend Rich Cash, a seasoned trader who has been through many bull and bear markets, has come up with some eye-popping numbers below for some of our favorite trading vehicles.  Silver at $10 an ounce when the Great Recession becomes something much worse? It’s just speculation now, but the point of the exercise is to mentally and psychologically prepare us for…anything. Read on for an old pro’s take on shifting paradigms. RA ] In August 1987, inspired by fellow Merrill Lynch Alum Arch Crawford and Harmonic Convergence bullish market hysteria, we commissioned a high net worth productive enterprise conclave at the Chemical Club, with its downtown view of the World Trade Centers and Statue of Liberty, all overlooking what was one of the busiest harbors in the world, since displaced by central planning mercantilist Shanghai, Singapore, Hong Kong and 9-11. Our topic was the unpopular if accurate one: The End of the Trend? Our turnout was less than the recent Buffett Obama Wall Street fundraiser at Four Seasons, “Tax Hikes for the Rich.” At the end of the trend, no one wants to hear about the end of the trend.  No one believes it and few bring themselves to trade it. So what if we are in decade-plus equity bear market, gold commodity bull market and  three-decade bond bull-market trends? Is there anyone on the street who thinks it even remotely possible that currently profitable paradigm trends will end? No? And we are unanimous in that. What about a Gedankenexperiment (thought experiment) financial fantasy just for fun and profit? Suppose Long Treasury interest rates, 2.694% as this is written, actually continued down to their current target of 0.8%, dead-as-a-doornail depression levels? Would it be fair to say there might be some changes in other asset prices? No man nor

The protest that started nearly a month ago in the Battery now has a name – Occupy Wall Street -- and we’re sorry we didn’t think of it first, since the catchy title – “Occupy (fill-in-the-location)” -- seems destined to go viral worldwide. We’re not sure whether the demonstrators’ demands will eventually skew right or left politically, or perhaps in neither direction, but Mr. Obama and Rep. Pelosi have not wasted any time getting the jump on the Tea Party and GOP frontrunner-by-default Mitt Romney by presenting the demonstrators with verbal fruit baskets and bouquets – everything but the key to the city, which as of this writing was still in the safekeeping of Mayor Bloomberg.  To her credit, Ms. Pelosi zeroed in an actual reason for the demonstrations, even if the protestors themselves haven’t quite figured it out. It’s about jobs, she told ABC News in an interview -- and that is undoubtedly on many of the protestors’ minds. But it seems predictable that the movement will come to be “about” many more things as the months roll by. What is not so predictable is who will assume leadership, or perhaps try to co-opt the movement from outside, as it spreads to every city, town and village in the Western world. But if protests should turn violent – a possibility that we’d rate an even-odds bet at this point, it’ll be interesting to see whether the Establishment that has rushed to embrace the demonstrators will start cracking heads. Whatever happens, the protestors have nearly a year to build up steam ahead of the national political conventions.  Charlotte, North Carolina, will play host to the Democrats in early September, and although the event, with 35,000 delegates reportedly planning to attend, is expected to generate $150 million in business for the

We can’t recall ever having spoken a kind word about Barack Obama, nor do we even imagine him capable of saying or doing something that might bring us around. However, we do not – repeat, do not – blame him for the terminal state of the economy. It was headed irretrievably into a Second Great Depression long before he took office, and the things he has tried so far to forestall a day of reckoning are, for the most part, the same things that any president, Democrat or Republican, would have tried. Nothing would have worked, of course, because the deflation that the U.S. and the rest of the world have been trying so desperately to counteract is drawing irresistible force from an imploding derivatives bubble valued notionally at nearly a quadrillion dollars. Small wonder, then, that a relatively puny stimulus effort amounting to mere trillions of dollars has bought us only time, not growth, and done so in a way that will burden future generations with more debt than they will be able to service, let alone repay. To be sure, a solution has always lain well outside the boundaries of political discussion. The best we could have hoped for was a legislative sausage pleasing to the tastes of Harry Reid and John Boehner alike.  But nothing those two could conceivably have agreed on would have brought the economy around. Nor would a change at the top have helped.  Put someone else in the White House not handicapped by Mr. Obama's timidity, incompetence and cluelessness – New Jersey Gov. Chris Christie is our idea of the right guy for the job – and even he would have failed to slow the country’s slide into deepest recession, let alone reverse it. For in fact we face 30% unemployment, a wave

When will our political leaders get real?  The Wall Street Journal’s peerless Peggy Noonan asked that question last weekend in a column that was circulated widely, and it is probably high on the list of everyone else who cares about the state of the union For the time being, unfortunately, far from facing up to The Great Recession, our President has obsessed over “shaping a story” for the American people, presumably to soften us up for whatever it is that Big Government would purport to do next in our behalf. Mr. Obama went as far as telling an interviewer, Confidence Men author Ron Suskind, that dealing with the nation’s high unemployment had thus far failed because of the complexity of the problem, but also because “we didn’t have a clean story that we wanted to tell against which we could measure various actions.”  Come again?  It wasn’t “clean,” he explained, because “what was required to save the economy might not always match up with what would make for a good story.”  Nothing like a good yarn to help get the jobless back to work. Later in the interview, he amplified the point while inadvertently underscoring the smallness of his presidency: “The irony is, the reason I was in this office is because I told a story to the American people.”  Ahhh, so that’s what the hope and change thing was all about! This fixation on what Noonan refers to as The Narrative has got to stop, she says, since there really is no story: “At the end of the day,” she writes, “there is only reality. Things work or they don’t. When they work, people notice, and say it.”  Unfortunately, political leaders on both sides of the aisle, unchallenged by a news media that is either too stupid or too

Gold did everything we’d asked of it yesterday, but Silver still has some work to do if precious-metal bulls are going to go back on the offensive. Comex December Gold need only have achieved 1659.10 yesterday to generate some positive signs on the hourly chart. In fact, it was trading well about that threshold early Monday evening, hovering round 1668 after having gotten as high as 1674.  This suggests that the next upthrust could go as high as 1729.20, a “Hidden Pivot” target that comes from our proprietary Hidden Pivot Method. (Click here to find out more about this method and the “camouflage” trading technique we use to reduce risk.) However, Silver was relatively timid, and although the December contract finished slightly higher on the day, the 31.430 peak of yesterday’s rally fell 48 cents shy of our bullish trigger threshold at 31.905. By our lights, that number is a key “hidden” resistance, and if it is bettered on a closing basis or by more than a few cents intraday, we would expect Silver to launch sharply higher, reaching a minimum 34.715 over the next 6-10 days.  We never want to chisel these forecasts in stone, however, and we will therefore be looking closely Monday night and Tuesday for subtle signs of corroboration on the lesser charts. Meanwhile, there are two non-technical factors that strike us as bullish for gold and silver: 1) bullion quotes rose even though the U.S. dollar was also rallying; and 2) institutional sharks who typically let precious-metal prices waft higher on Sunday night did not slam them back down before the opening, as is their wont. What this suggests is that even though they generally like to fade the trend – in this instance by going short -- buyers were too eager Sunday night to

Two weeks of protests on Wall Street have spawned sympathetic demonstrations across the U.S., but it’s too early to say whether a full-fledged political movement with charismatic leadership will emerge.  While demonstrators have noticeably lacked the passion and focus of 1960s campus radicals, we shouldn’t rule out the possibility that today’s somewhat angry crowds will tomorrow make up for their docility with tenacious sticking power. For the time being, though, the objects of their ire are so nebulous that the demonstrators might as well be targeting food additives or the juicing of baseballs to get attention. “The one thing we have in common is that We Are the 99% that will no longer tolerate the greed and corruption of the 1%,” reads the wishy-washy manifesto of, for one, Seattle activists.  Let’s hope, however, that if mere intolerance of greed and corruption eventually turns into anger, as it well may, that the torch mobs will be able to distinguish the scoundrels who run the banking system from all of us small-businessmen and entrepreneurs whom Mr. Obama would designate as “rich” simply because we have lounge privileges at the nation’s airports. Perhaps the protestors would be surprised to learn that many of the traders and market-watchers who weigh in regularly at the Rick’s Picks forum explicitly agree that greed and corruption have claimed America's very soul. Far be it from us, however, to discourage activists with the cynical observation, oft voiced in the forum, that things have decayed beyond reform or redemption. To borrow a famous line from the Vietnam era, though, it may be necessary to destroy the village to save it. When Crowds Disperse… Whatever strategy evolves on the streets, the protestors have shown admirable restraint so far, having done no worse than tie up Brooklyn Bridge traffic for a few hours on a

(Louis Piro is an investor from the old school, a guy who innately understood that there were no shortcuts to building wealth.  His approach may seem almost quaint in an era of instant IPO billionaires, but --  who knows? -- it may yet come back into vogue. Piro was my barber when I lived in Mountain View a decade ago, and his story originally appeared in the Sunday San Francisco Examiner during the dot-com boom of the late 1990s. I republish it here every couple of years because the advice it holds for investors remains timeless. RA] If there is a single word to sum up the success of investor Louis Piro, that word is "dull." Piro has never made a killing on a stock.  He doesn't play hunches and he runs from hot tips.  He says he passed up Pfizer not long ago because its shares were too pricey even before impotent men started flocking to their Viagra pill for a cure. Nor will Piro sell anything from his portfolio.  He just keeps buying -- and then only with money he knows he won't need any time soon.  He adds stock whenever the price drops substantially. Piro shuns companies that sell products or services he can't understand, and he has never even owned a share of a Silicon Valley upstart. His favorite word -- "dividend" -- could be the mantra of a successful hypnotist.  Zzzzzzzz.  Finally there is this pearl, the cliché that underlies nearly every investment decision that Louis Piro has made in the last 45 years:  "Buy shares in companies that will grow with America." ‘Build a Little Nest Egg’ That Piro, 63, could have amassed considerable riches by following such homely rules is probably not unusual.  What is striking, however, is the remarkable degree of his

With only a handful of players savvy enough to compete in the major leagues of tablet computing, competition has nonetheless erupted that is likely to hearten consumers, especially those who have tired of paying exorbitant prices for gadgets bearing the Apple logo. Yesterday, it was Amazon that stepped into the ring -- with Kindle Fire, a $199 tablet that will sell for less than half of the cheapest Apple model. The 7-inch display is only half the size of Apple’s, but as Hewlett Packard’s close-out sale for a similar device proved, buyers are willing and eager to forsake Apple products if the price is right. To be sure, Amazon has targeted the lower end of the market with a tablet that cannot do all of the tricks that iPad is capable of.  It lacks an embedded camera and microphone, for starters, and there is no 3G cellular connection, only Wi-Fi.  Give Amazon a little time, however – perhaps eight to twelve months -- and a fully-featured product will be able to go head-to-head with Apple’s best, but with the kicker of Amazon “content” to make it more than merely competitive. Amazon’s announcement, presented by CEO Jeff Bezos with Steve Jobs-like flair, comes on the heels of an announcement that Dish, through its recently acquired Blockbuster unit, will offer streaming movies and TV shows to compete with Netflix. Recall that Netflix shot itself in the foot last month with a horrific new pricing scheme that elicited a firestorm of protests from subscribers and enough cancellations to cause NFLX shares to collapse. Since July, they’ve fallen from $305 to a recent low of $125, or nearly 60 percent. Netflix founder Reed Hastings, who even now probably still doesn’t get it, responded with some pro forma blather about how he is sure Netflix

Take a look at the chart below if you think yesterday’s monster short-squeeze meant something. The Dow Industrials were up 326 points at their apex, making plenty of noise but signifying little or nothing.  Some saw the buying spree as a bet that everything will turn out all right for Europe. Yeah, sure. And Obama’s “jobs program” will turn the U.S. economy into the muscular dynamo it was in the 1950s. In actuality, Wall Street’s latest buying riot was simply one more ‘up’ in a tedious series of ups and downs that are being used by the Masters of the Universe to distribute stocks to widows and pensioners before They pull the plug.  The usual bunch of rascals and thieves timed this dog-and-pony show so that it was nearly impossible for anyone to make more than chump change after stocks opened in New York. The big money had already been made overnight on index futures that closely tracked similarly meaningless effusions in Europe and Asia. The rally was of course the mirror image of last week’s hellish collapse (see chart below), which, like Monday’s spasm, was all but spent before traders who keep New York hours had downed their first cup of coffee. These pointless, machine-driven panic attacks are managed so that only a small handful of traders can make money on them.  However, a bigger picture of gratuitous swings that have been occurring since early August explains why long-term bulls and bears alike have effectively been prevented from profiting.  What bear who was short when the week began could possibly have withstood the fright-mask lunge of the last two days?  And what bull could have held steady when the Dow plummeted an even more frightening 950 points last week in just three days? Not that the markets are even