Monday, December 31, 2007

2007 - A Fubar'ed Financial Year in Review

Well, I spent large portions of 2006 and 2007 telling you what I thought would happen in financial markets this year.

I'm going to attempt to review some of those calls here and critique what we got right and what we screwed up royally.

1.) US residential housing would fall HARD


2.) Bank failures would be more prevalent

check -- however, forces are fighting hard to liquidate markets to keep insolvent lenders alive

3.) The reliquification would create a drop in the value of the US dollar


4.) Commodities would benefit from the dollar crunch, Gold out of credit tightness and fear


5,) Uranium prices would dip in summer and then reignite in fall


6,) Uranium juniors would be a good bet in fall through spring 2008 fact junior miners across the board have been hit hard with some (very few) notable exceptions.

7.) financials were ripe for a fall from grace

check. in fact, we've already seen quite a few BIG names taking on serious water. expect more of this as the depth of the fraud and excesses becomes better known in 2008.

8.) The broader market was ripe for a fall at Dow 13,000

NOT. I reiterated my call again at 14,000 and it seems to be under significant pressure, but so far Sovereign wealth fund investments in financials (classic knife catchers, imo) and a falling dollar has meant that dollar holders are looking for something to buy. This has kept the market bouncing between 13 and 14k.

The broader market has gone basically nowhere since summer.

What my "call" for 2008?

Not nearly as exciting or risky as my calls for 2007. more of the same.

As 2007 turned out I had very little time for trading and just stuck (mostly) with my macro trends (dollar down, stuff up). Trend following is the most predictably profitable trade, and calling the turn (down) in the broader markets is where i lost the most money in 2007.

Calling a "turn" in a market is not for the faint of heart or weak of pocketbook. If I'd had more time for trading I would have had more time for research and been leaning pretty heavily (short) on subprime lenders. But, I didn't, and probably won't in 2008 either. So, it will be an exercise in trying "not to lose" rather than winning.

"Trying not to lose" is a little like the NFL's "prevent defense" when I try it. Not very successful. It is something where I have a VERY spotty record, so it will be interesting to see if I'm able to figure things out without getting washed out.

Good luck to all, and a prosperous new year.


1 comment:

El Torero said...

Dude! Totally cool to catch up on life in Urulandia!

Like how you hit most of your prognostications for 2007. Where's your 2008 outlook... Inquiring minds want to know!