Told You So

by Larry Levin

Sure, the title of today's missive may be boorish, but it's also true. What have I railed about for so long that is so right? Where do I start? The market is in a SECULAR bear market, analysts and economists are less accurate than the weatherman, house prices are still dropping, and bailouts are wasted money.

Last week's latest bailout of Shitigroup led to a 119-point drop on the Dow Friday. Today's latest bailout of AIG led to a 300-point drop on the Dow. Why? Because it is clear those handouts did not work and therefore the government is just wasting your tax dollars. Moreover, when a smaller situation emerges that the government may be able fix or, once a few banks and AIG finally fail, there won't be any capital left to spend.

For those of you that still doubt me, for those who email asking "What would you do, nothing?" witness the government's handouts and guarantees - they have now exceeded $11-TRILLION! What has that $11-TRILLION brought you? Companies continuing to fail, asking for more and more money, and a stock market that continues to plummet.

Commercial real estate should be suckling up to the government teat very soon. The automakers will be asking for more money and AIG is by no means done. States will come back for more money. Private pensions will come knocking as well. We already know that bailouts do not work but it won't matter, they'll get a little taste of that cash.

The Nikkei Dow is down over 80% from its high despite the multiple trillion Yen that its government has thrown away in special projects and quantitative easing rather than letting banks fail.

The government needs to step back and let life take over. Bad things happen in life but the question remains: will we learn from them? We may learn, but politicians will not. By their actions they have proven to have learned nothing from Japan's nearly 20-year saga.

That being said, hope springs eternal on Wall Street as evidenced by the never-ending conga line of bottom pickers. These glittering jewels of colossal ignorance/Pollyannaism tell you to buy because the market is down. Hmm, I'll bet your kids could give you the same insight for free!

Anyhow, there should be a short term rally soon. That's how it works: down, then up - light, then dark - bad, then good. Who knows, maybe someone at the SEC will remove the mark-to-market rule and unleash a several week rally.

I hope my admonitions and warnings have helped you to this point. But it doesn't end here, I have another caveat: don't let a rally fool you into believing the hype of "the bottom's in and we'll see Dow 15,000 by 2010" or I'll be forced to once again say, "I told you so."


Previous Day's Trading Room Results:

Trade Date: 3/2/09

E-Mini S&P Trades*
(before fees and commissions):

1) B/away sell @ 8:35am at 718.75 = -.25 (1-lot)

2) OTF sell @ 11:30am at 709.50 = +1.00 & +.75 (2-lot)

3) FT sell @ 12:40pm at 705.25 = +1.50 & -1.50 (2-lot)

4) FT sell @ 2:25pm at 705.50 = b/e (1-lot)

5) Algorithm positions (7)...combined SofT and Algo total...-0.75


Electronic (YM) Mini-Dow:


1) No trades today



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