The Education of a Blogger

Good morning.

As you all know, I am a big discipline of technical analysis. Technical analysis is simply a collection of tools in the tool box. Elliott Waves, moving averages, and stochastic readings can keep us on the right side of the trend. And that's really enough to make money or to keep from losing money. There is an art to market research. Different researchers might draw different conclusions from the same raw market conditions. And that is ok. Nicholas Darvas might only go long the market and make money while Jesse Livermore might go long and short and make money. Its a personal call. My aim is to beat the S&P 500 Index this year by taking advantage of waves, moving averages, and trends. As market conditions change, I might substitute one tool for another but the aim always remains the same; i.e. to outperform the S&P 500 Index for 2011.

Do I have long-range views on the economy? Yes, I do.

One of my favorite activities is reading. I love to read. For me, hanging out at Barnes and Noble is the ultimate R&R. I should have become a history professor but I digress. As a law professor, I was drawn to a study of the Commerce Clause, specifically the Dormant Commerce Clause. Shadows intrigued me. I wanted to better understand the shadows cast by the congressional power to regulate interstate commerce when congress was silent. Heady stuff, no? (Smile) Ok, I'm a nerd to the nth degree which is probably why I understand Hedge Fund Manager Michael Burry, formerly of Scion Capital.

I continued to read about the market and the economy during the early 2000s. I wanted to know why Bear Markets developed. I can still remember reading Riding the Bear by Sy Harding and feeling like the fog had been lifted. Harding's vital revelation to me was that the 200-day moving average separated a Bull Market from a Bear Market. As economic conditions worsened, I began reading The Prudent Bear blog. In those days, I soaked in all of the commentary that I could digest about economic cycles, debt cycles, and business cycles. I am sure that Prudent Bear led me to Ian Gordon and the Kondratieff Winter.

Ian Gordon's website, The Long Wave, was like Harding's Riding the Bear on steroids. Gordon laid out the clear and compelling case that we had entered a new season, the Kondratieff Winter. The idea was that economies went through four seasons similar to the weather. There was a Spring when economic conditions gave birth to a new boom. It was a good time to invest in stocks for the long haul. It was not a good time to be in precious metals or cash. As the economy got stronger, the economy moved into the Summer time. These were good times, times of prosperity. Recessions were short-lived. However, the seeds of good fortune led to too much debt. This debt would cripple the economy and result in an eventual Winter of bankruptcies, defaults, and insolvencies.

The more I read, the more the Kondratieff Winter made sense. It explained better than alot of other stuff why the Bear Market began in 2000 and seemed to keep going. Gordon believed the Kondratieff Winter was generational in length. So, we should expect subpar economic conditions until at least 2022. This time frame is also consistent with Arnold's demographic work in The Great Bust Ahead and Larry Williams' cycle work.

So, on a day to day basis, I may give you running commentary on the latest short-covering rally or late day sell-off. These dramas are but ripples in the larger story. The larger story, I believe, is a generational turn down. No amount of Federal Reserve quantitative easing will solve the structural dilemma of too much sovereign debt. (In this regard, I am a daily reader of Zero Hedge Blog, Market Oracle UK, and Economic Collapse. These are uber Bearish blogs and not for the faint of heart/smile.)

I take a Bearish view of the world over the long run. For my money, Gordon T. Long has replaced Professor Nouriel Roubini as the intellectual force for the Bear Case. I suggest a casual reading of Long's prolific essays and articles (Where does he find the time?) Long's work is insightful, far-sighted, and prophetic. I would not bet against Long in my investing and trading.

So, there you have it--the education of a blogger.

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1. This blog is for educational purposes only.
2. None of the individuals associated with the Las Vegas TSP Investment Club are registered financial advisors.
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