In March '08 we had a post commemorating the guts, brains and plain hard work of the folks who pulled off the Berlin Airlift sixty years earlier:
Ag Stocks and The Berlin Airlift (AG; MOS; MON; POT)
Last night in "Commodities Comeuppance" I said my best guess was that the ag stocks would be up today. When POT and MOS opened down I was reminded of a vignette from the Berlin Airlift.
We're coming up on the 60th anniversary of the Soviet blockade that June.
During the summer the two million people that the Brits and Americans were trying to feed could get by with two tons of coal per day (over the course of the airlift 80% of the weight hauled was coal) but as the blockade went on, it was apparent that the Sov's. intended to starve the city and it became imperative that an efficient method of delivering coal be found.
During winter the absolute minimum requirement was 3100 tons of coal per day. The little C-47's could haul around three tons per flight. The first week of the airlift, deliveries averaged 90 tons per day. The second week, 1000 tons/day.
It was decided to experiment with a low-speed, low-level drop of coal onto an empty field, the idea being that if it worked, B-29 Superfortress' with a 105 mph stall speed and 22-25 ton capacity would solve the problem.
On the appointed day the senior commanders went to the field, the plane came over, low and slow, dropped the coal, packed 100 pounds to a bag, the bags landed, exploded open, the coal was pulverized and a great black cloud of coal dust covered everyone watching.
One of the Generals, I forget if it was LeMay, Tunner or Smith, said "Doesn't work" and that was that.
When I saw the ag stocks open this morning I thought
"Doesn't work".
The logistics geniuses figured out what needed to be done, took 300 of the 400 10-ton capacity C-54's in the U.S. fleet, developed flight rules so efficient that the Germans called it "die Luftbrücke" (Air Bridge) and on Easter Sunday 1949 in a move to crush the Soviet's spirit, they decided to show off with the "Easter Parade".
In the 1440 minutes of that day, they flew 1398 flights into Berlin delivering 12,940 tons of coal.
The Soviets gave up the blockade the next month, two million people didn't starve or be forced to live under Moscow masters and thousands of kids remembered the candy bars the pilots would tie to handkerchief parachutes and drop as they came into Tempelhof.
39 British and 31 American airmen were killed in crashes during the airlift...
I don't go in for fancy explanations for failure. That kind of rationalizing can lead to muddled thinking that can cost you real money. It's smarter to learn what you can (long was wrong the last five days of the month) and move on.
I also violated the first rule of analyst CYA; if you give a price, don't give a date. The violation was deliberate and against the recommendation of some sharp friends.
On the other hand I did point out the risks (and they are real) to long portfolios:
Wednesday, October 14, 2009
Markets: Where Do We Go From Here? (INTC; JPM) The Beat Goes On
Regular readers know we are looking for S&P 1125 sometime this month. If you watch this stuff (and I understand normal people who don't) the level of nervousness about the market's direction and this earnings season is as high as I can remember. Participants know they are playing a dangerous game; we all think we will be the one to grab a chair when the music stops.
This is creating a frisson for the players that has to be at least as exciting as Chris Matthews reaction to a Barack Obama speech...
Tuesday, October 20, 2009
Short Interest Declines Again (and Why it Matters)
...As we saw* in the 2008 oil market, a relentless up-move crushes the bears, both financially and psychologically. If you don't have that potential buying power, the down moves are fast and furious. From here it is not hard to see a 200 point down day in the DJIA come out of the robo-traders at any time, for any reason....Wednesday, October 21, 2009
15% correction coming in SP500?
I'm pretty sure the market doesn't subscribe to the Poincaré recurrence theorem.Friday, October 23, 2009
I however, may, this being the second gloomer chart of the day.
("Seasonal Drop in U.S. Stocks May Just Be Delayed: Chart of Day")
Approaching the Height of the Earnings Reporting Season
...As can be seen in the graph below, today is the lightest reporting day of the week whereas next week has the busiest. Keep those stops tight.Friday, October 23, 2009
Something to Think About: "The US stock market is overvalued by 40%"
Friday, October 23, 2009
A Trend is A Trend (Until it Isn't)
A reader emailed "What did you mean by 'Keep those stops tight?"' [in this morning' post "Approaching the Height of the Earnings Reporting Season" -ed]So there you go.
Good question. A quick look at the DJIA hourly chart for the last ten days reveals a couple interesting points to consider (from BigCharts)...
...First off, the triple top around 10,100. Three time this week the index got to this level and stalled out. Secondly, the daily low to high range has expanded considerably. This kind of sloppy action is often the sign of half-hearted buying by participants.
Although we are still looking for S&P 1125 this month (which means next week), this is dangerous territory. To quote myself [favorite source? -ed]:
Markets: Where Do We Go From Here? (INTC; JPM) The Beat Goes OnRegular readers know we are looking for S&P 1125 sometime this month. If you watch this stuff (and I understand normal people who don't) the level of nervousness about the market's direction and this earnings season is as high as I can remember. Participants know they are playing a dangerous game; we all think we will be the one to grab a chair when the music stops.There is downside risk. Any drop could be the start of a 15 to 30% decline.
This is creating a frisson for the players that has to be at least as exciting as Chris Matthews reaction to a Barack Obama speech...
I am comfortable with a 2% loss in futures or options, 4% in leveraged ETF's and 7-8% in individual stocks. Your comfort level will vary but at this point the goal has to be preservation of capital.
The kind of action we've been experiencing will stop you out a lot which can drive you crazy.
[not a long drive -ed]
If you aren't comfortable scale back your exposure to the "I can sleep at night" level.
As I said, good question.
Be smart, be honest, be brief, be gone.
Mañana.
