One of the things I do is trade the futures markets. Most of the money is made going short because prices seem to fall faster than they rise. Perhaps it’s a function of gravity. In any case, most people just won’t short a market. Something to do with patriotism, I think. The other excuse they claim for avoiding a short position is that a market can only fall to zero, but the upside is unlimited. So what! Anyone with a brain cell left in his or her skull would place a stop loss order whether they were long or short a market. It’s called “money management,” and it’s the only trading system that’s ever worked in the long run. There’s a guy who’s had a national radio program on investing for many years who brags about the fact that he’s never advised going short the stock market. When he gets a so called sell signal, he tells his newsletter subscribers to get out of the market and put their money into a money fund until he gets his next buy signal. Why not tell them to go short in order to capture the incredible profits that his indicators are screaming are there for the taking in the impending bear market. Beats me.
I went short the United States of America on the Chicago Board of Trade in late November of 1963. Of course, as you might have guessed, I did so theoretically, as the actual contract was and still is not available on the CBOT or any other futures exchange for that matter. But if it were, and you subscribed to the old adage that “the trend is your friend,” then, other than some brief bear market rallies, my short position would have become more and more profitable over the ensuing 47 years. And since January, 2001 the position has been making an obscene amount of money. My futures contract has been dropping like a stone. Which is the direction you want it to go if you’re short.
It is not easy to stay with a position for 47 years. In the past I had always gotten out too soon and thus missed out on most of the profits. After all, it is near the end of a trend that most of the money is made. Markets tend to overshoot on the upside and again on the downside. But the short USA position was a piece of cake to stay with. All you had to do was to forget anything you ever learned about technical analysis and concentrate on the fundamentals. And the fundamentals for this country have been relentlessly bleak.
With the killing of the first Kennedy came the loss of hope. That loss was finalized with the assassinations of the second Kennedy and Martin Luther King. Hope is a vital commodity to the “have nots” in our society. Kill it off and you gain total control. It paves the way for the undoing of democracy and the takeover of mediocrity that appears in the form of such embarrassments as Nixon, Reagan and Bush. As you can imagine, I added to my short position in 1968, 1980 and 2000. In each case my order to the broker was the same: “Sell short X number of USA contracts at the market.” At this juncture, in the winter of 2009-2010, I have amassed the largest short position in my trading career. With Corporate America running the country in all matters domestic and foreign in conspiracy with the Federal Government, I am letting my profits run.
I take no pleasure in this lucrative trade. In fact, I watch from the sidelines in shock as our jobs leave the United States of America along with our 1st Amendment Rights. I sit at my computer in awe as I observe the greatest transfer of wealth in the history of this country take place before our collective eyes. It is not the transfer from the few to the many that the Right Wing has always feared most about Communism and Socialism. This time we bear witness to the withdrawal of funds out of the bank accounts of the many and into those of the few.
Am I getting greedy, do you ask? Shouldn’t I take some of my profits off the table? In normal times you would be right in making such a suggestion. But this time the “few” have a plan that guarantees even greater profits down the road for my short position. By combining wars for oil with tax cuts at the same time, this greatest of debtor nations will reach a point where it will be necessary for the “Authoritarians,” the “Controllers,” the “Few” to announce that we can no longer afford any entitlement programs i.e. Social Security, Medicare, Medicaid, whatever is left of welfare, corporate pensions and healthcare for corporate employees. That is when all bids will be withdrawn for the USA contract, and it will fall as if in a vacuum. Then I will take some, not all, of my profits and wait to see whether the “have nots” and the former Middle Class regain consciousness and start to push back.
January 28, 2010
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