Simple Solution to an Ancient Problem

This story applies a simple solution to the current credit seizure and market fears that are prevalent at many investment houses today.

From FOXNEWS

Russian Mayor Bans Phrase 'I Don't Know'

Wednesday, September 05, 2007


The mayor of a Siberian oil town has ordered his bureaucrats to stop using expressions such as "I don't know" and "I can't." Or look for another job.

Alexander Kuzmin, the 33-year-old mayor of Megion, has banned these and 25 other phrases as a way to make his administration more efficient, his spokeswoman said Tuesday.

"It's a suggestion to the staff that they should think before saying something," Oksana Shestakova said by telephone. "To say `I don't know' is the same as admitting your helplessness."

To reinforce the ban, a framed list of the banned expressions has been hanging on the wall next to Kuzmin's office for the past two weeks, Shestakova said.

Some of the other prohibited phrases are "What can we do?" "It's not my job," "It's impossible," "I'm having lunch," "There is no money," and "I was away/sick/on vacation."

Kuzmin, a businessman who was elected mayor 1 1/2 years ago, wants to "shake things up" in Megion, a town of 54,000 in the Khanty-Mansiisk region, the spokeswoman said.

The region, located some 1,500 miles northeast of Moscow, produces more oil than the rest of Russia combined. As world oil prices have risen sharply in recent years, the region has flourished, and in stark contrast to the rest of the country its population has grown at the rapid rate of more than 7 percent annually.

But construction has not kept pace, and the lack of adequate housing is one of the town's most serious problems, Shestakova said.

"Town authorities are there to make town residents' life comfortable and prosperous," Kuzmin, a trained oil engineer who studied business administration in Canada, said in a statement posted on the town Web site. "Town officials must work out mechanisms to solve and remove problems, not to avoid them."

Officials who disobey the ban while in the mayor's office "will near the moment of their departure," the statement said.

Providing the mayor with wrong or incomplete information, or being late in reporting important information will be considered an attempt to undermine his work, it said.

Anna Borovikova, the mayor's chief of staff, said the novel approach has improved discipline.

"Before, it was so easy to say `I don't know.' Now before reporting to the mayor we prepare several proposals on how one or another problem can be solved," Borovikova said.

At first it was hard to remember not to use the banned expressions, she said, and they "slipped in sometimes."

Timing Market Turns

September 5, 2007

We exited back to cash at today's closing after entering 50% short in the Swing
positions in the indexes (25% short NDX) on Tuesday's closing. We were
short last week from the closing on Friday, the 24th, and exited the 31st before
the long weekend at breakeven.

We are expecting an upward bias toward Monday in a choppy lateral nature.
We expect that the action between now and the Fed meeting will get a wee bit
more volatile, as the guessing about a rate cut, or the news of trouble of another
CDO vehicle comes forward.

Sentiment

We expect our Daily Sentiment Index to remain in the neutral zone for several
days as the indexes slog toward the Fed meeting. Daily Index Sentiment Chart

Performance

We are maintaining a steady rise in all the Swing accounts, as seen here in the
SPX Swing position. Here is our verified Performance Graph from TimerTrac.

We remain 100% short in the Investor Core positions, portfolio hedged to
100% neutral, for all indexes.

Rate Cut?

We don't expect the FOMC to cut rates at the September 18th meeting. We
believe that if a Fed Funds rate is coming, it will likely be in early October after
the correction low is set in. A potential late September rapid decline is the only
other alternative that we can project a potential Fed Funds rate cut of 25 basis
points (less than 10% chance for Sept.).

W. B. Busin
W. B. Busin Group Publishing
http://www.market-timing-wbbusin.com/

What's Next? Market Crash? Downward? Upward? More lateral?

September 4th is the next major Time Locus for the indexes.


What will it be: a high or an acceleration point; or the least likely, a continuation of the past week's lateral move?


We believed it would be a market turn at a low. It won't be viewed by us as a low unless the SPX/NDX/Dow close near or below their Monday, August 20th intraday low.


We do view last week's action as the potential end of a lateral (consolidation) phasing. We have stated since the July highs that the swings have been shortened by volatility, weak volume patterns and by extreme moves in our proprietary market sentiment indicator.


The Daily Sentiment Index continues to show much faster movement just as the intraday sentiment has exceeded 80 (bearish) and 20 (bullish) several times last week. Last week reminds us that the normal 3-5 day swings are still under compression to a 2-3 day swing length. The extremes marked intraday highs and lows in index structure and form.


Investors are fully hedged to portfolio neutral from the Friday, August 24th high. Swing traders (3-5 trading days) are in cash.


Bernanke's speech this week clearly shows that the Fed is attending to its mission, and not what the shrill economists are 'demanding'. The Fed is not going to bail you out of your subprime mortgage portfolio. We are already seeing the exact bargain hunting we predicted and believe will continue in the collateralized debt (CDO) market with Citigroup scooping up a bargain this week.


It proves our point in a previous post that the complaint in any market about 'not knowing what something is worth' is a signal that the price is not low enough.


We have seen, traded and lived through several structural corrections in the stock markets and in the economy over the past 4 decades. From that viewpoint, we believe (even more today than 2 weeks ago) that the Bernanke led Federal Reserve Board and FOMC are doing their job just about as close to perfect as a human can be expected to perform. They have one eye on today and a real focus on what tomorrow will be like if they overreact to the hue and cry of a few stuck in the mire of their own making.


Does the Fed lower the Fed Funds rate at its September 18th meeting? We hope it does not. will there be continuing losses, even mega losses for portfolios and holders of some mortgage backed securities and derivatives? Yes, and it will continue for a few more years. Losses can be controlled by cooler heads than those that created and sold these super-leveraged instruments.

Just lower the price, take your loss, sell your portfolio to those that have the capital, and then move onward. Buyers are already waiting for the holders to lower their prices. Who is going to buy Carlyle Capital's assets if its parent, Carlyle Group, cuts it off in the next slide? Carlyle Capital has already received $200 million this week. Even the big and quiet fall hard and loudly.


Give me some direction.


Two scenarios are the easiest - more consolidation with withering heat like the high desert, or just retest the lows of Monday, August 20th. The RUT has already blazed that path through August 20th low for the other indexes to follow, if real buyers don't step back into the market after the long weekend.


Direction could be a difficult call if the indexes set in two extremes in one trading day, Tuesday. An apparent breakout upward or breakout downward that reverses to the opposite extreme by the closing will be easy to daytrade, but will take its measure of our models. That is the principal reason for our cash position in all index Swing positions (remember that we can only enter and exit at openings and closings).


Technicals say -


Momentum indicators, volume and volume patterns still point to a downward move. If divergent indicators were in control, we would give the downward direction a positive balance. The low volume rise from Wednesday through Friday is not unusual before a holiday weekend. Low volume and the patterns show weakness, but these same patterns can be found preceding a blowoff and a breakout of a trading spread.


The objective is to enter trades according to each person's risk management/money management plan. We will decide whether a change to short or long is the call after observing currency trading and tomorrow's track for international indexes. Join our email newsletter.

W. B. Busin