Bookkeeping: Taking some Lennar (LEN) Profits

Wow - the moves right now are so extreme - gold, currencies, commodities, home builders, solar, REITs, bonds! Bonds!! Bonds are moving like penny stocks.... Seriously folks, HAL9000 is on the loose and things are moving with velocity like no other. Quite amazing to watch. Fear has turned to greed.

I bought Lennar (LEN) less than 24 hours ago @ just over $9 saying I should own homebuilders based on all I believe Obama would do to save the system. Uncle Ben came in within minutes and helped the cause. The stock is now in the $10.70s. That 19% in less than 24 hours of holding (this would be a 5000% or so annualized rate haha)- just out of karma I need to take some off the table. Again, I am willing to miss some upside and will not be sticking around to squeeze everything out of every trade - this rally is all based on "price action" (stocks don't go down on bad news) nothing fundamental so we're all playing with fire. The only reason anyone appears to be buying is because other people are - that's the definition of Ponzi scheme. Everything is technical driven - like no period I can ever recall.

The 2.6% stake I had yesterday in Lennar already grew to 3.0% so I'm lowering it to 2.2%. Again I want to stress I believe the jobless of America won't be piling into homes even at 1% interest rates but I won't fight hedge fund thesis, which is best espoused by the screamings of Jim Cramer. I do like to listen to him because he espouses "the textbook" thinking - important to know for us who live on Main Street. Even if we think it's a hoax, it's important to know what all those guys in Stamford, CT and NYC are "thinking" - Cramer is a great mirror into that line of thinking.

Now taking a step back, as I look at the S&P 500 we have level 940 approaching which is resistance (50 day moving average). With casino hour approaching that could be reached within an hour or so. So we'll see what the market does when it gets there but we are seeing buying on every dip which is a complete change in character - again I think hedge funds want to move this market up to make their year end number look better than it should be and why not? The toothless SEC can't even figure out manipulation when people give them tips. The outlaws run this casino. (regulation slows down innovation! like Ponzi schemes!)

More interesting than the indexes however is the massive moves under the surface. The movement in the bond market in normal times would signify a frightful moment as people run into bonds at lower and lower yield. However, with our "government managed" market I don't know what anything means anymore - the government could be in there buying bonds to drive yields low so that all Americans can borrow at 0% rates, and we can all re-lever up and rekindle our 2004-2006 days of (spending) lore. The rules are completely out of bounds now, and who knows what these things mean with so much "Big Brother" interference. But all things being equal what is happening in the bond market (in a parallel non Big Brother galaxy) should be frightening. In this galaxy? I have no idea - I've never invested in this atmosphere before - no one has.

Each time we've seen this disassociation in 2007 and 2008 - bond market doing 1 thing, equity market 180 degrees opposite - the equity market has within 4-6 weeks crumbled. The bond market has been right each time and if its action means anything anymore, it's still screaming that. So theoretically, take your gains as the Grim Reaper should visit equities by mid January 2009. (if the hedgies can run up this market into Dec 31st, we're going to be sitting in high cash at 4 PM the last day of 2008) But again, I don't even know the rules of this game anymore since there is so much outside influence. Which is the problem with being in this market at all, frankly. The rules are changed by the day.

So for now we're taking our trades, banking our winnings and hoping one day things return to normal. While we are profiting nicely along the way as the opportunities have been excellent of late, the current circus (market) is just a mess. But as long as the market goes up, people are fine with the circus (parallel to housing market circa 2004-2007)... since all the old signals seem to be useless, I'm not so fine with it- but it is what it is.

Long Lennar in fund; short of ideas on what old "sign posts" mean anymore