April 25, 2006

Some trends - the good and bad.

1. The stocks of pawnshops and sub prime lending outfits (AACE, EZPW, FCFS) have had a major run in their stocks. I asked my friend Cole (lot's of spare time as well) to reverse engineer the reasoning. Easy (LOL) stuff to do once you see a stock chart and here is what he says is going on:

"Higher interest rates and energy price are creating more people with cash flow problems which in increasing the demand for payday and small asset loans to manage their short term liquidity needs. The demand from these new customers is greater than the default rates of the existing customers which creates large revenue and earnings growth for the pawn industry. It also reflects a continued reduction of the "real" credit quality of the average American. More people borrowing “off the grid” to make on time payments on things that effect their credit rating which artificially props of their credit quality – scary…"

That could end any moment or go on for a while. Maybe I need to visit a pawn shop?

As a pure trend follower intuition is left alone. But I am sure there are hundreds of discretionary traders trading off these types of assumptions. Too hard for me. Thanks Cole.

2. Why it is always tough to be a small speculator, especially when the Fed gangs up? Bill Cara has some great insight into how mad you got when a trade went against you from something out of your control. Protectionism and intervention for these reasons are just bad - ALL THE TIME.

I agree and it is one of the reasons I found trend following appealing. No blame other than your own money management systems.

3. Chicks are digging the internet - at least this site . I guess marriage is still popular. They shoud launch a divorce site as well called - ratbastard.com! Pretty much anything mean and nasty would work.

4. Canada raised their Prime rate this morning and rates in the US keep pushing higher.

Markets could get ugly for a few days and I am just watching. Hope I am wrong for those of you on leverage.

Sold a bunch of BLDP at $12 and change yesterday and it is down to $10.20 as I speak. I am looking to buy in the 8's.

PS - I have a Suns's ticket for one lucky reader - Let me know - howard@lindzon.com

Comments: Post a Comment

Links to this post:

Create a Link



<< Home