"Experts" buy high sell low.

Oil is not out of the woods by any measure yet but capitulation is happening all over that that is something that I like to see.  Today's examples of this begin with this story about LINNCO Energy.  Apparently, Elvis has left the building in terms of bullishness on this used-to-be Wall St darling.  The "last bull standing" has trashed his buy rating on LNCO after riding it down from, um, $44 to a recent low of, errr, $2.  Both of those magick numbers are worth paying attention to IMO.

In any case, the company has 6mn cash and zero debt which is hard to believe for a Wall St darling because they generally get to be darlings via the use of leverage during boom times.  That aspect of it is more about luck than skill because none of these people know what an Elliott wave is.  It's trading at price to book of 0.3, probably because of TTM earnings of -$10.  Of course, all that means is that the company took advantage of the oil bust to write everything down and throw in the kitchen sink so that when the next upcycle came the numbers would look fantastic.  I'm guessing that the CEO is heavily compensated in stock and so such a thing would be of great advantage to him personally.

The red is my primary path but beware the blue as well.  In fact, hope for the blue!  That would make the wave count much clearer and of course afford you the opportunity to buy at the great depression price of $$1.25.  But there are enough waves in that last leg to already count as the bottom and that deal that looks like it might turn into an HT is not in fact an HT yet.




 In other "news", Freeport McMoron (McMorRan - ticker FCX), the highly leveraged commodities producer is "giving up" on energy in order to focus on copper.  Of course the truth is, they are selling their oil exploration business at nearly the very bottom for pennies on the dollar because they fear commodities will stay in the dirt forever and they have lots of debt that threatens to eat them alive.  466mn in cash is backstopping 20bn in debt.   What can go wrong there, huh?

FCX is a great example of how debt cannot increase the GDP forever.  The "use debt to buy production capacity" game only works at the start of the Ponzi.  At the end of the Ponzi everyone has played the game, everyone is in debt up to their necks and there is too much production relative to demand.  The most leveraged greedy bastard companies die off as their debt eats them alive and someone who is conservative and who would not pay sky high prices for production capability comes in and buys it all up at pennies on the dollar.  Once production is brought back in line with consumption, prices rise again and the new owners look like geniuses and are called "turn around artists" when all they had to do was be very patient and wait for the Ponzi to collapse.

It is ridiculous to believe that debt can sustainably buy GDP!!!!  It is a pump and dump con game which is not only enabled but actually encouraged by this fraudulent money supply that we are so foolish to labor under.  We are not free until we dump the concepts of fiat currency and fractional reserve lending.  It might seem like that is impossible to happen but it is an intrinsically worthless system and that means at some point it will revert to its mean value of zero.  This will happen not because of official proclamation but rather simply because the herd decides in some form or fashion that it will be so.  In fact, it will probably happen as the status quo jumps up and down loudly proclaiming that it will not be allowed to happen.