World
  |
ISSUES....
Inside, confidential and off the record
Repercussions
THERE IS NEVER JUST ONE COCKROACH: This is one of our favourite rules of trading, and indeed in this year’s list of Rules, which we sent out last week, it was #13. In life, the sight of one cockroach in a restaurant is an assurance that others are nearby, and in the world of trading, the first bad news is almost always… ALWAYS… followed by more such. We came upon this rule years ago in
the aftermath of the Enron Affair when the rather newly appointed President of the company at the time, Mr. Jeff Skilling, announced his retirement so swiftly after his promotion, ostensibly to spend more time with his family. We knew… and indeed everyone knew… that that was just a false front and that bad news was to follow. More did… and more did… and even more did.
Then we began considering how often bad earnings news from one company or another gave way to even worse earning’s news shortly thereafter, followed by
even more bad sales news, followed by worse earnings news seemingly ad infinitum. We knew then that one of the new rules of trading would be that “there really is never just one cockroach.” Bad news tends to beget more bad news.
It is in this light that we note comments from our old friend, Mr. Marc Faber of the Gloom, Doom and Boom report regarding the situation in Dubai. He… like we… is convinced that the problems of Dubai World are but the “tip of the iceberg,” or in our parlance, the first cockroach. Marc said yesterday in an interview with Bloomberg news that In the context of all the default[s] that will happen in the world, [Dubai] is not a big thing, But it’s a reminder that governments can default.
That is precisely what Dubai World has done. It has raised the concern that governments can and do default, and that government guarantees are all too often “writ small, not large.” Dubai World may prove a mote in the eye of the global economy when all is said and done, but it may also have been the first or second cockroach. We must always be on the watch for others that might follow as the global recession… which we are certain has ended… is still having repercussions on the periphery that may spread to the centre stage sooner rather than later.
- Dennis Gartman/ The Gartman Letter 12/ 03 / 09
- For more on interesting comments, you can subscribe to The Gartman Letter by contacting Dennis Garthman: Phone - Fax: or email : dennis@thegartmanletter
ISSUES.... 12/02/09
ISSUES.... Inside, confidential and off the record
Is an independent journalist effort from Petroleumworld, on Inside, Confidential and Off The Record Information, its views are not necessarily those of Petroleumworld - Send Us Your Issues
Legal information: Copyright/Disclaimer
Copyright© 2008 respective author or news agency. All rights reserved.
We welcome the use of Petroleumworld™ stories by anyone provided it mentions Petroleumworld.com as the source. Other stories you have to get authorization by its authors.Your feedback is important to us!
We invite all our readers to share with us
their views and comments about this article.Write to editor@petroleumworld.com
Any question or suggestions, please write to:
editor@petroleumworld.com
Best Viewed with IE 5.01+
Windows NT 4.0, '95, '98 and ME +/ 800x600 pixels