The 1-3-6 Idea
Many a moon ago, a strange comment was made to me by what might be called a ’sage’ in the idea of trading in markets of all types. If it appeared that too much money was pouring into one particular investment or vehicle, then something was wrong with the efficient functioning of that market. Forever and a day I ignored this sage and probably should not have. Think about what we have witnessed since the great “crisis” began. In February of 2007 when the first cracks became evident that our subprime society was filled with cracks and that an earthquake was imminent with the failure of several medium sized mortgage lenders, the notion that we should expect an all out collapse was there and certain celebrity investors and talking heads made billions from the idiocy and misfortunes of those who thought that nothing could be whipped into something profitable and the residue they wiped on the curb by that fire hydrant was actually gold.
Oops again.
So when things started to shift violently, I started to listen to this sage who told me in 2007 “watch the short end” and no, that was not related to something pornographic or a hook-up with Tiger at a disco, this referred to the Treasury markets. When one looks at the charts for the three securities at the short end, the 1, 3, and 6 month bills, you understand as to what I am referring to and why I felt the need to call Glenn Beck last Thursday and warn him that something historic was on the verge of happening again.
