Judge Kramer is giving Samsung time to get another attorney up to speed, and taking into account the holiday period around Thanksgiving and Christmas – since a lengthy trial could be a burden to the jury.

Event driven traders moved quickly to the sidelines today, but nothing has fundamentally changed.  We detailed our bullish conviction here, and would certainly not recommend bailing out now.  In fact, today’s sudden pullback creates an excellent entry point for risk tolerant investors.  A settlement before trial remains a real possibility.  Rambus also has a disagreement with NVIDIA (NVDA) that could come to a head at a hearing in mid October.

Let the day traders purge, and hope some misguided investors drive up the short interest.  They are creating the perfect set-up for a monster move higher later this year.

Disclosure:  Long Rambus Common Stock

The problem is that investor buying has begotten more buying, and the tape is not matching the fundamentals.  If the only reason you are buying is that the herd is telling you the market leads the economy, then why was the S&P 500 at 1575 in October 2007?  That’s where the debate should begin and end.

The question is: how well was the market discounting the next 6-12 months back in Q4 2007?  Not so well!  The same may be true today.  The next question is: What about market efficiency?  The previous example proves the point.

Take any market…traders like to cite China and the Shanghai Index breathlessly these days, especially on the heels of a 100% surge this year alone.  But look farther back.  The Shanghai Composite Index traded to 6100 in late 2007.  It crated below 1700 last year.  Today it is around 2900, after nearly reaching 3500 two weeks ago!  Hello discounting market, hello efficiencies!!

The point of my rant is that the panic chase to buy stocks since mid-July and the level of bullishness are good reasons to fret.  The next time someone tells you how the market reflects future information, I’d caution you as to the reliability of such a notion.  Stocks move on perception as well as reality.

Sometimes perception is all that matters, until reality takes hold.  Right now the spin-doctors hope you rely on perception, in the sense that you must own stocks because the economy is getting better and the great recession ended three weeks ago!  How many times have you heard that in the past seven days?!

The recession may have indeed ended last month, but what happens if or when the economy pulls a W rather than a V?  The market is as much a casino as ever before, and you better not rely on certain viewpoints without thinking through the pros and cons before taking a position.

Frankly, the manic tendencies our market has faced these past two years (and likely well into the future) will dictate attention to a mixed type of portfolio.  It would contain loads of cash, a few targeted equity and fixed income securities, and a whole lot of patience.  Perception may not be reality, but as Warren Buffett likes to say, the market votes in the short run and weighs in the long run.  I plan to thrive in the long run and will manage accordingly.

Good luck out there.

The objective of SIVR is to track the performance of silver bullion.  The shares are backed by physically allocated bullion held by the custodian, HSBC Bank.  Each share will represent one ounce of silver.  Additional information can be found in the fact sheet and prospectus.

ETF Securities has filed for a host of new ETFs in the US as they seek to capitalize on the demand for commodity-based exchange-traded products.  On the surface, SIVR is a me too product.  Perhaps there are differences in terms of auditing, as the ETF Securities literature seems to play up the independent vault inspection report, and how one of the twice-a-year audits will be a “surprise audit” conducted by world renowned bullion assayers Inspectorate International.  

No matter what the material differences (if any) between SIVR and SLV turn out to be, we’ll watch from the sidelines for now to see if trading activity turns into something substantial or not.  We will be looking at average daily value traded (ADVT), which is a better indicator of activity than just volume alone.

Disclosure:  no positions

Note:  As originally posted, this article made reference to SLV representing 10 ounces of silver per share.  However, SLV had a 10:1 split one year ago (7/24/08) and now has only one ounce of silver per share.

On July 10^th, the S&P 500 traded in a range from 873 to 883 with a close around 879.  Today’s high was over 979 – almost exactly 100 points higher in nine trading days.  Call it a silky smooth 11% pop in less than two weeks.  Kowabunga!

Now mind you, if our vacation loving couple were net short, they’re crying over their empty Diet Coke cans.  However, if they’ve been invested, even conservatively, they’ll see a big increase in their net worth.  As an added bonus – their vacation paid is in full, with plenty left over!  Cha-Ching!

Now, here’s the rub.  What should Mr. and Mrs. Nuclear Parent do now?  All they read about in the financial press before vacation was something about a reverse head and shoulder pattern, support cracking, the market shaping up for a big downside move.  Now, the Sunday morning business section will be lathered with bullish spin – better-than-expected earnings, housing recovery, and Fed Chief Ben Bernanke’s magically delicious exit plan.  Go figure!

It’s the sign of the times.  We are now moving from over-sold to over-bought conditions in hours, not weeks or months.  Discussions about “the VIX,” bull/bear surveys, unemployment reports, corporate earnings, changes in the price of gold or oil are all becoming common in our hyperactive investing society.  We have engineered a bi-polar investing world!

Have the capital markets evolved from an investment organism into a trading organism?  Do prices reflect fundamentals, or is perception all that matters now?  There are no easy answers.  We are in a bi-polar world.

I think it makes sense, especially in this dangerous market, to maintain a disciplined approach, with heavy cash balances and a skeptical eye toward what the masses on Wall Street are pitching.  We’ve come a long way in a very short time.  And now we’ll hear how the train is leaving the station and you better not get left behind.  I’d be careful not to get caught up in the hype.

We’ve all seen firsthand how this market can swing violently up, down, and then back up again.  Don’t be so sure it’s a one-way ride to Dow 10,000 now.  Good luck.

The iShares MSCI ACWI Index Fund (ACWI) and Vanguard Total World Stock ETF (VT) are world stock market ETFs with global exposure to equities.  We featured ACWI here on its first day of trading back in March 2008.  It is an excellent product and has captured over $400 million in assets.  VT is slightly smaller but still doing well in the asset race.

There are some slight differences between the two.  VT’s expense ratio is 5 basis points less.  It also has exposure to seven more countries than the iShares product.  This is a minor point, however, since the top twenty countries represent approximately 95% of the index tracked for both funds.

ACWI is benchmarked to the MSCI All Country World Index, while VT tracks the FTSE All-World Index.  There are 2,416 holdings in the MSCI World Index, while the FTSE All-World has 2,757 components.  One key differential is that the iShares ETF attempts to track the index by using a sampling technique and holding just 702 securities (29%) as opposed to the Vanguard ETF which holds 2,748 securities (99%).

As for performance, since both are relatively new, we will look at YTD results thru 07/16/09.  ACWI is +10.2% on a total return basis (including dividends), compared to a +10.3% advance for VT.

For now, ACWI seems to have an edge in liquidity, with the average daily value traded (ADVT) running about three times higher than that of VT.  Checking bid/ask spreads a few times during the day reveals that they are pretty comparable.  

Both ACWI and VT should appeal to the investor seeking a one ticket/one-way ride on the global equity market train.  But if we have to declare which is best, we would have to give the nod to VT today.  Its lower expense ratio and lower potential tracking error (due to larger number of stocks) gives it a slight advantage for investors seeking to own the world.

Disclosure:  Our money management affiliate, Capital Cities Asset Management, was the first to buy 100 shares of ACWI on the day of its launch, and we still hold those shares today.

Merkel is on the tape with the following:

“What other central banks have been doing must be reversed. I am very sceptical about the extent of the Fed’s actions and the way the Bank of England has carved its own little line in Europe.  Even the European Central Bank has somewhat bowed to international pressure with its purchase of covered bonds.  We must return to independent and sensible monetary policies, otherwise we will be back to where we are now in 10 years’ time.”

To top it off, U.S. Federal Reserve Chairman Ben Bernanke told Congress it needs to cut spending and/or raise taxes and audaciously suggested the Fed will not monetize the federal debt.  Oil and gold sloughed off a one-day pullback and marched even higher on Thursday before retreating again today.  Treasury yields are soaring.

Commodity bulls should probably thank Merkel for pointing out the obvious and short-circuiting Wednesday’s commodity sell-off.  All that is forgotten now, as the uptrend for energy, ags, and metals is still generally intact.  The unemployment report is causing the dollar to catch a bid, but any pullback in the commodity space should be used as a buying opportunity. At the end of the day, the capital markets are the final judge, not any politician or elected official.

For now, the vicious move is over.  Trading in hard assets has been furious.  Commodity prices, from ags to oil to metals, have been on a tear.  This is a crowded trade in the short term.  Yes, large budget deficits, out-of-control spending, and banana republic-like tactics have pushed the US Dollar over the edge.  Commodity and Treasury prices now reflect those factors.  For those interested in the intermediate to longer-term view, I suggest you wait for the dust to settle before loading additional anti-dollar plays.  When Chinese officials pummel Secretary Geithner and the market sells off, it will be safer to re-establish your core positions.  It may also make the administration wish they had sent the t-bond salesman-in-chief instead.

We still favor the following securities and would be a buyer on pullbacks: Market Vectors-RVE Hard Assets Producers (HAP), iShares Silver (SLV), Marvet Vectors Nuclear Energy ETF (NLR), PowerShares DB US Dollar Index Bearish Fund (UDN), CurrencyShares Australian Dollar Trust (FXA), iShares COMEX Gold Trust (IAU), Goldcorp (GG), PowerShares DB Agriculture Fund (DBA), PowerShares DB Commodity Index Fund (DBC), and Fronteer Development (FRG).

Take advantage of the recent surge to stand down, and feel good about your portfolio.  Nothing goes straight up.  Any sector or security can decline ten percent in a blink.  With markets in a lather, the prudent trader knows to be cautious.  There will be a time to join the fun; it’s just not now.  Good Luck.

Disclosure: long many of the securities mentioned

Fortunately, some ETFs and ETNs are designed to exploit such an environment.  We have highlighted many of them here at investwithanedge.com.  Here are are two currency and two gold plays that will allow you to profit from the falling dollar.

PowerShares DB US Dollar Index Bearish Fund (UDN): This one is straight-forward.  It’s the inverse of the US Dollar Index – a basket of major currencies.  If the USD gains against the index, this ETF goes down.  When the Dollar loses, this baby goes up.  Any questions?  Good, you may proceed to the next level.

CurrencyShares Australian Dollar Trust (FXA): Getting long the Australian dollar is akin to being short the US Dollar, and you are also playing the commodity theme since Australia is rich in natural resources.  A slam dunk!

iShares COMEX Gold Trust (IAU): The traditional inflation hedge, and the bunker of choice when investors around the world seek safety from the greenback.  Gold is a must-own commodity in this difficult market.  Avoiding precious metals can be dangerous to your health.

Goldcorp (GG): As the dollar falls, gold will reflate.  Own one of the largest miners on the planet, with a portfolio of mining operations in SAFE parts of the world, i.e., primarily N. America.  GG is a company one can own with confidence and sleep well at night.

Finally, we would be remiss in not making sure you have oil and agriculture exposure when inflation kicks in.  If you want a fighting chance in the new economy, harness the horsepower of the ag space via PowerShares DB Agriculture Fund (DBA).  DBA gets you long corn, soybeans, sugar, and wheat.   The way to play oil and gas is thru the US Oil Fund (USO) and US Natural Gas Fund (UNG).

Bottom line:  the reckless stimulus and spending plans rolling out of the nation’s capital aren’t just driving the nation to the brink of bankruptcy: they’re sending the once-mighty U.S. dollar over the edge and into the woodshed.  This will inevitably create a surge in commodity prices as investors seek to store value in hard assets.  Nothing on Wall Street is bulletproof anymore, but a portfolio with anti-dollar currency plays, precious metals, agriculture, and oil/gas will give you a chance to survive the coming dollar melt-down.

Disclosure: Long UDN, various gold and oil exchange-traded funds, and mining equities.