After two weeks of travel - very stressful - I've returned to my turret and see the jizz [ that's a real word - a prior Word of the Day ! ] of the market as devastation in many stocks reminscent of a World War I battlefield after a thorough shelling and gas attack. Ugh !
Obviously, my moves to buy the big commercial bank stocks in my Alpha Fund was ... "early" at best. At worst, I suppose "stunk" fits. Other postions in the Alpha Fund, except GE, have performed rather well taking into account the trading adds at the lows earlier this year. Even though the Alpha Fund is designed to be concentrated in a few big positions ( < 10 ), some diversification is still crucial to prevent a really huge meltdown. Of course, limiting the Alpha Fund to about 15-20% of my holdings helps, too. This is risk and money management.
What now ?
I will continue to play out the hand using meliorism. Some new money coming in a few days will be deployed into my stocks that are now ... uh ... "bargains". Oh, I remember well those quotes of Jesse Livermore scoffing at the public buying "bargains". But my long term thesis still seems correct, viz., that the big banks will gain share and profitability vs. the other parts of the financial sector. Also, I need to seek a few smaller stocks with really good growth prospects.
I wonder if this news was overlooked on Friday: "WASHINGTON: Sales of existing US homes rose a surprising 2.0 percent in May from April amid falling home prices, the National Association of Realtors (NAR) said on Thursday. The improved monthly data for the battered real-estate sector offered a fleeting glimpse of relief from a severe and prolonged slump that has resulted in spiking foreclosures and credit turmoil. " Uh ... who was it that forecast a housing bottom in Spring ? Uh ... I think that name began with "Bu..." Hehehe, and it wasn't "Butthead". I also read in the Financial Times that London's regulators are forcing hedge funds to disclose large short positions much faster. Will our SEC follow ? Short interest continues to grow, so I suspect the beefers will continue to push the market down.
Inflation
Gosh, I thought that "inflation" meant a broad increase in prices. In the late 1970s, housing costs increased dramatically as inflation was rampant due to excessive money printing by Jimmy Carter's Fed. This weekend I got my real estate tax bill and it was down by 6.8%. So that prompted me to compute my actual housing costs. This is mostly mortgage interest and principal, taxes and insurance. Bunkerman has a fixed rate, 30 year mortgage at 5.41%, so that cost has not changed. Real estate taxes are down, as mentioned. Insurance, including an umbrella liabiliy policy and earthquake insurance, is down by 12.7%. Combining in actual $ amounts, the total is down by 3.42% year over year. That is strange, for a year of such rampant "inflation".
Reading the history of the Mameluk empire in the period from about 1200 AD to 1516 AD, I noted that the cost of living in Cairo was increasing dramatically in the late 1400s ... before 1492. Gosh, I wonder how that Spanish gold affected prices before the discovery of America by Columbus - a time warp ? Ok, enough jest. But the point is that blithe quips about inflation and its causes in the past might fall apart when actually looking at historical facts. That same applies to the present.
Checking gasoline demand from my commodity research site, the public's demand for gasoline has sharply fallen. Summer "driving" season seems to be gone. Year over year demand is about 3% lower and the usual hump from June to late August might not exist this year. Recent demand is about the same as last December. Since the US is the largest consumer, overtime this will have an effect. If only Congress would kick the pension funds out of the futures market and into the real, physical oil markets where they belong. Let them buy physical oil in the ground, not futures or other derivatives with limited natural hedgers.
Word of the Day
This week I will focus on "syn-" words. That's "syn-", not "sin" for those readers thinking about that other, slang, meaning of "jizz".
"Syn-" is a combining form to make compound words, being a Latinized form from Greek.
Syn- means together, similarly, alike.
"Synchronic" - adjective {$10]
Synchronic means describing a subject as it exists at one point in time; it's opposite is "diachronic"
Sentence: A simple, synchronic summary of the US presidential campaign for 2008 is a slugfest between Obama and Big John.
[Did you notice that alliteration in Bunkerman's prose ? Hehe ...]
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37 comments:
gud to see u made it back from your journey.
BILLIONAIRE investor Warren Buffett said today the United States was experiencing "exploding" inflation amid a slowing economy.
The chairman and chief executive of Berkshire Hathaway said the world’s biggest economy was in the middle of a period of stagflation and it might get worse.
"I think we are in the middle of it," he told Bloomberg TV, adding he's uncertain when that will end, "maybe not even next year."
He told the Fox Business Network the US was experiencing "exploding" inflation, matched with an economy slowing at an even more pronounced rate and a jobless rate likely to go higher.
In an interview with CNBC, Mr Buffett also said the Federal Reserve had to balance its dual role of controlling inflation while promoting growth.
Speaking just hours before the Fed announced it had kept interest rates steady at 2 per cent for the first time since last year and issued its policy statement, Mr Buffett called on the central bank to prioritise responses to rising prices and the "weakening" economy.
He also said the reasons for soaring oil prices were largely supply and demand, not speculation.
so please explain where mister buffett is misinformed or has misunderstood (new word created by roger clemens) staggflation and oil?
bman there were 2 homie CC last week. neither company sees a bottom this yr, NOT EVEN CLOSE.
there was overwhelming data to support housing is still falling, but once again u find the one data point that sorta fits your thesis.
like on stagger lee to quote another classic.
"well u aint gonna learn what you dont wanna know"
if buffett sees stagger lee across his business's, how can you hang onto "core is right"?
article in nytimes about no more friday and saturday night cruising in cars by hi-school kids.......$4gas took care of that
i'd love to see gas change our wasteful habits for good
PS.....frosty loves cruising
The Bman's synchronic view on the state of the US economy can best be described as 'baloney'.
'the big banks will gain market share'
the problem is the 'market'
we had a once in a lifetime housing boom that the banks decided to give everyone who had a heartbeat a home loan creating bogus earnings
that will happen again......but i'll be long dead when it does
Bman are you against the long-only oil etf's? some are arguing that they are takin out some risk from oil and the fund managers are takin advantage of that........i don't understand it
if you buy a futures contract and roll it over before it expires.....isn't that the same thing as bein long oil etf?? so how are oil etf's bad then......am i missing something
PS.....this is not a knuckle ball.....it's a legit question
come on bud, u grew up in the city.
if u grow up in the burbs
then
article in nytimes about no more friday and saturday night cruising in cars by hi-school kids.......$4gas took care of that
i'd love to see gas change our wasteful habits for good
then thats all u have.
i guess they can just find the parents in town that think it is ok to let kids party in the basement, but i still think teenagers shud be drinking in the woods, around a fire!
pickens and buffett say oil prices r demand related.
DC blames speculation.
who to believe?
well since DC is NEVER right..............
Obama gets Clark to do the dirty work and attacks McCain's military service....promise change...but the game remains the same.....pftttttt
"housing has bottomed"
pass the cheeba, baby
wierd ... "SIA says worldwide chip sales up 7.5% in May"
I thought the world was ending ... why are companies buying chips.
homies will be last to see anything since their developments in exurbia was permanently gutshot due to gasoline commute costs.
re Buffet: I never believe nor trust prophets or seers. Just facts.
one needs a year of growth under 2% for "stagnation" - otherwise it's just a slowdown.
Words matter.
a long only oil EFT just buys futures which have a short for every long.
That is in contrast to the gold ETF that really buys physical gold.
Yes, oil futures and any other futures EFTs should be prohibited.
being permanently long a futures contract via rolling still requires someone to be permanaently short. Who ?
That is not the same as buying physical timberland or even investing in oil wells.
of course oil price rise is "related" to demand .. big deal ... "related" is a big tent.
But current price rises are pension fund investment bubble.
Ditto in some other commodities.
Bunkerman it seems mern is accusing you of data mining...how do you respond sir?
that usage is ok, Bud re synchronic, but the "on the state" is redundant, as "synchronic" covers that.
A view of how the US economy got here over the past eight years might be a "diachronic" view. That would bring in mern's Elmer beef, etc.
"Diachronic" refers to a subject's development, not just the point in time which is it's "state".
Jim Rogers, who has been short Citigroup for years now, said he would consider covering his short when the stock reaches $5...
If there is a better forecaster/investor at recognizing and capturing longer term trends/moves, I'd love to see him....eventhough Bud's favorite reverend used to downplay Rogers and call him "overrated"...
Hmmm ... how is it "data mining" to expect it, then have it happen ?
What did I leave out that contradicts my point, without a good reason.
I never thought new home sales would start improving or that homies would improve. Homies need to go out of business to stop building anything new untl the existing inventory is well down.
Not data mining, just good reasoning.
Btw, that is a "logos" argument - a reasoned, logical argument, not a "pathos" or a "ethos" argument. Hehe, I'm learning terms of rhetoric
All the illogical whining about oil prices and inflation is a "pathos" argument, i. e. an emotional argument.
And citing Boone or buffet is a "ethos" argument, re deferring to "character".
logos, pathos, ethos are Greek terms from rhetoric, but are English now, being in the Oxford English Dictionary
Hmmm that could be a blog topic later this week, perhaps.
;-)
uh mern ... Rogers was wrong for over a decade in the 1980s
So Rogers is right now re commodities, but wrong in the 1980s and early 1990s. Hmmm 50:50 record ... isn't that a coin flip ?
;-)
the american flag wears a bunky pin.
frosty come out of the closet yet?
guess all these rumors are from short beefers wanting to window dress and get a bigger fee for Q2.
well Bman....the beefer shorts do deserve big fees
they have done very well for their clients
in fact beefers who listened to me ( 'amercan banks are a sham.......armageddon is coming)
made a killing in Q2
'housing has bottomed'
lmaooooooooooooooooooooooo
I'm always happy to see "people" make money, Bud.
That's people, not beefers.
;-)
jimmy rogers?
huh?
i have never mentioned him.
cnbc poll, americans believe inflation is going up at 11%.
perception is reality.
core is wrong, very wrong.
for anyone thinking housing bottomed today, u r disconnected from reality.
i am looking at a beautiful house (for an Investment) on the watter in apollo beach for 359. was over 800k 2 yrs ago.
mite put a bid in at 300 and see what happens.
there were probably 20 housing data points last week including 2 quartely updates. i know these calls well, like the semi caps guys. i agree they dont EVER see the bottom, but at the bottom they sure as hell dont say shit like, this is just the begining, yada yada yada.
i suppose 1 out of 20 was ok, but to focus on that makes as much sense as using the UK's retail sales to suggest the US consumer is just fine.
and if it not stagflations fault the dow just went from 13k to 11k while the fed eased more aggresively than ever before, then what caused this selloff?
maybe the market is pricing in what i guaranteed in feb, an OBAMA win in november.
um, thats a done deal. mccain will lose, for better or worse. he is too close with bush, and by the time november rolls around the economy and the wars will be going so bad, OBAMA wins in a LANDSLIDE.
he sux, but better get used to him.
we r going black!
liz ann sonders says this is a oil bubble.
lol, u know it aint over.
one reason she is chief investment stragiest at scwab and not me.
i am not a hot blond.
that simple!
if i was, i wud be running the motherships portfolios.
pm post indeed...misplace your beads.
in 2002 mister buffett predicted a range bound S&P for the decade.
a gud call or no?
he also called deriviatives financial WMD's
a gud call or no?
he laffed at the tech bubble, and while i made a killing, my best friend killed himself in 2001 becuase he did not deploy risk management techniques.
now he is singing stagger lee louder than anyone, even bill gross..... i was stunned.
i wud not igore that guy unless my NW was around 20 mil.
so u can ignore him Bman, but under 20 mil, u wud be fool not to listen.
nope bob, i decided it is a very bad idea to post at work.
plus i am getting very busy.
i guess that tsuanmi is hitting.
on a side note, i think, i punted the worden, for real.
i hope women in the mid 20's still like jerks like me, becuase im headed back out there. shit!
9 yrs down the drain, but i realized she does not love and is only going through the motions. i know she isnt cheating, i thought so, spent a few bucks, nope.
we just have nothing in common.
i need a crunchy, hot, freak that is about 10 yrs younger than i.
where i can find that.
shows!
i shud have always stuck with a head. it is just such a part of my soul, if u cant go there or watch football, WTF?
and i just spent 7 yrs watching fucking american idol!
i mite be most pissed about that!
oops, mfl mentioned Jimmy Rogers ... sorry mern .. it was the mmmm's
girls in their 20's do..women dont.....(know what Im sayin?..lol)
range bound for a decade ?
uh, in 2002 S&P was under 800 ... five years late it hits over 1500 ... that's a "range-bound" market ?
strange "range"
tech bubble ... gosh, he agreed with me.
ditto derivatives.
I always listen ... and think.
Buffet is not a god nor perfect ... maybe he's right this time, but if the world is ending, why is he buying all that stock ?
hmmm my father-in-law lives in Apollo Beach.
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