I just heard a Russian billionaire say he paid $200,000 to go to the Davos conference. Amazing.
Illinois governor impeached.
Bears attacked in force yesterday.
Obama attacks Wall Street bonuses.
Most of House "stimulus" bill is crap - aid to states to "replace" their spending is NOT stimulus.
I hope Senate fixes it. Pelosi is soooo bad - a partisan hack. Obama needs to show some leadership on it. he's only got one chance, or it becomes his mess (politically).
It's raining layoffs.
I started working on my French vocabulary at 4AM this morning and learned some "interesting" French terms. They have a very colorful language. I found them by looking up the term for "bolt" and following the chain of connected words. Hehe.
Word of the Day
"Diglot" - adjective & noun [$100]
Diglot means (adjective) bilingual; (noun) a bilingual book or edition. I suppose a bilingual person could be a "diglot", too.
Sentence: Will Bunkerman successfully become a diglot by learning French, or will he fail ? Time will tell. Perhaps if this blog became a diglot blog, it would help him. Thinking ... Maybe I'll try one sentence a day for awhile as a motivational force for learning.
Friday, January 30, 2009
Thursday, January 29, 2009
More Davos Crap
It's endless on Babblevision and Blabberg. Davos drivel. I wonder why the snow doesn't melt with all that hot air being pumped out ?
Yesterday the Chinese leader, Wen, and the Russian leader, Putin, lectured the US and criticised the western system. Uh ... those are the leaders of two corrupt gangocracies. That's like Al Capone lecturing Roosevelt on how to run a nation. Or Carlo Gambino lecturing John Kennedy. Sheesh. I suppose one should just politely ignore them, but "stuff it" comes more to mind.
The system of freedom and private property works superbly, but the tendency for excess accumulations of wealth and power by a few needs to be somehow properly directed - social pressure would be best - and their tendencies to create aristocracies stopped. And their raiding parties need to be squashed.
For example, what philanthropist funds artists or mathematicians or writers or philosophers to increase human knowledge ? Mostly they pay big $ to museums to buy old masters or build new wings. Nothing new is created. Davos is full of them - those wanting a big monument to themselves. A few do good things to increase human knowledge. But just a few.
For example, a program to teach young children foreign languages would be incredibly valuable. The young can learn languages so easily. But is that done ? No.
I again reproduce the quote from Thucydides that sparked my thinking on this matter - I first read it referenced in Erasmus' "Praise of Folly". The quote is from the famous oration of Pericles.
"We cultivate refinement without extravagance and knowledge without effeminacy; wealth we employ more for use than for show, and place the real disgrace of poverty not in owning to the fact but in declining the struggle against it."
Unfortunately, too much wealth has been used to buy estates in the Hamptons or invested in hedge fund speculations. And not enough has been productively invested or used to increase human knowledge. That is the real problem.
Markets
A good day yesterday. Today is starting weak. The bears are sure to attack. Obama Fund and Fido Fund are fully invested now. Waiting.
Word of the Day
"Zaftig" - adjective [$100] slang, from Yiddish
Zaftig means 1. (of a woman) having a pleasantly plump figure; 2. full bodied, well-proportioned.
Sentence: Famous zaftig women of the 20th century include Marilyn Monroe and Sofia Loren. Before that, Lillian Russell and Josie Mansfield were zaftig femme fatales.
Yesterday the Chinese leader, Wen, and the Russian leader, Putin, lectured the US and criticised the western system. Uh ... those are the leaders of two corrupt gangocracies. That's like Al Capone lecturing Roosevelt on how to run a nation. Or Carlo Gambino lecturing John Kennedy. Sheesh. I suppose one should just politely ignore them, but "stuff it" comes more to mind.
The system of freedom and private property works superbly, but the tendency for excess accumulations of wealth and power by a few needs to be somehow properly directed - social pressure would be best - and their tendencies to create aristocracies stopped. And their raiding parties need to be squashed.
For example, what philanthropist funds artists or mathematicians or writers or philosophers to increase human knowledge ? Mostly they pay big $ to museums to buy old masters or build new wings. Nothing new is created. Davos is full of them - those wanting a big monument to themselves. A few do good things to increase human knowledge. But just a few.
For example, a program to teach young children foreign languages would be incredibly valuable. The young can learn languages so easily. But is that done ? No.
I again reproduce the quote from Thucydides that sparked my thinking on this matter - I first read it referenced in Erasmus' "Praise of Folly". The quote is from the famous oration of Pericles.
"We cultivate refinement without extravagance and knowledge without effeminacy; wealth we employ more for use than for show, and place the real disgrace of poverty not in owning to the fact but in declining the struggle against it."
Unfortunately, too much wealth has been used to buy estates in the Hamptons or invested in hedge fund speculations. And not enough has been productively invested or used to increase human knowledge. That is the real problem.
Markets
A good day yesterday. Today is starting weak. The bears are sure to attack. Obama Fund and Fido Fund are fully invested now. Waiting.
Word of the Day
"Zaftig" - adjective [$100] slang, from Yiddish
Zaftig means 1. (of a woman) having a pleasantly plump figure; 2. full bodied, well-proportioned.
Sentence: Famous zaftig women of the 20th century include Marilyn Monroe and Sofia Loren. Before that, Lillian Russell and Josie Mansfield were zaftig femme fatales.
Wednesday, January 28, 2009
Arghhhhhhh ...
Both Babblevision and Blabberg are putting these Davos suits on TV endlessly. Hello ... they are part of the problem, not the solution.
European markets are up solidly and US futures are strong, reportedly on talk that Obama is closer to creating a huge "bad bank" to take crappy assets off the banks books. Good, if they can work it out.
I have early tasks to do before the snowstorm here, hence a very short post.
Word of the Day
"Bete noire" - noun [$10]; French term absorbed into English; from the card file.
Bete noire means a person or thing strongly detested or avoided.
Sentence: One does not have to be perspicacious to recognize that Bunkerman's bete noire is the beefer - the big evil fund, whether it's a hedge fund or a very active money manager.
Literally, in French, "bête noire" means "black beast"; the idiom means one's pet hate or pet peeve.
European markets are up solidly and US futures are strong, reportedly on talk that Obama is closer to creating a huge "bad bank" to take crappy assets off the banks books. Good, if they can work it out.
I have early tasks to do before the snowstorm here, hence a very short post.
Word of the Day
"Bete noire" - noun [$10]; French term absorbed into English; from the card file.
Bete noire means a person or thing strongly detested or avoided.
Sentence: One does not have to be perspicacious to recognize that Bunkerman's bete noire is the beefer - the big evil fund, whether it's a hedge fund or a very active money manager.
Literally, in French, "bête noire" means "black beast"; the idiom means one's pet hate or pet peeve.
Tuesday, January 27, 2009
The Arrogance of Wealth and Power II
[This is adapted from the blog post of last year at this time. I was surprised how few changes I had to make to update it.]
“Davos" is the epitome of that syndrome. Rich and powerful people meet in a resort to discuss the "world economy", viz., how they can control the common man and bend him to their wishes. Is increasing human freedom a pillar of their goals ? ... No. Is increasing human culture and knowledge a goal ? ... No. They network among each other to exchange thinking on how to maintain and increase their control over ... the rest of us. Every year Davos makes me want to puke.
Lately I have read in the WSJ, FT, the BBC online, Le Monde and Le Figaro that some in government want to "change capitalism" due to the financial crisis. Hmmm, the world's governments want to tell us how to change "capitalism". I don't think they really know what the word means. That word, "capitalism" is unfortunately a Marxist word for an economic system in contraposition to socialism and communism. "Capitalism" is not simply a system with private capital employed for increasing wealth, but is a label for the entire free private property system where a free man or woman can "own" things and do with them what they please. What people think of as "capitalism" is an effect of this human freedom which developed in the early 19th century as free people found ways to band together and use resources more effectively by sharing and exchanging risks and ideas.
So efforts to "change capitalism" are simply stupid. What does that mean ? If it means anything other than trying to get leaders to "freely" adjust business practices, then it is really a limitation on human freedom. Now some limits on human freedom are fine with me, namely those that prevent the rich & powerful from using their positions to dominate the common man and become new feudal lords. Now huge pools of money from the rich raid companies and small nations like the Vikings of the 9th century. They manipulate the dynamics of markets to create fear and intimidate the common man. And panics of the rich from their unproductive speculations trample the lives and livelihoods of the common man. That's how feudalism began ... fighting men used their skills to dominate farmers into giving up their own freedom and lands and accepting "protection".
So is Davos about actually helping people .. or is it about using and creating fear and grabbing power so "they" can become new Dukes & Barons ? I think it's a bit of both, but the well-meaning fools seeking the former are being used as cover by those knaves seeking the latter. Are restrictions on the rich and powerful a subject at Davos ? What about regulation of hedge funds ? If they want to discuss how to control themselves, fine, that's an admirable topic. Otherwise, they should shut up and leave us alone.
Word of the Day
"Sempiternal" - adjective [$10]; literary; a Mencken word
Sempiternal means eternal, everlasting.
Sentences -
The Mencken usage (from the Truman Presidential election campaign in 1948]: "Every one of them (voters), he (Truman) figured, was itching for something, and he made his campaign by the sempiternal device of engaging to give it to them."
Bunkerman: The sempiternal desires of the rich and powerful for more wealth and power are the psychological cause of their recurrent efforts in history to create an aristocracy to dominate a nation. In many civilizations, this led to the downfall of the civilization as the aristocracy weakened and subjugated the foundational pillars of the its strength, viz., the common man and woman. Instead of interfering with enterprise, central governments should put reasonable limits on that budding aristocracy and prevent it from gaining more wealth and power. The common man and woman should be completely free to pursuit their happiness.
“Davos" is the epitome of that syndrome. Rich and powerful people meet in a resort to discuss the "world economy", viz., how they can control the common man and bend him to their wishes. Is increasing human freedom a pillar of their goals ? ... No. Is increasing human culture and knowledge a goal ? ... No. They network among each other to exchange thinking on how to maintain and increase their control over ... the rest of us. Every year Davos makes me want to puke.
Lately I have read in the WSJ, FT, the BBC online, Le Monde and Le Figaro that some in government want to "change capitalism" due to the financial crisis. Hmmm, the world's governments want to tell us how to change "capitalism". I don't think they really know what the word means. That word, "capitalism" is unfortunately a Marxist word for an economic system in contraposition to socialism and communism. "Capitalism" is not simply a system with private capital employed for increasing wealth, but is a label for the entire free private property system where a free man or woman can "own" things and do with them what they please. What people think of as "capitalism" is an effect of this human freedom which developed in the early 19th century as free people found ways to band together and use resources more effectively by sharing and exchanging risks and ideas.
So efforts to "change capitalism" are simply stupid. What does that mean ? If it means anything other than trying to get leaders to "freely" adjust business practices, then it is really a limitation on human freedom. Now some limits on human freedom are fine with me, namely those that prevent the rich & powerful from using their positions to dominate the common man and become new feudal lords. Now huge pools of money from the rich raid companies and small nations like the Vikings of the 9th century. They manipulate the dynamics of markets to create fear and intimidate the common man. And panics of the rich from their unproductive speculations trample the lives and livelihoods of the common man. That's how feudalism began ... fighting men used their skills to dominate farmers into giving up their own freedom and lands and accepting "protection".
So is Davos about actually helping people .. or is it about using and creating fear and grabbing power so "they" can become new Dukes & Barons ? I think it's a bit of both, but the well-meaning fools seeking the former are being used as cover by those knaves seeking the latter. Are restrictions on the rich and powerful a subject at Davos ? What about regulation of hedge funds ? If they want to discuss how to control themselves, fine, that's an admirable topic. Otherwise, they should shut up and leave us alone.
Word of the Day
"Sempiternal" - adjective [$10]; literary; a Mencken word
Sempiternal means eternal, everlasting.
Sentences -
The Mencken usage (from the Truman Presidential election campaign in 1948]: "Every one of them (voters), he (Truman) figured, was itching for something, and he made his campaign by the sempiternal device of engaging to give it to them."
Bunkerman: The sempiternal desires of the rich and powerful for more wealth and power are the psychological cause of their recurrent efforts in history to create an aristocracy to dominate a nation. In many civilizations, this led to the downfall of the civilization as the aristocracy weakened and subjugated the foundational pillars of the its strength, viz., the common man and woman. Instead of interfering with enterprise, central governments should put reasonable limits on that budding aristocracy and prevent it from gaining more wealth and power. The common man and woman should be completely free to pursuit their happiness.
Monday, January 26, 2009
Another Reader Revealed ...
Perusing this morning's Financial Times online, I saw evidence this blog has another silent reader. It's really remarkable how much one can read here in advance of other more prominent people saying the same thing. How can I conclude otherwise than they read this blog ? [joke]
***quote begins ***
The financial crisis has exposed greed, predatory behaviour and conflicts of interest in Wall Street banks and investment firms, one of the top investors in the US has said. David Swensen, the chief investment officer of Yale University’s endowment who has achieved near-legendary fame, said he hoped some “moderation of compensation” on Wall Street would be a result of the crisis.
He said: "Even if the returns they generated were real, they were paid too much, and in the context of the absolutely disastrous performance of these institutions their pay was obscene".
Fortress, Goldman Sachs, Microsoft, Morgan Stanley and large buy-out funds are among those which he criticises for self-interested actions at the expense of their investors.
He said: “Look at investment banks and how they price swap transactions. Instead of being symmetric and using the same discount rate when selling and buying, they will say that on the cash flows you owe us, we’re going to use a low discount rate, and on the cash flows we owe you, we’re going to use a high discount rate.
“It’s stunning that anyone could say something like that with a straight face.
“This bad, predatory behaviour – unilaterally changing marks, asking for more collateral, etc – it seems the financial crisis stripped off this veneer and caused them all to behave in more venal ways.
“The overwhelming number of investors fail because the fees charged by the investment management industry are egregious relative to the amount of value that is added. It is really quite stunning.“
Mr Swensen said nobody should use hedge funds of funds, which take investor money and, for an additional fee, allocate it to a range of hedge funds.
“You can’t make sensible investment decisions with fund of funds or consultants. Madoff is just a great example of the dangers of making an investment and not understanding where the money is going.”
He said the $17bn Yale endowment was shifting as much available money as possible into distressed debt.
*** quote ends ***
More ...
Davos is coming .... arghhhhhhhhh. I think I have an old post about that rat's nest.
Actions - The Fido Fund
I re-bought some GE on Friday around 12. This is a very long term account - not part of Obama Fund. It's now fully invested until I put more money into it in the Spring. The fund holds CCJ, RIG, JPM, GE, DVN, AAPL, and GOOG. Those are my old favorites - so I've named the fund the Fido Fund, after my first dog, Fido.
Word of the Day
"Flagitious" - adjective [$10]; a reprise of a good one.
Flagitious means criminal, utterly villianous.
Original usage noted from a super book, "The Battle for North America" by Francis Parkham
"The Duke of New Castle used flagitious patronage to win elections."
Sentence: That Wall Street trading desks have inherently flagitious behavior has been known for years. The entertaining book, "Liar's Poker", had numerous sketches from the venal 1980s firm, Salomon Brothers. David Swensen in today's FT mentions more modern versions of Wall Street sleaze in the swaps markets.
***quote begins ***
The financial crisis has exposed greed, predatory behaviour and conflicts of interest in Wall Street banks and investment firms, one of the top investors in the US has said. David Swensen, the chief investment officer of Yale University’s endowment who has achieved near-legendary fame, said he hoped some “moderation of compensation” on Wall Street would be a result of the crisis.
He said: "Even if the returns they generated were real, they were paid too much, and in the context of the absolutely disastrous performance of these institutions their pay was obscene".
Fortress, Goldman Sachs, Microsoft, Morgan Stanley and large buy-out funds are among those which he criticises for self-interested actions at the expense of their investors.
He said: “Look at investment banks and how they price swap transactions. Instead of being symmetric and using the same discount rate when selling and buying, they will say that on the cash flows you owe us, we’re going to use a low discount rate, and on the cash flows we owe you, we’re going to use a high discount rate.
“It’s stunning that anyone could say something like that with a straight face.
“This bad, predatory behaviour – unilaterally changing marks, asking for more collateral, etc – it seems the financial crisis stripped off this veneer and caused them all to behave in more venal ways.
“The overwhelming number of investors fail because the fees charged by the investment management industry are egregious relative to the amount of value that is added. It is really quite stunning.“
Mr Swensen said nobody should use hedge funds of funds, which take investor money and, for an additional fee, allocate it to a range of hedge funds.
“You can’t make sensible investment decisions with fund of funds or consultants. Madoff is just a great example of the dangers of making an investment and not understanding where the money is going.”
He said the $17bn Yale endowment was shifting as much available money as possible into distressed debt.
*** quote ends ***
More ...
Davos is coming .... arghhhhhhhhh. I think I have an old post about that rat's nest.
Actions - The Fido Fund
I re-bought some GE on Friday around 12. This is a very long term account - not part of Obama Fund. It's now fully invested until I put more money into it in the Spring. The fund holds CCJ, RIG, JPM, GE, DVN, AAPL, and GOOG. Those are my old favorites - so I've named the fund the Fido Fund, after my first dog, Fido.
Word of the Day
"Flagitious" - adjective [$10]; a reprise of a good one.
Flagitious means criminal, utterly villianous.
Original usage noted from a super book, "The Battle for North America" by Francis Parkham
"The Duke of New Castle used flagitious patronage to win elections."
Sentence: That Wall Street trading desks have inherently flagitious behavior has been known for years. The entertaining book, "Liar's Poker", had numerous sketches from the venal 1980s firm, Salomon Brothers. David Swensen in today's FT mentions more modern versions of Wall Street sleaze in the swaps markets.
Friday, January 23, 2009
It's Nice To Be Proved Right
When one expresses rather blunt opinions about subjects in the public arena, "proof" is quite often elusive. The strength of one's arguments, their structure and rhetorical power can carry the battle - for awhile. So when examples comes to light from the news, it's gratifying when they provide factual proof for one's arguments.
One past example was the discovery that Neptune is warming ... and since no SUVs are on Neptune, clearly Man is not the cause. Something else is causing Neptune to warm, and by simple interpolation, something else is making the Earth warm. This goes to prove with hard fact my statements that Man is not causing the Earth to warm.
Today's WSJ brings proof of another broad statement, viz. that Congressional earmarks are payoffs or bribes.
"US Raids Contractors Aided By Murtha"
" Federal agents raided two small Pennsylvania defense contractors that were given millions of dollars in federal funding by Rep. John Murtha, chairman of the defense appropriations committee and one of the most powerful men in Congress. Kuchera Industries and Kuchera Defense Systems shut down for the day after the raid by officers from the Defense Criminal Investigative Service, the Federal Bureau of Investigation and an Internal Revenue Service criminal unit.
" In a statement Thursday night, the Pittsburgh U.S. attorney confirmed that offices in Windber, Johnstown and Summerhill were raided "as part of an ongoing investigation." A second federal official said that ties to lawmakers would be examined as part of the probe.
A spokesman for Mr. Murtha, Matthew Mazonkey, said, 'We know nothing more than what we've read in the press today,' referring to an initial report on the Web site of the Tribune-Democrat newspaper in Johnstown. Messages left last night for Kuchera executives weren't returned.
" Pentagon auditors have been looking at the use of earmarks, which are special-interest spending items directed to a specific company by members of Congress. An Oct. 30, 2007, page-one story in The Wall Street Journal identified Rep. Murtha as the largest earmarker in the House."
It's nice to be proved right.
Markets
Possible bad day coming - futures are down bigtime and Europe is down, too. I suspect hedge fund liquidations starting in Europe. The signs are similar to days from the fall when we now know that was occurring.
Word of the Day
"Rimose" - adjective [$10]; A Mrs. B word
Rimose means (especially Botanical uses) full of chinks or fissures; covered with cracks.
Sentence: The rimose edifice of Congressional earmarking practice might soon crumble as investigators find evidence of criminal payoffs and bribes of Members. The earmarks themselves are a roadmap for investigators.
One past example was the discovery that Neptune is warming ... and since no SUVs are on Neptune, clearly Man is not the cause. Something else is causing Neptune to warm, and by simple interpolation, something else is making the Earth warm. This goes to prove with hard fact my statements that Man is not causing the Earth to warm.
Today's WSJ brings proof of another broad statement, viz. that Congressional earmarks are payoffs or bribes.
"US Raids Contractors Aided By Murtha"
" Federal agents raided two small Pennsylvania defense contractors that were given millions of dollars in federal funding by Rep. John Murtha, chairman of the defense appropriations committee and one of the most powerful men in Congress. Kuchera Industries and Kuchera Defense Systems shut down for the day after the raid by officers from the Defense Criminal Investigative Service, the Federal Bureau of Investigation and an Internal Revenue Service criminal unit.
" In a statement Thursday night, the Pittsburgh U.S. attorney confirmed that offices in Windber, Johnstown and Summerhill were raided "as part of an ongoing investigation." A second federal official said that ties to lawmakers would be examined as part of the probe.
A spokesman for Mr. Murtha, Matthew Mazonkey, said, 'We know nothing more than what we've read in the press today,' referring to an initial report on the Web site of the Tribune-Democrat newspaper in Johnstown. Messages left last night for Kuchera executives weren't returned.
" Pentagon auditors have been looking at the use of earmarks, which are special-interest spending items directed to a specific company by members of Congress. An Oct. 30, 2007, page-one story in The Wall Street Journal identified Rep. Murtha as the largest earmarker in the House."
It's nice to be proved right.
Markets
Possible bad day coming - futures are down bigtime and Europe is down, too. I suspect hedge fund liquidations starting in Europe. The signs are similar to days from the fall when we now know that was occurring.
Word of the Day
"Rimose" - adjective [$10]; A Mrs. B word
Rimose means (especially Botanical uses) full of chinks or fissures; covered with cracks.
Sentence: The rimose edifice of Congressional earmarking practice might soon crumble as investigators find evidence of criminal payoffs and bribes of Members. The earmarks themselves are a roadmap for investigators.
Thursday, January 22, 2009
Strangeness
I thought the world was ending ...
AAPL reports good numbers, profit gains year over year. Yes, I said "gains".
Lately, IBM, UTX and BNI all had good numbers. The "real economy" seems OK for well run companies.
For poorly run companies though, the pain is great as prior sleaze and fat now bear on them.
By the way, why are British stock analysts so much more reasoned and well-spoken ? They seem to be able to do better analysis and articulate their opinions better. They provide plenty of facts to buttress their cases. Quite puzzling ...
Sleaking of sleaze, Merrill Lynch paid out $4 billion in "bonuses" just before the sale to BAC closed. So the firm loses untold billions and no one is responsible. Amazing greed and sleaze - sheer looting. Why is John Thain still at the firm ?
Word of the Day
"Dissentient" - noun and adjective [$10]; A Mencken word.
Dissentient means (adjective) disagreeing with the majority or official view; (noun) a person who dissents.
Sentence: Bunkerman seems to be quite the lone dissentient with his conclusions that hedge fund rapine bear raids and subsequent panic selling caused the recession that began strongly in midsummer and accelerated in October. The principle problem was the massive concentration of monies in unproductive hedge fund speculation instead of productive investments.
AAPL reports good numbers, profit gains year over year. Yes, I said "gains".
Lately, IBM, UTX and BNI all had good numbers. The "real economy" seems OK for well run companies.
For poorly run companies though, the pain is great as prior sleaze and fat now bear on them.
By the way, why are British stock analysts so much more reasoned and well-spoken ? They seem to be able to do better analysis and articulate their opinions better. They provide plenty of facts to buttress their cases. Quite puzzling ...
Sleaking of sleaze, Merrill Lynch paid out $4 billion in "bonuses" just before the sale to BAC closed. So the firm loses untold billions and no one is responsible. Amazing greed and sleaze - sheer looting. Why is John Thain still at the firm ?
Word of the Day
"Dissentient" - noun and adjective [$10]; A Mencken word.
Dissentient means (adjective) disagreeing with the majority or official view; (noun) a person who dissents.
Sentence: Bunkerman seems to be quite the lone dissentient with his conclusions that hedge fund rapine bear raids and subsequent panic selling caused the recession that began strongly in midsummer and accelerated in October. The principle problem was the massive concentration of monies in unproductive hedge fund speculation instead of productive investments.
Wednesday, January 21, 2009
More Ughhhhh
The positive reversal of late last week was cancelled along with the Bush presidency yesterday. Strong, real selling came in due to the surprise losses at State Street Bank, which is major custody bank. Why they have surprise losses is a bit of a mystery. They seem to be eating losses of institutional money market funds whihc they manage in order to maintain that business line. I guess they made some investment errors. The stupidity of financial executives continues to amaze me. Such risks were taken for miniscule spreads by so many "smart" people.
In the UK, the huge losses at Royal Bank of Scotland over the long weekend stunned markets there, too.
But IBM had good earnings and a good 2009 forecast.
As mentioned yesterday, my posts will be brief for the next three weeks as I take one of my dogs to get some medical treatment. The appointments are in the morning and involve a long drive, so my time to work on posts is much more limited.
Perhaps I'll re-post some old favorites.
In a very long term stock account at Vanguard, I am accumulating CCJ, RIG, JPM, GOOG, DVN, AAPL, and BHP for now - in other words, my old favorites. I might pick so other ones later. I just buy a few shares on big dips, using time diversification. This account complements Mrs. B's Sky Fund. I guess I need a name for it ... thinking. I suppose she will kick my butt over time, but I must try.
Word of the Day
"Coryza" - noun [$10]; a Mencken word. Pronounced kuh ri' za.
Coryza means a catarral inflammation of the mucous membrane of the nose, caused, e. g., by a cold or hay fever; a cold in the head. [Latin from Greek 'koryza' meaning 'running at the nose']
Sentence: [" ... " part is from from Mencken's example] The Republican leaders are facing a long period of Democratic domination, "so they resign themselves to it gloomily, just as they resign themselves to coryza and monogamy."
In the UK, the huge losses at Royal Bank of Scotland over the long weekend stunned markets there, too.
But IBM had good earnings and a good 2009 forecast.
As mentioned yesterday, my posts will be brief for the next three weeks as I take one of my dogs to get some medical treatment. The appointments are in the morning and involve a long drive, so my time to work on posts is much more limited.
Perhaps I'll re-post some old favorites.
In a very long term stock account at Vanguard, I am accumulating CCJ, RIG, JPM, GOOG, DVN, AAPL, and BHP for now - in other words, my old favorites. I might pick so other ones later. I just buy a few shares on big dips, using time diversification. This account complements Mrs. B's Sky Fund. I guess I need a name for it ... thinking. I suppose she will kick my butt over time, but I must try.
Word of the Day
"Coryza" - noun [$10]; a Mencken word. Pronounced kuh ri' za.
Coryza means a catarral inflammation of the mucous membrane of the nose, caused, e. g., by a cold or hay fever; a cold in the head. [Latin from Greek 'koryza' meaning 'running at the nose']
Sentence: [" ... " part is from from Mencken's example] The Republican leaders are facing a long period of Democratic domination, "so they resign themselves to it gloomily, just as they resign themselves to coryza and monogamy."
Tuesday, January 20, 2009
Delays
This week's posts will be delayed until late morning, except for the "Word of the Day".
By the way, I've been writing this blog for two years now and have written about 250,000 words. What is my most significant regret ? Easy, not actually listening and acting on my posted fear from nearly two years ago that the subprime mortgage mess might infect the entire securitization market.
Not predicting the panic of October was my biggest miss. Although I have been preaching the dangers of beefers for the entire duration of this blog, I missed the panic caused by all of them being liquidated at once by the dumb rich.
Oh well, what I don't know, I don't know. Probability has nothing to do with it. In fact, I will say now that the most foolish modern usage is asking people to predict probabilities of some future event that involves humans. Chance has nothing to do with those. All one is truly asking is for someone to measure their own ignorance, which is obviously an impossible feat.
To repeat, "What I don't know, I don't know."
Words of the Day
"Malapropism" - noun [$10] also "Malaprop"
Malapropism means the use of a word in mistake for one sounding similar, to comic effect, e. g. dance a 'flamingo' (for 'flamenco').
"Malapropos" - adverb, adjective and noun [$10]; from French "mal à propos"
Malapropos means (adverb) inopportunely, inappropriately; (adjective) inopportune, inappropriate; (noun) something inappropriately said, done, etc.
Sentence: Today the Chief Boob, famous in America and worldwide for both his malapropos remarks and malapropism, leave office. Bunkerman heaves a sigh of relief.
By the way, I've been writing this blog for two years now and have written about 250,000 words. What is my most significant regret ? Easy, not actually listening and acting on my posted fear from nearly two years ago that the subprime mortgage mess might infect the entire securitization market.
Not predicting the panic of October was my biggest miss. Although I have been preaching the dangers of beefers for the entire duration of this blog, I missed the panic caused by all of them being liquidated at once by the dumb rich.
Oh well, what I don't know, I don't know. Probability has nothing to do with it. In fact, I will say now that the most foolish modern usage is asking people to predict probabilities of some future event that involves humans. Chance has nothing to do with those. All one is truly asking is for someone to measure their own ignorance, which is obviously an impossible feat.
To repeat, "What I don't know, I don't know."
Words of the Day
"Malapropism" - noun [$10] also "Malaprop"
Malapropism means the use of a word in mistake for one sounding similar, to comic effect, e. g. dance a 'flamingo' (for 'flamenco').
"Malapropos" - adverb, adjective and noun [$10]; from French "mal à propos"
Malapropos means (adverb) inopportunely, inappropriately; (adjective) inopportune, inappropriate; (noun) something inappropriately said, done, etc.
Sentence: Today the Chief Boob, famous in America and worldwide for both his malapropos remarks and malapropism, leave office. Bunkerman heaves a sigh of relief.
Friday, January 16, 2009
Some Leadership Appears
Late yesterday afternoon the Senate voted in favor of releasing the second tranche of the TARP money. That ensures its availability as a vote by both houses of Congress was necessary to stop the release. Obama showed a bit of leadership in getting his party to go along, in face of continued public wrong-headed opposition.
So Obama gets something done even before becoming President. This leadership should help get the government, the economy, the public's perceptions and outlook on the right path again. That's a the crucial element of the Obama Fund strategy.
So as long as Obama and his team read this blog and do what I tell them, the world should be OK. [joke]
BAC gets more capital and a loss cap on the Merrill Lynch assets. The BAC shareholders pay the price with a dividend cut to one cent and executives get a pay cap. Why is Ken the Cad in love with John Thain, who sold him a lemon ? That seems unnatural.
Markets
Yesterday's reversal counts as a hit for the good guys, a win for the forces of light, or however one puts it. Let's see if that makes an intermediate term low. If so, the lows of the fall will have held and a positive chart formation will emerge.
If Obama gets some momentum going, a bull market might develop. Certainly huge amounts of cash are on the sidelines. All that money pulled from hedge funds might find its way to productive investments.
I'll look at charts today to see if some Obama stocks merit adds. Yesterday I did buy a bit more TLF - very thinly traded, use limit orders on that one. I'd like to go 150% in Obama Fund today, if I can find meritorious adds.
In a separate very long term account, I also bought some AAPL and some JPM.
Word of the Day
"Chrestomathy" - noun [$10] (accent is on the 'stom')
Chrestomathy means 1. a collection of choice passages from an author or authors (H. L. Mencken's definition); a selection of passages used especially to help learning a language.
Sentence: Bunkerman is laboring over a Descartes selection in the chrestomathy titled "First French Reader", a Beginner's Dual Language Book. Descartes is interesting, but hard. His long sentences have strings of "que" and "de" which have alternate meanings and usage. One single line had three instances of "que" - arghhhhhhh.
So Obama gets something done even before becoming President. This leadership should help get the government, the economy, the public's perceptions and outlook on the right path again. That's a the crucial element of the Obama Fund strategy.
So as long as Obama and his team read this blog and do what I tell them, the world should be OK. [joke]
BAC gets more capital and a loss cap on the Merrill Lynch assets. The BAC shareholders pay the price with a dividend cut to one cent and executives get a pay cap. Why is Ken the Cad in love with John Thain, who sold him a lemon ? That seems unnatural.
Markets
Yesterday's reversal counts as a hit for the good guys, a win for the forces of light, or however one puts it. Let's see if that makes an intermediate term low. If so, the lows of the fall will have held and a positive chart formation will emerge.
If Obama gets some momentum going, a bull market might develop. Certainly huge amounts of cash are on the sidelines. All that money pulled from hedge funds might find its way to productive investments.
I'll look at charts today to see if some Obama stocks merit adds. Yesterday I did buy a bit more TLF - very thinly traded, use limit orders on that one. I'd like to go 150% in Obama Fund today, if I can find meritorious adds.
In a separate very long term account, I also bought some AAPL and some JPM.
Word of the Day
"Chrestomathy" - noun [$10] (accent is on the 'stom')
Chrestomathy means 1. a collection of choice passages from an author or authors (H. L. Mencken's definition); a selection of passages used especially to help learning a language.
Sentence: Bunkerman is laboring over a Descartes selection in the chrestomathy titled "First French Reader", a Beginner's Dual Language Book. Descartes is interesting, but hard. His long sentences have strings of "que" and "de" which have alternate meanings and usage. One single line had three instances of "que" - arghhhhhhh.
Thursday, January 15, 2009
Déjà Vu All Over Again
In French, "déjà vu" means "already seen" literally. The commonly expressed annoyance with the French overlooks the massive influence the French have and have had on American culture and language. The French overlook this, too, in their professed disgust with American cultural incursions there. Maybe both sides should open their eyes and accept good new ideas and words more readily.
Back to the news ...
My morning reading is FT, WSJ, Le Monde, Le Figaro, BBC news, and Briefing.com - all online editions. What do I see ?
"Bank of America is counting on a new multibillion-dollar capital injection from the government"
"Investors pulled close to a net $150bn from hedge funds last month in spite of moves by dozens of funds to halt or suspend redemptions"
"Israeli tanks have pushed deep into Gaza City, prompting fierce exchanges of gunfire with fighters of the Palestinian militant group Hamas."
"Oppenheimer's Meredith Whitney appears on CNBC; believes financials go lower before they go higher"
All this seems like endless déjà vu to me, especially the part of Molotov Meredith tossing a few more cocktails at the behest of her beefer masters. Every few months her appearance on financial TV seems like a signal for her financial terrorist friends in the hedge funds to start shorting the financial stocks in the same attacks we've seen for so long.
They're even hitting the credit default swaps of C as that ingrained tactical habit doesn't change either. The fact that the Federal government is on the hook for about $50 billion before C can default on debt seems forgotten. Or is it ? Maybe they just want to create more panic ?
Oh well. Let it pass.
When the selling dries up, I'll look for adds in the Obama Fund.
One Obama Fund stock - marked as ultra-risky - might BK soon. SSCC seems to be setting up talks with its banks to negotiate some debt relief. That stock was and is already priced for BK so this is not really a surprise. Since I'm so diversified, my position is small. Waiting for developments. The actual operating business is pretty good - the company just is overleveraged.
Word of the Day
"Heigh-ho" - interjection [$10] from Shakespeare and Rudy Vallee.
Heigh-ho is an interjection expressing boredom, resignation, etc.
Sentence: Bunkerman has been sighing, heigh-ho, heigh-ho, as he sees the news and financial vikings - beefers - coming to attack in the same old way. The cluster fandango of the news, "analysis" and reports makes him just sit and wait for a trend to develop.
Back to the news ...
My morning reading is FT, WSJ, Le Monde, Le Figaro, BBC news, and Briefing.com - all online editions. What do I see ?
"Bank of America is counting on a new multibillion-dollar capital injection from the government"
"Investors pulled close to a net $150bn from hedge funds last month in spite of moves by dozens of funds to halt or suspend redemptions"
"Israeli tanks have pushed deep into Gaza City, prompting fierce exchanges of gunfire with fighters of the Palestinian militant group Hamas."
"Oppenheimer's Meredith Whitney appears on CNBC; believes financials go lower before they go higher"
All this seems like endless déjà vu to me, especially the part of Molotov Meredith tossing a few more cocktails at the behest of her beefer masters. Every few months her appearance on financial TV seems like a signal for her financial terrorist friends in the hedge funds to start shorting the financial stocks in the same attacks we've seen for so long.
They're even hitting the credit default swaps of C as that ingrained tactical habit doesn't change either. The fact that the Federal government is on the hook for about $50 billion before C can default on debt seems forgotten. Or is it ? Maybe they just want to create more panic ?
Oh well. Let it pass.
When the selling dries up, I'll look for adds in the Obama Fund.
One Obama Fund stock - marked as ultra-risky - might BK soon. SSCC seems to be setting up talks with its banks to negotiate some debt relief. That stock was and is already priced for BK so this is not really a surprise. Since I'm so diversified, my position is small. Waiting for developments. The actual operating business is pretty good - the company just is overleveraged.
Word of the Day
"Heigh-ho" - interjection [$10] from Shakespeare and Rudy Vallee.
Heigh-ho is an interjection expressing boredom, resignation, etc.
Sentence: Bunkerman has been sighing, heigh-ho, heigh-ho, as he sees the news and financial vikings - beefers - coming to attack in the same old way. The cluster fandango of the news, "analysis" and reports makes him just sit and wait for a trend to develop.
Wednesday, January 14, 2009
Cold to Last Decades
I read in the WSJ that temperatures in the upper MidWest are at arctic levels. Temperatures are -35F to -40F in the northern areas of North Dakota and Minnesota. Babblevision just reported that Chicago has 5F. So far this winter we've had an unusual number of overnight temperatures hitting 10F or lower.
The truly bad news is the pattern of below "normal" cold weather is expected to persist for two decades. Yes, I said two decades.
Why ?
The North Atlantic Oscillation has turned over. The pattern is now that of the cold years of the 1930s, 1940s and 1960s and early 1970s. See http://www.ldeo.columbia.edu/res/pi/NAO/ for a chart and explanation. Other sites can be found easily.
In the late 1960s, some climate scientists now bloviating about human-caused global warming were talking about the coming Ice Age. Those knowledgeable about World War II remembers so many reports of "the coldest winter in decades" occurring in WW II years, causing much suffering among troops.
So we should all get used to this pattern and be prepared for cold and bad weather for the coming years.
I suppose soon the climate change "scientists" will be screeching about man causing this. After all, they need grant money from the government and wild claims do work for generating grant money.
Markets
Nothing is happening. Obama Fund is about 100% long. I am waiting and will make selective adds as I see good buys.
Word of the Day
"Vaticination" - noun [$10]; "Vaticinate "- verb [$10[
Vaticination means 1. something foretold: prediction; 2. the act of prophesying.
Vaticinate means (transitive) to foretell, prophesy; (intransitive) to be a prophet.
Sentence: Modern man seems incapable to vaticinate natural events rationally or analysing such vaticinations about the natural world. He is the opposite of ancient man who always blamed actions of the gods. Modern man always blames action of mankind. That the universe and earth can change or are changing independent of man seems beyond his comprehension.
The truly bad news is the pattern of below "normal" cold weather is expected to persist for two decades. Yes, I said two decades.
Why ?
The North Atlantic Oscillation has turned over. The pattern is now that of the cold years of the 1930s, 1940s and 1960s and early 1970s. See http://www.ldeo.columbia.edu/res/pi/NAO/ for a chart and explanation. Other sites can be found easily.
In the late 1960s, some climate scientists now bloviating about human-caused global warming were talking about the coming Ice Age. Those knowledgeable about World War II remembers so many reports of "the coldest winter in decades" occurring in WW II years, causing much suffering among troops.
So we should all get used to this pattern and be prepared for cold and bad weather for the coming years.
I suppose soon the climate change "scientists" will be screeching about man causing this. After all, they need grant money from the government and wild claims do work for generating grant money.
Markets
Nothing is happening. Obama Fund is about 100% long. I am waiting and will make selective adds as I see good buys.
Word of the Day
"Vaticination" - noun [$10]; "Vaticinate "- verb [$10[
Vaticination means 1. something foretold: prediction; 2. the act of prophesying.
Vaticinate means (transitive) to foretell, prophesy; (intransitive) to be a prophet.
Sentence: Modern man seems incapable to vaticinate natural events rationally or analysing such vaticinations about the natural world. He is the opposite of ancient man who always blamed actions of the gods. Modern man always blames action of mankind. That the universe and earth can change or are changing independent of man seems beyond his comprehension.
Tuesday, January 13, 2009
Investing with Bernie
I'd like to see a new movie made as a parody of the dumb rich, "Investing with Bernie". The twist from the hilarious movie, "Weekend at Bernie's" would be that zombies would be the dumb rich being led along to invest with Bernie Madoff who proceeds to steal all their money as they foolishly give it to him on and on for years.
The Funds of Funds and private banks would be Bernie's facilitators, funneling their dumb clients' money to Bernie while at the Hamptons and golf clubs and other parties and charity balls in tuxedos partying with him.
Location of Large Amounts of Madoff Money Revealed ...
I'd guess about 1/3 of the Madoff money is in the coffers of the governments. Think about this: 10% returns for 10 years is 100%. So Madoff investors had taxable income over that period of 100% of their "investment". All would be short term gains. At a rough 33% tax rate, the amount to be withdrawn to pay taxes is 33% of the total invested. So that 1/3 is residing in the government treasuries.
The funds of funds and advisors had to be paid. They got 1% per year and 10% of "gains", so that's 2% total per year. Over ten years, that's 20% of the total. So now we have accounted for 53% of the total.
Bernie probably gave away 25% to his charities and expenses which were critical sources of new money for his scam. That gets us to 78%. Let's presume Bernie lost about 12% in the flowing money through his firm to support it as his cover.
The last 10% is probably in Bernie's offshore accounts where he'll flee before going to prison.
More
Here's a quote from today's Wall Street Journal online edition from David Swensen, the famous and very successful manager of Yale's endowment.
"Fund of funds are a cancer on the institutional-investor world. They facilitate the flow of ignorant capital. If an investor can't make an intelligent decision about picking managers, how can he make an intelligent decision about picking a fund-of-funds manager who will be selecting hedge funds? There's also more fees on top of existing fees. And the best managers don't want fund-of-fund money because it is unreliable. You need to be in the top 10% of hedge funds to succeed. In a fund of funds, you will likely be excluded from the best managers. [Mr.] Madoff also relied enormously on these intermediaries. He wouldn't have had nearly as much resources were it not for fund of funds."
I'd modify the first two sentences to "Funds of funds are a cancer in the investor world. They facilitate the flow of capital of the stupid rich."
What does Swensen say to do ?
"You can divide institutional investors into two camps: those who can hire high-quality, active-management investors and those who can't. If you are going to invest in alternatives, you should be all in, and do it the way Yale does it -- with 20 to 25 investment professionals who devote their careers to looking for investment opportunities. Or you belong at the other end, with a portfolio exclusively in index funds with low fees. If you're not going to put together a team that can make high-quality decisions, your best alternative is passive investing. With a casual attempt to beat the market, you're going to fail."
How does this apply to individuals ? Easy. Either find a good broker for work with you to invest and do the hard work, or adopt a diversified, Krypto Fund style, or a bit of both.
Does Swensen recommend changes now ? No.
"I don't think it makes sense for an institutional investor with as long an investment horizon as Yale's to structure a portfolio to perform well in a period of financial crisis. That would require moving away from equity-oriented investments that have served institutions with long time horizons well."
How does this apply to individuals ? Simple. Pay attention to time horizon. Any needs in near term should be funded with safe investments, like top rated annuities or bond index funds like the Vanguard Total Bond Market Fund, which was up in 2008. Longer term needs continue to be funded with diversified equity investments. The allocations depend on your age and realistic retirement plans.
According to Swensen, what looks good now ?
"Distressed securities are one of the most interesting opportunities for institutional investors. But returns won't come right away because the credit markets are fundamentally broken. TIPS [Treasury-Inflation Protected Securities] are pretty attractively priced. They promise reasonable returns, and protection against inflation is really important. We may not see it in the next year or two, but the government's massive fiscal stimulus can't help but produce massive inflationary pressures. Stocks also look a lot more attractive than they have for a long time. We prefer higher-quality companies with low leverage."
Hmmm ... Mrs. B has the high quality stocks with low leverage covered. Obama Fund is going for distressed securities - the stocks, at least. And Krypto Fund has the TIPs covered. Close enough. By the way, the Krypto Fund time horizon runs from about 10 to 30 years from now.
Word of the Day
"Deliquesce" - verb, intransitive [$10]; an oldie from the card file
Deliquesce means to become liquid, melt.
Sentence: The monies of the dumb rich were fed to Bernie and quickly deliquesced in his mouth like sugar candy.
Deliquesce is a word I saw reading Florence King's books. She wrote a superb column for National Review for many years and several fine books, too. She combines humor and erudition brilliantly.
The Funds of Funds and private banks would be Bernie's facilitators, funneling their dumb clients' money to Bernie while at the Hamptons and golf clubs and other parties and charity balls in tuxedos partying with him.
Location of Large Amounts of Madoff Money Revealed ...
I'd guess about 1/3 of the Madoff money is in the coffers of the governments. Think about this: 10% returns for 10 years is 100%. So Madoff investors had taxable income over that period of 100% of their "investment". All would be short term gains. At a rough 33% tax rate, the amount to be withdrawn to pay taxes is 33% of the total invested. So that 1/3 is residing in the government treasuries.
The funds of funds and advisors had to be paid. They got 1% per year and 10% of "gains", so that's 2% total per year. Over ten years, that's 20% of the total. So now we have accounted for 53% of the total.
Bernie probably gave away 25% to his charities and expenses which were critical sources of new money for his scam. That gets us to 78%. Let's presume Bernie lost about 12% in the flowing money through his firm to support it as his cover.
The last 10% is probably in Bernie's offshore accounts where he'll flee before going to prison.
More
Here's a quote from today's Wall Street Journal online edition from David Swensen, the famous and very successful manager of Yale's endowment.
"Fund of funds are a cancer on the institutional-investor world. They facilitate the flow of ignorant capital. If an investor can't make an intelligent decision about picking managers, how can he make an intelligent decision about picking a fund-of-funds manager who will be selecting hedge funds? There's also more fees on top of existing fees. And the best managers don't want fund-of-fund money because it is unreliable. You need to be in the top 10% of hedge funds to succeed. In a fund of funds, you will likely be excluded from the best managers. [Mr.] Madoff also relied enormously on these intermediaries. He wouldn't have had nearly as much resources were it not for fund of funds."
I'd modify the first two sentences to "Funds of funds are a cancer in the investor world. They facilitate the flow of capital of the stupid rich."
What does Swensen say to do ?
"You can divide institutional investors into two camps: those who can hire high-quality, active-management investors and those who can't. If you are going to invest in alternatives, you should be all in, and do it the way Yale does it -- with 20 to 25 investment professionals who devote their careers to looking for investment opportunities. Or you belong at the other end, with a portfolio exclusively in index funds with low fees. If you're not going to put together a team that can make high-quality decisions, your best alternative is passive investing. With a casual attempt to beat the market, you're going to fail."
How does this apply to individuals ? Easy. Either find a good broker for work with you to invest and do the hard work, or adopt a diversified, Krypto Fund style, or a bit of both.
Does Swensen recommend changes now ? No.
"I don't think it makes sense for an institutional investor with as long an investment horizon as Yale's to structure a portfolio to perform well in a period of financial crisis. That would require moving away from equity-oriented investments that have served institutions with long time horizons well."
How does this apply to individuals ? Simple. Pay attention to time horizon. Any needs in near term should be funded with safe investments, like top rated annuities or bond index funds like the Vanguard Total Bond Market Fund, which was up in 2008. Longer term needs continue to be funded with diversified equity investments. The allocations depend on your age and realistic retirement plans.
According to Swensen, what looks good now ?
"Distressed securities are one of the most interesting opportunities for institutional investors. But returns won't come right away because the credit markets are fundamentally broken. TIPS [Treasury-Inflation Protected Securities] are pretty attractively priced. They promise reasonable returns, and protection against inflation is really important. We may not see it in the next year or two, but the government's massive fiscal stimulus can't help but produce massive inflationary pressures. Stocks also look a lot more attractive than they have for a long time. We prefer higher-quality companies with low leverage."
Hmmm ... Mrs. B has the high quality stocks with low leverage covered. Obama Fund is going for distressed securities - the stocks, at least. And Krypto Fund has the TIPs covered. Close enough. By the way, the Krypto Fund time horizon runs from about 10 to 30 years from now.
Word of the Day
"Deliquesce" - verb, intransitive [$10]; an oldie from the card file
Deliquesce means to become liquid, melt.
Sentence: The monies of the dumb rich were fed to Bernie and quickly deliquesced in his mouth like sugar candy.
Deliquesce is a word I saw reading Florence King's books. She wrote a superb column for National Review for many years and several fine books, too. She combines humor and erudition brilliantly.
Monday, January 12, 2009
A Fraud By Any Other Name Is ...
A Fraud.
That is the character of the latest recognized Wall Street "product" sold to the public, viz. the leveraged and short ETFs. THe WSJ and Barron's have had articles in the past week showing how those ETFs are simply bunco scams sold under misleading names to the public.
Here's an example from this week's Barron's -
"SUPPOSE YOU HAD PREDICTED -- correctly, as it turned out -- that the Chinese economy would slow following last summer's Beijing Olympics, causing China's stock markets to tumble. Also suppose that, to profit from your insight, you had invested in the ProShares UltraShort FTSE/Xinhua China 25 , a leveraged exchange-traded fund (ticker: FXP) designed to go up by as much as twice the percentage that the FTSE/Xinhua China 25 Index falls on a given day.
When Chinese stocks crashed by 34% over the following four months, shouldn't you have reaped a gaudy return around 68%? Not exactly. In fact, you would have lost 56%. How can this be?"
Easy. The mountebanks at Proshares, Rydex and others created a product to make themselves and their Street market maker pals money at the public's expense. And the SEC, as usual, played along. All these ETFs that are based on derivatives and not actually holding the true assets are simply casino games. No assets are owned or investments made. The fund has a deal with the Street derivative desks who buy and sell it derivatives to meet the technical fine print "performance" in the fund's prospectus. Never mind that the title of the "fund" is grossly misleading. And to even call these "investments" is a lie. These are no more "investments" than the racing bet slips one gets at the track.
At least at Las Vegas one can know the true odds of a bet. In casino craps - my preferred game - the house take is 1.41% on a pass line bet. If you leverage that with the free odds, you can reduce it to 0.374% at most Las Vegas tables where 3-4-5x free odds bets are allowed. Not bad. But over time you'll lose everything. We all know that.
That principal applies to these derivative-based ETFs. As these "funds" churn up and down, the Street 'vig" is extracted over and over as money flows into and out of these "funds". Don't "invest" in them or use them to "hedge". The Street "vig" will bleed you to death over time.
They are suitable only for day traders to speculate.
Other factors cause large changes, too. The amount of leverage in the fund DOES NOT match the leverage of an actual short or leveraged positions. Any investor on margin knows his leverage changes as the price of the asset changes: the amount of debt is fixed but the net equity moves up and down, changing the leverage ratio. The Street products don't do that as they are based on "notional" derivatives. So these "funds" are not suitable for hedgers, either.
"Investors" in the oil ETF know this by now. When the USO was created, its price was about equal to the price of a barrel of oil. Now it's price is about $31, but the price of a barrel of oil is about $39. So "investors" in oil have lost about 20% of their "investment" more that the actual value of a barrel of oil have fallen. Nice.
Thanks, SEC, for letting these bunco artists loose on the public.
Speaking of frauds ...
Another hedge fund bites the dust.
"Harbinger Capital, the activist US hedge fund headed by Philip Falcone that shot to fame in 2007 with a lucrative bet against subprime mortgages, joined the list of funds restricting withdrawals for investors a day before the end of last year, according to two investors.
Harbinger’s main fund rose almost 43 per cent in the first six months of last year but lost all its profits and ended the year down 27.1 per cent. After redemptions and losses, the fund now manages about $6bn, one investor said, down from a peak of almost $20bn last summer."
Aw, shucks ...
Word of the Day
"Pulchritude" - noun [$10] literary; "Pulchritudinous" - adjective. A Mencken word.
Pulchritude means beauty.
Pulchritudinous means possessing or relating to beauty.
Sentence: The pulchritudinous schemes of the creators of the leveraged and short ETFs would be deeply appreciated by Dutch Shultz, who loved the numbers racket in old New York City. Over time, he got it all.
That is the character of the latest recognized Wall Street "product" sold to the public, viz. the leveraged and short ETFs. THe WSJ and Barron's have had articles in the past week showing how those ETFs are simply bunco scams sold under misleading names to the public.
Here's an example from this week's Barron's -
"SUPPOSE YOU HAD PREDICTED -- correctly, as it turned out -- that the Chinese economy would slow following last summer's Beijing Olympics, causing China's stock markets to tumble. Also suppose that, to profit from your insight, you had invested in the ProShares UltraShort FTSE/Xinhua China 25 , a leveraged exchange-traded fund (ticker: FXP) designed to go up by as much as twice the percentage that the FTSE/Xinhua China 25 Index falls on a given day.
When Chinese stocks crashed by 34% over the following four months, shouldn't you have reaped a gaudy return around 68%? Not exactly. In fact, you would have lost 56%. How can this be?"
Easy. The mountebanks at Proshares, Rydex and others created a product to make themselves and their Street market maker pals money at the public's expense. And the SEC, as usual, played along. All these ETFs that are based on derivatives and not actually holding the true assets are simply casino games. No assets are owned or investments made. The fund has a deal with the Street derivative desks who buy and sell it derivatives to meet the technical fine print "performance" in the fund's prospectus. Never mind that the title of the "fund" is grossly misleading. And to even call these "investments" is a lie. These are no more "investments" than the racing bet slips one gets at the track.
At least at Las Vegas one can know the true odds of a bet. In casino craps - my preferred game - the house take is 1.41% on a pass line bet. If you leverage that with the free odds, you can reduce it to 0.374% at most Las Vegas tables where 3-4-5x free odds bets are allowed. Not bad. But over time you'll lose everything. We all know that.
That principal applies to these derivative-based ETFs. As these "funds" churn up and down, the Street 'vig" is extracted over and over as money flows into and out of these "funds". Don't "invest" in them or use them to "hedge". The Street "vig" will bleed you to death over time.
They are suitable only for day traders to speculate.
Other factors cause large changes, too. The amount of leverage in the fund DOES NOT match the leverage of an actual short or leveraged positions. Any investor on margin knows his leverage changes as the price of the asset changes: the amount of debt is fixed but the net equity moves up and down, changing the leverage ratio. The Street products don't do that as they are based on "notional" derivatives. So these "funds" are not suitable for hedgers, either.
"Investors" in the oil ETF know this by now. When the USO was created, its price was about equal to the price of a barrel of oil. Now it's price is about $31, but the price of a barrel of oil is about $39. So "investors" in oil have lost about 20% of their "investment" more that the actual value of a barrel of oil have fallen. Nice.
Thanks, SEC, for letting these bunco artists loose on the public.
Speaking of frauds ...
Another hedge fund bites the dust.
"Harbinger Capital, the activist US hedge fund headed by Philip Falcone that shot to fame in 2007 with a lucrative bet against subprime mortgages, joined the list of funds restricting withdrawals for investors a day before the end of last year, according to two investors.
Harbinger’s main fund rose almost 43 per cent in the first six months of last year but lost all its profits and ended the year down 27.1 per cent. After redemptions and losses, the fund now manages about $6bn, one investor said, down from a peak of almost $20bn last summer."
Aw, shucks ...
Word of the Day
"Pulchritude" - noun [$10] literary; "Pulchritudinous" - adjective. A Mencken word.
Pulchritude means beauty.
Pulchritudinous means possessing or relating to beauty.
Sentence: The pulchritudinous schemes of the creators of the leveraged and short ETFs would be deeply appreciated by Dutch Shultz, who loved the numbers racket in old New York City. Over time, he got it all.
Friday, January 9, 2009
Recovery
For me, that is. The economy begins recovery later this Spring.
Regular "thoughtful" posts should resume Monday.
Unemployment Pool
I have been asked to organize a pool for predictions of the peak unemployment number for this business cycle. The contest will be determined from BLS data, so no griping that it's fixed or biased to the low side, please. So far, selections have been 8% (me), 11.5%, 13.45% and 12%. This is open to anyone, but your choice must be posted in the comments. who posts in the comments, I will write them down on a card and a winner will be determined whenever the peak is obviously past.
By the way, BLS data truly IS biased to the low side, as persons in part-time work or who have left the workforce due to futility are not counted as unemployed.
I might give a prize, perhaps a fine WW II style Army helmet. I had bought some for prizes for Dow 15,000, but that might not happen for awhile.
Word of the Day
"Futility" - noun [$10] an interesting usage for variant of the common word, futile.
Futile (adjective) means 1. useless, ineffectual, vain; 2. frivolous, trifling.
Futility (noun) would be the state or quality of being futile.
Sentence: (from H. L. Mencken describing Herbert Hoover) "In the past his futilities were only too often overlooked in the blinding light of his publicity ..."
Interestingly, H. L. Mencken had a very low opinion of Herbert Hoover even in 1928, before the Great Depression. In modern terms, Mencken thought Hoover was a mere resume with no leadership ability. Reading Mencken's concurrent writings about Hoover make me think that many modern revisionist writings of Hoover are wrong.
Another sentence: The futilities of most members of the U. S. Senate becomes glaring as soon as they open their mouths.
Regular "thoughtful" posts should resume Monday.
Unemployment Pool
I have been asked to organize a pool for predictions of the peak unemployment number for this business cycle. The contest will be determined from BLS data, so no griping that it's fixed or biased to the low side, please. So far, selections have been 8% (me), 11.5%, 13.45% and 12%. This is open to anyone, but your choice must be posted in the comments. who posts in the comments, I will write them down on a card and a winner will be determined whenever the peak is obviously past.
By the way, BLS data truly IS biased to the low side, as persons in part-time work or who have left the workforce due to futility are not counted as unemployed.
I might give a prize, perhaps a fine WW II style Army helmet. I had bought some for prizes for Dow 15,000, but that might not happen for awhile.
Word of the Day
"Futility" - noun [$10] an interesting usage for variant of the common word, futile.
Futile (adjective) means 1. useless, ineffectual, vain; 2. frivolous, trifling.
Futility (noun) would be the state or quality of being futile.
Sentence: (from H. L. Mencken describing Herbert Hoover) "In the past his futilities were only too often overlooked in the blinding light of his publicity ..."
Interestingly, H. L. Mencken had a very low opinion of Herbert Hoover even in 1928, before the Great Depression. In modern terms, Mencken thought Hoover was a mere resume with no leadership ability. Reading Mencken's concurrent writings about Hoover make me think that many modern revisionist writings of Hoover are wrong.
Another sentence: The futilities of most members of the U. S. Senate becomes glaring as soon as they open their mouths.
Thursday, January 8, 2009
Zzzzzzzzzzzz ...
A rare event just occurred. I woke up at dawn, not predawn at 4AM. My dog, Sky, licked my face to wake me up. I guess the cold medicine made me oversleep. I probably needed the extra sleep as I am still a bit sick.
Word of the Day
"Stipendiary" - noun and adjective [$10]
Stipendiary means (adjective) 1. receiving a stipend; 2. working for pay, not voluntarily; (noun) a person receiving a stipend.
Sentence: Instead of being masters of the Universe with colossal bonuses, much work in the financial industry is sure to become stipendiary as risk taking will surely not be rewarded with high pay hitherto.
Word of the Day
"Stipendiary" - noun and adjective [$10]
Stipendiary means (adjective) 1. receiving a stipend; 2. working for pay, not voluntarily; (noun) a person receiving a stipend.
Sentence: Instead of being masters of the Universe with colossal bonuses, much work in the financial industry is sure to become stipendiary as risk taking will surely not be rewarded with high pay hitherto.
Wednesday, January 7, 2009
Uhhhh
That's me groaning as I am still fighting this illness. It's a moving target and hard to hit as it moves and morphs in me.
$^#&$% - I discovered I screwed up and did not buy IDSA. So now I'll have to wait for a pullback if one occurs.
Word of the Day
"Diglossia" - noun [$100]
Diglossia means 1. the widespread existence within a society of sharply divergent formal and informal varieties of a language used in different social contexts or for performing different functions, as the existence of Katharevuia and Demotic in modern Greece; 2. (pathology) the presence of two tongues or of a single tongue divided in two parts.
Sentence: A spoken example of diglossia in America is the use of the eubonics dialect in many black communities for spoken English concurrent with standard English as the written language. Another new example would be the used the new evolving text message dialect for short written notes with standard English for longer, formal writing. Considered with an oral dialect such as eubonics or Valley-speak, arguably America now has triglossia.
$^#&$% - I discovered I screwed up and did not buy IDSA. So now I'll have to wait for a pullback if one occurs.
Word of the Day
"Diglossia" - noun [$100]
Diglossia means 1. the widespread existence within a society of sharply divergent formal and informal varieties of a language used in different social contexts or for performing different functions, as the existence of Katharevuia and Demotic in modern Greece; 2. (pathology) the presence of two tongues or of a single tongue divided in two parts.
Sentence: A spoken example of diglossia in America is the use of the eubonics dialect in many black communities for spoken English concurrent with standard English as the written language. Another new example would be the used the new evolving text message dialect for short written notes with standard English for longer, formal writing. Considered with an oral dialect such as eubonics or Valley-speak, arguably America now has triglossia.
Tuesday, January 6, 2009
Brevity Continues
Being still a bit ill, today's post features "brevity".
My "Oxford Dictionary of Quotations" lists five quotations including the word, "brevity".
"Brevity is the sister of talent." From a letter to Chekhov.
"Brevity is the soul of lingerie, as the Petticoat said to the Chemise." Dorothy Parker, in caption written for Vogue in 1916.
"Brevity is the soul of wit." Shakespeare in Hamlet, Act 2, Scene 2.
"The brevity of our life, the dullness of our senses, the torpor of our indifference, the futility of our occupation, suffer us to know but little: and that little is soon shaken and then torn from the mind by that traitor to learning, that hostile and faithless stepmother to memory, oblivion." John of Salisbury, an English ecclesiastical scholar c. 1115-1180.
"What is an Epigram ? a dwarfish whole
"Its body brevity, and wit its soul."
-Coleridge in "Epigram", 1809.
Word of the Day
"Chiral" - adjective [$10]
Chiral means (of a molecule) not superimposeable on its mirror image; compare to handedness - left or right.
Chiro - of a hand
Sentence: The American political spectrum is chiral. The common metaphor of a line from the to the right just doesn't fit reality. Leftist and rightist 'atomic' components - opinions on issues - are combined in people into complex chiral molecules. Even a mirror candidate's political support is unpredictable from the components alone. The relative positions matter.
My "Oxford Dictionary of Quotations" lists five quotations including the word, "brevity".
"Brevity is the sister of talent." From a letter to Chekhov.
"Brevity is the soul of lingerie, as the Petticoat said to the Chemise." Dorothy Parker, in caption written for Vogue in 1916.
"Brevity is the soul of wit." Shakespeare in Hamlet, Act 2, Scene 2.
"The brevity of our life, the dullness of our senses, the torpor of our indifference, the futility of our occupation, suffer us to know but little: and that little is soon shaken and then torn from the mind by that traitor to learning, that hostile and faithless stepmother to memory, oblivion." John of Salisbury, an English ecclesiastical scholar c. 1115-1180.
"What is an Epigram ? a dwarfish whole
"Its body brevity, and wit its soul."
-Coleridge in "Epigram", 1809.
Word of the Day
"Chiral" - adjective [$10]
Chiral means (of a molecule) not superimposeable on its mirror image; compare to handedness - left or right.
Chiro - of a hand
Sentence: The American political spectrum is chiral. The common metaphor of a line from the to the right just doesn't fit reality. Leftist and rightist 'atomic' components - opinions on issues - are combined in people into complex chiral molecules. Even a mirror candidate's political support is unpredictable from the components alone. The relative positions matter.
Monday, January 5, 2009
A Brief Post
As I am fighting off an illness, today's post will be brief.
On Friday I published the master list of stocks for consideration for my Obama Fund. The objective of the Obama Fund is to multiply my investment by 10x over two years via stock selection, intermediate term trading and stock rotation. All the stocks on the list have the capability to provide 3-4x multiple returns in that period if and only if ("IFF" for non-mathematically inclined readers) Obama performs well as US President. See Friday's post for details.
As the morning rally seemed to hold promise, I bought quite a few stocks around 10:30AM ET. Added to prior holdings of FCX, EXM, GNK HUN, FCT and SSCC were AMCN, MOS, KBR, MS, IHG, CAB, MTW, TEX, IDSA, MRT, FL, RCKY, CMI, SUTR, SID, SPAR, CLDN, ANF, NBG, WFT, ME, GPOR, GMET, ROSE, HWD, GT, SGR, FTK, CETV.
As you can see, I am very well diversified. About 1/2 of buying power is invested. I wait now.
In a separate, very long term account, I also, bought some CCJ and RIG. I don't check that account very often so those are quite long term positions.
Word of the Day
"Tanistry" - noun [$100]
"Tanist" - noun [$100]
Tanistry means the system among various Celtic tribes of choosing a tanist.
Tanist means the successor apparent for a Celtic chief, usually the oldest or worthiest of his kin, chosen by election among the leaders of his tribe during his lifetime.
Sentence: The Democratic party and media tanistry for filling the to-be-vacant Senate seat for New York is quite unusual. A Mrs. Schossberg, neé Caroline Kennedy, a formerly dignified lady with no political, legislative or leadership experience, seems to be the favored candidate and has apparent support of President-elect Obama as a payoff for her early, valuable support for his presidential candidacy . Considerations of ability to serve the people of New York are not heard from those pushing her appointment. Perhaps she is suitable, as the people of New York seem has a history of preferring a celebrity Senator.
exper
On Friday I published the master list of stocks for consideration for my Obama Fund. The objective of the Obama Fund is to multiply my investment by 10x over two years via stock selection, intermediate term trading and stock rotation. All the stocks on the list have the capability to provide 3-4x multiple returns in that period if and only if ("IFF" for non-mathematically inclined readers) Obama performs well as US President. See Friday's post for details.
As the morning rally seemed to hold promise, I bought quite a few stocks around 10:30AM ET. Added to prior holdings of FCX, EXM, GNK HUN, FCT and SSCC were AMCN, MOS, KBR, MS, IHG, CAB, MTW, TEX, IDSA, MRT, FL, RCKY, CMI, SUTR, SID, SPAR, CLDN, ANF, NBG, WFT, ME, GPOR, GMET, ROSE, HWD, GT, SGR, FTK, CETV.
As you can see, I am very well diversified. About 1/2 of buying power is invested. I wait now.
In a separate, very long term account, I also, bought some CCJ and RIG. I don't check that account very often so those are quite long term positions.
Word of the Day
"Tanistry" - noun [$100]
"Tanist" - noun [$100]
Tanistry means the system among various Celtic tribes of choosing a tanist.
Tanist means the successor apparent for a Celtic chief, usually the oldest or worthiest of his kin, chosen by election among the leaders of his tribe during his lifetime.
Sentence: The Democratic party and media tanistry for filling the to-be-vacant Senate seat for New York is quite unusual. A Mrs. Schossberg, neé Caroline Kennedy, a formerly dignified lady with no political, legislative or leadership experience, seems to be the favored candidate and has apparent support of President-elect Obama as a payoff for her early, valuable support for his presidential candidacy . Considerations of ability to serve the people of New York are not heard from those pushing her appointment. Perhaps she is suitable, as the people of New York seem has a history of preferring a celebrity Senator.
exper
Friday, January 2, 2009
The Obama Fund
I have restructured and re-christened my old "Alpha Fund" as the new Obama Fund, looking for "change" in the markets' character. Its strategy will be to buy beaten down stocks that could rise by 3x or 4x over two years if and only if Obama succeeds as President in returning the economy to normalcy. The total objective is a 10x on capital in the fund. The second leg of multiple returns will be gotten from intermediate term trading and stock rotation.
I have a list of 60 stocks in 25 sectors. The sectors include those that rebounded very strongly in the 1974 bear market and recession into 1976, plus a number of other sectors appropriate to the current world economy and situation. I rejected stocks with excessive debt and bankruptcy risks, as well as stocks showing terminal CFO stupidity in having excessive stock buybacks at high prices. My research on individual stocks was neither sweeping nor intensive. I relied on general measures provided by Daily Graphs, balance sheets and income statements mostly from Yahoo Finance supplemented by SEC filings as needed. My general knowledge of stocks and sectors was used quite often, too.
Do your own work. I will not buy every stock. I plan to buy stocks on good entries and rotate within the list as opportunities arise. I won't use margin until a good bull market trend develops. Diversify over sectors and time.
OBAMA FUND MASTER LIST as of January 1, 2009
Advertising: AMCN
Agriculture: MOS
Apparel – clothing mfg: TLF
Basic Materials: SSCC, FCX, HUN
Batteries: XIDE
Cement: CX (pullback)
Engineering: KBR, JEC (pullback), SGR
Financial: CIT, MS (pullback), EEFT, NBG, FCT
Gems: HWD
Hotels: IHG, HMIN (Chinese), MAR (on pullback)
Industrial: IR
Leisure: ACAT, MTN (pullback), DKS, CAB
Media: CETV
Mining, Constr. Eq.: MTW, TEX
Pollution Services: IDSA
Resources: AREX, ME, GPOR, GMET, ROSE, CRZO,
Oil Services & products: RIG (under 50), WFT, FTK
Restaurants: MRT; On modest pullback: CPKI, DRI, CAKE
Retail – Clothing: ANF, FL, URBN (modest pullback)
Shipping: DRYS, EXM, GNK
Shoes, Footwear Mfg.: RCKY, ICON
Steel: X, MT, GSI, SUTR, SID, AKS
Tires: GT
Truck Eq – mfg.: CMI, SPAR
Trucking: CLDN
Many of these stocks have been perky lately, so I am not alone in doing this. Try to get a good entry and not get washed out when the short term traders sell "en mass".
Obama Fund already owns GNK, EXM, FCX, FCT, HUN and a small bit of ultra risky SSCC.
Krypto Fund
For 2008, Krypto Fund was down 27.17% compared to the S&P 500 being down 37% and the Wilshire 5000 being down 37.23% in total return. So for dog biscuits as a management fee, I got 10% outperformance. Quite good on a relative basis. By the way, Krypto Fund outperformed in the years the S&P 500 was up, too.
Word of the Day
"Litotes" - noun [$10]; a term of rhetoric
Litotes means an ironical understatement, especially the expressing of an affirmative by the negative of its contrary. Example: using "I shan't be sorry" for "I shall be glad".
Sentence: Bunkerman's frequent expressions of not being sorry as large numbers of hedge funds are liquidated are merely polite litotes, as he truly is gleefully dancing on their graves blowing a trumpet in joy.
I have a list of 60 stocks in 25 sectors. The sectors include those that rebounded very strongly in the 1974 bear market and recession into 1976, plus a number of other sectors appropriate to the current world economy and situation. I rejected stocks with excessive debt and bankruptcy risks, as well as stocks showing terminal CFO stupidity in having excessive stock buybacks at high prices. My research on individual stocks was neither sweeping nor intensive. I relied on general measures provided by Daily Graphs, balance sheets and income statements mostly from Yahoo Finance supplemented by SEC filings as needed. My general knowledge of stocks and sectors was used quite often, too.
Do your own work. I will not buy every stock. I plan to buy stocks on good entries and rotate within the list as opportunities arise. I won't use margin until a good bull market trend develops. Diversify over sectors and time.
OBAMA FUND MASTER LIST as of January 1, 2009
Advertising: AMCN
Agriculture: MOS
Apparel – clothing mfg: TLF
Basic Materials: SSCC, FCX, HUN
Batteries: XIDE
Cement: CX (pullback)
Engineering: KBR, JEC (pullback), SGR
Financial: CIT, MS (pullback), EEFT, NBG, FCT
Gems: HWD
Hotels: IHG, HMIN (Chinese), MAR (on pullback)
Industrial: IR
Leisure: ACAT, MTN (pullback), DKS, CAB
Media: CETV
Mining, Constr. Eq.: MTW, TEX
Pollution Services: IDSA
Resources: AREX, ME, GPOR, GMET, ROSE, CRZO,
Oil Services & products: RIG (under 50), WFT, FTK
Restaurants: MRT; On modest pullback: CPKI, DRI, CAKE
Retail – Clothing: ANF, FL, URBN (modest pullback)
Shipping: DRYS, EXM, GNK
Shoes, Footwear Mfg.: RCKY, ICON
Steel: X, MT, GSI, SUTR, SID, AKS
Tires: GT
Truck Eq – mfg.: CMI, SPAR
Trucking: CLDN
Many of these stocks have been perky lately, so I am not alone in doing this. Try to get a good entry and not get washed out when the short term traders sell "en mass".
Obama Fund already owns GNK, EXM, FCX, FCT, HUN and a small bit of ultra risky SSCC.
Krypto Fund
For 2008, Krypto Fund was down 27.17% compared to the S&P 500 being down 37% and the Wilshire 5000 being down 37.23% in total return. So for dog biscuits as a management fee, I got 10% outperformance. Quite good on a relative basis. By the way, Krypto Fund outperformed in the years the S&P 500 was up, too.
Word of the Day
"Litotes" - noun [$10]; a term of rhetoric
Litotes means an ironical understatement, especially the expressing of an affirmative by the negative of its contrary. Example: using "I shan't be sorry" for "I shall be glad".
Sentence: Bunkerman's frequent expressions of not being sorry as large numbers of hedge funds are liquidated are merely polite litotes, as he truly is gleefully dancing on their graves blowing a trumpet in joy.
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