Of course that's Martin Luther King's famous speech line. I'm borrowing it today to post my "dream" about where Ms. Market will take us this year. Will she dance on that tables & party, or dump us?
Stocks (S&P 500): high - 1500, low 1200, close 1500.
Bonds: (US 10 year yield): high 4.5%, low 3.3%, close 4.5%
TIPs (the ETF): high 108, low 104, close 104
Gold: high 1500, low 1200, close 1500
Muni bonds: solid A-AA yields rise to 5.5%
From where we are now in these asset classes, the "buy low, sell high" and "sell high, buy low" tactics will pay off well.
Timing: Ms. Market will dance and party a bit, then take a break, then hit the dance floors again.
Hedge funds will have a poor year as the commodity trades will sour, providing little upside and much pain from drops and sideways action. Favorites like AAPL will be sideways. Winnings will be boring stocks like those in the DJIA - big cap blue chips. Big banks will sputter as regulations grind profits away.
Krypto anticipates a fine year and is drooling over those dog biscuits.
Bman will keep riding this bull elephant, but pick fruit off the trees as he passes good trades. The ending waterhole is not yet in sight.
Word of the Day
"Progenerate" - verb [$1000] Obsolete, rare; a T. S. Eliot word
Progenerate means to beget, propagate, procreate.
Sentence: After due exercise of my little grey cells towards the likely path for the various major asset classes for 2011, Bunkerman today progenerated the outcomes that he now believes the near future will bring. Will be a hero or a goat? Time will tell. The future is not determined, but is (mostly) controlled by men riding along the waves of our world in time and space.
Showing posts with label financial markets. Show all posts
Showing posts with label financial markets. Show all posts
Tuesday, January 18, 2011
Wednesday, June 30, 2010
Sky Wins !!!
That is, Mrs. B & Sky win first place in a sheep herding trial in the "novice-novice" class (20 dogs). They brought home a blue ribbon, many compliments from the trial sponsor, and smiles all around. At last all the hard work & training by both came together. This also means they qualify for the regional championships this Fall. Congratulations again !
Market
A big drop yesterday on Euro-fears. Fear still seems to be the dominant emotion in the market. Eventually barring a new surprise, this should wear off. The hopes that "stimulus" would save the day are now dashed. Companies continue to hoard cash. Leadership in government does not exist. Emerging market economies seems strong, though.
I continue to invest mechanically using the Krypto Fund asset allocation model. Its asset allocation tactics are greatly outperforming standard static investment theory. Year to date S&P 500 return is -5.71%; Krypto Fund return is -0.78%, almost 5% better. That's huge. Why pay a money manager when my dog, Krypto, can outperform like that for dog biscuits ?
Balanced, well-diversified investing with unemotional asset allocation works. One must keep the emotions out of allocation and use simple "buy low, sell high" & "sell high, buy low" rules with as little added thinking as reasonable.
Actions
I checked the model this AM and found no orders from Krypto. She waits for lower prices. I think a further drop to S&P 1000 will prompt her to open the purse and do some buying.
Word of the Day
"Aleatory" - adjective [$10] ( = "aleatoric")
Aleatory means 1. depending on the throw of a die or chance; 2. (Music & Art) involving random chance by a performer or artist.
Sentence: Why subject investing for retirement to aleatoric returns of mutual fund managers, or worse, your own ETF trading ? Use simple, asset allocation with low cost index funds and broad based index ETFs like Krypto.
Market
A big drop yesterday on Euro-fears. Fear still seems to be the dominant emotion in the market. Eventually barring a new surprise, this should wear off. The hopes that "stimulus" would save the day are now dashed. Companies continue to hoard cash. Leadership in government does not exist. Emerging market economies seems strong, though.
I continue to invest mechanically using the Krypto Fund asset allocation model. Its asset allocation tactics are greatly outperforming standard static investment theory. Year to date S&P 500 return is -5.71%; Krypto Fund return is -0.78%, almost 5% better. That's huge. Why pay a money manager when my dog, Krypto, can outperform like that for dog biscuits ?
Balanced, well-diversified investing with unemotional asset allocation works. One must keep the emotions out of allocation and use simple "buy low, sell high" & "sell high, buy low" rules with as little added thinking as reasonable.
Actions
I checked the model this AM and found no orders from Krypto. She waits for lower prices. I think a further drop to S&P 1000 will prompt her to open the purse and do some buying.
Word of the Day
"Aleatory" - adjective [$10] ( = "aleatoric")
Aleatory means 1. depending on the throw of a die or chance; 2. (Music & Art) involving random chance by a performer or artist.
Sentence: Why subject investing for retirement to aleatoric returns of mutual fund managers, or worse, your own ETF trading ? Use simple, asset allocation with low cost index funds and broad based index ETFs like Krypto.
Tuesday, May 25, 2010
Heavy Shelling ...
The Euro-beefers are bailing out, hence the severe weakness in the AM futures markets. I think yesterday's very late, massive sell-off was the precursor to the today's AM drop off. I'd guess the Street had the orders in already or knew that Euro-beefers were being liquidated, so used the firmness yesterday to front-run the moves at the close.
Of course, since all participants [except the common man investor] have learned to recognize signs of computer order floods, and to climb the trees to safety at first sight, the swings are much larger and faster than an orderly market would normally have. For all the blather about "liquidity" provided by computer trading, is it not NOW obvious to all that such "liquidity" is a phantom, and is NOT there when needed ?!
Get rid of ALL computer trading EXCEPT within very narrow market windows of time and price.
The knaves at the SEC won't do that, though. They care NOTHING for the common man investors. All they want to to line up a job with fat pay at the Street or the Street's law firms after leaving government.
Actions
Waiting. Krypto has plenty of cash to redeploy. She did a LOT of selling as the market approached the recent highs - I posted them all. Notice that UNLESS one does selling on the way up, one will not have cash to buy on big plunges. You really do have to buy low, sell high AND sell high to buy low. It will take a good bit more drop to trigger Krypto's buy programs again. Just sitting & waiting.
Mrs. B has a bit more more cash to redeploy, too. No ideas in mind for now, though. Lolol, I think she is the only buyer at her local broker's office lately.
Word of the Day
"Apophasis" - noun [$100] Rhetorical
Apophasis means denial of one's intention to speak of a subject that is at the same time named or insinuated, as "I shall not mention Caesar's avarice, nor his cunning, nor his morality."
Sentence: In modern political dialog, one often hears examples of apophasis as a way to smear an opponent with negative or even false accusations, while seeming or purporting to be clean.
[From Greek, ap'opha(nai) - to say no, deny]
Of course, since all participants [except the common man investor] have learned to recognize signs of computer order floods, and to climb the trees to safety at first sight, the swings are much larger and faster than an orderly market would normally have. For all the blather about "liquidity" provided by computer trading, is it not NOW obvious to all that such "liquidity" is a phantom, and is NOT there when needed ?!
Get rid of ALL computer trading EXCEPT within very narrow market windows of time and price.
The knaves at the SEC won't do that, though. They care NOTHING for the common man investors. All they want to to line up a job with fat pay at the Street or the Street's law firms after leaving government.
Actions
Waiting. Krypto has plenty of cash to redeploy. She did a LOT of selling as the market approached the recent highs - I posted them all. Notice that UNLESS one does selling on the way up, one will not have cash to buy on big plunges. You really do have to buy low, sell high AND sell high to buy low. It will take a good bit more drop to trigger Krypto's buy programs again. Just sitting & waiting.
Mrs. B has a bit more more cash to redeploy, too. No ideas in mind for now, though. Lolol, I think she is the only buyer at her local broker's office lately.
Word of the Day
"Apophasis" - noun [$100] Rhetorical
Apophasis means denial of one's intention to speak of a subject that is at the same time named or insinuated, as "I shall not mention Caesar's avarice, nor his cunning, nor his morality."
Sentence: In modern political dialog, one often hears examples of apophasis as a way to smear an opponent with negative or even false accusations, while seeming or purporting to be clean.
[From Greek, ap'opha(nai) - to say no, deny]
Wednesday, May 19, 2010
Germany Leading ...
in putting the financial markets back to reality. Germany acted alone, why ? I'd guess they are sick and tired of the platitudes and theoretical baloney bantered about in London and the US at the behest of hedge funds and the Street, mostly by people getting paid by, or in the pocket of those same parties.
FT: "... The euro fell to a fresh four-year low overnight as traders were spooked by news that Germany was banning ‘naked’ short-selling – selling securities such as shares and bonds that are not owned or borrowed – of some banks’ stocks and bonds. This provided a deadly compound for the market to swallow ... "
Oh woe !!! Traders can't sell shares they don't own or haven't borrowed.
!NOT! IT'S ABOUT BLEEPING TIME THIS FRAUD WAS STOPPED ABSOLUTELY 100%.
Thank you, Germany, for showing some reason and leadership.
And "Germany is also prohibiting investors from buying credit-default swaps on sovereign debt unless they own the underlying bonds. "
GOOD !!! That ban should be worldwide and apply to all credit default swaps.
SEC
How STUPID is the SEC ? Their report on the "flash crash" say ETFs got hit hardest. Why ? That's because the market makers can do naked shorts on ETFs. So when e-minis go down a lot, the market makers who might not be able to do naked shorts on stocks in the S&P 500, can do them on ETFs. So they dumped them.
Ban ALL naked shorts by ANYONE, including market makers.
Elections
The sleazy politician, Arlen Specter, was defeated. Excellent !
Richard Blumenthal, the current Connecticut Attorney General and a candidate for the US Senate, lied about serving in Vietnam. That is a particularly despicable lie and proves he is a knave. We don't need more knaves in the US Senate.
Actions
Krypto is salivating, awaiting a chance to buy more stocks at good prices. But having feasted last Friday, she will wait at least one week. One must diversify over time, too.
Word of the Day
"Bricole" - noun [$100]; - verb [$1000] obsolete, rare.
"Bricolage" - noun [$100] from bricole.
Bricole means (noun) 1. (from Billiards) a shot in which the cue ball strikes a cushion after touching the object ball and before hitting the carom ball; 2. an indirect action or unexpected stroke; 3. an ancient military engine or catapult for throwing stones or bolts; (verb) to cause to rebound, to pass a ball, toss it sideways.
Bricolage means a pattern or collection of the bricoles or the results of bricoles.
Sentence: (A) (from "How to Live: A Life of Montaigne" by Sarah Bakewell, p 242) "In the city, as with his book, he [Montaigne] thought creative bricolage and imperfection preferable to sterile orderliness, and took pleasure in contemplating the result." (B) The bricole that Germany provided last evening to financial markets overnight - by imposing a ban on naked short selling of government debt and putting some restriction on some credit default swaps - is causing some volatiliy this morning.
FT: "... The euro fell to a fresh four-year low overnight as traders were spooked by news that Germany was banning ‘naked’ short-selling – selling securities such as shares and bonds that are not owned or borrowed – of some banks’ stocks and bonds. This provided a deadly compound for the market to swallow ... "
Oh woe !!! Traders can't sell shares they don't own or haven't borrowed.
!NOT! IT'S ABOUT BLEEPING TIME THIS FRAUD WAS STOPPED ABSOLUTELY 100%.
Thank you, Germany, for showing some reason and leadership.
And "Germany is also prohibiting investors from buying credit-default swaps on sovereign debt unless they own the underlying bonds. "
GOOD !!! That ban should be worldwide and apply to all credit default swaps.
SEC
How STUPID is the SEC ? Their report on the "flash crash" say ETFs got hit hardest. Why ? That's because the market makers can do naked shorts on ETFs. So when e-minis go down a lot, the market makers who might not be able to do naked shorts on stocks in the S&P 500, can do them on ETFs. So they dumped them.
Ban ALL naked shorts by ANYONE, including market makers.
Elections
The sleazy politician, Arlen Specter, was defeated. Excellent !
Richard Blumenthal, the current Connecticut Attorney General and a candidate for the US Senate, lied about serving in Vietnam. That is a particularly despicable lie and proves he is a knave. We don't need more knaves in the US Senate.
Actions
Krypto is salivating, awaiting a chance to buy more stocks at good prices. But having feasted last Friday, she will wait at least one week. One must diversify over time, too.
Word of the Day
"Bricole" - noun [$100]; - verb [$1000] obsolete, rare.
"Bricolage" - noun [$100] from bricole.
Bricole means (noun) 1. (from Billiards) a shot in which the cue ball strikes a cushion after touching the object ball and before hitting the carom ball; 2. an indirect action or unexpected stroke; 3. an ancient military engine or catapult for throwing stones or bolts; (verb) to cause to rebound, to pass a ball, toss it sideways.
Bricolage means a pattern or collection of the bricoles or the results of bricoles.
Sentence: (A) (from "How to Live: A Life of Montaigne" by Sarah Bakewell, p 242) "In the city, as with his book, he [Montaigne] thought creative bricolage and imperfection preferable to sterile orderliness, and took pleasure in contemplating the result." (B) The bricole that Germany provided last evening to financial markets overnight - by imposing a ban on naked short selling of government debt and putting some restriction on some credit default swaps - is causing some volatiliy this morning.
Wednesday, May 12, 2010
More Failures in Government
Today's papers illustrate that government in the US at both the Federal and local levels has moved further into fantasy land.
On the local level, read this one from the FT: "Health campaigners have opened up another front in the battle against childhood obesity after a California county prepared to approve a ban on the use of toys and gifts to sell fast-food meals. ... Ken Yeager, the county supervisor who introduced the latest measure, told the Financial Times the ban was a “tool to combat the skyrocketing rate of childhood obesity”."
Why stop at fast food ? Candy, etc. to follow ? No more baseball cards in bubble gum. No more toys in Cracker-Jacks. Heck, they will probably ban Animal Crackers, too.
Why not just seize all children at birth and put them in state-run clinics where they can be properly indoctrinated into agents of state policy ? Where does one draw the line there ?
Here's another example of arbitrary government from the WSJ: "When officials at New York Stock Exchange parent NYSE Euronext and the Nasdaq Stock Market's owner Nasdaq OMX Group Inc. decided last week to cancel certain transactions made during Thursday's market tumult, they drew a sharp dividing line. On one side stood investors allowed to cash in on the trade of a lifetime. On the other side were people who narrowly missed. Now some are speaking out against the exchanges' decision, which they say was arbitrary and has served to undermine confidence in the markets."
Who can say they aren't correct ? The order cancellations WERE arbitrary. Why a cut-off at 60% ? That's a HUGE change. Why not 10% ? I'd guess the SEC/Exchanges want to protect the "market makers", letting as many trades go through as possible.
The SEC/Exchanges (except NYSE) really don't care about investors. All they want to do is preserve the vig for the Street and the big money boys.
We need people with a clear philosophy of fairness to INVESTORS and who want market to serve INVESTORS, not the Street or big money traders. But all we have now are people who want their next job to be a high paying one with the likes of Goug'em Sachs or its law firms.
Sigh ...
We need to clean out the stables full of manure that is DC.
Actions
None yet. Krypto wants lower prices to swing her bat.
Word of the Day
"Gimcrack" - noun & adjective [$10]
Gimcrack means (adjective) showy but flimsy & worthless; (noun) a cheap, showy ornament, a knickknack.
Sentence: All I expect from the SECto the latest market disaster in another gimcrack response to be announced in a big press conference with soothing, but meaningless words.
On the local level, read this one from the FT: "Health campaigners have opened up another front in the battle against childhood obesity after a California county prepared to approve a ban on the use of toys and gifts to sell fast-food meals. ... Ken Yeager, the county supervisor who introduced the latest measure, told the Financial Times the ban was a “tool to combat the skyrocketing rate of childhood obesity”."
Why stop at fast food ? Candy, etc. to follow ? No more baseball cards in bubble gum. No more toys in Cracker-Jacks. Heck, they will probably ban Animal Crackers, too.
Why not just seize all children at birth and put them in state-run clinics where they can be properly indoctrinated into agents of state policy ? Where does one draw the line there ?
Here's another example of arbitrary government from the WSJ: "When officials at New York Stock Exchange parent NYSE Euronext and the Nasdaq Stock Market's owner Nasdaq OMX Group Inc. decided last week to cancel certain transactions made during Thursday's market tumult, they drew a sharp dividing line. On one side stood investors allowed to cash in on the trade of a lifetime. On the other side were people who narrowly missed. Now some are speaking out against the exchanges' decision, which they say was arbitrary and has served to undermine confidence in the markets."
Who can say they aren't correct ? The order cancellations WERE arbitrary. Why a cut-off at 60% ? That's a HUGE change. Why not 10% ? I'd guess the SEC/Exchanges want to protect the "market makers", letting as many trades go through as possible.
The SEC/Exchanges (except NYSE) really don't care about investors. All they want to do is preserve the vig for the Street and the big money boys.
We need people with a clear philosophy of fairness to INVESTORS and who want market to serve INVESTORS, not the Street or big money traders. But all we have now are people who want their next job to be a high paying one with the likes of Goug'em Sachs or its law firms.
Sigh ...
We need to clean out the stables full of manure that is DC.
Actions
None yet. Krypto wants lower prices to swing her bat.
Word of the Day
"Gimcrack" - noun & adjective [$10]
Gimcrack means (adjective) showy but flimsy & worthless; (noun) a cheap, showy ornament, a knickknack.
Sentence: All I expect from the SECto the latest market disaster in another gimcrack response to be announced in a big press conference with soothing, but meaningless words.
Tuesday, May 11, 2010
Unplug the Machines. II.
An article in today's Wall Street Journal online makes the situation last Thursday clear: it was a catastrophe perfectly preventable and precisely caused by excessive use of machines for trading. And it was caused by Wall Street firms and the big hedge funds. "Real" investors had nothing to do with it.
***A few quotes from the WSJ follow***
Did a Big Bet Help Trigger 'Black Swan' Stock Swoon?
On any other day, this $7.5 million trade for 50,000 options contracts might have briefly hurt stock prices, though not caused much of a ripple. But coming on a day when all varieties of financial markets were deeply unsettled, the trade may have played a key role in the stock-market collapse just 20 minutes later.
The trade by Universa, a hedge fund advised by Nassim Taleb, author of "Black Swan: The Impact of the Highly Improbable," led traders on the other side of the transaction—including Barclays Capital, the brokerage arm of British bank Barclays PLC—to do their own selling to offset some of the risk, according to traders in Chicago.
Then, as the market fell, those declines are likely to have forced even more "hedging" sales, creating a tsunami of pressure that spread to nearly all parts of the market.
The tidal wave of selling fed into a market already on edge about the economy in Europe. As the selling spread, a blast of orders appears to have jarred the flow of data going into brokerage firms, such as Barclays Capital, according to people familiar with the matter.
Exchanges, in turn, were clogged by huge volumes of offers to buy and sell stocks, say traders and exchange executives. Even before some individual stocks collapsed to just a penny a share, data from the NYSE Euronext's electronic Arca exchange started to appear questionable, say traders.
...
"It did point out that there is a structural flaw," said Gus Sauter, chief investment officer at Vanguard Group. "We have to think through how you preserve the immediacy and yet preserve the liquidity."
The episode highlights a bigger question about the stock market. In recent years, the market has grown exponentially faster and more diverse. Stock trading's main venue is no longer the New York Stock Exchange but rather computer servers run by companies as far afield as Austin, Texas; Kansas City, Mo.; and Red Bank, N.J.
This diversity has made stock-trading cheaper, a plus for both institutional and individual investors. It has also made it more unruly and difficult to ensure an orderly market. Today that responsibility falls largely on a group of high-frequency traders who make up an estimated two-thirds of stock-market volume. These for-profit hedge funds look out for their own investors' interests and not those of investors in the stocks they trade.
***end of quotes***
It's simple. Whenever the market (or individual stock) moves past a precise limit, unplug the machines. Make people make the decisions. Expose orders widely to everyone and give PEOPLE time to think. In these situation, liquidity is irrelevant. Fairness matters a lot more.
If this sounds like the OLD NYSE order imbalance mechanism, then you're right. Bring it back and enforce it on ALL markets.
The market is for investors, not computer traders. They come last.
Actions
I deferred Krypto's orders as yesterday gave no good buy points. The futures are down today, to it's likely I'll buy Krypto's buys today.
Word of the Day
"Kakistocracy" - noun [$100]
Kakistocracy means government by the worst person; a form of government in which the worst persons are in power.
Sentence: Al Capone's Chicago was a 20th century example of a small kakistocracy that was not ideologically driven. But modern DC seems moving towards a venal kakistocracy where its ruling classes are interested only in their own money and power, not the good of the nation.
***A few quotes from the WSJ follow***
Did a Big Bet Help Trigger 'Black Swan' Stock Swoon?
On any other day, this $7.5 million trade for 50,000 options contracts might have briefly hurt stock prices, though not caused much of a ripple. But coming on a day when all varieties of financial markets were deeply unsettled, the trade may have played a key role in the stock-market collapse just 20 minutes later.
The trade by Universa, a hedge fund advised by Nassim Taleb, author of "Black Swan: The Impact of the Highly Improbable," led traders on the other side of the transaction—including Barclays Capital, the brokerage arm of British bank Barclays PLC—to do their own selling to offset some of the risk, according to traders in Chicago.
Then, as the market fell, those declines are likely to have forced even more "hedging" sales, creating a tsunami of pressure that spread to nearly all parts of the market.
The tidal wave of selling fed into a market already on edge about the economy in Europe. As the selling spread, a blast of orders appears to have jarred the flow of data going into brokerage firms, such as Barclays Capital, according to people familiar with the matter.
Exchanges, in turn, were clogged by huge volumes of offers to buy and sell stocks, say traders and exchange executives. Even before some individual stocks collapsed to just a penny a share, data from the NYSE Euronext's electronic Arca exchange started to appear questionable, say traders.
...
"It did point out that there is a structural flaw," said Gus Sauter, chief investment officer at Vanguard Group. "We have to think through how you preserve the immediacy and yet preserve the liquidity."
The episode highlights a bigger question about the stock market. In recent years, the market has grown exponentially faster and more diverse. Stock trading's main venue is no longer the New York Stock Exchange but rather computer servers run by companies as far afield as Austin, Texas; Kansas City, Mo.; and Red Bank, N.J.
This diversity has made stock-trading cheaper, a plus for both institutional and individual investors. It has also made it more unruly and difficult to ensure an orderly market. Today that responsibility falls largely on a group of high-frequency traders who make up an estimated two-thirds of stock-market volume. These for-profit hedge funds look out for their own investors' interests and not those of investors in the stocks they trade.
***end of quotes***
It's simple. Whenever the market (or individual stock) moves past a precise limit, unplug the machines. Make people make the decisions. Expose orders widely to everyone and give PEOPLE time to think. In these situation, liquidity is irrelevant. Fairness matters a lot more.
If this sounds like the OLD NYSE order imbalance mechanism, then you're right. Bring it back and enforce it on ALL markets.
The market is for investors, not computer traders. They come last.
Actions
I deferred Krypto's orders as yesterday gave no good buy points. The futures are down today, to it's likely I'll buy Krypto's buys today.
Word of the Day
"Kakistocracy" - noun [$100]
Kakistocracy means government by the worst person; a form of government in which the worst persons are in power.
Sentence: Al Capone's Chicago was a 20th century example of a small kakistocracy that was not ideologically driven. But modern DC seems moving towards a venal kakistocracy where its ruling classes are interested only in their own money and power, not the good of the nation.
Monday, May 10, 2010
Unplug the Machines
The solution to avoid ANY more crack-ups in the markets is so simple and pure that, of course, the SEC and Congress will not do it. This potential for a disaster has been talked to death for almost 25 years since the crash of 1987.
Thursday's meltdown appears to have been purely machine driven as they took over the markets: trading algorithms, rapid-fire trading, program trades ... on and on. They moved so fast that no one had time to make rational decisions. And we all know that the "selling" was largely naked short selling by hedge funds and market makers. You know very well they did not have borrows in place. That famous "market maker" exception - that's the same fig leaf Goldman Sachs hides behind for a lot of its deceptive trades.
Sigh ... 25 years of building trouble and no one listens or does anything. That's the power of money. Wall Street and hedge fund money has bought the markets for their own playground. The seller ? The SEC, which dithers for years doing ... nothing.
The solution ?
Unplug the machines. Not permanently, as in stable markets they provide good liquidity benefits in stable or slowly drifting markets. Unplug them whenever stock has fallen (or risen) 2% or a major average has fallen (or risen) 2% from the prior day's close. Let people handle those trades. And enforce trading halts nationwide. And extend them to options and futures markets. AND to derivatives. AND "dark pools". Apply them to ALL broker-dealers for ANY trades.
I don't care if "market makers" have a tougher time. That's their problem. If they want to sell options and can't "hedge", just charge more for the risk.
I don't care if electronic exchanges have trouble and lose business. That's tough - they simply do not work fairly in rapid markets. Force all trades in fast, unstable markets onto the NYSE.
More: no short selling when a stock is down 2%. No naked shorts by ANYONE including market makers AND ETFs. And for ANY short sale not from the broker's in-house holdings, I think a borrow should be pre-arranged.
No more ETFs backed by derivatives. And get rid of the ones that exist now. The markets should be brought back to REALITY from the phantom zone.
Travel
I spent a few days in my hometown last week. What a fine place to live ! Uh .. that is, if one has a good job. Unemployment is very high and I'd guess "underemployment" is stunning. A cousin had me over for a BBQ - ahhhh ... the pleasures of burgers, baked beans and beer ! And a taco salad for multicultural diversity.
And then ... Big Al had a BBQ and produced a culinary masterpiece: grilled spam burgers with cheese. Mon dieu ... c'est magnifique !!!
Actions
Krypto has many buy orders for me, as does Sky. I will do them sometime today, likely not at the open as futures indicate a huge up day on the news of the Euro-EU stabilization package. Krypto wants me to sell TIPs, and cash and buy European, Emerging market and US. Sky wants me to re-buy some resource stocks (these will be one or all of BHP, FCX and CLF).
By the way, I closed Fido Fund as a separate fund and now put those stocks in the Sky Fund, run by my fine herding dog, Sky, as directed by whistle commands from Mrs. B.
More ... Sky placed 6th and 7th in the weekend's sheep herding trials in northern New Hampshire. This was Mrs. B's (near) debut as a handler and she did very well, of course. Krypto was a bit of a goofball, but she's a beginner.
Book of the Week
The Grass Crown, by Colleen McCullough is the follow-on book to The First Man in Rome. This very fine historical novel combines good writing with solid research to produce an engaging and enjoyable story of the rise of Sulla to power in Rome. And it puts "meat" onto the dry historical accounts of the 100 years destruction of the Roman Republic. By who ? Easy ... the rich and powerful in the Senate did it by their lust for money and power. Too few had old fashioned integrity or any sense of fairness.
The Grass Crown is superb - if you are interested in Rome, read it.
Word of the Day
"Retradition" - noun [$1000] (rare)
Retradition means the action of handing back.
Sentence: Financial markets need the retradition of ALL trading in fast or unstable markets back to the NYSE where humans can stop the machines from causing disasters.
Thursday's meltdown appears to have been purely machine driven as they took over the markets: trading algorithms, rapid-fire trading, program trades ... on and on. They moved so fast that no one had time to make rational decisions. And we all know that the "selling" was largely naked short selling by hedge funds and market makers. You know very well they did not have borrows in place. That famous "market maker" exception - that's the same fig leaf Goldman Sachs hides behind for a lot of its deceptive trades.
Sigh ... 25 years of building trouble and no one listens or does anything. That's the power of money. Wall Street and hedge fund money has bought the markets for their own playground. The seller ? The SEC, which dithers for years doing ... nothing.
The solution ?
Unplug the machines. Not permanently, as in stable markets they provide good liquidity benefits in stable or slowly drifting markets. Unplug them whenever stock has fallen (or risen) 2% or a major average has fallen (or risen) 2% from the prior day's close. Let people handle those trades. And enforce trading halts nationwide. And extend them to options and futures markets. AND to derivatives. AND "dark pools". Apply them to ALL broker-dealers for ANY trades.
I don't care if "market makers" have a tougher time. That's their problem. If they want to sell options and can't "hedge", just charge more for the risk.
I don't care if electronic exchanges have trouble and lose business. That's tough - they simply do not work fairly in rapid markets. Force all trades in fast, unstable markets onto the NYSE.
More: no short selling when a stock is down 2%. No naked shorts by ANYONE including market makers AND ETFs. And for ANY short sale not from the broker's in-house holdings, I think a borrow should be pre-arranged.
No more ETFs backed by derivatives. And get rid of the ones that exist now. The markets should be brought back to REALITY from the phantom zone.
Travel
I spent a few days in my hometown last week. What a fine place to live ! Uh .. that is, if one has a good job. Unemployment is very high and I'd guess "underemployment" is stunning. A cousin had me over for a BBQ - ahhhh ... the pleasures of burgers, baked beans and beer ! And a taco salad for multicultural diversity.
And then ... Big Al had a BBQ and produced a culinary masterpiece: grilled spam burgers with cheese. Mon dieu ... c'est magnifique !!!
Actions
Krypto has many buy orders for me, as does Sky. I will do them sometime today, likely not at the open as futures indicate a huge up day on the news of the Euro-EU stabilization package. Krypto wants me to sell TIPs, and cash and buy European, Emerging market and US. Sky wants me to re-buy some resource stocks (these will be one or all of BHP, FCX and CLF).
By the way, I closed Fido Fund as a separate fund and now put those stocks in the Sky Fund, run by my fine herding dog, Sky, as directed by whistle commands from Mrs. B.
More ... Sky placed 6th and 7th in the weekend's sheep herding trials in northern New Hampshire. This was Mrs. B's (near) debut as a handler and she did very well, of course. Krypto was a bit of a goofball, but she's a beginner.
Book of the Week
The Grass Crown, by Colleen McCullough is the follow-on book to The First Man in Rome. This very fine historical novel combines good writing with solid research to produce an engaging and enjoyable story of the rise of Sulla to power in Rome. And it puts "meat" onto the dry historical accounts of the 100 years destruction of the Roman Republic. By who ? Easy ... the rich and powerful in the Senate did it by their lust for money and power. Too few had old fashioned integrity or any sense of fairness.
The Grass Crown is superb - if you are interested in Rome, read it.
Word of the Day
"Retradition" - noun [$1000] (rare)
Retradition means the action of handing back.
Sentence: Financial markets need the retradition of ALL trading in fast or unstable markets back to the NYSE where humans can stop the machines from causing disasters.
Tuesday, March 2, 2010
Market Muddle
The stock markets moved up yesterday. So far, it has recovered about 2/3 of its Greek panic losses. For this blogger, I have not been able to visualize a path for much higher prices grounded in reality, not hope. My old target from 2009 was 1200 on the S&P, and perhaps that can be hit. World trade has recovered considerably. Today's FT online: "Global trade in goods has continued to bounce back rapidly from its huge fall a year ago, with an authoritative index recording the fastest monthly increase in December in its 19-year history. Data from the Bureau for Economic Policy Analysis, a Dutch research institute, suggest that little permanent damage has been done to the world trading system by the financial crisis."
More: "Richard Baldwin, professor of international economics at the Graduate Institute in Geneva, said that the rapid recovery suggested that it was largely a fall in demand that had caused trade to contract. 'A large part of the fall was the shock to expectations – the ‘Oh my God’ factor,” he said. “Anything postponable largely got postponed.' "
That was my analysis from early 2009 published here at various times - a Panic caused by the beefers in the fall of 2008 led to the huge economic contraction as everythign was deferred. Here's the link to the full FT article -> http://www.ft.com/cms/s/0/296dedc0-2564-11df-9cdb-00144feab49a.html
By the way, FT is my first read in the morning. Sometimes I read it online the prior evening - many stories are current then as it's ready for the European morning ahead of ours.
Another very interesting article in FT is this one, on similarities - and differences - between quantitative easing in Japan after 2001 and the current Fed adn ECB policies. See -> http://www.ft.com/cms/s/0/af295c08-255d-11df-9cdb-00144feab49a.html
Back to the markets, my thinking is a slow slide down this year until around S&P 1000. Jobs numbers stink. The Fed will cease buying mortgages in March. Obama's stimulus plan was crappy and did not work as the Pelosi-Reid crowd wasted it. State governments have huge pain to go through and must but pay and benefits, particularly for retirees. I expect a wave of taxpayer revolts.
The US will recover from all this eventually and do well. But lots of restructuring must be done and Obama is NOT providing any leadership to a stable future. His plans and efforts want to push the US to a proto-fascist swamp where the US economy is run by the EPA and his bureaucrats control and ration the health care of everyone. That's not a "glide path" to optimism. Hence my moderate bearishness.
BUT that opinion and $1 will get you a cup of Joe in most diners or corner coffee shops. Make the $5 for Starbucks, $2 for Dunkin Donuts.
1-2-3 Fund
My April puts are red. Ugh. My original plan was to buy three slugs to go 300% short. I never got the third slug as the market dropped. Now perhaps I can get it. I'll wait for S&P 1120 to improve my average price enough for the added risk. Well .... that's the rationale I'm using to violate my Green-Red rule. This might not work. Rule violations can bring punishment from the market gods.
Word of the Day
"Dolorous" - adjective [$10]
Dolorous means 1. distressing, painful, doleful, dismal; 2. distressed, sad.
Sentence: US state and local governments face a dolorous future: the bubble of easy tax money from capital gains taxes, high income persons and real estate was squandered and is gone. They locked in a huge cost base in employee pay and benefits, particularly retiree benefits. Now they must cut and the squeals from the public sector hogs will be shrill.
More: "Richard Baldwin, professor of international economics at the Graduate Institute in Geneva, said that the rapid recovery suggested that it was largely a fall in demand that had caused trade to contract. 'A large part of the fall was the shock to expectations – the ‘Oh my God’ factor,” he said. “Anything postponable largely got postponed.' "
That was my analysis from early 2009 published here at various times - a Panic caused by the beefers in the fall of 2008 led to the huge economic contraction as everythign was deferred. Here's the link to the full FT article -> http://www.ft.com/cms/s/0/296dedc0-2564-11df-9cdb-00144feab49a.html
By the way, FT is my first read in the morning. Sometimes I read it online the prior evening - many stories are current then as it's ready for the European morning ahead of ours.
Another very interesting article in FT is this one, on similarities - and differences - between quantitative easing in Japan after 2001 and the current Fed adn ECB policies. See -> http://www.ft.com/cms/s/0/af295c08-255d-11df-9cdb-00144feab49a.html
Back to the markets, my thinking is a slow slide down this year until around S&P 1000. Jobs numbers stink. The Fed will cease buying mortgages in March. Obama's stimulus plan was crappy and did not work as the Pelosi-Reid crowd wasted it. State governments have huge pain to go through and must but pay and benefits, particularly for retirees. I expect a wave of taxpayer revolts.
The US will recover from all this eventually and do well. But lots of restructuring must be done and Obama is NOT providing any leadership to a stable future. His plans and efforts want to push the US to a proto-fascist swamp where the US economy is run by the EPA and his bureaucrats control and ration the health care of everyone. That's not a "glide path" to optimism. Hence my moderate bearishness.
BUT that opinion and $1 will get you a cup of Joe in most diners or corner coffee shops. Make the $5 for Starbucks, $2 for Dunkin Donuts.
1-2-3 Fund
My April puts are red. Ugh. My original plan was to buy three slugs to go 300% short. I never got the third slug as the market dropped. Now perhaps I can get it. I'll wait for S&P 1120 to improve my average price enough for the added risk. Well .... that's the rationale I'm using to violate my Green-Red rule. This might not work. Rule violations can bring punishment from the market gods.
Word of the Day
"Dolorous" - adjective [$10]
Dolorous means 1. distressing, painful, doleful, dismal; 2. distressed, sad.
Sentence: US state and local governments face a dolorous future: the bubble of easy tax money from capital gains taxes, high income persons and real estate was squandered and is gone. They locked in a huge cost base in employee pay and benefits, particularly retiree benefits. Now they must cut and the squeals from the public sector hogs will be shrill.
Wednesday, February 17, 2010
Same Old ...
The problems with Greece debt has brought to the forefront the same old "root cause" of the Panic of 2008 and all the problems that arose in that financial crisis.
The root cause is the colossal sums sloshing around in hedge funds and the Wall Street "investment" banks that facilitate their antics.
Look at the FT article today: http://www.ft.com/cms/s/0/87c3d0c6-1b30-11df-953f-00144feab49a.html
Here are some excepts if you can't get it all: "A few weeks ago, a distinctive delegation was spotted in the financial quarter of Athens: bankers from Goldman Sachs were escorting a high-powered team from the investment group run by John Paulson, the American hedge fund guru, around meetings with Greek officials and analysts ... "
"That is partly because of the manner in which hedge funds and others are perceived to be betting against the euro in general, and the debt of economically “peripheral” countries such as Greece in particular, by using derivative instruments such as credit default swaps ... "
"Goldman burst on to the Athens scene in 2002 by arranging a massive swaps transaction aimed at reducing the cost of financing that country’s public debt, which had reached a level that exceeded annual gross domestic product. The deal involved some €5bn ($6.8bn, £4.4bn) of off-market cross-currency swaps linked to outstanding Greek debt, where bonds denominated in yen and dollars were swapped for euros. Because it was treated as a currency trade rather than a loan, it helped Greece to meet European Union deficit limits while pushing repayments far into the future."
In simple words, it was a financial scam to defraud "real" bond investors of necessary information. Who make hundreds of million (billion ?) facilitating the fraud ? GS.
Who created the subprime mess ? The Wall Street investment banks did, and the hedge fund provided money for the equity and lowest rated tranches. Of course, BOTH then shorted the securities they were selling to real investors. Their swaps and positions in phony indexes such as created by Markit and derivatives on those gave them a huge, unregulated sandbox to play their games.
And they created all those phony collateralized debt obligations (CDO) - some concocted out of swaps alone - and the credit default swaps on those. All that was done to have a hidden playroom for their proprietary trading arms and their co-conspirators, the hedge funds. Nothing was regulated or reported accurately.
And what is DC doing ? Ooops I means RC = Racketeer Central. Nothing. Most are busy collecting bribes and payoffs (oops, I mean campaign contributions) from hedge funds and Wall Street as payoffs to slow and complicate efforts for real reform.
Ban all credit default swaps. Stop proprietary trading operations in ANY financial institution with any governmental licenses for anything. Bring back openness and expose all "swaps" to disclosure and require real cash collateral to back open short positions in those. And regulate all large hedge funds; limit lending to them. They are dangerous to the common man.
Word of the Day
"Incontinent" - adjective [$10 for precise definition]
Incontinent means 1. unable to control movements of the bowels or bladder or both; 2. lacking self restraint (especially in regard of sexual desire); 3. (followed by 'of') unable to control.
Sentence: In the long term, the greed inherent in Wall Street and hedge funds make them terminally incontinent of their leverage and risk. Without real regulation, they will blow up again. That old "Liar's Poker" metaphor of a "Big, swinging dick" fits their incontinence (definition #2) perfectly, too.
The root cause is the colossal sums sloshing around in hedge funds and the Wall Street "investment" banks that facilitate their antics.
Look at the FT article today: http://www.ft.com/cms/s/0/87c3d0c6-1b30-11df-953f-00144feab49a.html
Here are some excepts if you can't get it all: "A few weeks ago, a distinctive delegation was spotted in the financial quarter of Athens: bankers from Goldman Sachs were escorting a high-powered team from the investment group run by John Paulson, the American hedge fund guru, around meetings with Greek officials and analysts ... "
"That is partly because of the manner in which hedge funds and others are perceived to be betting against the euro in general, and the debt of economically “peripheral” countries such as Greece in particular, by using derivative instruments such as credit default swaps ... "
"Goldman burst on to the Athens scene in 2002 by arranging a massive swaps transaction aimed at reducing the cost of financing that country’s public debt, which had reached a level that exceeded annual gross domestic product. The deal involved some €5bn ($6.8bn, £4.4bn) of off-market cross-currency swaps linked to outstanding Greek debt, where bonds denominated in yen and dollars were swapped for euros. Because it was treated as a currency trade rather than a loan, it helped Greece to meet European Union deficit limits while pushing repayments far into the future."
In simple words, it was a financial scam to defraud "real" bond investors of necessary information. Who make hundreds of million (billion ?) facilitating the fraud ? GS.
Who created the subprime mess ? The Wall Street investment banks did, and the hedge fund provided money for the equity and lowest rated tranches. Of course, BOTH then shorted the securities they were selling to real investors. Their swaps and positions in phony indexes such as created by Markit and derivatives on those gave them a huge, unregulated sandbox to play their games.
And they created all those phony collateralized debt obligations (CDO) - some concocted out of swaps alone - and the credit default swaps on those. All that was done to have a hidden playroom for their proprietary trading arms and their co-conspirators, the hedge funds. Nothing was regulated or reported accurately.
And what is DC doing ? Ooops I means RC = Racketeer Central. Nothing. Most are busy collecting bribes and payoffs (oops, I mean campaign contributions) from hedge funds and Wall Street as payoffs to slow and complicate efforts for real reform.
Ban all credit default swaps. Stop proprietary trading operations in ANY financial institution with any governmental licenses for anything. Bring back openness and expose all "swaps" to disclosure and require real cash collateral to back open short positions in those. And regulate all large hedge funds; limit lending to them. They are dangerous to the common man.
Word of the Day
"Incontinent" - adjective [$10 for precise definition]
Incontinent means 1. unable to control movements of the bowels or bladder or both; 2. lacking self restraint (especially in regard of sexual desire); 3. (followed by 'of') unable to control.
Sentence: In the long term, the greed inherent in Wall Street and hedge funds make them terminally incontinent of their leverage and risk. Without real regulation, they will blow up again. That old "Liar's Poker" metaphor of a "Big, swinging dick" fits their incontinence (definition #2) perfectly, too.
Friday, January 22, 2010
Welcome Back ...
Obama, as a reader of this blog. He had stopped reading this blog quite awhile ago as he moved to the Statist camp with his foolish and fiendishly complex ObamaCare plan. But now, duly chastened by the Scott Brown win in Massachusetts, he's adopting some of my long propounded policies regarding banks and hedge funds.
In its essence, proprietary trading in a bank or securities firm is trading against their own customers. Every single $ of that profit comes at the expense of their own customers. Obviously, no financial institution with the privileged position of serving the public markets should be permitted to do that.
And that is precisely what destroyed Bear Stearns and Lehman Brothers and almost Merrill Lynch until Bank of American ate that road kill. Their balance sheets were swollen with illiquid, unmarketable proprietary trades and their cousin, unsold chunks of underwritings.
Not all failed banks failed from proprietary trading: Wachovia and Washington Mutual died from bad loans. BUT some did.
Why should a bank with access to the Fed be able to speculate with that money ? They should be prohibited from doing so.
And who hasn't been harmed by the giant banks gobbling up fine small banks ? The big boys raise fees and gouge customers. There is no economy of scale in community banking; the big banks buy them and then suck the community's money to "invest" in securities. This trend has been going on for years and it is not good.
Economies of scale ? Nope. Most bank fees much less at small banks that at the big ones ? And service is better at the small banks, too. Banks can and do contract out a lot of their computer services now anyway.
Of course SECURITIES firms do have some economies of scale. But the level of scale that provides those efficiencies has long been passed. Size is necessary for underwriting large bond issues. That critical size is way below the size of the big Wall Street Banks. And the reality is, they bank should pre-sell most of an issue anyway. If a bank gets stuck with anything, they miss-priced it.
One the the reason Citibank was in so much trouble is the leveraged loans it made (to get a big fee) and did not re-sell. That is simply bad business.
That whole industry needs a heavy dose of rationality and POPULISM.
Welcome back, Obama, as a reader. Keep reading this blog and adopt more of my populist libertarian ideas.
Word of the Day
"Orotund" - adjective [$10]
Orotund means 1. (of the voice or phrasing) full, round, imposing; 2. (of writing, style, expression) pompous, pretentious.
Sentence: Obama used his orotund rhetorical skills to propose some well-need reforms on bloated banks that have strayed so far from their mission they seem to no longer understand why their privileged positions exist.
In its essence, proprietary trading in a bank or securities firm is trading against their own customers. Every single $ of that profit comes at the expense of their own customers. Obviously, no financial institution with the privileged position of serving the public markets should be permitted to do that.
And that is precisely what destroyed Bear Stearns and Lehman Brothers and almost Merrill Lynch until Bank of American ate that road kill. Their balance sheets were swollen with illiquid, unmarketable proprietary trades and their cousin, unsold chunks of underwritings.
Not all failed banks failed from proprietary trading: Wachovia and Washington Mutual died from bad loans. BUT some did.
Why should a bank with access to the Fed be able to speculate with that money ? They should be prohibited from doing so.
And who hasn't been harmed by the giant banks gobbling up fine small banks ? The big boys raise fees and gouge customers. There is no economy of scale in community banking; the big banks buy them and then suck the community's money to "invest" in securities. This trend has been going on for years and it is not good.
Economies of scale ? Nope. Most bank fees much less at small banks that at the big ones ? And service is better at the small banks, too. Banks can and do contract out a lot of their computer services now anyway.
Of course SECURITIES firms do have some economies of scale. But the level of scale that provides those efficiencies has long been passed. Size is necessary for underwriting large bond issues. That critical size is way below the size of the big Wall Street Banks. And the reality is, they bank should pre-sell most of an issue anyway. If a bank gets stuck with anything, they miss-priced it.
One the the reason Citibank was in so much trouble is the leveraged loans it made (to get a big fee) and did not re-sell. That is simply bad business.
That whole industry needs a heavy dose of rationality and POPULISM.
Welcome back, Obama, as a reader. Keep reading this blog and adopt more of my populist libertarian ideas.
Word of the Day
"Orotund" - adjective [$10]
Orotund means 1. (of the voice or phrasing) full, round, imposing; 2. (of writing, style, expression) pompous, pretentious.
Sentence: Obama used his orotund rhetorical skills to propose some well-need reforms on bloated banks that have strayed so far from their mission they seem to no longer understand why their privileged positions exist.
Tuesday, November 10, 2009
It is Wednesday ?
Nothing is happening - it sure seems like a typical Wednesday.
The Dow hit a recovery high yesterday. Yawn. The S&P 500 got to within one sneeze of its recovery highs. Why ?
The bears and doomsters fail to realize that returning to a prior know condition or state is much easier than growth into a new domain. They use growth rates appropriate for "new growth" applied to recession earnings levels and moan, "too far, too fast". But they are simply using the wrong method for assessing the changes.
I suppose an extended metaphor might help illuminate this concept. Suppose you are digging a hole in "virgin" earth (undug previously). That ground is going to be firm and hard. You'll have to really put your foot on the shovel and push it into the ground, and break the adhesion of the earth to itself. Now fill it in, and dig again. It's easy now - you probably don't even have to use your foot to remove the dirt with the shovel.
Another metaphor. Suppose you had many years of Latin in high school. And 40 years later, you decide to re-learn Latin. Guess what ? It's a LOT easier to recover that knowledge than it was to learn it first. This is something I now have personal experience with, as I am doing just that.
This is why "return to normalcy" can occur with great rapidity. Everyone already knows how to do what they were doing three years ago. So everyone (worldwide) can simply to revert to "normal" behavior once the panic is over. A bit of government stimulus helps regain the psychological confidence. Once that hits, the race begins to reclaim old business everywhere.
Actions
I sold the S&P call options yesterday, booking a 50% gain on quite respectable size. Although I still expect S&P 1200 soon (year end), who knows what the future will bring ? And with the beefers out there, maybe they'll attack and let me re-buy at lower levels.
As I posted in the comments upon the sale of the final chunk, "Je ne suis pas un goinfre" - I am not a greedy pig.
I still have some calls on HBC, MT and BA. HBC reported in Europe today and is trading up. HBC says loss provisions are decreasing - that's good. I'll read the report and decide later whether to sell or hold a few more days.
Word of the Day
"Quondam" - attributive adjective [$10]
Quondam means that once was; sometime; former.
Sentence: Returning to one's quondam state or condition is usually much easier than changing to, or learning, something new.
The Dow hit a recovery high yesterday. Yawn. The S&P 500 got to within one sneeze of its recovery highs. Why ?
The bears and doomsters fail to realize that returning to a prior know condition or state is much easier than growth into a new domain. They use growth rates appropriate for "new growth" applied to recession earnings levels and moan, "too far, too fast". But they are simply using the wrong method for assessing the changes.
I suppose an extended metaphor might help illuminate this concept. Suppose you are digging a hole in "virgin" earth (undug previously). That ground is going to be firm and hard. You'll have to really put your foot on the shovel and push it into the ground, and break the adhesion of the earth to itself. Now fill it in, and dig again. It's easy now - you probably don't even have to use your foot to remove the dirt with the shovel.
Another metaphor. Suppose you had many years of Latin in high school. And 40 years later, you decide to re-learn Latin. Guess what ? It's a LOT easier to recover that knowledge than it was to learn it first. This is something I now have personal experience with, as I am doing just that.
This is why "return to normalcy" can occur with great rapidity. Everyone already knows how to do what they were doing three years ago. So everyone (worldwide) can simply to revert to "normal" behavior once the panic is over. A bit of government stimulus helps regain the psychological confidence. Once that hits, the race begins to reclaim old business everywhere.
Actions
I sold the S&P call options yesterday, booking a 50% gain on quite respectable size. Although I still expect S&P 1200 soon (year end), who knows what the future will bring ? And with the beefers out there, maybe they'll attack and let me re-buy at lower levels.
As I posted in the comments upon the sale of the final chunk, "Je ne suis pas un goinfre" - I am not a greedy pig.
I still have some calls on HBC, MT and BA. HBC reported in Europe today and is trading up. HBC says loss provisions are decreasing - that's good. I'll read the report and decide later whether to sell or hold a few more days.
Word of the Day
"Quondam" - attributive adjective [$10]
Quondam means that once was; sometime; former.
Sentence: Returning to one's quondam state or condition is usually much easier than changing to, or learning, something new.
Thursday, August 13, 2009
Empiricism
Empiricism is the name philosophers give to theories of knowledge (viz, epistemologies) that look to actual facts from senses and the world to access what one knows. When examined deeper, this concept can get complex, but for the use I intend to give it, that definition is good enough.
Viewers and readers of the financial press probably have never heard of this nor seen it in use. That media always seems to rely on mere theories and / or seers to tell us what is happening. Good past performance is not necessary as no one ever checks on whether a theory or a seer was wrong.
Today's FT has a good data point for us. "Germany and France on Thursday delivered a boost to hopes that the eurozone is clawing its way back from recession as the region’s largest members said their economies grew in the second quarter after shrinking for a year.
Robust consumer and public spending - buoyed by large government stimulus programmes - helped both economies grow 0.3 per cent in April, May and June, according to data released by both countries’ statistical offices. "
"The trends surprised economists, who had been expecting both economies to contract again – by 0.3 per cent - after German gross domestic product plummeted 3.5 per cent and French GDP shrank by 1.3 per cent in the first quarter. “The recession has ended. Not just in Germany,” said Jörg Krämer, an economist at Commerzbank in Frankfurt, adding that the “post-Lehman global confidence shock” had receded and companies appeared to be investing again." [my emphasis]
What does this tell us ?
1. All bearish seers and economic theorists prognosticating more pain and serious declines ahead were wrong.
2. Decoupling is partly happening now. Ten years ago the coupling between other regions and the US was very strong. Now it's much less. Soon it may be nil. It's not a binary, static concept.
3. This blog has prominent readers worldwide [that's a joke!].
Rambo said, "I always believed the mind was the best weapon." This is true. One must hold the financial press and seers to a higher epistemological standard. Empiricism has seen use for about 500 years, perhaps beginning with Galileo. Let's use it. Don't believe anything on the financial press unless they provide some facts and proofs.
Actions
Doing nothing. I'm just riding this bull elephant to the next waterhole. Fido Fund and Krypto Fund have plenty of longs. Of course I wish I had more longs [arghh that July blunder due to distractions and taking counsel of my fears], but I don't and accept that. I do not like to be leveraged or too long when the market has broken out to new intermediate highs. I just like parity then and ride along. On rips up, I'll sell some. On big drops, I'll buy the dips unless circumstances change.
I do not trust Obama and fear that he will not re-appoint Ben. If he replaces Ben with the wrong person, risks of inflation and / or stagnation rise considerably.
Word of the Day
"Vicissitude" - noun [$10]
Vicissitude means 1. the quality of being changeable; mutability; 2. sudden changes or alterations.
Sentence: Economic outlooks over time must endure vicissitudes as people and data are not fixed physical constants. Human economics do change and one must accept that as an axiom. Pundits often can't make two good forecasts in a row as they ignore this simple epistemological truth.
Viewers and readers of the financial press probably have never heard of this nor seen it in use. That media always seems to rely on mere theories and / or seers to tell us what is happening. Good past performance is not necessary as no one ever checks on whether a theory or a seer was wrong.
Today's FT has a good data point for us. "Germany and France on Thursday delivered a boost to hopes that the eurozone is clawing its way back from recession as the region’s largest members said their economies grew in the second quarter after shrinking for a year.
Robust consumer and public spending - buoyed by large government stimulus programmes - helped both economies grow 0.3 per cent in April, May and June, according to data released by both countries’ statistical offices. "
"The trends surprised economists, who had been expecting both economies to contract again – by 0.3 per cent - after German gross domestic product plummeted 3.5 per cent and French GDP shrank by 1.3 per cent in the first quarter. “The recession has ended. Not just in Germany,” said Jörg Krämer, an economist at Commerzbank in Frankfurt, adding that the “post-Lehman global confidence shock” had receded and companies appeared to be investing again." [my emphasis]
What does this tell us ?
1. All bearish seers and economic theorists prognosticating more pain and serious declines ahead were wrong.
2. Decoupling is partly happening now. Ten years ago the coupling between other regions and the US was very strong. Now it's much less. Soon it may be nil. It's not a binary, static concept.
3. This blog has prominent readers worldwide [that's a joke!].
Rambo said, "I always believed the mind was the best weapon." This is true. One must hold the financial press and seers to a higher epistemological standard. Empiricism has seen use for about 500 years, perhaps beginning with Galileo. Let's use it. Don't believe anything on the financial press unless they provide some facts and proofs.
Actions
Doing nothing. I'm just riding this bull elephant to the next waterhole. Fido Fund and Krypto Fund have plenty of longs. Of course I wish I had more longs [arghh that July blunder due to distractions and taking counsel of my fears], but I don't and accept that. I do not like to be leveraged or too long when the market has broken out to new intermediate highs. I just like parity then and ride along. On rips up, I'll sell some. On big drops, I'll buy the dips unless circumstances change.
I do not trust Obama and fear that he will not re-appoint Ben. If he replaces Ben with the wrong person, risks of inflation and / or stagnation rise considerably.
Word of the Day
"Vicissitude" - noun [$10]
Vicissitude means 1. the quality of being changeable; mutability; 2. sudden changes or alterations.
Sentence: Economic outlooks over time must endure vicissitudes as people and data are not fixed physical constants. Human economics do change and one must accept that as an axiom. Pundits often can't make two good forecasts in a row as they ignore this simple epistemological truth.
Monday, August 10, 2009
More Readers ...
This most influential blog seems to have quite a following at Barron's now. Mike Santoli at Barron's borrowed my thinking for his column in this week's edition, titled, "Can the S&P handle 1200?" I have written for months that 1200 was a logical place for stocks to go in a "return to normalcy" Here's how he phrased it: "Tough as it may be to place much faith in such a target, the 1200 level is of particular interest and importance. That's about where the market was when Lehman Brothers failed. Other indicators have reverted to pre-Lehman levels, as popularly noted -- including the pace of job losses, interbank lending conditions, spreads on auto-loan securities and volatility indexes."
That's also where the market was before the panic caused by the beefers and shorts. Now that Ben has dealt with most credit market problems, with commercial real estate being last and in process, a return to normal economic conditions should be at hand barring new troubles.
Worldwide economic conditions are improving. From FT: "Business confidence is surging across European manufacturing, with the UK and Italy taking the lead, according to reports on Monday that also highlight the turnround in countries such as Brazil and China. Optimism about production trends is back at levels seen before the intensification of the global slowdown late last year, and points to a clear growth in manufacturing activity by the middle of 2010, the latest KPMG business outlook survey shows. The results are the latest evidence of a synchronised global rebound, possibly at a faster pace than expected until recently."
Copper prices seem to have a clear uptrend for now. At some point they'll level off, but if US housebuilding ever recovers - maybe another year - that metal will surge to the old high, in my humble opinion.
And one more sign of a return to normalcy: (WSJ) "Yanks Get Their Swagger Back
With Red Sox Streak Broken, Planets Are Realigned. ... How do we know the Yankees are playing well again? Because they're annoying. That's how it is with the Yankees: When they're playing poorly, they're strangely lovable in their vulnerability and fear of failure. But when they're rolling, like they are now after four straight wins against the Red Sox, they're ruthless."
I read that A-roid made a game winning hit. It's about time he earned his pay. The Red Faces ... oops ... Sox need to loosen their collars. Hmm David Roidtiz says some bad supplements caused his positive drug test. Sure ...
Actions
Doing nothing. Krypto Fund is doing well. Lately it's significant real estate holdings and REITs (via VNQ - the Vanguard real estate ETF) have perked up. In the last bull market (out of the 2002-3 bottom), those stocks performed very, very well. Real estate is a distinctive asset class and needs to be treated as such. If conditions just return to normal, VNQ will provide excellent gains.
Word of the Day
"Ersatz" - adjective [$10]
Ersatz means being a usual artificial and inferior substitute.
Sentence: The SEC has announced more hearings on short selling. I expect that corrupt agency will provide the same ersatz regulation as it has done for years as it operates out of the pockets of Wall Street.
Le Mot du Jour
"Conjoncture" - noun, feminine; and "Conjoncturel, -elle" - adjective.
Conjoncture means situation, circumstances (economic).
Conjoncturel means linked to the present economic climate.
La Phrase: La conjoncture dans le monde entier s'ameliore.
Sentence: The economic situation all over the world is improving.
That's also where the market was before the panic caused by the beefers and shorts. Now that Ben has dealt with most credit market problems, with commercial real estate being last and in process, a return to normal economic conditions should be at hand barring new troubles.
Worldwide economic conditions are improving. From FT: "Business confidence is surging across European manufacturing, with the UK and Italy taking the lead, according to reports on Monday that also highlight the turnround in countries such as Brazil and China. Optimism about production trends is back at levels seen before the intensification of the global slowdown late last year, and points to a clear growth in manufacturing activity by the middle of 2010, the latest KPMG business outlook survey shows. The results are the latest evidence of a synchronised global rebound, possibly at a faster pace than expected until recently."
Copper prices seem to have a clear uptrend for now. At some point they'll level off, but if US housebuilding ever recovers - maybe another year - that metal will surge to the old high, in my humble opinion.
And one more sign of a return to normalcy: (WSJ) "Yanks Get Their Swagger Back
With Red Sox Streak Broken, Planets Are Realigned. ... How do we know the Yankees are playing well again? Because they're annoying. That's how it is with the Yankees: When they're playing poorly, they're strangely lovable in their vulnerability and fear of failure. But when they're rolling, like they are now after four straight wins against the Red Sox, they're ruthless."
I read that A-roid made a game winning hit. It's about time he earned his pay. The Red Faces ... oops ... Sox need to loosen their collars. Hmm David Roidtiz says some bad supplements caused his positive drug test. Sure ...
Actions
Doing nothing. Krypto Fund is doing well. Lately it's significant real estate holdings and REITs (via VNQ - the Vanguard real estate ETF) have perked up. In the last bull market (out of the 2002-3 bottom), those stocks performed very, very well. Real estate is a distinctive asset class and needs to be treated as such. If conditions just return to normal, VNQ will provide excellent gains.
Word of the Day
"Ersatz" - adjective [$10]
Ersatz means being a usual artificial and inferior substitute.
Sentence: The SEC has announced more hearings on short selling. I expect that corrupt agency will provide the same ersatz regulation as it has done for years as it operates out of the pockets of Wall Street.
Le Mot du Jour
"Conjoncture" - noun, feminine; and "Conjoncturel, -elle" - adjective.
Conjoncture means situation, circumstances (economic).
Conjoncturel means linked to the present economic climate.
La Phrase: La conjoncture dans le monde entier s'ameliore.
Sentence: The economic situation all over the world is improving.
Thursday, June 11, 2009
What Does It Mean ?
By "it", I refer to the rise in the yield on ten year US Treasury notes to nearly 4%. This is so easy, yet oddly, the doomsayers and pundits on Toshvision and Blabberg seem not to grasp it.
It's a harbinger of a return to normalcy. It means the "panic premium" on US Treasury debt is going away - gone. Buyers want a rational, real return, not just "safety" at any price. If a buyer doesn't get the expected core inflation rate [i. e. 2%] plus a real return of 2% on those notes, then he's either stupid or panicked. For the US 30-year bond, he should get about 3% "real" in my opinion.
The marginal buyer of 10 to 30 year US Treasury debt is now a "real" buyer, not a speculator or a panicked investor or even a Central Bank needing dollar investments. Real buyers mean normalcy in debt markets. This is good.
FT says stock funds got positive cash flows again last week for the twelfth straight week. The accompanying chart was interesting. During the three week Obama panic, cash flows were hugely negative. Otherwise, the flows are positive for many weeks.
Obama Fund is performing well. Yesterday I flipped bits of AKS, SPAR and SSCCQ. Their position sizes had gotten too large. This is just portfolio management. I still like all three stocks. [Beware: SSCCQ is ultra-risky as a stock.]
Word of the Day
"Descry" - verb, transitive [$10] literary
Descry means to catch sight of, discern.
Sentence: Bunkerman descries the return to normalcy.
Le Mot du Jour
"En" - this is a ubiquitous word in French with many uses as a preposition, an indefinite pronoun and in expressions. For today's Le Mot du Jour, I've picked one usage which was the subject of a French workbook lesson last evening. Which I did imbibing a glass on fine French wine - an excellent 2005 Pomerol.
En means (indefinite quantity) 'of it', 'of them'.
La Phrase: Les Fonds d'Obama ont cinqante actions, mais les Fonds d'Fido en ont juste neuf.
Sentence: Obama Fund has 50 stocks, but Fido Fund has just nine of them. [NB: The 'of them' is often not translated or expressed in English, but the 'en' is mandatory in French.]
It's a harbinger of a return to normalcy. It means the "panic premium" on US Treasury debt is going away - gone. Buyers want a rational, real return, not just "safety" at any price. If a buyer doesn't get the expected core inflation rate [i. e. 2%] plus a real return of 2% on those notes, then he's either stupid or panicked. For the US 30-year bond, he should get about 3% "real" in my opinion.
The marginal buyer of 10 to 30 year US Treasury debt is now a "real" buyer, not a speculator or a panicked investor or even a Central Bank needing dollar investments. Real buyers mean normalcy in debt markets. This is good.
FT says stock funds got positive cash flows again last week for the twelfth straight week. The accompanying chart was interesting. During the three week Obama panic, cash flows were hugely negative. Otherwise, the flows are positive for many weeks.
Obama Fund is performing well. Yesterday I flipped bits of AKS, SPAR and SSCCQ. Their position sizes had gotten too large. This is just portfolio management. I still like all three stocks. [Beware: SSCCQ is ultra-risky as a stock.]
Word of the Day
"Descry" - verb, transitive [$10] literary
Descry means to catch sight of, discern.
Sentence: Bunkerman descries the return to normalcy.
Le Mot du Jour
"En" - this is a ubiquitous word in French with many uses as a preposition, an indefinite pronoun and in expressions. For today's Le Mot du Jour, I've picked one usage which was the subject of a French workbook lesson last evening. Which I did imbibing a glass on fine French wine - an excellent 2005 Pomerol.
En means (indefinite quantity) 'of it', 'of them'.
La Phrase: Les Fonds d'Obama ont cinqante actions, mais les Fonds d'Fido en ont juste neuf.
Sentence: Obama Fund has 50 stocks, but Fido Fund has just nine of them. [NB: The 'of them' is often not translated or expressed in English, but the 'en' is mandatory in French.]
Wednesday, June 10, 2009
What is Normal?
1200.
That's where the S&P would be if the SEC and CFTC and Congress had not gutted financial market regulation to let the Vikings rape & pillage stocks without any rules or regulation.
[Doubters: when Warren Buffet and George Soros agree with Bunkerman, question your thinking.]
And the panic happened last July to October. The retirement savings of middle America was gutted by 35%. The drop stunned the people and they reacted, gutting spending on everything. The real recession began. Thank you, libertarians. I hope you enjoyed the fruits of your "no regulation" mantra. Letting the Vikings raid the financial landscape sure helped, didn't it.
So the panic dropped the markets to the 800-900 range last fall. Then the Obama "panic of the conservatives" dropped it 666 in March. All the rally from early March to April did was wipe out the Obama panic, to get the markets back to the fall trading range, i. e. to the Viking Raid panic levels. The "too far, too fast" crowd doesn't seem to recognize that. Erasing a panic fall - which did go too far down too fast - is NOT becoming overextended. The baseline is the fall trading range.
The stock markets have been consolidating in those levels since late March. Now the S&P 500 is over its 200 day moving average. The 50 day moving average is rising.
Commodity prices are rising, perhaps to re-entry by speculators, or perhaps to user hedging. Shipping rates are rising. Demand in Asia is rebounding. And all that "stimulus" money remains to be spent. The Fed is still accomodative. TALF is working. Well-run major banks are re-paying TARP monies foisted on them.
Lots of pain exists in housing, especially in the sun and surf areas where speculators & the second home crowd played. And the jobs market stinks. Thanks to the Vikings. And the financial libertarians. But all the newly free people of the world want to improve their lives and that tailwind is huge.
Obama Fund is sitting long at about 125% long on stocks that should continue to outperform on a "Return to Normalcy".
Word of the Day
"Crawfish" - noun and verb [$10]
Crawfish means (noun) = crayfish; (intransitive verb) (often followed by 'out') US colloquial retreat, back out.
Sentence: As Bunkerman watches Congress and the Obama administration crawfish away from real, comprehensive reform of the financial markets and regulation, he feels disgust and anger.
Le Mot du Jour
"Salir" - verb, regular -ir conjugation
Salir means 1. to make dirty, to make a mess in, to mess up; 2. to corrupt, to defile.
Le Phrase: Les libertaires de la haute finance salissent le monde.
Sentence: The libertarians of high finance messed up the world.
That's where the S&P would be if the SEC and CFTC and Congress had not gutted financial market regulation to let the Vikings rape & pillage stocks without any rules or regulation.
- They repealed Glass-Steagal to let banks speculate in the financial markets with depositors' money.
- They dropped the uptick rule so raids could push stocks down with no relief to cause fear & panic.
- They gutted efforts to regulate derivatives, which then let credit default swaps and equity derivatives become new "weapons of mass destruction" for the Vikings to manipulate stocks and cause more panic.
- They permitted creation of uncountable numbers of short and ultra short ETFs that are essentially betting machines for speculators.
- And they opened the field to the Street market makers via the Madoff rule and the ETF short sale rules to let market makers "print" stocks to short with NO rules at all. Short selling of nonexistent shares rose to huge amounts.
[Doubters: when Warren Buffet and George Soros agree with Bunkerman, question your thinking.]
And the panic happened last July to October. The retirement savings of middle America was gutted by 35%. The drop stunned the people and they reacted, gutting spending on everything. The real recession began. Thank you, libertarians. I hope you enjoyed the fruits of your "no regulation" mantra. Letting the Vikings raid the financial landscape sure helped, didn't it.
So the panic dropped the markets to the 800-900 range last fall. Then the Obama "panic of the conservatives" dropped it 666 in March. All the rally from early March to April did was wipe out the Obama panic, to get the markets back to the fall trading range, i. e. to the Viking Raid panic levels. The "too far, too fast" crowd doesn't seem to recognize that. Erasing a panic fall - which did go too far down too fast - is NOT becoming overextended. The baseline is the fall trading range.
The stock markets have been consolidating in those levels since late March. Now the S&P 500 is over its 200 day moving average. The 50 day moving average is rising.
Commodity prices are rising, perhaps to re-entry by speculators, or perhaps to user hedging. Shipping rates are rising. Demand in Asia is rebounding. And all that "stimulus" money remains to be spent. The Fed is still accomodative. TALF is working. Well-run major banks are re-paying TARP monies foisted on them.
Lots of pain exists in housing, especially in the sun and surf areas where speculators & the second home crowd played. And the jobs market stinks. Thanks to the Vikings. And the financial libertarians. But all the newly free people of the world want to improve their lives and that tailwind is huge.
Obama Fund is sitting long at about 125% long on stocks that should continue to outperform on a "Return to Normalcy".
Word of the Day
"Crawfish" - noun and verb [$10]
Crawfish means (noun) = crayfish; (intransitive verb) (often followed by 'out') US colloquial retreat, back out.
Sentence: As Bunkerman watches Congress and the Obama administration crawfish away from real, comprehensive reform of the financial markets and regulation, he feels disgust and anger.
Le Mot du Jour
"Salir" - verb, regular -ir conjugation
Salir means 1. to make dirty, to make a mess in, to mess up; 2. to corrupt, to defile.
Le Phrase: Les libertaires de la haute finance salissent le monde.
Sentence: The libertarians of high finance messed up the world.
Thursday, May 14, 2009
Shopping Trip
The double voodoo spell I cast last week is working, producing a reasonable pullback from the extended stock prices of last week. The S&P 500 has a broad base of support in the 850-870 area so buyers on the sidelines might step up their IF news does not turn to the worse. If one glosses over the Obama V move down & up in a few weeks around March 1, the market is really in a huge, long term base since last fall. Small stocks & banks have led. Why ?
That's easy. Those companies were being priced for BK. We now now most of those BKs will not occur as the junk bond market is open again. Companies with cash flow can refinance.
Bears are being bolder now, making strident calls for more doom. Some of these calls are quite stupid. Roubini writes that the Chinese yuan will become a "reserve" currency sooner than expected. I guess he doesn't read this blog. I destroyed that prospect a couple weeks ago in my series on "World Reserve Currency".
I will spend some time today going over charts and news on my Obama Fund stocks. I plan to slowly add to some of those positions to raise the fund's leverage back to 150% long. My thinking is that by mid-summer, the recession will be obviously ending and investors will start pricing in much better 2010 earnings prospects. I might cull some non-performers, too.
No rush, though. This pullback might run a few more days. Option expiration is Friday and the traders like to play games then.
Word of the Day
"Salubrious" - adjective [$10]
Salubrious means favorable to or promoting health or well-being.
Sentence: Like a couple glasses of red wine for the adult physiology, intermittent modest pullbacks are quite salubrious for a bull market. And again similarly, both excessive wine consumption and large pullbacks are bad.
Le Mot du Jour
"Voilà" - an exclamation; and its complement, "Voici"
Voilà means this/that/those/there/here is/are. Voici means expressly this/these/here is/are. As you can see, one uses voici when one expressly wants to indicate something nearby or close in some way. Voilà can be used for both if no distinction is needed.
La Phrase: Voilà le repli des valeurs que j'attendais.
Sentence: This is the pullback of stock prices that I was waiting for.
That's easy. Those companies were being priced for BK. We now now most of those BKs will not occur as the junk bond market is open again. Companies with cash flow can refinance.
Bears are being bolder now, making strident calls for more doom. Some of these calls are quite stupid. Roubini writes that the Chinese yuan will become a "reserve" currency sooner than expected. I guess he doesn't read this blog. I destroyed that prospect a couple weeks ago in my series on "World Reserve Currency".
I will spend some time today going over charts and news on my Obama Fund stocks. I plan to slowly add to some of those positions to raise the fund's leverage back to 150% long. My thinking is that by mid-summer, the recession will be obviously ending and investors will start pricing in much better 2010 earnings prospects. I might cull some non-performers, too.
No rush, though. This pullback might run a few more days. Option expiration is Friday and the traders like to play games then.
Word of the Day
"Salubrious" - adjective [$10]
Salubrious means favorable to or promoting health or well-being.
Sentence: Like a couple glasses of red wine for the adult physiology, intermittent modest pullbacks are quite salubrious for a bull market. And again similarly, both excessive wine consumption and large pullbacks are bad.
Le Mot du Jour
"Voilà" - an exclamation; and its complement, "Voici"
Voilà means this/that/those/there/here is/are. Voici means expressly this/these/here is/are. As you can see, one uses voici when one expressly wants to indicate something nearby or close in some way. Voilà can be used for both if no distinction is needed.
La Phrase: Voilà le repli des valeurs que j'attendais.
Sentence: This is the pullback of stock prices that I was waiting for.
Monday, May 11, 2009
Monday Morning Ramblings
Calls of "overbought" and "overvalued" and "extended" are raining onto us à propos the stock market. All true, except the "overvalued" claim. Those pundits point to current PEs. That one is so imbecilic as to almost be ignorable. Driving using the rear view mirror as a primary visual indicator would be considered rather stupid by everyone. Anyone looking at long term charts showing stock prices and earnings in prior severe recessions would "know" that the PE is the trough is irrelevant. What matters are earnings one year in the future.
So what are earnings going to be in 2010 ? A small gain over 2009 trough earnings ? Or a small discount from 2006 earnings ? Or what ?
My Obama Fund is predicated on 2010 earnings being the latter. The bears would say sell the rally since it will be the former. The distribution of expectations is what makes markets volatile as one group takes command, then the other, sort of like a closely matched bout of boxing.
But looking at charts, one can see instantly that all the market has done in this rally is recover to its levels of the fall of 2008. The Obama inaugural sell-off has been reversed. That's it.
Futures are down this morning. Good. Maybe I'll get a good pullback to load up again.
I am also studying the natural gas market. Obama's greenie nonsense "might" make many coal plants shift to natural gas. I've heard anecdotal evidence of that. And with a whiff of industrial demand, that market's glut might get taken up. Natural gas rose a lot last week, about 20% from the lows. That might just be short covering, hedging or new longs. The natural gas ETF saw big increases in volume. IF I do anything, it will NOT be to buy that ETF. It's a loser for anything but short term trading as the monthly rolls kill it.
I put some money back into my commodities account and would buy some more distance futures. IF I decide to do it. I have lots of study to do before that.
Word of the Day
"Jejune" - adjective [$10]
Jejune means 1. lacking nutritive value; 2. lacking interest or significance; 3. lacking maturity: puerile.
Sentence: Writing on the news pages of the Wall Street Journal has sunk to the jejune level of sophomore* journalism clases.
*see bonus below.
Le Mot du Jour
"Éxiger" - verb, transitive, conjugates like manger.
Éxiger means to erect, to set up, to establish (+ en ); S'éxiger means to set oneself up.
La Phrase: Des dirgeants européenes veulent éxiger le socialisme d'État en model pour l'economie du monde. Ils ont tort.
Sentence: Some European leaders want to set up state socialism as a model for the world economy. They are wrong.
*Bonus: a durable 5,000 year old concept: the "sophomore" and the "sophmoric".
The English word for "sophomore" derives from the Greek compound word, "sophos-moros" meaning "clever fool. It was first used in English in 1688 in Cambridge. BUT there is a Sumerian word transliterated as "galam-huru" that means the identical thing - "clever fool" - literally. The word is used in an essay in Sumerian literature that is a type of verbal contest between higher level students and lower level ones.
So what are earnings going to be in 2010 ? A small gain over 2009 trough earnings ? Or a small discount from 2006 earnings ? Or what ?
My Obama Fund is predicated on 2010 earnings being the latter. The bears would say sell the rally since it will be the former. The distribution of expectations is what makes markets volatile as one group takes command, then the other, sort of like a closely matched bout of boxing.
But looking at charts, one can see instantly that all the market has done in this rally is recover to its levels of the fall of 2008. The Obama inaugural sell-off has been reversed. That's it.
Futures are down this morning. Good. Maybe I'll get a good pullback to load up again.
I am also studying the natural gas market. Obama's greenie nonsense "might" make many coal plants shift to natural gas. I've heard anecdotal evidence of that. And with a whiff of industrial demand, that market's glut might get taken up. Natural gas rose a lot last week, about 20% from the lows. That might just be short covering, hedging or new longs. The natural gas ETF saw big increases in volume. IF I do anything, it will NOT be to buy that ETF. It's a loser for anything but short term trading as the monthly rolls kill it.
I put some money back into my commodities account and would buy some more distance futures. IF I decide to do it. I have lots of study to do before that.
Word of the Day
"Jejune" - adjective [$10]
Jejune means 1. lacking nutritive value; 2. lacking interest or significance; 3. lacking maturity: puerile.
Sentence: Writing on the news pages of the Wall Street Journal has sunk to the jejune level of sophomore* journalism clases.
*see bonus below.
Le Mot du Jour
"Éxiger" - verb, transitive, conjugates like manger.
Éxiger means to erect, to set up, to establish (+ en ); S'éxiger means to set oneself up.
La Phrase: Des dirgeants européenes veulent éxiger le socialisme d'État en model pour l'economie du monde. Ils ont tort.
Sentence: Some European leaders want to set up state socialism as a model for the world economy. They are wrong.
*Bonus: a durable 5,000 year old concept: the "sophomore" and the "sophmoric".
The English word for "sophomore" derives from the Greek compound word, "sophos-moros" meaning "clever fool. It was first used in English in 1688 in Cambridge. BUT there is a Sumerian word transliterated as "galam-huru" that means the identical thing - "clever fool" - literally. The word is used in an essay in Sumerian literature that is a type of verbal contest between higher level students and lower level ones.
Wednesday, May 6, 2009
Lots of News
The Chrysler bankruptcy proceedings appears to be a mugging of the secured creditors orchestrated by Obama to give the company to the union. A good rule: never trust the government.
Some big banks are finding this out, too. BAC is rumored to need a huge infusion of common equity. This is the dilution I worried about in avoiding that stock.
The SEC is filing some cases for fraud and insider trading. So far the effort is anemic, but that's no surprise as its staff in practically on the payroll of the fraudsters.
Meanwhile, the junk bond market is roaring and seems wide open to new issues. That is hugely positive news for many small stocks which need refinancings to survive. I suspect that's part of the reason small stocks are performing so well lately.
Obama Fund is up 43% year-to-date. I guess buy and hold isn't dead as in investment strategy, but I do modify that with some trading to buy low and sell high on dips and rips. Obama Fund is benefiting greatly from the re-opening of the junk bond market as its cheap but risky companies are now perceived as less risky.
Fido Fund is up 45% year to date, showing that the gains are not tied to small stocks.
Both funds are about 100% long now as I've sold some bits of many positions after being 150% long around the lows. On a significant pullback, I'd go back to 150% long if fundamental news and outlook did not change.
Word of the Day
"Bespeak" - verb, transitive [$10]; past tense is "bespoke".
Bespeak means 1. engage in advance; 2. order (goods); 3. suggest, be evidence of (his gift bepeaks a kind heart); (literary) speak to. The usage #3 seems to be used when a thing is 'speaking'.
Sentence: Actions of the Obama administration bespeak racketeering tactics: force, pressure and intimidation versus the rule of law. I expect the judge - a government official - to bend over and let Obama have his way.
Le Mot du Jour
"Exprimer" - verb, regular -er.
Exprimer means to express. S'exprimer means to express oneself.
Le Phrase: Je veux apprendre exprimer l'idée, "I want another beer, please", dans six langues.
Sentence: I want to learn to express the idea, "I want another beer, please", in six languages.
Some big banks are finding this out, too. BAC is rumored to need a huge infusion of common equity. This is the dilution I worried about in avoiding that stock.
The SEC is filing some cases for fraud and insider trading. So far the effort is anemic, but that's no surprise as its staff in practically on the payroll of the fraudsters.
Meanwhile, the junk bond market is roaring and seems wide open to new issues. That is hugely positive news for many small stocks which need refinancings to survive. I suspect that's part of the reason small stocks are performing so well lately.
Obama Fund is up 43% year-to-date. I guess buy and hold isn't dead as in investment strategy, but I do modify that with some trading to buy low and sell high on dips and rips. Obama Fund is benefiting greatly from the re-opening of the junk bond market as its cheap but risky companies are now perceived as less risky.
Fido Fund is up 45% year to date, showing that the gains are not tied to small stocks.
Both funds are about 100% long now as I've sold some bits of many positions after being 150% long around the lows. On a significant pullback, I'd go back to 150% long if fundamental news and outlook did not change.
Word of the Day
"Bespeak" - verb, transitive [$10]; past tense is "bespoke".
Bespeak means 1. engage in advance; 2. order (goods); 3. suggest, be evidence of (his gift bepeaks a kind heart); (literary) speak to. The usage #3 seems to be used when a thing is 'speaking'.
Sentence: Actions of the Obama administration bespeak racketeering tactics: force, pressure and intimidation versus the rule of law. I expect the judge - a government official - to bend over and let Obama have his way.
Le Mot du Jour
"Exprimer" - verb, regular -er.
Exprimer means to express. S'exprimer means to express oneself.
Le Phrase: Je veux apprendre exprimer l'idée, "I want another beer, please", dans six langues.
Sentence: I want to learn to express the idea, "I want another beer, please", in six languages.
Thursday, April 2, 2009
Springtime Green
Hong Kong stocks are up for the year.
Australia reports a strong trade surplus with exports UP. FT: "Despite weaker global growth, Australia boosted rural exports, particularly wheat and meat, while metals and minerals sales rose 3 per cent. A 55 surge in gold exports to A$784m, was offset by gold imports worth nearly the same amount."
Copper prices are moving up.
I wonder if Q1 will be seen as the end of the recession? This is possible as huge amounts of stimulus are flowing now.
Yesterday was a strong up day, which was a bit surprising since futures were down early. Futures are up strongly this morning as of 5AM ET. Europe is up strongly. Asia markets were up.
Many hedge fund withdrawals filed early this year have been canceled [source - FT], leaving the beefers with surprisingly more money to invest.
What would surprise everyone? A rocket shot to Dow 10,000.
I'm not predicting this, but few are positioned for it. My Obama Fund is, as is my Fido Fund, but ... I've been an incurable and quite wrong optimist for months as the panic unfolded.
I'll be deploying new money over the next few weeks. All will be going to stocks or real estate, which are the two areas my Krypto Fund model says are quite underweighted.
Word of the Day
"Conjure" verb [$10]
I concentrate on an old usage pronounced with stress on 'jure', not the usage related to magic, etc., which is pronounced with stress on the 'con' syllable.
Conjure means (in this usage) to appeal solemnly to [a person, group].
Sentence: Bunkerman conjures G20 to regulate hedge funds strongly.
Le Mot du Jour
"Compter" - verb, transitive; regular -er conjugation.
Compter means to count, to intend, to expect to.
La Phrase: [from today's Le Figaro] Les 20 chefs d'Etat comptent également imposer pour la première fois une supervision aux fonds spéculatifs (hedge funds).
Sentence: The 20 chiefs of state intend as well to impose for the first time a supervision on speculative funds (hedge funds).
I chose this sentence from Le Figaro as it makes clear that the French words for "hedge funds" is "hedge funds". This is clear from the title to the application paragraph: "vers une supervision imposée aux hedge funds." meaning, "towards a supervision imposed on hedge funds."
Australia reports a strong trade surplus with exports UP. FT: "Despite weaker global growth, Australia boosted rural exports, particularly wheat and meat, while metals and minerals sales rose 3 per cent. A 55 surge in gold exports to A$784m, was offset by gold imports worth nearly the same amount."
Copper prices are moving up.
I wonder if Q1 will be seen as the end of the recession? This is possible as huge amounts of stimulus are flowing now.
Yesterday was a strong up day, which was a bit surprising since futures were down early. Futures are up strongly this morning as of 5AM ET. Europe is up strongly. Asia markets were up.
Many hedge fund withdrawals filed early this year have been canceled [source - FT], leaving the beefers with surprisingly more money to invest.
What would surprise everyone? A rocket shot to Dow 10,000.
I'm not predicting this, but few are positioned for it. My Obama Fund is, as is my Fido Fund, but ... I've been an incurable and quite wrong optimist for months as the panic unfolded.
I'll be deploying new money over the next few weeks. All will be going to stocks or real estate, which are the two areas my Krypto Fund model says are quite underweighted.
Word of the Day
"Conjure" verb [$10]
I concentrate on an old usage pronounced with stress on 'jure', not the usage related to magic, etc., which is pronounced with stress on the 'con' syllable.
Conjure means (in this usage) to appeal solemnly to [a person, group].
Sentence: Bunkerman conjures G20 to regulate hedge funds strongly.
Le Mot du Jour
"Compter" - verb, transitive; regular -er conjugation.
Compter means to count, to intend, to expect to.
La Phrase: [from today's Le Figaro] Les 20 chefs d'Etat comptent également imposer pour la première fois une supervision aux fonds spéculatifs (hedge funds).
Sentence: The 20 chiefs of state intend as well to impose for the first time a supervision on speculative funds (hedge funds).
I chose this sentence from Le Figaro as it makes clear that the French words for "hedge funds" is "hedge funds". This is clear from the title to the application paragraph: "vers une supervision imposée aux hedge funds." meaning, "towards a supervision imposed on hedge funds."
Tuesday, March 24, 2009
So What ?
That seems to be the jizz* of yesterday's strong upward move in stocks from my reading of the news and a bit of painful listening to Blabberg. [aside: Why are the faces on financial news mostly imbeciles who ask stupid questions and make silly comments?]
*see Word of the Day
The move has two sparks: Timmy's plan was well-received by potential private investors and existing homes sales jumped. Regarding the former, I wonder why it took him so long to get the plan out ? The general outline was written in this blog months ago and was rather obvious. Regarding the latter, even though much of the sales were from foreclosures, clearly the bloated home inventories are being cleared slowly now. It's not getting worse. Buyers are stepping up for bargains.
More Readers ...
Now I learn that George Soros is a secret reader of this blog. Check out his op-ed in the WSJ today. Here's a quote: "it's clear that AIG, Bear Stearns, Lehman Brothers and others were destroyed by bear raids in which the shorting of stocks and buying CDS mutually amplified and reinforced each other. The unlimited shorting of stocks was made possible by the abolition of the uptick rule, which would have hindered bear raids by allowing short selling only when prices were rising. The unlimited shorting of bonds was facilitated by the CDS market. The two made a lethal combination."
And more: "Many argue now that CDS ought to be traded on regulated exchanges. I believe that they are toxic and should only be allowed to be used by those who own the bonds, not by others who want to speculate against countries or companies. "
Good ideas, George. Sigh ... imitation is indeed the sincerest form of flattery ;)
By the way, above for the first time in an actual post, I borrowed from the text message dialect of written English to use its sign ;) to mean I am joking about something. It's a wink. I think this is appropriate now as this blog is becoming more multilingual with my French phrases, so adding the text message dialect fits, too.
PS: If you are voting proxies on stock you own, I urge you to vote against executive compensation plans, against any directors of companies which have cut dividends, and in favor of shareholder proposals that seem to help shareholders get more power. I just voted against all GE directors and in favor of all five shareholder proposals.
Word of the Day
"Jizz" - noun [$10]; a reprise selection
Jizz means the characteristic (immediate) impression given by an animal or plant.
Sentence: Yesterday's huge rally had the jizz of a yawn for the public. Perhaps that signals that it's real this time ?
Le Mot du Jour
"Pouvoir" - noun, masculine [this is a common verb, too]
Le pouvior means power, ability, capacity.
La Phrase: Les pouvoirs de l'État sont grandes pour relancer l'économie.
Sentence: The powers of the State are great for reviving the economy.
*see Word of the Day
The move has two sparks: Timmy's plan was well-received by potential private investors and existing homes sales jumped. Regarding the former, I wonder why it took him so long to get the plan out ? The general outline was written in this blog months ago and was rather obvious. Regarding the latter, even though much of the sales were from foreclosures, clearly the bloated home inventories are being cleared slowly now. It's not getting worse. Buyers are stepping up for bargains.
More Readers ...
Now I learn that George Soros is a secret reader of this blog. Check out his op-ed in the WSJ today. Here's a quote: "it's clear that AIG, Bear Stearns, Lehman Brothers and others were destroyed by bear raids in which the shorting of stocks and buying CDS mutually amplified and reinforced each other. The unlimited shorting of stocks was made possible by the abolition of the uptick rule, which would have hindered bear raids by allowing short selling only when prices were rising. The unlimited shorting of bonds was facilitated by the CDS market. The two made a lethal combination."
And more: "Many argue now that CDS ought to be traded on regulated exchanges. I believe that they are toxic and should only be allowed to be used by those who own the bonds, not by others who want to speculate against countries or companies. "
Good ideas, George. Sigh ... imitation is indeed the sincerest form of flattery ;)
By the way, above for the first time in an actual post, I borrowed from the text message dialect of written English to use its sign ;) to mean I am joking about something. It's a wink. I think this is appropriate now as this blog is becoming more multilingual with my French phrases, so adding the text message dialect fits, too.
PS: If you are voting proxies on stock you own, I urge you to vote against executive compensation plans, against any directors of companies which have cut dividends, and in favor of shareholder proposals that seem to help shareholders get more power. I just voted against all GE directors and in favor of all five shareholder proposals.
Word of the Day
"Jizz" - noun [$10]; a reprise selection
Jizz means the characteristic (immediate) impression given by an animal or plant.
Sentence: Yesterday's huge rally had the jizz of a yawn for the public. Perhaps that signals that it's real this time ?
Le Mot du Jour
"Pouvoir" - noun, masculine [this is a common verb, too]
Le pouvior means power, ability, capacity.
La Phrase: Les pouvoirs de l'État sont grandes pour relancer l'économie.
Sentence: The powers of the State are great for reviving the economy.
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