The hot air in DC and the dens of the press is oven-like. But what is the point or use in speculating or even discussing what Obama might do, or whom he might appoint ? Why not just wait and see what he actually does ?
Here's some real news: China announces $586 billion stimulus plan. That's real money. Stock futures are up on the news worldwide.
WSJ has a story that jobs in many parts of China are hard to find. That means trouble for that authoritarian / communist government. So they had to act.
I read that five large beefer managers are called before Congress on Thursday. Good. I hope they are skewered. Hedge funds are a fundamental, root cause of much of the problems the world faces. Trillions of $ speculating in trading schemes instead of making real investments caused massive stress and dislocations.
AIG bailout is being re-written. From the looks of it, the troubles in the credit default swap "market" are quite intense. Obviously, that entire casino needs eviscerated. Writers of credit default swaps should be required to put % collateral in Treasuries in isolated subsidiaries and regulated as insurance companies. Anything less is fraud and or mere gambling.
Barron's had an article about the recent rush to "alternative" investments by college endowments and pension funds. We now see most of those "investments" were just speculation in commodity futures - not real assets at all - and hedge funds. Buying timber, farmland and venture capital are real investments. Hedge funds, commodity funds, private equity and that ilk are just leveraged speculations.
Everyone now agrees the LEH bankruptcy was a huge mistake. Some world leaders blame the US for letting it happen. Hindsight is so clear. But at the time, the "moral hazard" police were quite strident. Politically, I don't see how the US could have done anything else. The fallout from BSC was quite bad.
The LEH failure did bring to light hitherto unknown or unappreciated financial interconnections and leverage, such as from "rehypothecation".
Actions
Doing nothing. I will buy more of my stocks IFF they drop to buy points. By the way, IFF means "if and only if".
I've deferred re-balancing Krypto Fund as I am contemplating some transfers and exchanges that will let me take a valuable tax loss on some ETFs held in a taxable account. This will save me real money and not affect my overall asset allocations.
Tax loss selling for the rest of this year will be heavy. But I wonder if the money will just be shifted around. I plan to just shift the money around.
Word of the Day
"Conceit" - noun [$10]
Conceit means 1. personal vanity, pride; 2. (literary) a. a far fetched comparison, especially as a stylistic affectation; a convoluted or unlikely metaphor; b. a fanciful notion.
Sentence: All the information conveyed by one person speaking directly to another is subsumed in the Anglophone world under their conceit, "personal chemistry". [adapted from a thought in "Travels with Herodotus" a very fine book by R. Kapuscinsky, cf. page 185 top.
Monday, November 10, 2008
Friday, November 7, 2008
TGIF and more
Hmmm I guess yesterday's French sentence can be mostly re-used.
Hier, les Bourses replongent.
Translation - "yesterday, the markets plunged again." That French verb, "replonger" might be the label for this market, as it means "to plunge again."
WSJ has a story about more and more liquidations of hedge funds and redemptions. Perhaps more of this is coming. Beefers are the "root" cause of all the problems of this economy and market. Colossal sums invested by the greedy and dumb rich in speculative funds instead of new growth businesses led to the housing bubble, commodity bubble and all this insane volatility as they are liquidated.
You ask, how did hedge funds cause the housing bubble ? Who do you think bought the subordinated classes of all those subprime CDOs ? Without those buyers, the junk mortgages could not have been securitized and hence never created.
Sarkozy of France has suggested some regulations or restrictions on hedge funds. I hope other world leaders listen.
The jobs number will likely be quite bad.
Actions
Doing nothing. The DRYS secondary has crushed my shipping stocks. Ugh... I guess the lenders are pushing these companies to raise equity as a cushion. To me, they are risky, but quite valuable companies IFF they survive. Time will tell.
Word of the Day
"Viand" - noun [$10] formal
Viand means 1. an article of food; 2. (in plural) provisions, victuals.
Sentence: Will the future look back on today's financial turmoil to see the caricature of a former hedge fund manager in a tuxedo seeking viands on the streets of New York ?
Hier, les Bourses replongent.
Translation - "yesterday, the markets plunged again." That French verb, "replonger" might be the label for this market, as it means "to plunge again."
WSJ has a story about more and more liquidations of hedge funds and redemptions. Perhaps more of this is coming. Beefers are the "root" cause of all the problems of this economy and market. Colossal sums invested by the greedy and dumb rich in speculative funds instead of new growth businesses led to the housing bubble, commodity bubble and all this insane volatility as they are liquidated.
You ask, how did hedge funds cause the housing bubble ? Who do you think bought the subordinated classes of all those subprime CDOs ? Without those buyers, the junk mortgages could not have been securitized and hence never created.
Sarkozy of France has suggested some regulations or restrictions on hedge funds. I hope other world leaders listen.
The jobs number will likely be quite bad.
Actions
Doing nothing. The DRYS secondary has crushed my shipping stocks. Ugh... I guess the lenders are pushing these companies to raise equity as a cushion. To me, they are risky, but quite valuable companies IFF they survive. Time will tell.
Word of the Day
"Viand" - noun [$10] formal
Viand means 1. an article of food; 2. (in plural) provisions, victuals.
Sentence: Will the future look back on today's financial turmoil to see the caricature of a former hedge fund manager in a tuxedo seeking viands on the streets of New York ?
Thursday, November 6, 2008
Les Bourses replongent ce matin.
That's French for "the markets are plunging again this morning." To find practical current terms in French to describe the stock market actions, I turned to Le Monde at http://www.lemonde.fr/ because just simply translating American idioms might not have made sense. But I read this morning that French does use terms like "red" aka "rouge" and "green" aka "vert" to characterize gains and losses.
Did I mention that I am learning French ? I've been doing this from about six weeks now and have made fine progress.
Why ?
Simple, I need more culture and often good writers include some French phrases without translation. And the French language has innumerable works of great literature, unlike Spanish which has had little for four hundred years since Cervantes wrote Don Quixote. And one even comes across French in fine TV shows like the old "The Avengers" series with Diana Rigg as Mrs. Emma Peel. Last evening while watching some shows from that series [I bought the entire series on DVD], I understood the French that John Steed spoke.
And a bonus, research shows that learning a language helps one improve and retain memory skills as one ages. And I am aging. After 40 years of cramming science and finance into half of my brain, the verbal, literature and language side is "relatively" empty. After a session of French, I can actually feel that my head is "pumped" like a muscle after lifting weights. So this does work to "exercise" one's mind.
My guess is that since language skills were certainly a critical ability in the development and evolution of human beings from apes, to exercise and develop one's mind fully really requires learning languages.
Learning more words and usages in one's native language is one way to that. But I think learning a foreign language is another, complementary way.
By the way, English borrowed so many words from French that learning French vocabulary gets a huge boost. And so far, I think much of the grammar is a bit similar, too. I had learned some Latin and Russian in the past. To me, French is far easier and also far more rewarding.
PS: I see that web site for Le Figaro has helpful writing about stocks in French, too. See http://www.lefigaro.fr/
Markets
What will the ECB to today ? And the Bank of England ? Both central banks have base rates far too high for conditions. They need to cut rates in large steps.
PS: Bank of England cuts 150 bps from 3% to 1.5% ! Good move. Will "The Ostriche" awaken ?
PPS: I see the Sgeve Leisman on Babblevision reads this blog. He just said that there never was any inflation ... just a commodity bubble.
Actions
None. Two shippers (DRYS and EXM) posted fine earnings. Both benefit from having a majority of ships under long term contracts at good rates.
Word of the Day
"Argosy" - noun [$10] poetic
Argosy means a large merchant ship, originally especially one from Dubrovnik (aka Ragusa) or Venice.
Sentence: Every voyage of an argosy in world trade among nations requires financing the goods being transported for the duration of the voyage until delivery. This is a critical corner of credit that is having problems in recent weeks according to recent articles in FT and WSJ. Governments looking to help cure the credit crisis need to focus some resources and / or verbal suasion here.
Did I mention that I am learning French ? I've been doing this from about six weeks now and have made fine progress.
Why ?
Simple, I need more culture and often good writers include some French phrases without translation. And the French language has innumerable works of great literature, unlike Spanish which has had little for four hundred years since Cervantes wrote Don Quixote. And one even comes across French in fine TV shows like the old "The Avengers" series with Diana Rigg as Mrs. Emma Peel. Last evening while watching some shows from that series [I bought the entire series on DVD], I understood the French that John Steed spoke.
And a bonus, research shows that learning a language helps one improve and retain memory skills as one ages. And I am aging. After 40 years of cramming science and finance into half of my brain, the verbal, literature and language side is "relatively" empty. After a session of French, I can actually feel that my head is "pumped" like a muscle after lifting weights. So this does work to "exercise" one's mind.
My guess is that since language skills were certainly a critical ability in the development and evolution of human beings from apes, to exercise and develop one's mind fully really requires learning languages.
Learning more words and usages in one's native language is one way to that. But I think learning a foreign language is another, complementary way.
By the way, English borrowed so many words from French that learning French vocabulary gets a huge boost. And so far, I think much of the grammar is a bit similar, too. I had learned some Latin and Russian in the past. To me, French is far easier and also far more rewarding.
PS: I see that web site for Le Figaro has helpful writing about stocks in French, too. See http://www.lefigaro.fr/
Markets
What will the ECB to today ? And the Bank of England ? Both central banks have base rates far too high for conditions. They need to cut rates in large steps.
PS: Bank of England cuts 150 bps from 3% to 1.5% ! Good move. Will "The Ostriche" awaken ?
PPS: I see the Sgeve Leisman on Babblevision reads this blog. He just said that there never was any inflation ... just a commodity bubble.
Actions
None. Two shippers (DRYS and EXM) posted fine earnings. Both benefit from having a majority of ships under long term contracts at good rates.
Word of the Day
"Argosy" - noun [$10] poetic
Argosy means a large merchant ship, originally especially one from Dubrovnik (aka Ragusa) or Venice.
Sentence: Every voyage of an argosy in world trade among nations requires financing the goods being transported for the duration of the voyage until delivery. This is a critical corner of credit that is having problems in recent weeks according to recent articles in FT and WSJ. Governments looking to help cure the credit crisis need to focus some resources and / or verbal suasion here.
Wednesday, November 5, 2008
What Now ?
Obama wins. Now we are to get "change". I wonder what that means ? The biggest problem Obama will face is that he has no specific mandate to do anything except raise taxes on high income people. Other than that, he didn't specify what "change" he wanted. That's going to cause him problems building a governing consensus in Congress, even with his majorities in both houses.
Obama won by a rather small margin - just 5% in the popular vote. The nature of the Electoral College system provides a decisive result for small margins. The margin of victory in Ohio was about 4% - 200,000 votes. W won it by about 100,000 votes in 2004. In Florida, the margin of victory was 2% - 200,000 votes there, too. If those two states swung for McCain and a couple smaller ones, too, the result would be different. Obama won, but not by enough for much mandate for sweeping "change".
And expectations are very, very high due to his vague, but sweeping, rhetoric. Well, he will the press on his side for awhile. I suppose we'll soon be hearing of his canonization as a saint or his elevation to demi-god. The press likes to do that when their man wins.
On Blabberg I heard parts of a remarkably hostile and aggressive speech by Russian President Medvedev. They are clearly going to push for more world power. Trouble to come ...
Markets
My guess is that optimistic European buying drove up prices yesterday as they are ecstatic on Obama's election. The afternoon followthru was probably caused by expectations of a very large stimulus package that the Democrats will surely push.
Actions
Doing nothing.
Word of the Day
"Homunculus" - noun [$10]; I saw this word reading Goethe's "Faust", part II.
Homunculus means a little man, a manikin.
Sentence: The coming deification of Obama by his worshippers in the press and the Olympian expectations he has created with vague promises make his probable decent to being merely human quite risky. Will the path of that decent take him straight the status of homunculus in the eyes of the public and DC ruling classes ?
Obama won by a rather small margin - just 5% in the popular vote. The nature of the Electoral College system provides a decisive result for small margins. The margin of victory in Ohio was about 4% - 200,000 votes. W won it by about 100,000 votes in 2004. In Florida, the margin of victory was 2% - 200,000 votes there, too. If those two states swung for McCain and a couple smaller ones, too, the result would be different. Obama won, but not by enough for much mandate for sweeping "change".
And expectations are very, very high due to his vague, but sweeping, rhetoric. Well, he will the press on his side for awhile. I suppose we'll soon be hearing of his canonization as a saint or his elevation to demi-god. The press likes to do that when their man wins.
On Blabberg I heard parts of a remarkably hostile and aggressive speech by Russian President Medvedev. They are clearly going to push for more world power. Trouble to come ...
Markets
My guess is that optimistic European buying drove up prices yesterday as they are ecstatic on Obama's election. The afternoon followthru was probably caused by expectations of a very large stimulus package that the Democrats will surely push.
Actions
Doing nothing.
Word of the Day
"Homunculus" - noun [$10]; I saw this word reading Goethe's "Faust", part II.
Homunculus means a little man, a manikin.
Sentence: The coming deification of Obama by his worshippers in the press and the Olympian expectations he has created with vague promises make his probable decent to being merely human quite risky. Will the path of that decent take him straight the status of homunculus in the eyes of the public and DC ruling classes ?
Tuesday, November 4, 2008
Election Day
A few years ago in an analysis of American political choices, a writer concluded that American voters tend to choose the person whom they think will best deal with the most important problems the nation is facing. So in 1980, voters elected Ronald Reagan to deal with both the Soviet aggression and expansionism as evidenced in the Afghan war, and the economic sclerosis that was permeating and stifling the nation through high taxes and excessive regulations.
Ronald Reagan proceeded to perform magnificently, creating the base for the boom of the last two decades of the 20th century and the conditions for freeing billions of people from oppressive Leninist communism.
So today the public must choose again in a time of serious economic problems and an insidious terrorist threat.
In 1864, the public chose well in wartime, re-electing Lincoln. So good decisions in times of crisis are possible. A problem today is the pervasive propaganda war in the press has prevented serious discussion of issues. People today really have no idea what Obama stands for except the vacuous notion of "change". So they read into his platitudes whatever they want to hear.
On the other hand, John McCain is an honest man who knows how to make decisions and lead in times of stress. And he favors freedom. And sensible reform. So to me, he's the obvious choice.
Actions
Doing nothing. DRYS reported good earnings and solid cash flows are locked in for several years. The stock popped, but is still quite depressed. Of course if the world's economy ends and we return to a barter system, it will surely suffer. So it's quite risky. My play in the shippers is EXM, DRYS and GNK. These are all very depressed in stock prices, but have reasonable debt levels and substantial contracts locked in at favorable rates. All are high risk, but have very high potential returns.
Quote of the Week
From "The Impossible H. L. Mencken", page 597 re the Scopes trial.
"The sole commentary of the sardonic Darrow consisted of bringing down a metaphorical custard pie upon the occiput [*Word of the Day] of the learned jurist."
Word of the Day
"Occiput" - noun [$10]
Occiput means the back of the head.
Sentence: In six months, will American voters be patting themselves on the back for making a fine choice for President, or rapping their occiput as they puke, realizing what a foolish vote they cast ? Time wll tell.
Ronald Reagan proceeded to perform magnificently, creating the base for the boom of the last two decades of the 20th century and the conditions for freeing billions of people from oppressive Leninist communism.
So today the public must choose again in a time of serious economic problems and an insidious terrorist threat.
In 1864, the public chose well in wartime, re-electing Lincoln. So good decisions in times of crisis are possible. A problem today is the pervasive propaganda war in the press has prevented serious discussion of issues. People today really have no idea what Obama stands for except the vacuous notion of "change". So they read into his platitudes whatever they want to hear.
On the other hand, John McCain is an honest man who knows how to make decisions and lead in times of stress. And he favors freedom. And sensible reform. So to me, he's the obvious choice.
Actions
Doing nothing. DRYS reported good earnings and solid cash flows are locked in for several years. The stock popped, but is still quite depressed. Of course if the world's economy ends and we return to a barter system, it will surely suffer. So it's quite risky. My play in the shippers is EXM, DRYS and GNK. These are all very depressed in stock prices, but have reasonable debt levels and substantial contracts locked in at favorable rates. All are high risk, but have very high potential returns.
Quote of the Week
From "The Impossible H. L. Mencken", page 597 re the Scopes trial.
"The sole commentary of the sardonic Darrow consisted of bringing down a metaphorical custard pie upon the occiput [*Word of the Day] of the learned jurist."
Word of the Day
"Occiput" - noun [$10]
Occiput means the back of the head.
Sentence: In six months, will American voters be patting themselves on the back for making a fine choice for President, or rapping their occiput as they puke, realizing what a foolish vote they cast ? Time wll tell.
Monday, November 3, 2008
A New Month
After those fine breakfasts of fried eggs, Spam and Valveeta this weekend, I realized how I felt about the markets after the events of the past six weeks. I felt just like I did after the Crash of 1987 - a bit stunned and even more disgusted with the markets and the panic. My guess is that huge numbers of "investors" have similar feelings. Hiding in cash was the wrong move then. Is it different this time ?
Economically, the time periods are quite different. This was mostly a panic of the rich, but the underlying economic problems were twofold: (I) a gross overvaluation and overbuilding of housing primarily in CA, FL, NV, AZ and a few places like DC, and (II) an oil and commodity bubble caused by pension fund and hedge fund speculation. Both events caused real economic shocks that in normal times would have, and were, causing a slow growth period. Toss in the panic of the rich and foolish pharisaic libertarian Republicans and ... voilà ... a harsh bear market, credit crisis and recession ensue.
What is left to fix ? The price of residential real estate in CA, FL, NV, AZ is getting close to true values based on incomes of the residents. Oil prices are back to longer term trend values. To fix is whatever damage was caused by the six week credit panic and the momentum and expansion of that damage. Perceptions are damaged, too.
Perceptions can change quickly. Damage caused from the credit panic can be quickly cured with extensions of credit. The cures and cash are really being pumped rapidly into the economy. The Fed rate cuts help anyone with floating rate loans, such as Prime Rate home equity loans. And the lower oil prices save people money at every fill-up.
I think this malaise will quickly dissipate as the reality of the damage is that it's not as bad as the talk nor is it permanent. But of course, I'm an optimist.
Actions
Doing nothing. Alpha Fund had a good week and is about 150% long.
Word of the Day
"Monad" - noun [$10]; also monadic (adj.) and for sense 2. monadism (n) = monadology (n).
Monad means the number one; a unit; 2. (philosophy) any ultimate unit of being (e. g. a soul, an atom, a person, god); 3. (biological) a simple organism, e. g. one assumed as the first in a genealogy of living beings.
Monadism = Monadology means 1. the doctrine of monads as the ultimate units of being; 2. (sometimes upper case 'M') the philosophy of Leibnitz.
Sentence: The monad of the US Presidential election is the electoral vote, which was created by the framers of the Constitution as a compromise among the larger and smaller states to balance population with regions.
Economically, the time periods are quite different. This was mostly a panic of the rich, but the underlying economic problems were twofold: (I) a gross overvaluation and overbuilding of housing primarily in CA, FL, NV, AZ and a few places like DC, and (II) an oil and commodity bubble caused by pension fund and hedge fund speculation. Both events caused real economic shocks that in normal times would have, and were, causing a slow growth period. Toss in the panic of the rich and foolish pharisaic libertarian Republicans and ... voilà ... a harsh bear market, credit crisis and recession ensue.
What is left to fix ? The price of residential real estate in CA, FL, NV, AZ is getting close to true values based on incomes of the residents. Oil prices are back to longer term trend values. To fix is whatever damage was caused by the six week credit panic and the momentum and expansion of that damage. Perceptions are damaged, too.
Perceptions can change quickly. Damage caused from the credit panic can be quickly cured with extensions of credit. The cures and cash are really being pumped rapidly into the economy. The Fed rate cuts help anyone with floating rate loans, such as Prime Rate home equity loans. And the lower oil prices save people money at every fill-up.
I think this malaise will quickly dissipate as the reality of the damage is that it's not as bad as the talk nor is it permanent. But of course, I'm an optimist.
Actions
Doing nothing. Alpha Fund had a good week and is about 150% long.
Word of the Day
"Monad" - noun [$10]; also monadic (adj.) and for sense 2. monadism (n) = monadology (n).
Monad means the number one; a unit; 2. (philosophy) any ultimate unit of being (e. g. a soul, an atom, a person, god); 3. (biological) a simple organism, e. g. one assumed as the first in a genealogy of living beings.
Monadism = Monadology means 1. the doctrine of monads as the ultimate units of being; 2. (sometimes upper case 'M') the philosophy of Leibnitz.
Sentence: The monad of the US Presidential election is the electoral vote, which was created by the framers of the Constitution as a compromise among the larger and smaller states to balance population with regions.
Sunday, November 2, 2008
Fried Eggs & Spam II
A successful experiment always makes me feel good.
Last week in the comments on my "Fried Eggs and Spam" post, I theorized that putting a slice of Valveeta cheese onto the eggs might really taste good. This weekend I had fried eggs and Spam and the slice of Valveeta on both days. There is no doubt that adding the slice of Valveeta makes a significant improvement.
Very, very tasty !
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