Not about the stock casino, oops, I mean stock market.
Normally I enjoy kicking Bill Gates in the butt and pointing out all the garbage Microsoft produces: that p. o. s. Vista operating system being the latest.
BUT I found a capability of the Microsoft word processing program, Word, that is quite remarkable - amazing even.
As I teach myself French, I've started to translate selections of writing. To do that without writing and making corrections by hand, I type the passage - sentence by sentence - into Word, then work on my translation below. Somehow Word has figured out that I am writing in French for some paragraphs and will do automatic spelling checking of the French. Word gets the endings and accent marks correct, too. Even a word that could be correct in English, but not French, is marked.
So here's one cheer for Bill Gates and Microsoft -> !
Market
Another good rally.
Actions
Like Santa Claus, I'm making my list and checking it twice. That is, a list of sectors and stocks that could make really huge gains IFF the world returns to normal in a couple of years.
Here's something interesting: I looked at my "Green Book" of 35 year stock charts to see which groups overperformed coming out of the 1974 bear market, which coincided with a very severe recession.
These groups had moves of about 300% to 400% from their lows in late 1974 to a peak in early 1976: apparel & luxury goods, shoes, home furnishings, hotels & resorts, leisure products, restaurants, and environmental services.
Those are certainly not in the group of "usual suspects". The common ground for all but one seems to be products or services for consumers that are easily deferred. Once the troubles are perceived as being over, the consumer comes roaring back to spend on those items.
That was long ago and not every group of today even existed then. For example, dry bulk shipping was a completely private industry then. And today is not exactly a match for 1974. But still, the sectors are interesting for stock investigations.
The next step is to check those sectors and similar ones to see what stocks might be good picks.
PS: WSJ had an interesting article about investment banking. What was missing are the contacts with "real" investors. To me, an investment banker could be calling on potential "real" investors - not trading funds - to find out their needs and what types of investments they would consider. They do have cash flow and needs to invest to match future liabilities with "good" investments. Then go find those for them. But I suppose many of the current generation doesn't have those skills.
Word of the Day
"Beshrew" - verb, transitive [$100] a Mrs. B word.
Beshrew means to curse, invoke evil upon.
Sentence: Bunkerman today deviates from his normal mode: To borrow from Marc Antony's speech in Shakespeare's play, Julius Caesar, "He came not to beshrew Bill Gates, but to praise him".
Tuesday, December 9, 2008
Monday, December 8, 2008
A New Reader
I guess I have a new reader, viz. Obama, or perhaps his advisors. Maybe, or maybe this is just Tim Geitner passing on my ideas. [ joke ;) ]
From FT this morning: "Barack Obama on Sunday spelled out his plans for the biggest infrastructure investment in the US for half a century. The president-elect argued that with the economy reeling, his incoming administration could not afford to worry about a spiralling budget deficit. Mr Obama’s proposals for government works on roads, bridges, Internet broadband and school buildings, together with energy efficiency measures and health spending ..."
They are proposing almost everything I did except direct housing market suport, but I suspect they will do something to aid that market, too.
I'd like to see money spent on high speed rail between major cities less than 300 or 400 miles apart, instead of this wasted money on"alternative energy". "Alternative energy" has been a bottomless pit for over 30 year for crackpot schemes to violate either the laws of economics or the laws of physics or both.
Markets
Futures are up substantially so far this morning, perhaps a relief rally that Obama might not screw this up.
The concerns about corporate spreads are misguided. In my long experience of placing secured notes of corporations with institutions, absolute level of the rate is very important. Long term lenders really do not want to make long term, investment grade loans under 6%. They prefer to wait.
I also read with amusement that the credit default swaps rates of numerous nations is rising, including the US. What a fraud ! Who is going to pay off those swaps in such a catastrophe ? Those are just credit betting parlors and that whole "market" is a joke. Anyway, a credit default swap bears two risks, viz. the counter party AND the named credit. How does one distinguish that ? Credit default swaps should be banned from the financial system. Only those backed by regulated insurance contracts and hard capital should be permitted.
Word of the Day
"Irrefragable" - adj [$10] a Mrs. B word
Irrefragable means 1. (of a statement, argument or person) unanswerable, indisputable; 2. (of rules, etc.) inviolable.
Sentence: An irrefragable truth about General Motors is that its top managers and management culture has been a disaster for that company for at least 15 years, perhaps as long as 40 years.
From FT this morning: "Barack Obama on Sunday spelled out his plans for the biggest infrastructure investment in the US for half a century. The president-elect argued that with the economy reeling, his incoming administration could not afford to worry about a spiralling budget deficit. Mr Obama’s proposals for government works on roads, bridges, Internet broadband and school buildings, together with energy efficiency measures and health spending ..."
They are proposing almost everything I did except direct housing market suport, but I suspect they will do something to aid that market, too.
I'd like to see money spent on high speed rail between major cities less than 300 or 400 miles apart, instead of this wasted money on"alternative energy". "Alternative energy" has been a bottomless pit for over 30 year for crackpot schemes to violate either the laws of economics or the laws of physics or both.
Markets
Futures are up substantially so far this morning, perhaps a relief rally that Obama might not screw this up.
The concerns about corporate spreads are misguided. In my long experience of placing secured notes of corporations with institutions, absolute level of the rate is very important. Long term lenders really do not want to make long term, investment grade loans under 6%. They prefer to wait.
I also read with amusement that the credit default swaps rates of numerous nations is rising, including the US. What a fraud ! Who is going to pay off those swaps in such a catastrophe ? Those are just credit betting parlors and that whole "market" is a joke. Anyway, a credit default swap bears two risks, viz. the counter party AND the named credit. How does one distinguish that ? Credit default swaps should be banned from the financial system. Only those backed by regulated insurance contracts and hard capital should be permitted.
Word of the Day
"Irrefragable" - adj [$10] a Mrs. B word
Irrefragable means 1. (of a statement, argument or person) unanswerable, indisputable; 2. (of rules, etc.) inviolable.
Sentence: An irrefragable truth about General Motors is that its top managers and management culture has been a disaster for that company for at least 15 years, perhaps as long as 40 years.
Friday, December 5, 2008
TGIF
So The Ostrich cuts rates in Europe ... about six months too late. That means Europe's recovery will be slower. And then one of their big mouths says a "pause" now, so Europe's base lending rate will be 2.5%, well over other nations' base rates. That was disappointing. And the EU is still interferes with nations' bank recapitalization efforts. While people everywhere look for errors, mistakes and reforms, Europe obviously need to reform the EU and the ECB. I suggest copying the US institutions. Of course, they won't do that, even though the US model has worked well for over 200 years, far longer than any other democratic republic.
The damage down by the autumn panic is unfolding now. No bad news should be a surprise.
But we know that huge, positive cash flow benefits are flowing into the public now: lower oil prices, low interest rates on home equity loans, and now mortgage refinancing cash flow. The profit margin on bank loans is colossal now. More jawboning is necessary to make them lend aggressively. JPM seems to get the picture, announcing more lending programs. Other banks need to follow.
A dangerous game of chicken is occurring in DC. Congress seems to be unwilling to aid the auto makers even though huge numbers of jobs are at stake. And some in Congress seems unwilling to give Hank the Tank the second tranche of the TARP. Maybe they want maximum pain to occur just before Obama takes over. That's possible, as desire for power is the #1 focus of politicians.
Auto Industry
I favor a very large, debtor-in-possession financing for the auto industry. Bankruptcy is needed to break all those contracts that have been suffocating the industry for decades. But the technology and manufacturing base is very important and needs to be saved from liquidation.
Actions
Doing nothing. I want to know what Congress will do. Their delay in passing the Paulson plan caused the late September - October panic, in my opinion.
Word of the Day
"Cadge" - verb [$10]; a Mencken word; the 'a' is short as in 'cat'.
Cadge means 1. (transitive) get or seek by begging; 2. (intransitive) beg.
Sentence: The spectacle of the CEOs and the UAW boss of the auto industry cadging for loans from politicians was quite greasy, as they have operated grossly inefficient operations for dacades. One need only look at the "jobs bank" where people are well paid for not working.
The damage down by the autumn panic is unfolding now. No bad news should be a surprise.
But we know that huge, positive cash flow benefits are flowing into the public now: lower oil prices, low interest rates on home equity loans, and now mortgage refinancing cash flow. The profit margin on bank loans is colossal now. More jawboning is necessary to make them lend aggressively. JPM seems to get the picture, announcing more lending programs. Other banks need to follow.
A dangerous game of chicken is occurring in DC. Congress seems to be unwilling to aid the auto makers even though huge numbers of jobs are at stake. And some in Congress seems unwilling to give Hank the Tank the second tranche of the TARP. Maybe they want maximum pain to occur just before Obama takes over. That's possible, as desire for power is the #1 focus of politicians.
Auto Industry
I favor a very large, debtor-in-possession financing for the auto industry. Bankruptcy is needed to break all those contracts that have been suffocating the industry for decades. But the technology and manufacturing base is very important and needs to be saved from liquidation.
Actions
Doing nothing. I want to know what Congress will do. Their delay in passing the Paulson plan caused the late September - October panic, in my opinion.
Word of the Day
"Cadge" - verb [$10]; a Mencken word; the 'a' is short as in 'cat'.
Cadge means 1. (transitive) get or seek by begging; 2. (intransitive) beg.
Sentence: The spectacle of the CEOs and the UAW boss of the auto industry cadging for loans from politicians was quite greasy, as they have operated grossly inefficient operations for dacades. One need only look at the "jobs bank" where people are well paid for not working.
Thursday, December 4, 2008
What will The Ostrich Do ?
Today is all about the ECB.
Will The Ostrich [aka Trichet, the head of the ECB ] pick his head out of the sand and see to cut rates significantly. "Significantly" means 0.75% to 2.5% and even to signal a move to 2.0% and then lower. Last time the ECB was stingy and the markets fell worldwide. Why they see a need for tight money at a time that inflation, which never was more than a speculative oil bubble, is non-existent, is beyond comprehension ?
Bank of England needs to cuts rates, too. Sweden's central bank already cut rates by 1.75% to 2%, more than expected this morning.
So far, European stock markets are strong this mornings. That can change instantly if the ECB disappoints.
Actions
I am still working on my list of stocks to buy that might go up 5 or 10x within two years if the world survives and returns to normal in two years. I'll put some Alpha Fund money into those soon, perhaps starting in early January.
Word of the Day
"Gogue" - noun [$ ? ] not in OED or any dictionary I've seen; a Mencken word.
Gogue means (from Wiki, so beware) a piece of horse tack used for training.
Sentence: (Mencken usage referring to college students) "... and eager to dance, neck and hoodwink the poor gogues told off to struggle with them."
(Modern) Has Trichet spent enough time in the gogue to get out and really run a bit ? Or will he stay in the barn, eat and sleep in complacent comfort?
Will The Ostrich [aka Trichet, the head of the ECB ] pick his head out of the sand and see to cut rates significantly. "Significantly" means 0.75% to 2.5% and even to signal a move to 2.0% and then lower. Last time the ECB was stingy and the markets fell worldwide. Why they see a need for tight money at a time that inflation, which never was more than a speculative oil bubble, is non-existent, is beyond comprehension ?
Bank of England needs to cuts rates, too. Sweden's central bank already cut rates by 1.75% to 2%, more than expected this morning.
So far, European stock markets are strong this mornings. That can change instantly if the ECB disappoints.
Actions
I am still working on my list of stocks to buy that might go up 5 or 10x within two years if the world survives and returns to normal in two years. I'll put some Alpha Fund money into those soon, perhaps starting in early January.
Word of the Day
"Gogue" - noun [$ ? ] not in OED or any dictionary I've seen; a Mencken word.
Gogue means (from Wiki, so beware) a piece of horse tack used for training.
Sentence: (Mencken usage referring to college students) "... and eager to dance, neck and hoodwink the poor gogues told off to struggle with them."
(Modern) Has Trichet spent enough time in the gogue to get out and really run a bit ? Or will he stay in the barn, eat and sleep in complacent comfort?
Wednesday, December 3, 2008
Redux
Bill Gross wrote an honest investment outlook for the future that provides plenty of good data and some worries about the future. See http://www.pimco.com/TopNav/Home/Default.htm and click on his investment outlook link.
The Good News
The chart on the long term trend [1952 to now] of market values compared to replacement cost of corporate assets is quite interesting. It shows that equity values are very low and that a normal "reversion to the mean" could bring a 100% increase in stock values. A chart of P/E ratios from 1871 [!!] to now shows similar "cheap" valuation. In the past those were "screaming buy" situations and huge bull markets followed.
The Worries
Corporate taxes are very low based on his chart of the ratio of tax payments to profits before taxes. And Mr. Gross worries about "a world where the government fist is being substituted for the invisible hand". Demographics are a worry, too, except in the emerging markets (other than Russia and China). In other places I've seems charts of corporate profit margins being quite high historically, too.
Counter-Worries
His worry about the loss of entrepreneurial risk taking seems misplaced, though, as he cites the exit of clowns like Chuck Prince as examples of that loss. He also cites the loss of golden parachutes, options, executive compensation, etc. But to me, those are "counter-worries" aka positives.
For almost 15 years, the CEO, CFO and the executive suite has looted untold billions from the foolish stockholders who approved compensation plans and directors in the club who rubber-stamped idiotic levels of compensation. That loos of shareholder value might be gone for our lifetime - let's hope.
My memory tells me that CEO compensation alone was amounting to 10% of corporate profits. Toss in the rest of the executive suite and all those stock options and I suspect they looted about 20% of stockholders' profits "EBH" - i. e., profits before hogs.
I read in FT that the median CFO got around $2.9 million in total compensation last year. And many did not even know enough to fund long term assets with long term debt, not commercial paper. Elsewhere, I see they were rather more pre-occupied with corporate tax shelters than productive investments or stable financing. So they deserve a huge pay cut for sheer stupidity as a class.
Conclusions
Mr. Gross concludes that corporate bonds are an excellent opportunity, which I agree is true provided one looks to absolute levels of yield and ignores the false signal of credit spreads when US Treasuries are at foolish levels due to hedging mortgage prepayments.
But the counter-worries seems to balance the worries, leaving the data showing that corporate stocks are a "screaming buy" for long term investors. Remember to use time diversification if you act on this.
Word of the Day
"Fusty" - adjective [$10]
Fusty means 1. stale, smelling, mustly, moldy; 2. stuffy, close; 3. antiquated, old-fashioned.
Sentence: Will Obama and the Democratic Congress provide new ideas and energy, or just a fusty, recycled mash of new left, statist policies from the 1970s ?
The Good News
The chart on the long term trend [1952 to now] of market values compared to replacement cost of corporate assets is quite interesting. It shows that equity values are very low and that a normal "reversion to the mean" could bring a 100% increase in stock values. A chart of P/E ratios from 1871 [!!] to now shows similar "cheap" valuation. In the past those were "screaming buy" situations and huge bull markets followed.
The Worries
Corporate taxes are very low based on his chart of the ratio of tax payments to profits before taxes. And Mr. Gross worries about "a world where the government fist is being substituted for the invisible hand". Demographics are a worry, too, except in the emerging markets (other than Russia and China). In other places I've seems charts of corporate profit margins being quite high historically, too.
Counter-Worries
His worry about the loss of entrepreneurial risk taking seems misplaced, though, as he cites the exit of clowns like Chuck Prince as examples of that loss. He also cites the loss of golden parachutes, options, executive compensation, etc. But to me, those are "counter-worries" aka positives.
For almost 15 years, the CEO, CFO and the executive suite has looted untold billions from the foolish stockholders who approved compensation plans and directors in the club who rubber-stamped idiotic levels of compensation. That loos of shareholder value might be gone for our lifetime - let's hope.
My memory tells me that CEO compensation alone was amounting to 10% of corporate profits. Toss in the rest of the executive suite and all those stock options and I suspect they looted about 20% of stockholders' profits "EBH" - i. e., profits before hogs.
I read in FT that the median CFO got around $2.9 million in total compensation last year. And many did not even know enough to fund long term assets with long term debt, not commercial paper. Elsewhere, I see they were rather more pre-occupied with corporate tax shelters than productive investments or stable financing. So they deserve a huge pay cut for sheer stupidity as a class.
Conclusions
Mr. Gross concludes that corporate bonds are an excellent opportunity, which I agree is true provided one looks to absolute levels of yield and ignores the false signal of credit spreads when US Treasuries are at foolish levels due to hedging mortgage prepayments.
But the counter-worries seems to balance the worries, leaving the data showing that corporate stocks are a "screaming buy" for long term investors. Remember to use time diversification if you act on this.
Word of the Day
"Fusty" - adjective [$10]
Fusty means 1. stale, smelling, mustly, moldy; 2. stuffy, close; 3. antiquated, old-fashioned.
Sentence: Will Obama and the Democratic Congress provide new ideas and energy, or just a fusty, recycled mash of new left, statist policies from the 1970s ?
Tuesday, December 2, 2008
More Liquidations ...
Many more hedge funds are liquidating and most of the rest are restricting redemptions.
From FT: "The combination of the worst year on record for hedge fund returns and the biggest withdrawals on record mean the industry’s assets will shrink 35-45 per cent from June to the end of December, according to analysis by Morgan Stanley."
One famous hedge fund is restructuring in a manner similar to banks: "Paul Tudor Jones, who shot to fame and made a fortune when he predicted the 1987 stock market crash, plans to split toxic assets out of his $10bn flagship hedge fund and has suspended redemptions until the restructuring is complete. "
Hedge funds were NEVER a separate "asset class" as promoted to the rich and the pension funds. They were just a speculative, risky way to manage money and overpaid their managers by colossal sums.
Commodity funds were NEVER a separate "asset class" as they did NOT invest is true assets - namely the underlying oil in the ground, or the actual cows. They were just speculating in futures and derivatives. To repeat, they were just a speculative, risky way to manage money and overpaid their managers by colossal sums.
Yesterday's drop was probably a combination of these redemptions plus the public doing some selling after the recent rally plus more tax loss selling.
And the bear beefer mouthpieces and marionettes keep saying it's different this time, and nothing will ever change and an endless current of bad events will occur forever. To me, they sound like the rah rah crowd of late 1999 and early 2000 in reverse. They just don't recognize how fast the America and Americans react. change and adapt.
Let the bears and doomsters has their fun. When the liquidations are done - an unpredictable point in time - like Don Juan in that great opera, Don Giovanni, the unrepentant bears will be sucked into "l'enfer" as a great new bull market begins.
PS: Today I read the EU is interfering with an injection of capital into a German bank. How can the EU survive this ? with both the French and Germans screaming at its bureaucrats, I think the EU will have to be restructured.
Actions
My tax loss selling is done, saving me big $$$. Later this week I can re-allocate some funds in Krypto Fund. Otherwise, I'm doing research to compile a list of stocks to buy that perhaps can provide big profits on the coming bull market. And I means multiples, not mere percentages.
Word of the Day
From FT: "The combination of the worst year on record for hedge fund returns and the biggest withdrawals on record mean the industry’s assets will shrink 35-45 per cent from June to the end of December, according to analysis by Morgan Stanley."
One famous hedge fund is restructuring in a manner similar to banks: "Paul Tudor Jones, who shot to fame and made a fortune when he predicted the 1987 stock market crash, plans to split toxic assets out of his $10bn flagship hedge fund and has suspended redemptions until the restructuring is complete. "
Hedge funds were NEVER a separate "asset class" as promoted to the rich and the pension funds. They were just a speculative, risky way to manage money and overpaid their managers by colossal sums.
Commodity funds were NEVER a separate "asset class" as they did NOT invest is true assets - namely the underlying oil in the ground, or the actual cows. They were just speculating in futures and derivatives. To repeat, they were just a speculative, risky way to manage money and overpaid their managers by colossal sums.
Yesterday's drop was probably a combination of these redemptions plus the public doing some selling after the recent rally plus more tax loss selling.
And the bear beefer mouthpieces and marionettes keep saying it's different this time, and nothing will ever change and an endless current of bad events will occur forever. To me, they sound like the rah rah crowd of late 1999 and early 2000 in reverse. They just don't recognize how fast the America and Americans react. change and adapt.
Let the bears and doomsters has their fun. When the liquidations are done - an unpredictable point in time - like Don Juan in that great opera, Don Giovanni, the unrepentant bears will be sucked into "l'enfer" as a great new bull market begins.
PS: Today I read the EU is interfering with an injection of capital into a German bank. How can the EU survive this ? with both the French and Germans screaming at its bureaucrats, I think the EU will have to be restructured.
Actions
My tax loss selling is done, saving me big $$$. Later this week I can re-allocate some funds in Krypto Fund. Otherwise, I'm doing research to compile a list of stocks to buy that perhaps can provide big profits on the coming bull market. And I means multiples, not mere percentages.
Word of the Day
"l'enfer" - noun [$ ?] French
"l'enfer" means hell, the infernal regions. the underworld. An erudite reader and poster mentioned it as I asked how to tell someone to go to hell in French: Allez à l'enfer ! Doesn't it sound more polite in French ? And more sophisticated ? By the way, this is pronounced, "Allay a longfehr", roughly.
Sentence: This is not armageddon or l'enfer; World War II was that. Stop the whining. Adapt, improvise and more ahead into the unknown like a true pioneer.
Monday, December 1, 2008
Ban All Credit Default Swaps
Last Friday's Financial Times had an article about a dangerous new practice that banks are trying to foist onto corporate borrowers. The international banks want to price loans against the credit default swaps of a company on a variable, floating basis. That article points out that this would give hedge funds and speculators the power to destroy any company they wish.
The raiders could short its stock and them float the market with orders to buy credit defaults swaps of the company. As are no natural writers of these alien instruments, the price would rise explosively, and then the interest rates on the company's debt would skyrocket. And that would crush the company's earnings, in turn crushing its stock price. Payday for the raiders ... created for themselves.
A natural money machine for bear raiders. Of course we know they have already done this for those extremely credit sensitive institutions, viz. the banks and investment banks.
The solution to this is an internationally agreed edict that outlaws these contracts from any nation in the financial system.
Credit insurance - true insurance - can still exist and be available for commercial transactions only. Those would be regulated as insurance by the states or a future national insurance regulators.
To paraphrase the writer of the Financial Times article, since credit default swaps are "weapons of mass destruction" in financial transactions, let's not permit the banks to weaponize them and proliferate them to the raider community.
PS: I read the EU is blocking the French plan to add capital to its banks to increase lending. Amazingly stupid of the EU. The EU and the ECB are so far off the marks on this crisis that I wonder if the EU can truly survive.
Word of the Day
"Firman" - noun [$10] from Persian
Firman means 1. an oriental sovereign's edict; 2. a grant or permit.
Sentence: Derivatives needs to be regulated strictly and financial institutions should be required to obtain a positive firman before entering into or trading any type of derivative.
The raiders could short its stock and them float the market with orders to buy credit defaults swaps of the company. As are no natural writers of these alien instruments, the price would rise explosively, and then the interest rates on the company's debt would skyrocket. And that would crush the company's earnings, in turn crushing its stock price. Payday for the raiders ... created for themselves.
A natural money machine for bear raiders. Of course we know they have already done this for those extremely credit sensitive institutions, viz. the banks and investment banks.
The solution to this is an internationally agreed edict that outlaws these contracts from any nation in the financial system.
Credit insurance - true insurance - can still exist and be available for commercial transactions only. Those would be regulated as insurance by the states or a future national insurance regulators.
To paraphrase the writer of the Financial Times article, since credit default swaps are "weapons of mass destruction" in financial transactions, let's not permit the banks to weaponize them and proliferate them to the raider community.
PS: I read the EU is blocking the French plan to add capital to its banks to increase lending. Amazingly stupid of the EU. The EU and the ECB are so far off the marks on this crisis that I wonder if the EU can truly survive.
Word of the Day
"Firman" - noun [$10] from Persian
Firman means 1. an oriental sovereign's edict; 2. a grant or permit.
Sentence: Derivatives needs to be regulated strictly and financial institutions should be required to obtain a positive firman before entering into or trading any type of derivative.
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