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Andres Rueda  

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  • Rough Seas Ahead For Shipping [View article]
    Hi, Sean. With respect to DRYS, keep in mind that it owns 75% of ORIG, a deep sea oil driller. You should run the numbers. The market value of DRYS is less than the market value of its stake in ORIG. Apparently, the market continues to value the dry bulk and oil product transport aspect of DRYS at less than 0. That may help explain the recent run up in this stock, and why the run up may have more legs to go.
    Feb 9, 2012. 10:37 AM | 2 Likes Like |Link to Comment
  • Just How Efficient Is The Market? [View article]
    I agree with the author. If the market were "efficient", we would not see the wild volatility that we saw last calendar quarter. A 300-point drop that corrects itself the next day on "no news" does not reflect an efficient market. It reflects a market driven by fear. 10-year T yields at 1.67% also do not reflect "efficiency." They reflect fear. High, almost perfect correlations across securities and across asset classes also do not reflect efficiency, but, once again, fear.
    Feb 3, 2012. 02:37 PM | Likes Like |Link to Comment
  • Barron's Raises Interesting Questions On Portfolio Allocation [View article]
    I don't understand the attraction of hedge fund investments. Hedge funds are just unregistered mutual funds, with huge and unfair fees structured so that tails you and hedge fund manager win, heads you lose. I've seen hedge funds with "performance" fees as high as 50% (ie., the manager gets to keep half of your mark-to-market gains!!!), and people still invest because of the brand name.

    Also, it has not been demonstrated that hedge fund managers as a group actually "beat" the market. The hedge fund indices that purport to show this are full of survivorship biases and other errors.
    Jan 31, 2012. 12:46 PM | 1 Like Like |Link to Comment
  • What Is The Bond Market Telling Us? [View article]
    The bond market is not "usually right". That is a load of bull. The bond market is in fact right behind most financial problems. Argentina bons, triple-AAA mortgage CDOs, Greek debt. Come on. Next you'll be telling us that S&P is a leading market indicator. Give me a break.
    Jan 14, 2012. 03:12 PM | 1 Like Like |Link to Comment
  • What Is The Bond Market Telling Us? [View article]
    The T-bill market is a huge bubble. Banks required to buy triple-A paper, the illusion of a safe haven, fear... Nobody pays attention to fundamentals. There is a massive built-in loss on every purchase of of 10- and 30-year Treasuries. Say interest rates move 100 basis points up, 200 basis points, 700 basis points? What happens? Because we are dealing with bonds, anybody can run the numbers. The potential loss is huge. With the money supply growing at clips of 10% to 20% per annum, and central banks worldwide printing money like there is no tomorrow, only the dim-witted buy this paper. And yet, they keep buying and buying until the music stops. And then, ooops... Internet stocks, China, triple-AAA mortgage CDOs. Same with every other bubble, except that in this case the Federal Reserve is actively in the market. This will not end well!
    Jan 14, 2012. 03:12 PM | Likes Like |Link to Comment
  • Debunking Altucher's Bull: 'I Could See, But Now Am Blind' [View article]
    Ok, here's an issue where your article is conceptually unsound. You say the following: "But I will answer this question of what usually happens when cash is sitting around doing nothing. The answer is nothing, and that's generally the problem these days." This is of course false. If you increase the money supply, you tend to increase the price of everything, including stocks. The pool of cash does not sit around doing "nothing." Some cash is always being deployed. If you increase the pool of available cash, then you increase the amount of cash that is available to go into the stock market. Right? (This should not be controversial!)

    Are you saying that the fraction of the cash going into the stock market is decreasing as you increase the amount of total cash so that stock market prices should stay static or even decline? Everything is possible, sure, but this is unlikely. According to Fed Reserve statistics, money supply is exploding. M1 has increased 19.1% y/y according to the latest reading, while M2 has increased 9.8%.

    Good luck buying 10-yr. T-bills at 1.9% per annum when the money supply is growing at a clip of 20% per annum. Do the math, guy! It's called compounding. Run the numbers over a ten-year period. Brilliant, huh?

    What is happening, in my view, is that the Treasury market is seeing a bubble in reverse, assisted by Fed policies. People are so scared, that they behave irrationally and dump huge amounts of cash into assets (T-bills) in which, over the long term, they are destined to lose mucho, mucho dinero. Either that, or they can't do basic math.

    Jan 9, 2012. 12:09 AM | 2 Likes Like |Link to Comment
  • M1, Q3 GDP, And Interpreting Money Flows [View article]
    Something I don't understand from your otherwise excellent article. M1 (or M2 or the Mises M or whatever) does not increase as a result of asset liquidation. In fact, M1 remains static after an asset is sold from one party to another. The reason is simple. When an asset gets sold, bank credits flow from the bank account of the purchaser to that of the seller. So, it's a wash. Correct?
    Nov 24, 2011. 04:55 PM | Likes Like |Link to Comment
  • M1, Q3 GDP, And Interpreting Money Flows [View article]
    Something I don't understand from your article. Asset liquidation does not result in an increased M1. When an asset gets sold, the dollars purchasing the asset move from the buyer's bank account to the seller's. So, it's a wash.
    Nov 24, 2011. 04:55 PM | Likes Like |Link to Comment