Bruce Vanderveen

Why You Shouldn't Hold Leveraged ETFs Long-Term

Yes, the dangers of holding levered ETFs long term has been well discussed on Seeking Alpha and elsewhere. However, newcomers to Seeking Alpha and investing arrive regularly so we do need, on occasion, to call attention to these risks.

China, The Global Carry Trade and Oil

Interesting! So three forces may (will?) drive commodity (especially oil) prices ever onward and upward:

1. Quantitative easing (dollar printing).
2. Peak Oil
3. And now, potential strengthening of the Yuan vs the USD

Less than 24 hours ago Korea's state run oil company signed a contract to buy Harvest Energy Trust (HTE). More coming?

Charlie as a Too Big to Fail Bank

I saw the Frontline Show last night. The 5 largest banks, led by Goldman are still playing with the dynamite, especially in (supposedly benign) interest rate swap derivatives.

Benign? Hardly, Harvard lost $500 million on them under Larry Summer's watch according to Forbes article awhile back.

I wonder what kind of disruption a sudden rise in interest rates will cause in this market?

BET ON STUFF

Good Article. No, we will not "run out of oil". However, with all the picking of "low hanging fruit" it will become increasingly expensive.

We DO need to look much more intensively at using Natural Gas to replace oil and coal. Oil because it will get more and more costly. Coal because it is dirty and has large carbon emissions. By "dirty" I mean heavy metals and sulfur. Coal released mercury for example is poisoning fish worldwide, in turn poisoning us.

Why Gold, If Deflation Is the Threat?

Right Northstar, Just don't stand too close to your stash when it explodes.


On Oct 03 09:41 AM Northstar10000 wrote:

> Nat Gas has so many potential surprises that you must own it.
> Eventually it will explode.

Why Banking Is Insolvent

I don't think average mortgage balances are near $200,000 (certainly not double) in Florida. In the central Florida area I am familiar with (north Tampa suburbs) the peak 2006 value for an mid-priced 3/2/2 home with 1600 sq ft living area was around $225,000, now it is closer to $125,000.

Those who purchased 2005-2007 are likely underwater. Many have already defaulted. Those who can are hanging on or have paid down the loans. Houses purchased prior to 2005 would have much smaller balances though some took out equity loans.

Derivatives Datapoint of the Day

Derivative defenders are quick to claim "notional amounts are completely irrelevant". Felix's question was: Why the hundreds of Trillions exposure now? People like Matt might wish to answer his question rather than sidestepping and pontificating.

Remember the AIGFP CDS derivative debacle? Major systemic risk, necessitating $100's of billion in taxpayer bailouts. Why are TBTF institutions so heavily into this market? Taxpayers deserve an answer.

I don't know the answer. Felix doesn't apparently. If Matt knows he is not telling and can't understand why you would even ask. Draw your own conclusions.

Prepaying Mortgages

In the world of private mortgages prepaying at a discount is common. Both parties can benefit. Negotiations can be done at the kitchen table.

I don't know why banks don't offer discounts for prepaying.

Australia's Implications for Global Capital Flows

So how long will the commodity run go on? The US dollar weakens and commodity based currencies soar. When gasoline is priced high enough NASCAR and its muscle car loving fans will go into decline.

Fed Policy at the Breaking Point

Well said! We averted the systemic crisis last fall but at what cost? The Fed needs to start the exit process now, even if painful.

Empty Storefronts

I never could figure why, unlike residential property, commercial property seems to sport vacancies for such long periods. If I have a residential property that is vacant for a month or more I look on it as a fairly big problem.

I know a nice looking new strip mall north of Tampa, Florida that, though open for 9-10 months, only has one unit out of 16 leased (a donut shop). Someone has to have deep pockets here. I'm wondering how long before the foreclosure signs appear.

Even though I don't like donuts very well (yeah, I know, I'm weird) I'm rooting for them to succeed. Maybe one of those cinnamon ones.

Inflation Ahead

Inflation? deflation? How about: "Out of Control". The FED would like a steady 1-2% inflation rate, but those days are gone. Now the window is very hard to hit. It could go to either extreme and then swing back the other way viciously, so fasten your seat belts.

Today's Best Risk / Reward Income Investments, Part I: Canadian Power Stocks

Thanks Cliff for telling us about these high yielding utilities.

I followed your advice a few months ago and it paid off nicely.

Oil as a Deflationary Investment

I would like to note that EOG was included as "oil rich" only because they have a strong presence in the Bakken Shale of North Dakota. The "oil rich" part largely come from future potential. Also, the "3-forks" Sanish Formation in the same area may be oil rich too. Google it for more information.

Oil as a Deflationary Investment

Robert and others: Thanks for commenting:

Yes, I should have mentioned that peak oil thinking is behind some of the logic Oil is not intrinsically a good deflationary investment (rather the opposite). However, the point is a depleting resource is a good investment no matter what inflation/deflation is.

"Demand Destruction" in US and Europe is being offset by "Demand Explosion" in large Asian countries such as China, India and Indonesia. One must take a world view.

True, some of the same arguments for oil can be made for gold. However, oil is a working asset while gold is purely defensive. (If you like to handle assets, gold beats oil).

On Aug 13 10:07 AM Robert Martorana wrote:

>
>
> Bruce,
> This article seems to be about peak oil.
>
> I didn't see how your thesis for oil is related to deflation. You
> mentioned other assets that are clearly defensive: cash, bonds, and
> inverse ETFs. Your thesis for oil, however, seems to rely solely
> on diminishing supply/peak oil.
>
> Thanks,
> Rob