Daniel Moser

Money Managers Find Favor in Oil

You know what I find most interesting about this particular article? According to this analysis the "big bad energy speculators" are longer than ever in the market, yet somehow prices managed to stay below $140/bbl. How in the world can that be? I was so sure that speculation was what drove oil prices to $140 per barrel. Is it truly possible that supply and demand might actually have something to do with the price of oil? I digress...

Thank you for the update on the position of market players. Now if only policy makers will focus on fixing the problems rather than playing idiotic blame games that clearly lack insufficient evidence supporting their claims.

Stanford's Garage Sale Shows Swensen's Model Is Discredited

Appreciate the update, but I am not really sure how sizable losses disprove the notion of Swensen's views on diversification of investment strategies.

Microsoft vs. Apple - Which Is Worth More?

I would sure love to see someone much more tech saavy than myself do some analsyis on profit/megabite of product sold. Intuition suggests that AAPL is 10X more effecient than MSFT on that metric but I am not exactly a techy so I my intuition might just be wrong.

Hedge Fund ETFs: The Door Has Opened

I must respectfully disagree. Index IQ HF replication is a joke. They are curve fitting historical returns and not actually capturing the "real" source of alpha and probably not even capturing the real beta either. Do you really think that the average Global Macro hedge fund is 33% allocated to fixed income securities? Granted I obviously don't know the answer to that, but somehow I doubt it.

There is definitely an argument to be made that hedge funds fees are too high for the majority of them, but niavely investing into a portfolio of etf's thinking you are going to get a sterotypical hedge fund like returns is preposterous. If you can't actually locate the source of alpha/beta to mimic the returns, there is an inherent tracking risk and even a possible risk of a signficant blow up. Investors should be very cautious with these new ETF's.

Why I'm Long Uranium and Nuclear / Power Engineering

On the cost front, you might read the piece again...the upfront costs of nuclear are substantially higher, however the MARGINAL COST is remarkably lower. Which is to say once the nuclear plants are built, they are by far cheaper than everything but hydro (as far as I know).

Next, the vast majority of alternative forms of energy have extremely low scalability. I am not saying that wind, solar, etc are bad ideas in all cases. I am just suggesting that in the scheme of things, these technologies will not solve the problem without leading to a severe energy shortage in the U.S. and quite frankly the world.

In terms of generating capacity in the U.S., Wind Power makes up about 1%, Solar makes much less than 1%, Geothermal makes up well less than 1%, Hydroelectric makes up about 9%. So....lets just say for argument sake it is not exactly feasible to dam up every river accross the United States (of course I could be wrong, but nonetheless). If you quadrouple each of the other forms of renewable resources you are still under 10% of generating capacity. My point is that is that these forms of alternative energy are not a viable option to handle a major transition away from our reliance on "dirty" power without creating a major power shortfall.

Third point, on a marginal basis....natural gas is not cheaper than nuclear power. That point is 100% inaccurate. Hence, nuclear power is used as a "base load" power which means they switch those puppies on ramp 'em up to 90% (or whatever normal operating capacity is) and rarely switch them off. Nat Gas is most typically used for what is referred to as peak power...which is to say when demand suddenly gets ramped up (in the busy mornings for instance) the prices for power typically lead to Nat Gas turbines kicking on to take advantage...but when the peaking power demand subsides the Nat Gas turbines are turned off because the economics suggest to stop producing power.

Lastly, on my political views...I wouldn't consider offering up nuclear as the viable option to handle global warming while expanding power capacity in the U.S., and the rest of the world, a bias right wing rant. To be entirely honest, I have no idea if the "right wing" even supports nuclear power as an alternative. My initial thoughts would be that they probably do not given the artificial security risks with terrorists. So, I am not exactly sure which group I should attribute my political bias to.

In my opinion good policy is good policy and bad policy is bad policy whether it comes from the left or the right. I am sorry to let you in on this little secret...but corn based ethonal is not economic and on top of the poor economics it doesn't even help the environment. In fact, the only thing corn based ethonal does...is burn food. Food that could be used to feed the hungry (hardly a lunatic right wing position, wouldn't you say). I also apologize that other alternatives are not currently feasible or scalable to effectively tackle global warming at the current time (that doesn't mean they won't ever be). Clean coal technology at the present time doesn't exist. Someday maybe the technology will be there and it will be the save all solution but currently it doesn't exist.

So, while I don't personally think I am unfairly presenting a portion of the bullish case for nuclear power, I guess not respecting Bill Maher's opinion on any issue that is remotely important is a crazy right wing view. Heaven forbid being skeptical of a comedian's political view. I guess that does incorporate way to much independent thought for the likes of some.

Why I'm Long Uranium and Nuclear / Power Engineering

First off, I can't write a book online...so each post has to be a reasonable size. Secondly nothing you have said is particularly crucial to my underlying thesis being correct: which is that nuclear will eventually become the "duh" solution to solving global warming while keeping costs relatively cheap. Right now the environmentalist lobby is not rationally allowing policy makers (particularly left wing policy makers) the ability to pursue nuclear as the viable option hence your points about nuclear capacity actually declining...however that will change as it becomes abundently clear that there is no other currently viable option to produce energy at a reasonable cost that simultaneously helps reduce global climate change. Third, the rest of the world waking up/expanding nuclear (as the other commentor points out) will still lead to an increase in demand for uranium - which in and of itself promotes uranium prices and simultaneously puts the United States at a competitive disadvantage which will ultimately have to be corrected by some decent policy (we hope so anyways).

My bottomline, my analysis works it is just a matter of timing. You incorrectly focus on the present situation in which nuclear is not seen (as it should be) as the viable option - which actually feeds my argument that in the future this will change after a serious "alternative energy bubble" that mis-allocates capital to the incorrect resources-which will end in tears for most investors playing bad solar companies and what not. Good luck and I geniunly appreciate the feedback.

Everybody Has a Plan Until They Get Punched: Mistakes to Avoid in Turbulent Markets

Definitely a good read and a great quote. Thanks for the reminder.

Soaring Retail Sales in China Demonstrate Economic Shift

Desperate efforts to depict all the prosperity and progress in the U.S. as being monopolized by "the rich" have led to statistical mumbo jumbo, such as comparing the changing ratios between statistical categories over time and ignoring the fact that most people move from one category to another over the years.

Studies that follow individuals over time show the exact opposite. That is, most of the working people in the bottom fifth of the income distribution rise into the top half, and the rate of increase of their incomes is greater than that of most of the people initially in the top fifth.

- Thomas Sowell

The income distributional justice argument is largely irrelevant for essentially everyone reading this blog.

My contribution to the discussion would be that China actually has a few additional competitive advantages in terms of policy...they control the means of production for all practical purposes. In fact, approximately half of the Chinese stimulus money is actually coming from the government whereas the rest is being "directed" to banks and whatever other means the government has by the government. While the democratic nations of the world would like China to evolve into a more decentralized economy (i.e. more capitalistic), the very fact that they have a controlled economy can actually work to there benefit with one HUGE caveat: the government has to make good decisions. Which by virtually everyone's recognition-they are, especially when compared to the United States. I am fairly confident that as the global economy gets back on a robust track of expansion China will continue their progressively liberalizing to a full out capitalist society or at the very least much more decentralized.

China's data integrity issues are a solid point and investors should without a doubt be somewhat skeptical of the exact accuracy of the numbers. However, that says nothing about the directional accuracy of data released by China. Furthermore the notion that investors should forgo investing in China because the transparency of what is actually going on is sketchy is not a very good in the scheme of things as it requires those investors to ignore a tremendous amount of qualitative data.

For my final comment...

"Sadly, corrupt and incompetent Western governments have demonstrated that they are much too arrogant to learn from China. Instead, they foolishly repeat past mistakes, while serving the needs of no one other than their bankster-overlords."

It seems to me that the vast majority of U.S. politicians do things to benefit themselves regardless of whether or not it is good for the country. I guess in my opinion their second priority is to enrich their "chosen" people-which jeff apparently would argue is bankers whereas I might be inclined to argue it is environmentalists, unions, and government employees themselves.

Three Reasons to Own Oil E&P Companies: Update

Nat gas is a different story from oil. There is a glut of natural gas supply in the United States and it is likely to get worse with LNG imports to the U.S. tentatively rising.

Even if you are bullish nat gas in the long term bullish view I don't really believe that expressing it via UNG is the best idea. I am not exactly sure how UNG works but I am familar with how USO works...and if they are similar...I wouldn't plan on making money as an investor in those ETFs. Because they are purchasing natural gas futures contracts they can be eaten alive by the commodity roll in which they have to get out of this months contracts and buy next months at a different price-and since they are passive long only investors with your money...I would argue they are not too terribly concerned.

If I was bullish natural gas in the long term (which truthfully I would just consider myself neutral at this point), I would probably look for a small basket of natural gas stocks and natural gas trusts. Dennis Gartman is a huge fan of natural gas trusts because they typically pay very competitive dividends and so long as natty gas remains above a certain minimum those dividends are covered. In addition to E&P natty gas companies and natural gas trusts, it might be worth considering a few engineering/services companies that are significantly weighted towards natural gas drilling/services.

Either way, short term outlook for nat gas is hardly positive in my mind...but i wouldn't short it either. I would leave UNG/USO alone and find other ways to profit from your views. Good luck.

Will Hedge Strategy ETFs Replace Hedge Funds?

QAI is a marketing gimic and nothing more. They are playing to the crowd i.e. individual investors who do not really understand how "good" hedge funds work but they are well aware of the fact that some hedge funds have earned incredible returns. Any fool with a modest education in 10th grade algebra and 1 college finance course that taught optimization can use curve fitting to replicate a hedge fund strategy-which is all these people are doing. The enormous problem with this ETF is that they are replicating returns 1. using historical data and 2. aren't necessarily capturing the appropriate beta/alpha -which implies that going forward they will never statistically perform the way they are supposed to i.e. multi strategy hedge fund-like returns.

For example....could it be that multi strategy hedge funds exhibit a lower volatility and thus lower correlation to equities becuase of their frequent use of put options or stop losses that effectively allow them to create an assymetric payoff profile relative to long only stocks? Whereas QAI is simply using an overweighting to fixed income ETFs to create a very low volatility (they hope postive absolute return) investment vehicle. How are those two things similar?

I have said it before, and I am confident I will be able to prove it when more data is available on QAI, investors who purchase this ETF should not expect returns similar to a multistrategy hedge fund platform. They might make money or they might lose money...but I am extremely confident they will not realize returns that are statistically similar to any multi strategy hedge fund index.

It is a gimic, designed to take advantage of people's desire to get away from long only equity managers. Having said all that, these guys are quite smart for rolling out these vehicles and will without a doubt make a lot of money for themselves via fees and what not. But investors in these particular ETFs are being setup for disappointment. Please be very skeptical of these sort of investment vehicles before you buy them (if you intend to hold them for any lengthy period of time).

If you don't believe me...go online and look up Cliff Asness. He founded and runs a very large hedge fund investment company called AQR Capital Management. In early 2009 he rolled out a passive hedge fund strategy mutual fund. Go online and read about his mutual fund. I believe if you go to this website: www.aqrfunds.com/defau... there are some video interviews in which he discusses these funds and explains how they work. If they aren't there you can find them elsewhere online. Just watch them...and then compare his company/mutual funds to QAI and see if there is anything you find similar about them at all. I am confident after a tiny amount of due dilligence you will realize that QAI is little more than a marketing ploy.

Three Reasons to Own Oil E&P Stocks

You might be on point with who started the systematic destruction of the dollar. However, that point is moot. The fact is the USD is being systematically devalued, and I would argue the current administration has no intentions of altering its path via good policy. There are implications of this policy and as such, investors should aim to profit from trends that they predict will play out because of this policy. Hence, the weak dollar doctrine is merely one point among at least 3 as to why oil exploration and production companies represent a compelling opportunity for investors.

Monsanto: The Quintessential 'Growth' Stock

First of all, it is a misrepresentation of return on capital at risk, because if the puts expire in the money, you do have to pay an additional 9K and if you don't have it you are screwed. Thus a better basis to measure return, in my opinion, is using the net obligation of 18K.

Secondly, In what world is 3520 total profit better than 6000 (for 100 shares)? And suppose you prescribe to my method of accounting for the return on this...in what world is 3520 total profit better than 12,000 (for holding 200 shares outright if MOS moves to 150)?

Monsanto: The Quintessential 'Growth' Stock

Monstanto might be a fine company but your evaluation of your option trade is misrepresentative.

First of all you are analyzing returns from an "initial cash outlay" which is fundamentally flawed because the reality is you have to have 18K set aside for this trade or you will find yourself bankrupt should MOS trade below 90 at expiration obligating you to spend an additional 9K on buying the stock.

Secondly, your analysis didn't show any major moves in the stock price over the course of the next year and a half. So, here goes...

What if MOS is well above 90 at expiration? Lets take an extreme case...lets say MOS is at 150 at expiration in 2011. You will gain 6,000 in profit on the stock. You will lose 4250 = ((90-150)*100+1750)on the call you sold @ 90. You will gain 1770 on the put option that was sold. This sums up to a net profit of 3520. Now this might seem like a grand return on what you call your outlay...however when you properly account for how much capital you need to have to realistically put this trade on without the fear of going bankrupt...it is 3520/18000 or 19.6% return over the course of 1.5 years - or a 13.04% annualized return. Hardly a great return relative to a 66% total move in a stock (or 44.5% annualized).

What if you simply bought 18,000 worth of MOS and saw a similar move in the stock....you would earn 12,000 or the whole trade or the entire 66% return.

What about the other direction? What if the stock falls to 50? You would lose 4000 on the stock. You gain 1750 from the call you sold. And you would lose 2230 = ((50-90)*100+1770) from the put you sold @ 90. For a net loss of 4480 or a total loss of 24.9% (or annualized -16.59%).

If you are bullish on MOS, it would be far better to simply buy 9K or 18K worth of MOS and use a stop loss. Your option strategy is oriented for someone who doesn't think there is much upside potential in MOS over the next 1.5 years.

The Problems with 'Hedge Fund Strategy' Funds

Because intelligent investors have begun questioning the merits of long only investment strategies as their only source for returns. It is time that they look to more market neutral absolute investment return strategies.

Biting the Hedge Fund Hand That Could Save the Economy

Geez...I thought we were in this financial mess becuase major banks and residential mortgage companies went extremely lacks on responsible lending which allowed consumers to live WAY beyond their means using home refinancing as a source of income coupled with credit cards, and generally no real savings.

Thank you for clearing it up...everyone should be able to own a home regardless of their ability to pay and quite frankly Wall Street should be willing to finance it. Hedge funds, speculators, manipulators, and value destroyers are all to blame for our financial mess. Thank goodness we have Larry Summers, Tim Geitner, Rahm Emmanual, etc. who have never worked for such corrupt institutions that destroy value and offer nothing productive in the economy. These are great, hard working, honest individuals who we should be grateful were never involved in 1920s style "Chicago Politics" in the modern age. They are definitely not likely to do any backdoor deals in which a select few get filthy rich while laying all the risk off on the taxpayer.

The stock market and the United States economy will be much better off in the United Socialists States of America when Obama finally sets a few ground rules. Rule 1: the stock market WILL go up 5% per year for the rest of our lives with no fluctuations. Rule 2: NO ONE is allowed to bet against rule 1 from happening.

Sounds like a sustainable plan to me. I can't wait to wake up when they actually ban short selling all together leaving investors literally nothing to do to protect themselves financially against market meltdowns. Pension system failed, social security is failing, 401K and IRAs are not likely to escape the Obama administration as tax free or tax reduced investment vehicles (plus long only investments in the stock market are tenious at best at this point anyways). What is a young person to do in order to save for any sort of retirement? Hey when Obama and the Chicago mob bosses rewrite finance and how the stock market structurally works to include the above mentioned rules....I guess I know what I can do to save for retirement. I will give money to "the party" which will then manage to manipulate economic data such that I believe I am earning 5% per year in a very Madoff similar fashion. Sounds great to me.

*Essentially everything I have written is laced with sarcasm in case my writing wasn't clear.