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George Acs  

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  • Beware The Hand Of Government [View article]
    Given the nature of the Federal Reserve, which includes their existing as an independent body, and allows for delayed release of certain materials, such as access to transcripts, the closed nature of their investments isn't very unusual. Pragmatically, knowledge of Fed actions would likely lead to speculative action by others which could be detrimental to the nation's good.

    One way to look at the nature of the Federal Reserve's investments is that they have been assigned the responsibility of managing the nation's wealth, using it to help meet their dual mandate on behalf of the American people and doing so through the use of a blind trust, so that neither legislative nor executive actions could be undertaken to manipulate the components of the investment portfolio.
    Jun 28, 2014. 08:13 PM | Likes Like |Link to Comment
  • Beware The Hand Of Government [View article]
    I agree with you, but I think that if the Federal Reserve was ever in the business of buying stocks it would likely be as index baskets, rather than specific stocks.

    On the other hand if a sovereign fund existed sometimes a nation's Central Bank invests in industries that are vital to the nation despite potential conflicts of interest. For example, you may be able to justify taking an equity position in a company, such as a defense contractor, despite also doing business with that contractor, if the position would help protect it from certain economic stresses that might jeopardize its ability to maintain its independence.
    Jun 28, 2014. 08:03 PM | Likes Like |Link to Comment
  • Beware The Hand Of Government [View article]
    All I need to do is climb on my roof and I could probably see the NSA's satellite dishes. Snowden himself was from the town next door to me and a number of my neighbors are NSA people (apparently paid quite well)
    Jun 28, 2014. 07:57 PM | Likes Like |Link to Comment
  • Beware The Hand Of Government [View article]
    One of the things that distinguishes the US from many other nations is the lack of a sovereign fund. Those have long been intimately connected to Central Banks. The investment by those Central Banks in their own nation's sovereign funds hasn't been an extension of the Fed's QE, as you suggest. It has been done in what is perceived to be in their nation's best interests, as much of a nation's wealth, including that of the government is tied up in such funds.

    Suggesting that the Federal Reserve is in essence funneling or even laundering money through other nations seems to be a far fetched concept. It is also one laden with excessive risk and would leave the Federal Reserve in a passive position, something that would be completely unacceptable to the Fed itself, not to mention at least two of the 3 branches of government.

    However, if we had a sovereign fund in the US, I think that would be an appropriate means of diversifying the Federal Reserve's portfolio. Our Federal Reserve's dual mandate doesn't restrict how it may use its assets in order to achieve their objectives of price stability and increasing economic production. They have sought to indirectly boost stocks by heavily depressing the competition through bond purchases. That's good enough for me.
    Jun 28, 2014. 06:42 PM | 4 Likes Like |Link to Comment
  • Beware The Hand Of Government [View article]
    Ah, Ray, now you really opened up a can of worms. Before you know it we will learn about the Federal Reserve's use of Barclays dark pools that the NYS Attorney General has uncovered in a DaVinci Code sort of conspiracy.
    Jun 28, 2014. 06:25 PM | 1 Like Like |Link to Comment
  • This Roller Coaster Only Goes Higher - Don't Fight It [View article]
    I do like those days off that often seem to pay me, anyway, but I would so much rather that they paid better than in this current environment. The forward weeks are offering very little motivation to extend risk, but that's what I did last week, essentially bypassing the July 3 expiration on 8 of 11 trades.
    Jun 28, 2014. 06:03 PM | Likes Like |Link to Comment
  • Beware The Hand Of Government [View article]
    Let me understand this.

    You're asking for someone to prove that an unsubstantiated rumor is false, yet the proof would require presenting evidence of no action. That is to say you're asking for proof that the Federal Reserve did not but shares in stocks.

    The logic of that proposition requires that there be proof of the action that is alleged. So that really puts the ball in your court.

    Your assertion is no different from saying Area 51 is used by the government to house extraterrestrials and then challenging someone to "Prove to me that it isn't the case."

    Even demonstrating all of the uses of Area 51 could never satisfy your demand for proof, because if something doesn't really exist, it's lack of existence can never be directly demonstrated because there are no markers nor indicators of being.
    Jun 28, 2014. 05:58 PM | 9 Likes Like |Link to Comment
  • Beware The Hand Of Government [View article]
    That's exactly why there has to be a roll for government, but ideally that roll would identify problems during their nascent stages, be more of a preventive nature and not have to be an over-reaction to the problem as identified.
    Jun 28, 2014. 05:36 PM | 4 Likes Like |Link to Comment
  • Beware The Hand Of Government [View article]
    Unfortunately, the problem is that without regulation most everyone is trying to game the system and you find many living their existences at the fringes of what most people inherently know to be the border that straddles right and wrong.

    When regulation is diminished people and institutions tend to take advantage. That is simply human nature and the less aggressive are the ones who get trampled by those seeking to position themselves at an advantage.

    History is filled with examples of bad outcomes when there is little to rein in behavior and the result is the need to over-react by government in an effort to control, eliminate or regulate those behaviors. It's the over-reaction and the broad nature of actions that often has the unintended consequences.
    Jun 28, 2014. 05:35 PM | 3 Likes Like |Link to Comment
  • Beware The Hand Of Government [View article]
    Glad that worked for you. Like most things, you just never know, but it always helps to have an escape or coping strategy
    Jun 28, 2014. 12:15 PM | Likes Like |Link to Comment
  • Beware The Hand Of Government [View article]
    That's actually a strong possibility for HFC. The key will be, if having to rollover, being mindful of the approaching dividend so that the dividend is captured as an owner of shares, rather than subsidized as a seller of puts.
    Jun 28, 2014. 12:14 PM | Likes Like |Link to Comment
  • Beware The Hand Of Government [View article]

    I actually wrote an article a few months ago that looked at the use of a margin account specifically to write puts without incurring margin expenses as a means to supplement income flow. The key was making certain not to get assigned and rolling over, as needed, until expiration could occur.
    Jun 28, 2014. 12:13 PM | 1 Like Like |Link to Comment
  • Beware The Hand Of Government [View article]
    Thank you, as always Rose.

    In general, I have no problem with government's role in our lives. While I don't always believe in the specifics of a given policy or action, I tend to believe that their intentions are well founded. However, they often suffer from horrible execution and without thorough analysis of the unintended consequences. That tends to be true regardless of which party or side of the aisle is promulgating at the moment.

    The decision regarding oil, for example, may easily result in increased prices for crude as there will likely be increasing bidding for crude, now that refiners can be bypassed. The IRS decision could also open up companies like Federal Express seeking to convert or spin off their real estate holdings specifically to reduce tax consequences. It goes on, just as we've seen that the Affordable Healthcare Act (of which I'm a proponent) may have had a hand in the decreased GDP for the first quarter.

    It's complicated, but that's why we have elected officials. They're supposed to be on top of these things instead of being nothing more than a self-perpetuation machine that spends all of its time seeking re-election.
    Jun 28, 2014. 11:19 AM | 6 Likes Like |Link to Comment
  • This Portfolio Has 50% Upside And Will Outperform The Markets Again In 2014-2015 [View article]
    Nicely written article.

    You do mention the concept of diversification early in the article as it applies to all assets. However, it's not entirely clear to me that it is practiced in this portfolio.

    Among the questions I would have is the heavy representation of Chinese stocks in this portfolio, representing nearly 50% of the holdings. That represents considerable risk, just as at the right moment it may have presented considerable reward. What it doesn't represent is diversification, nor balance.

    Additionally, the average beta is very heavily skewed to 2, with the average being slightly greater than that. Surely that gives the potential for robust gains, but as these stocks have shown nice gains in 2013 their risk for out-sized losses can't be minimized.

    While you suggest that your portfolio is worth looking over, what kind of an investor do you believe it can serve as a model for in terms of risk temperament?

    Finally, with a portfolio gain of 4% for 2014 YTD and now with 6 months remaining, what do you believe will be the catalysts to help you achieve the additional 50% that you refer to as "Future Portfolio Return"?
    Jun 28, 2014. 11:08 AM | 3 Likes Like |Link to Comment
  • Beware The Hand Of Government [View article]
    I've been on the wrong side of cash accumulation for more than a year, although I keep plowing some back in each week and usually hope to get back to my starting cash level for that week.

    I'm currently at about 30% but am willing to get down to about 20% for the week. Without considering new cash inflows from the sale of options, that would mean about 5 new positions being opened up, as I usually have each lot represent about 2%.

    Not being fully invested has a downside if you don't have your existing positions in a state of overdrive generating revenue, but I always think in defensive terms. Like a lot of things you don't appreciate it until it's really needed.

    I wouldn't mind facing any correction with that 20% in reserve. Then the hard part becomes when to believe that the correction is done. Whether it's a market correction or an individual stock I'm usually on the early side, but I don't get bent out of shape if seeing more declines. If the declines steepen you simply adjust your covered call strategy taking advantage of the accompanying increase in volatility and the increased premiums that will make out of the money strikes as attractive as in the money strike are currently.
    Jun 28, 2014. 10:41 AM | 1 Like Like |Link to Comment