H.J. Huneycutt

There Are Opportunities Everywhere - Barron's Interview

He's right. It is the greatest time to be an investor for many of our lifetimes. It's too bad he's squandering the opportunity by buying overpriced companies like Strayer (STRA) and DeVry (DV).

In all fairness, some of this other buys would've been good a few months ago. I'm not quite as sure if they are good buys now. Blue Nile (NILE) appears to be selling at a P/B over 30 and a P/E over 50. Even if you go by their record earnings in 2007, it's still at a P/E of over 33. That's an awful lot of growth already priced into the stock.

"Leaked" stress test results show 16 of the nation's top 19 banks are already technically insolvent - any two of which could take down the FDIC. Update: Treasury says it doesn't even have the results yet, which Karl Denninger calls a lie. Zero Hedge, and others, question the veracity of the leak and its source's agenda.

Everyone is talking about this right now, but I'd be extremely relunctant to take anything from Hal Turner's site as being remotely accurate. The guy is a white supremacist and has a clear agenda. Not saying that this news couldn't in fact be true; but I'd have a very great deal of skepticism towards it until verified by a more reputable source.

The Global Oil Scam: 50 Times Bigger than Madoff

Yet another reason why the US needs to end its dependence on foreign oil. We need to move towards domestically produced natural gas, geothermal energy, alternative energies, and even nuclear power. We need to build up our rail infrastructure, for both passenger and freight service. In essence, almost anything is better than oil if we want to maintain our position in the world.

Socialism has failed. Capitalism is bankrupt. What comes next? "Whatever ideological logo we choose for it, it will mean a major shift away from the free market and towards public action."

"Socialism" and "capitalism" are both non-cognitive terms. They have no real meaning. If you ask 100 people what "socialism" is, you'll get radically different answers. Same thing with "capitalism."

The transformation of "capitalism" (a label used to describe the economic systems that began to take form in much of the Western world between the 12th and 16th Centuries) into an ideological term is a disturbing development in my view. 12th Century Venetian capitalism has little in common with 16th Century English capitalism which has little in common with 19th Century German capitalism which has little in common with 21st Century American captalism.

Capitalism shouldn't be an ideology. It's a reality. It's a label we give to the economic system that has evolved over the past severeal centuries due to the major trends taking place in the world.

People should focus on making the system (1) more meritocratic, (2) with more equal opportunities, (3) while promoting greater efficiency, and (4) innovation. In essence, the goal is to increase the standard of living for the greatest number of people. Who cares what you call it. I think 98% of the people in the world basically desire the same things if they'd stop mindlessly bickering over labels. The discussion should be over how "X policy action" promotes "X goal" rather than how "X policy action" is truly the "most capitalist" or "most conservative" or "most liberal" or most [insert any other mindless label]" proposal.

Why It's Actually Different This Time

While I enjoyed reading this article, I do disagree with many points and note a few inaccuracies:


"A few things lead us to think we are in worse position in 2009 than in 1974 or 1932. For one, we've fallen deeper and faster than we did in even the Great Depression, let alone the mid-70s. It took years to reach the lows in the last two events, but only a year and a half ago, we were at 14000 on the DJIA."

This simply is not true. Or at the very least, it's a distortion of the facts. Take a look at the chart for the stock market crash of '29 and the market fell 50% within a month or two!


"We are also now in a very different geopolitical position; Western nations are net debtors, and Asian countries are now net creditors. After World War I, the US and Britain were the world's creditors"

While we are in a different geopolitical situation, consider that one of the factors that lead to the exacerbation of the Great Depression was a tariff war coupled with increasing nationalism across the world and the rise of Fascist regimes in parts of Europe, plus the Japanese invasion in Asia. All these factors led to huge uncertainty, which is what the market fears the most.



For the most part, I agree with the rest of your analysis. I just don't necessarily believe that's a reason to be down on the markets. Certainly, America looks to be economically weakening due to many factors you describe, but if the markets have already considered that and if other factors lead to an increase in prices (such as inflation), stocks still might be one of the safer investment vehicles out there.

Eight Reasons Bank of America Is Going to $20

Good article.

I actually remarked today about how insane people shorting BAC are right now. Even if their right, risk-reward is not in their favor. At most, they pocket a 100% gain; on the flip-side, they could absorb a loss in the 300-1000% range. Unless one thinks the odds of nationalization are 95%+, that's not a very wise investment based on risk-reward principles.

Suckers' rally: "It is unwise and foolish to treat this bear market like any other in the post-WWII period because it is totally unique; the scope and depth of the ongoing destruction of consumer and business credit, bank balance sheet compression and insolvency, consumer retrenchment and soaring unemployment should not be underestimated."

It is totally unique. And it's totally unique from the Great Depression, too. Which is why everyone is going to get burned who thinks this is Great Depression Part Deux. It's not.

This recession/depression will be inflationary. Policymakers are printing money like crazy to "combat" the crisis, rather than cleaning up the financial system long-term. The end result is we'll get high inflation and then once that gets out of control, the Feds will try to stomp it down like Volcker did in the '80s. In which case, we'll probably endure more carnage.

But one way or another --- people should be bracing for stagflation.

House Democrats unveil an $894B healthcare bill that includes a compromise version of a public option - requiring individuals to buy health insurance, but providing tax credits to low/middle-income families to do so. It also repeals health insurers' exemption from federal antitrust laws.

I'd like to see healthcare reform --- I really would --- but I simply can't see how it's conscionable to *force* lower middle income earners to purchase insurance they can't afford and don't actually need.

I scrapped by for years on next to nothing and had looked into getting health insurance. In spite of the fact that I was a completely healthy 23-year old male at the time, it would have cost me nearly $2000/year just for minimum coverage -- which would've been useless unless I needed to make over 20 trips to the doctor in one year. If I wanted coverage that might actually cover something important (e.g. appendicitis, organ failure, emergency surgery, etc), it would have cost something like $3500/year. This issue is affordability --- you can't fix affordability merely by forcing people who can't afford it to buy it.

This is further proof that Washington doesn't really give a damn about the masses of people in this nation. This whole "mandatory health coverage" is being sold to the public on the flawed basis that it will "lower costs." Well, it will "lower costs" in a sense --- just like if we forced everyone to purchase three cars, the automakers would be able to increase efficiencies and their bottom line, which would mean "lower costs" to purchase a car. This doesn't mean it's desirable, moral, or even economical. Rather, it simply drains resources from more productive uses.

"Mandatory health coverage" makes poverty even more severe than it already is, without really solving the underlying problems with our health care system. Make no mistake about it --- "mandatory health coverage" has nothing to do with economic efficiency --- it is nothing more than a subsidy to the all-too-powerful insurance lobby.

How Much Natural Gas Remains in the USA?

With all due respect, this is a very poorly argued article. "Unproven reserves" are calculated based on seismic data, economic feasibility, and studies of areas with potential gas findings. It should probably be somewhat obvious, but natural gas drillers don't simply go around drilling all over the place for gas based on random guesses --- they use a lot of data to make determinations.

To claim "unproven reserves" are meaningless simply because they haven't been verified directly is like claiming Pluto doesn't exist because you've never visited it. In actuality, a large amount of the unproven reserves will eventually be "proven" and the amount of total reserves will probably increase in the future.

I don't know if we have a 100 years' supply of gas, but it's probably much closer to that your 10 years worth of gas claim. There is no natural gas "crisis" and while there will certain be boom and bust cycles in the future, your argument seems to go to an extreme and claim that natural gas will completely run out soon.

The only thing slowing new natural gas exploration and production right now is extremely low prices.

Three Strikes from Apple and Palm May Be Out

I'm in agreement. You never completely know how consumer electronics products are going to turn beforehand, but at PALM's current price, investors are basically assuming that the Pre will have record sales and bring PALM profits *AT LEAST* twice as large (and maybe three times as large) as they made in some of the boom years.

I realize the smartphone market is growing, but it's also crowded. Not sure how PALM earns enough to justify its share price even if the Pre is a success. And I'm not sure that consumers are dying to pay $300 for a Palm Pre on Sprint during one of the worst consumer environments of the past two decades.

I could be wrong, but it seems like a long shot to me. If I had to wager, I'd guess the Pre has good initial sales but then fades a little bit, but never really comes close to earning what current shareholders believe it will.

Paulson vs. Buffett

bobbobwhite,

The most egregious thing to me about Buffett's role through all of this is that he very aggressively advocated in favor of TARP. Moreover, he waived off concerns about it being unbeneficial to the taxpayers because 'you can't get everything perfect' and it's 'more important to save the system than worry about the details'.

That might not have been such a big deal had he been your every day average Joe with no vested interest in banks and financial institutions, but the fact of the matter is that Buffett was arguably the single biggest financial beneficiary of TARP. In essence, the taxpayers are subsidizing Buffett's investments that went sour.

I don't necessarily think Buffett is a bad guy --- I guess he was just looking out for his self-interest, but it's difficult for me not to notice that he has more than enough for himself while the average middle income American is struggling. I wish people simply quit looking at him as if he's some infallible beacon of wisdom looking out for all of us when in actuality, his advocacy during this crisis has mostly been about his own self-interests.

NPR's Planet Money spends a day with Barney Frank's Financial Services Committee. "We talked to 13 congresspeople, 12 of whom admitted that they don't understand this at all. And the guy who thought he did really didn't."

Not surprising. I wonder if Barney Frank was the "one guy who thought he but "really didn't."

Maybe it's not surprising that I would say this, but Congress needs more CPAs and less lawyers. In fact, Congress needs more people from a variety of professions, because it's simply not possible for it to function well when everyone in it has the exact same profession --- "Lawyer/Professional Politician"

Balancing California's Budget: The Home Game

That's not happening any time soon.

Also, other than NYC, what place on Earth has "better businesses" with "higher paying employment" than California? There might be a few places here or there in the developed world, but there aren't many.

The only significant new business that California might be able to lure in is offshore oil. Any other business that moves into California right now is absolutely insane. Why would anyone want to come with:

(1) The highest cost of living in the nation
(2) Close to highest wages in the nation
(3) A bankrupt state government
(4) High taxes with the prospect of higher taxes
(5) The myth of the Californian semi-utopia destroyed
(6) Ponzi-scheme tax system that punishes newcomers (see Prop 13)
(7) Silicon Valley no longer being the technological capital of the world
(8) There's sprawl, sprawl, and more sprawl --- coupled with some of the highest gas prices in the nation --- that's only going to get worse over time

At this point, the only major thing left to attract people to California is the university education system, which is the best in the world. But is it going to stay that way once CA balances its budget? Education spending is around 40% of the budget.

The Northeast, Mid-Atlantic, and Midwest might experience a gradual recovery over the next decade, but I think California is in for a prolonged period of suffering. I'm not saying it's going to turn into Detroit (though according to many sources Stockton is arguably worse than Detroit) --- but it's not going to be the big "winner" coming out of this.

Long-term macroeconomic cycles that affects regions and cities are not uncommon in American history. In 1950, Baltimore and Memphis were on top of the world. Not so much now. But maybe they will be again in another decade or two. And maybe California will feel like it's somewhere near the bottom.

I can't read the future, but I think California is going to have a really hard time convincing businesses to move to the state in mass numbers any time soon.


On Jul 01 06:39 PM HerrHansa wrote:

> Once again what is missing from the LA Times article is revenue generation.
> If California could entice better businesses with higher paying employment
> into the state, then tax revenues would increase without the need
> to increase individual taxes.

10 Dangerous Stocks to Avoid

This is an ill-informed article that completely ignores the actual fundamentals behind these companies. If a company is bringing in major cash flows, they can afford to take on more debt. IBM is not in any particular danger. While I'm less familiar with some of the rest of these companies, my initial guess is that most are in similiar situations --- high cash flows to offset higher debt levels.

Based on the author's two responses in the comment stream coupled with the choice of wording within the article, this seems like a shameless advertisement for the author's website and I'm not sure why Seeking Alpha has published it.

Rick Santelli: 21st-century Samuel Adams - or astroturfer?

The Democrats are the party of corruption.
The Republicans are the party of gross dishonesty.

I'd say of the Washington pols, only about 5-10% are worth a damn (and that's in both parties). Most of them are more concerned with working for their special interest donors, advancing their own careers, and creating phony wedge issues to divide the public.


One thing is for sure --- Santelli is more Joseph Goebells than Sam Adams.