Investors Beginning To Doubt U.S. Economy [View article]
Keep in mind that the reason international capital keeps running back to the dollar is because the U.S. has demonstrated that, however chaotic they may appear at first blush, democracy and (semi) free markets represent the most dependable, long-term viable socio-economic system in the world. BRICS and Company have a lot of room to grow because they're recovering from centuries of bad policy. Take China, for example: Historically speaking, wealth aggregation is confined to the coast, with rebellion springing from the peasant hinterland. The Chinese Government is afraid of Google and Facebook for just that reason. That's hardly confidence inspiring. India has an average standard of living on par with the worst Africa has to offer. Brazil is only recently emerging from years of military dictatorship. Russia is a former police state run by the former head of the KGB. Where in any of this is long-term viability/stability? What if all this amazing opportunity turns out to be nothing more than picking up quarters in front of a steamroller?
First, the author declares that (a) Mr. Buffett's strategy is to "hold forever." Then the author notes that (b) Mr. Buffett hasn't beaten the S&P in "one year, two years, three years, five years." If you admit (a), then (b) isn't a valid critique.
The author suggests that ALL strategies, even "buy and hold" fail over the long term. I fail to see how this anti-strategy theory can possibly be correct, since it would...
(a) have to draw a line somewhere ("one years, two years, three years, five years") in order to gauge results, knowing that (b) said empirical results could always be overturned in the next trading day [all theories are falsifiable], and (c) after Strategy ABC is incorporated, it would lead to diminishing returns, hence decreasing its strategic utility (hence, no one would use it; hence Strategy ABC would suddenly work again below a certain critical participation threshold), (d) A growing number of quant trading desks are being closed due to diminishing returns, invalidating the "the quants are coming for you!" objection, (f) appears to be the only exception to the rule that there are no exceptions to the rule (internally inconsistent, non-recursive)
I get the feeling that the author is attempting to call a bottom on Mr. Buffett. He would only be the 10,000th analyst or so that's tried, although someone may hit the jackpot sooner or later simply by luck of the draw.
Mr. Buffett IS quite old, after all, so I suppose the author has a 1 in 6 chance of striking pundit paydirt.
Great article, Kevin. My sentiments exactly. I suppose I'm one of those ghost buyers that isn't showing up on the radar.
It's remarkable how many otherwise seasoned investors are willing to put their money where their ideology is: as if being right and making money were the same thing. I'd rather be wrong and make money hand over fist any day.
But if they're willing to sell me AAPL for under $500, hey. Keep it coming. ;-)
I don't accept the contention that the deficit is a credit card or that the U.S. can "max out." The debt is a drag on growth, but not a lethal one at present. If the U.S. continues down this road, a Japan-type implosion from debt service is possible...in 2050.
(Source: CBO projections for "alternate" budget path of higher spending/decreased taxes over the next decade.)
Grand Bargain: Are Fiscal Spending Cuts And Revenue Increases Both Needed? Part 1 [View article]
Hamburgers cost about 25 cents back then, too. Milkshake, a dime. Your father also lived in a pre-globalized, industrialized America that paid people a wage they could live on. Those manufacturing workers had extremely strong unions which kept a steady upward pressure on salaries, less social stratification based upon college degrees, technology that revolutionized industry at a much slower pace and much higher taxes across the board. The top bracket on income over over $400,000 in 1964 was 77%,outright communism until you consider that in 1946 the top bracket on income over $200,000 was 91%.
What Happens If The iPhone 5 Flops? [View article]
It's an In-Group/ Out-Group dichotomization. If you're too poor or uncool to own an iPhone, that says something about you to a growing number of people.
Berkshire Hathaway's (BRK.A) credit rating is cut to AA with negative outlook from AA+ by S&P. "The lower credit rating ... better reflects our view of BRK's dependence on its core insurance operations for most of its dividend income ... only Burlington Northern has provided a significant portion of the total dividends paid from the operating companies to the holding company." [View news story]
The Italy (EWI -3.7%) and Spain (EWP -3.1%) ETFs lead a now-tumbling Europe (FEZ -1.8%) as - maybe we're being too simplistic here - Eurogroup President Dijsselbloem has more or less told anybody with greater than €100K in deposits at what could be a troubled bank they need to think about getting their money out. Italy's Unicredit and Intesa Sanpaolo are halted down more than 5%. EUFN -2.4%. [View news story]
If you think that the botched bank robbery in Cyprus isn't going to be repeated all over Southern Europe, I've got at least half a dozen bridges to sell you at prices starting below scrap.
1) Our debt is denominated in dollars. 2) Most of that debt is owed to ourselves. 3) Dollars are the world's reserve currency. 4) Whatever country supplies the world's reserve currency must also be willing to run deficits. 5) Deficits are not debt. 6) Countries only make the coupon payments on their debt, they don't pay off the debt itself. The relevant measure of a country's actual debt itself is Debt-to-GDP. 7) A run on the dollar without another currency to run to would bankrupt the bond holders making a run on the dollar. 8) A devalued dollar would boost exports, inflation and tightening monetary policy, ultimately boosting the dollar. 9) Inflation erodes the real burden of debt. 10) There is no other viable currency to run to with the capacity to replace the dollar besides the euro. See: #3.
The problem with this schema would be if European or Chinese banks were to accumulate gold reserves at a significantly faster rate than their counterparts in the U.S., or vice-versa, which would result in a shortage of available Tier 1 capital precisely when derivatives traders require more of it to operate due to Dodd-Frank.
The banks would naturally step in (for a hefty fee) by offering capital transformation services. While that's great for the for the bank's top line growth in the short term, it puts the rest of us on the hook for Lehman Redux the moment all that "transformed" garbage capital goes belly up.
Correct, nor did I mention OPEC at length because, again, identifying ALL the variables that go into the price of a barrel of oil would be beyond the scope of any article. I did note in the Conclusions section, "geopolitical tension" and "the survival of unstable regimes" were both contributing factors.
Apple stores are located on the wrong side of the road. High schools are missing. Museums are located under rivers. The red pin misses the Washington Monument and hits Independence Avenue. Sears Tower has shrunk. The city of Hong Kong is in mainland China. Cities are in the ocean. The Statue of Liberty is flat. Berlin has been renamed “Schöneiche bei Berlin." Whole areas are covered with clouds. Buildings twist, warp, and occasionally cease to exist altogether. Tip-Top.
Investors Beginning To Doubt U.S. Economy [View article]
BRICS and Company have a lot of room to grow because they're recovering from centuries of bad policy. Take China, for example: Historically speaking, wealth aggregation is confined to the coast, with rebellion springing from the peasant hinterland. The Chinese Government is afraid of Google and Facebook for just that reason. That's hardly confidence inspiring. India has an average standard of living on par with the worst Africa has to offer. Brazil is only recently emerging from years of military dictatorship. Russia is a former police state run by the former head of the KGB. Where in any of this is long-term viability/stability? What if all this amazing opportunity turns out to be nothing more than picking up quarters in front of a steamroller?
Herbalife Is An Endless Chain [View article]
The Seductive Warren Buffett [View article]
Then the author notes that (b) Mr. Buffett hasn't beaten the S&P in "one year, two years, three years, five years."
If you admit (a), then (b) isn't a valid critique.
The author suggests that ALL strategies, even "buy and hold" fail over the long term. I fail to see how this anti-strategy theory can possibly be correct, since it would...
(a) have to draw a line somewhere ("one years, two years, three years, five years") in order to gauge results, knowing that
(b) said empirical results could always be overturned in the next trading day [all theories are falsifiable], and
(c) after Strategy ABC is incorporated, it would lead to diminishing returns, hence decreasing its strategic utility (hence, no one would use it; hence Strategy ABC would suddenly work again below a certain critical participation threshold),
(d) A growing number of quant trading desks are being closed due to diminishing returns, invalidating the "the quants are coming for you!" objection,
(f) appears to be the only exception to the rule that there are no exceptions to the rule (internally inconsistent, non-recursive)
I get the feeling that the author is attempting to call a bottom on Mr. Buffett. He would only be the 10,000th analyst or so that's tried, although someone may hit the jackpot sooner or later simply by luck of the draw.
Mr. Buffett IS quite old, after all, so I suppose the author has a 1 in 6 chance of striking pundit paydirt.
The Stock Market Rebound Is Coming [View article]
It's remarkable how many otherwise seasoned investors are willing to put their money where their ideology is: as if being right and making money were the same thing. I'd rather be wrong and make money hand over fist any day.
But if they're willing to sell me AAPL for under $500, hey. Keep it coming. ;-)
The Stock Market Rebound Is Coming [View article]
(Source: CBO projections for "alternate" budget path of higher spending/decreased taxes over the next decade.)
Grand Bargain: Are Fiscal Spending Cuts And Revenue Increases Both Needed? Part 1 [View article]
Waiting For Godot: Time To Sell Nokia Stock [View article]
What Happens If The iPhone 5 Flops? [View article]
Berkshire Hathaway's (BRK.A) credit rating is cut to AA with negative outlook from AA+ by S&P. "The lower credit rating ... better reflects our view of BRK's dependence on its core insurance operations for most of its dividend income ... only Burlington Northern has provided a significant portion of the total dividends paid from the operating companies to the holding company." [View news story]
The Italy (EWI -3.7%) and Spain (EWP -3.1%) ETFs lead a now-tumbling Europe (FEZ -1.8%) as - maybe we're being too simplistic here - Eurogroup President Dijsselbloem has more or less told anybody with greater than €100K in deposits at what could be a troubled bank they need to think about getting their money out. Italy's Unicredit and Intesa Sanpaolo are halted down more than 5%. EUFN -2.4%. [View news story]
Why The Price Of Gold Is Falling [View article]
2) Most of that debt is owed to ourselves.
3) Dollars are the world's reserve currency.
4) Whatever country supplies the world's reserve currency must also be willing to run deficits.
5) Deficits are not debt.
6) Countries only make the coupon payments on their debt, they don't pay off the debt itself. The relevant measure of a country's actual debt itself is Debt-to-GDP.
7) A run on the dollar without another currency to run to would bankrupt the bond holders making a run on the dollar.
8) A devalued dollar would boost exports, inflation and tightening monetary policy, ultimately boosting the dollar.
9) Inflation erodes the real burden of debt.
10) There is no other viable currency to run to with the capacity to replace the dollar besides the euro. See: #3.
Basel III And Gold [View article]
The banks would naturally step in (for a hefty fee) by offering capital transformation services. While that's great for the for the bank's top line growth in the short term, it puts the rest of us on the hook for Lehman Redux the moment all that "transformed" garbage capital goes belly up.
The Stock Market Rebound Is Coming [View article]
How Oil Really Gets Priced [View article]
Wins And Losses In Apple's IOS 6 [View article]
Tip-Top.