Seeking Alpha
View as an RSS Feed

Mark Bern, CFA  

View Mark Bern, CFA's Comments BY TICKER:
Latest  |  Highest rated
  • Quick Chat 282 July 28 2015 [View instapost]
    shb - I like the concept, too. Even though I think we are in a deflationary environment, lots of folks would have a knee jerk reaction to buy gold if things get really dicey. It may be only a short-term reaction (a few months maybe?) but GDX could run up quickly.

    There are some folks that think this is like the 1930s again, but the differences are stark. Back then, liquidity dried up, trade wars broke out and trade dried up, gold miner shares fell instead of rising and the central banks sat on their thumbs.

    Today the global economy is awash in liquidity and free trade agreements could keep trade going even with the currency wars. CBs are willing to do "whatever it takes!" Gold could be the last bastion of safety in the minds of a lot of people. The US$ will also probably be the primary focus of those running to safety, but PMs could do well, also, especially since those shares have already been pummeled!
    Sep 3, 2015. 07:54 PM | Likes Like |Link to Comment
  • Quick Chat 282 July 28 2015 [View instapost]
    Maya - Exactly my thinking! But it could be more than a public relations move. If each household (that agreed to provide grounds) filled up an old coffee container with a lid and then set it by the mailbox for pick up when full the picks up could be done within normal deliveries. If the household was to receive some remuneration (maybe $1), the empty containers would need to be "mailed" to them with a bar code identifier. The USPS could arrange a fee for delivery and pick up (perhaps $0.50 each way), staggering the deliveries to level out the daily volumes.

    It wouldn't be a make or break revenue producer for USPS, maybe $10-20 million per month (peanuts for a $70 billion in sales organization), but it could at least cover costs and provide a much needed logistical solution.

    Now, is it economical to pay $2/mo. for coffee grounds? How many people would bother for only $1? Or is it less costly to buy the coffee wholesale, brew it, and throw out the coffee?

    My other thought is to just collect from Starbucks once a day. Much cheaper and the logistics would be simple.
    Sep 3, 2015. 07:45 PM | Likes Like |Link to Comment
  • Quick Chat 282 July 28 2015 [View instapost]
    HTL - I think we could solve the collection system easily if anyone was willing to pay something for the used coffee grounds. If there is enough value in them, collection won't be so hard.
    Sep 3, 2015. 06:45 PM | 1 Like Like |Link to Comment
  • Oil Producing Industry: When Will It Be Safe To Invest Again? [View article]
    Robert - Not overlooking millenials at all. I just think that they won't be able to take over the reins of driving the economy as quickly as the baby boomers did. We weren't saddle with as much student loan debt and good jobs were more plentiful when we entered. Enough of them need to have incomes in excess of what is needed to cover the basics before they can help drive the economy. They are coming in at lower real wage levels and many have to take part-time jobs. My son has a degree in physics with a minor in math and, while he only attained a 3.0 GPA, he could not find a full time job. He interviews well but wasn't able to get many interviews. He'll do fine eventually, but it has been a rough start for him and many of his friends after graduating from college.

    When I graduated with my degree in economics and business administration I got interviews and offers galore! I also graduated with a 3.0 GPA. It just seems like a different world now.

    The high earning boomers are retiring and being replaced with low earning millenials. The next generation will pick up its spending pace, but I don't expect to see the positive results of that in any big way for at least another 5 years when more of them have been "seasoned" a little and start earning a better wage, thus being able to consume more.

    I may be a little pessimistic on my view, but that is just how I read the passing of the baton. Thanks for bringing up the generational subject!
    Sep 3, 2015. 12:18 AM | Likes Like |Link to Comment
  • Quick Chat 282 July 28 2015 [View instapost]
    Maya - Agreed! It looks like this fall or winter we could see much lower prices for energy and that should usher in some even better entry prices. At least that is how it appears to me. Storage capacity is expected to reach 100% by late October or early November according to something I saw on Bloomberg and posted here back a week or two ago. There were no comments about it so I guess nobody watched it. Oh well, I thought it was very informative.
    Sep 2, 2015. 06:33 PM | 3 Likes Like |Link to Comment
  • Oil Producing Industry: When Will It Be Safe To Invest Again? [View article]
    Tack - Both true. But in the '30s we faced deflation because...

    Monetary policy made it worse but part of the reason deflation began had to do with demographics; not all of it, but it was a factor.

    Today is very different from 70s as you correctly portray. It is more akin to the 30s, imho. But the reaction by gov't and CBs has been just the opposite. Unfortunately, they I don't think they can control the economy forever and will lose the fight in the end. Deflation will win out. It is partially caused by the aging of the workforce into retirement and partially caused by oversupply of resources and over capacity in manufacturing on a global scale.

    We can continue to disagree, but I doubt that either of us will be able to win the other over to their own views. It has been a healthy discussion and I thank you for being respectful in detailing your views. It is always good for us all to look at all perspectives and consider what makes sense as individuals.
    Sep 2, 2015. 06:29 PM | Likes Like |Link to Comment
  • Oil Producing Industry: When Will It Be Safe To Invest Again? [View article]
    Tack - I do not disagree with your argument regarding "hideously bad governance." I also do agree with your assessment that all could be fixed by better gov't that actually created an environment that encouraged rather than discouraged business formation and prosperity. What we have here and in Europe is trending toward the antithesis of what we need for job creation.

    That said, without better government, which I wish for but do not expect, other factor do play a role. Gov't is in the way of the economy, it is too big and over reaching by nature and it is too powerful in many ways that undermine opportunity. Due to its continued growth and unadvised intervention, the economy is guided by other forces more than it should be.

    The last time the largest generation entered the work force to replace another large generation was in the mid 19060s through the 1970s. It caused a lot of disruption to the economy in terms of lower productivity improvements with a lot of low skilled workers entering the workforce replacing the highly skilled who were retiring. The government did nothing to help matters and we got stagflation. The market had its ups and downs, but was basically range-bound for over 15 years. If you start at year-end 1965, the DJIA stood at 969.26. The DJIA ended 1981 at 875. That works out to a loss of 9.7% (excluding dividends). Of course dividends were much higher back then, so the total return wasn't as bad as it seemed, especially if investors reinvested those dividends on the dips. But still, not a very great environment for equity investing, nevertheless.

    The other major transition from one large generation to the next came in the 1930s. I don't have to go into detail about what happened there.

    The point is, I think, that demographics do matter as long as governance does not take the necessary steps to override the resulting economic impact it can have. This time around, the Fed and CBs around the world are fighting the deflationary environment caused by people retiring and preparing to retire by implementing QE and holding interest rates artificially low. They are trying their best to create growth, but without any help from the fiscal side (gov't). It's a losing proposition, at best.

    I do not mean to say that our economy is doomed. Better governance would make a world of difference, especially if we became the "first to implement" the needed reforms. But, sadly, I agree with your assessment that gov't will most likely continue to be a major part of the problem instead of becoming part of the solution.

    Demographics are not the only factor at play here, but I believe it is causing reduced demand in OECD nations. As far as energy is considered, I believe that the rate of growth will be diminished going forward for several reasons, demographics being only one. But I expect growth to continue due to rising incomes in emerging economies around the world in some highly populated countries gradually bringing hundreds of millions more people into the consumer class (albeit at a very low level, but consistently rising) out of abject poverty. That will foster demand in the future more than anything that happens in the OECD countries, imho, and especially in terms of energy use.

    It is amazing to see what happens when the average income per capita rises from $1,500/yr to $3,000/yr., and then to $4,000, $6,000, etc. This still seems like poverty to us, but it is an entirely different thing to those experiencing it for the first time in history. And the one thing that both fosters that growth and is consumed at higher and higher rates when that happens is energy.

    So, I don't think we disagree that much. I wish you well and appreciate your point of view immensely. Thanks for posting your thoughts!
    Sep 2, 2015. 03:12 PM | Likes Like |Link to Comment
  • Quick Chat 282 July 28 2015 [View instapost]
    Chinese brokerages pledge another 3 billion pounds to buy equities! Now we're talking!

    http://yhoo.it/1Xe3kVZ

    Now that's what I call a fee market! (no misspelling) You've gotta pay to play.
    Sep 1, 2015. 11:50 PM | 4 Likes Like |Link to Comment
  • Oil Producing Industry: When Will It Be Safe To Invest Again? [View article]
    Ham - The CBs have been fighting an uphill battle for longer than one could expect. That is another factor as to the "when" things come unraveled. I agree that we will have to pay the piper but am not as confident as you as to whether this is it or not.

    The next couple of weeks should tell us a lot. If the market indexes break to lower lows and continue trending with lower highs and lower lows to follow I will call this a bear market. Either way, it does not matter so much to me since I am fully hedged. If the market goes up, I win; if the market goes down, I don't lose but I do get to add some more dividend income at lower prices with the cash I have accumulated from those dividends and a few stocks being called away while those companies were making new record highs. I don't have a lot of cash yet, but my hedge positions will add to the stash so I'll have more if the market crashes.

    I guess that makes me a very interested bystander! LOL!
    Sep 1, 2015. 11:45 PM | Likes Like |Link to Comment
  • Quick Chat 282 July 28 2015 [View instapost]
    Will the PPT show up today? Or will it take a day or two off and come back strong later in the week?

    Once again the Shanghai Index hit an intraday low down 4.7% and ended the day only losing 1.2%, but the Shenzhen Index ended down 4.6%! China's gov't allowing traders to unload stocks on Shenzhen exchange while propping up the Shanghai for public appearances. When will the arbitrage crowd step in and level things?
    Sep 1, 2015. 12:11 PM | 3 Likes Like |Link to Comment
  • The Time To Hedge Is Now - Or Is It Too Late? [View article]
    arthur - True. But I really don't think that the rate increase is as big a factor as it is being made out to be. It is really more of a non event at this point because it has been baked into the markets for months. While it can move the market a bit it/when the Fed changes its stance, it is not the real cause of all the market jitters. The volatility will continue until both China and energy calm down. Right now, those two stories pose much greater anxiety to market participants than a couple of 25 basis point increases. That is just my opinion, of course, but I see all the talk about interest rates as more of a smoke screen used to crowd the real problems off the front page and out of retail investors' minds.
    Sep 1, 2015. 12:08 PM | 1 Like Like |Link to Comment
  • Oil Producing Industry: When Will It Be Safe To Invest Again? [View article]
    Thanks, Tack. My point, exactly.
    Sep 1, 2015. 12:02 PM | Likes Like |Link to Comment
  • Oil Producing Industry: When Will It Be Safe To Invest Again? [View article]
    Ham-Bone,

    While your information about population growth rings true, my feeling is that as impoverished nations begin to increase per capita income (take India at $5,900/yr now but was struggling to get above $2,000/yr a couple decades ago) one of the first things they need more of is energy. Energy is one of the key elements that enables economic and income growth. Increases in demand won't be fast, primarily because there are offsetting trends in OECD countries, but it is relentlessly rising.

    The problem we face today is more supply-side induced, imho.

    But thanks for including the info about changing demographics. That is an important trend that, in fact, has the OECD economies stuck in a deflationary environment. And, yes, the CBs are pulling out all the stops in an attempt to get the world through the deflationary cycle. Inevitably, they will fail because we are still in the early stages and the CBs have used up nearly all their ammo already.

    This is a long process and could become very painful eventually.
    Sep 1, 2015. 12:01 PM | Likes Like |Link to Comment
  • Quick Chat 282 July 28 2015 [View instapost]
    It looks as thought the Chinese gov't is still a buyer since the Shanghai was down as much as 3.8% until about 1:40 p.m. there; then the index began to rise and ended down only .82%. But the smaller Shenzhen index fell just over 3% having been down by as much as 3.6% at about the time the Shanghais was down 3.8%.

    Gov't is focusing on the Shanghai because that is what the world is watching, but the Shenzhen is being allowed to fall. This could tell us how much further the Shanghai will ultimately fall if/when gov't throws in the towel. Just a thought.
    Aug 31, 2015. 05:44 PM | 4 Likes Like |Link to Comment
  • Quick Chat 282 July 28 2015 [View instapost]
    FPA - Thanks for the link! I wonder how many such scams will the gov't allow? If it cracks down it could chase those wealthy individuals out of the country with all that capital (sooner than later). It it continues to look the other way the banks are going to get creamed!

    This, along with the crack down on journalists, traders and officials who do not tow the party line (as mentioned above by shb) look like Chinese leadership is willing to risk some social unrest to quell the markets while still picking winners and losers. The crony rich may be allowed to continue winning as long as they are investing to inflate the bubble. Anyone cashing in as the bubble bursts is a traitor!
    Aug 31, 2015. 03:31 PM | 5 Likes Like |Link to Comment
COMMENTS STATS
5,766 Comments
14,037 Likes