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Mark Bern, CFA  

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  • QuickChat #280, April 16, 2015 [View instapost]
    With the Fed now entering the "regulatory arena" on banking and the major banks literally being owners of the Fed I don't see much pain heading in the direction of big banks in these areas.

    Other regulators will make prescribe (as HTL put it, cost of doing business penalties) smallish fines that look big to the public for PR. But the TBTF financials continue to rule the roost and will be allowed to skim profits from the masses to strengthen balance sheets in preparation for the next major financial storm.

    That seems to be the goal of the Fed and regulators, unfortunately the need to attain the end has been uesed to justified the means and will continue to allow corrupt activities as long as the public will take it. And that could be along time because the public, by and large, does not understand what is being done to it.

    Just my two bits (inflation).
    Apr 28, 2015. 12:58 PM | 4 Likes Like |Link to Comment
  • The Time To Hedge Is Now! April 2015 Update [View article]
    Robert - I agree with your assessment of the appearance of a bottom in commodities. However, I think that the long-term downward trend will remain intact for at least few more years making this current move just a temporary bounce. Commodities have generally exhibited long-term cycles. This time may be different because of all the external monetary stimulus by central banks, but I doubt it the difference will be so much.

    The commodity cycle, from trough to trough or from top to top, usually lasts around 30 years. That does not mean 15 years up and 15 down. But the down leg has, in the past, taken longer than 3 or 4 years. I am guessing that this time it will, too.

    My point is that we need to be nimble if we are to invest in commodities at this point in the cycle. I do agree with your assertion that we are seeing a lot of sector rotation. That happens is a lot in bull markets. Leadership changes, but the overall market trudges ever higher. It is when there is no sector(s) to lead that the bears can take over.

    Good luck and stay cautious!
    Apr 28, 2015. 12:47 PM | Likes Like |Link to Comment
  • The Time To Hedge Is Now! April 2015 Update [View article]
    chongkim74 - Sorry, but while I do not want a recession either I believe it will come sooner than you hope. Thanks for commenting.
    Apr 28, 2015. 12:27 PM | Likes Like |Link to Comment
  • The Time To Hedge Is Now! April 2015 Update [View article]
    Robert - Thanks for sharing your positions. And I think that bonds (especially junk bonds) could very well be a potential trigger. But, honestly, I don't know with any conviction where the problem will come from. That's the problem with black swan events. They are, by definition, events that were not foreseen.
    Apr 27, 2015. 11:08 PM | Likes Like |Link to Comment
  • QuickChat #280, April 16, 2015 [View instapost]
    QUAL, right?
    Apr 27, 2015. 08:40 PM | 5 Likes Like |Link to Comment
  • The Time To Hedge Is Now! April 2015 Update [View article]
    Fear & Greed - Thank you for sharing your perspectives. We may disagree but it is good that we can do so respectfully.
    Apr 27, 2015. 08:36 PM | Likes Like |Link to Comment
  • The Time To Hedge Is Now! April 2015 Update [View article]
    useruser14141 - Agree with the expectation that the next recession could come later rather than sooner and will likely be worse that 2008. But I don't profess to know how to time the market well, so I'll just stay prepared and hedged until it comes. Also agree that those in power (especially central banks) are doing their best to extend the recovery cycle even though it has been a weak one. Thanks for the comment.
    Apr 27, 2015. 02:52 PM | 1 Like Like |Link to Comment
  • The Time To Hedge Is Now! April 2015 Update [View article]
    leviek - Appreciate your insight. But also with all due respect, my strategy has worked for me in the past. I have tried many methods and settled on this one through experience.
    Apr 27, 2015. 02:49 PM | Likes Like |Link to Comment
  • The Time To Hedge Is Now! April 2015 Update [View article]
    moatfrog - I know what you mean. It seems that there is a plethora of such articles now. I started this series one year ago (before it was so fashionable) and intend to stick with it until the next recession actually occurs. I don't want to leave readers hanging without the follow through.

    Thanks for commenting.
    Apr 27, 2015. 12:46 PM | Likes Like |Link to Comment
  • The Time To Hedge Is Now! April 2015 Update [View article]
    timbishop - Thanks for the comment, suggestions and questions.

    First off, I don't sell stocks short, especially if the stock pays a dividend. I don't want to be responsible for those dividends for as long as I am wrong. The key here is that I don't know when I'll be right, just that eventually I will be and it will pay off then. Until then I want as much of my portfolio to be invested for income. That precludes me from using cash on margin as you suggested. I'd rather use it to produce income.

    Nothing wrong with using the pros to do your hedging for you but that comes with higher management fees which I try to avoid.

    I have employed this strategy twice before (at the end of 1999 when valuations made me nervous) and in 2007 when I thought things were getting frothy again. But in the two instances I only used a partial hedge. I also tried other hedge strategies such as discussed in Part V but found disadvantages in those compared to this one. This is the first time I am employing this strategy to cover 100% of my portfolio. I have found it to be the least expensive and to cause the least amount of disruption to my portfolio.

    My exit strategy is covered in detail in Part X. It is too lengthy to explain coherently in a comment. It can be found by clicking the link near the top of this article that takes you to my instablog with links to each article in this series. I hope that helps.
    Apr 27, 2015. 12:44 PM | Likes Like |Link to Comment
  • QuickChat #280, April 16, 2015 [View instapost]
    ungawah - earthquakes occur within three different zones of the earth's crust: crustal (near the earth's surface and usually caused by movement along faults or ruptures in fracture zones), subduction zone (where one tectonic plate is being subducted below another), and deep (within the mantle or in the plate that has been subducted below another).

    These quakes are crustal, happening near the surface, and, since there is no plate boundary in the vicinity, probably caused by ruptures in the local fracture zones. It is also possible (but not likely) that new extensions to existing fracture zones are being created by the extreme pressure and ruptures of fracking. It is most likely that existing fractures in the North American plate (within Ok and TX) are being disturbed by the fracturing process somehow. However, the chance of this process causing a major quake is relative to the extent, size and depth of the existing fractures and zones, imho.

    Here is a link to a model developed by my son. It won't help explain anything about OK or TX but I think it is pretty cool, just the same. http://bit.ly/1dkUUcD
    Apr 27, 2015. 12:20 PM | 5 Likes Like |Link to Comment
  • QuickChat #280, April 16, 2015 [View instapost]
    He's getting soft just because he got left off the "50 Greatest Leaders" list in Fortune this year! LOL!
    Apr 27, 2015. 11:35 AM | 2 Likes Like |Link to Comment
  • The Time To Hedge Is Now! April 2015 Update [View article]
    William - Thank you for commenting! The one thing I do like about holding stocks at this point in the game is the rising income from increasing dividends. I buy and hold only quality companies that have a relatively long history of raising dividends. I don't like to exit and re-enter (time) the market, so I hedge.
    Apr 27, 2015. 11:30 AM | Likes Like |Link to Comment
  • The Time To Hedge Is Now! April 2015 Update [View article]
    SH51 - Thanks for reading and the kind words!
    Apr 27, 2015. 11:27 AM | Likes Like |Link to Comment
  • The Time To Hedge Is Now! April 2015 Update [View article]
    sunnypt - Thanks for the comment and well-explained and very reasonable approach to investing for the long term. We have a great deal in common!

    I use the exact same strategies that you list for my portfolio. This strategy is the only exception that I deploy relative to yours. I am an advocate of all that you list and have written extensively about all of it in years past (and will again in the near future). I just like to avoid more than 15% market crashes and to have more cash (without selling out my treasured long-term dividend-paying positions in quality companies) to invest when the market gets hammered.
    Apr 27, 2015. 11:26 AM | 1 Like Like |Link to Comment
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