Why Iran Thinks It Can Get Away With A Blockade [View article]
Iran is playing right into our hands. The only reason we don't blow them back to the 3rd century right now is that we can't attack their homeland without causing unacceptable levels of civilian deaths. On the other hand, if they bring us a war on the open sea, they are doing us a favor. We can obliterate their navy and most of their air force within weeks, and their citizenry will never even see a puff of smoke. Then we can probalby even get our drone back.
Edward Maran And Connor Browne Position For 2012: The Value Proposition For Equities Is The Best It's Been In Decades [View article]
The two potential outcomes of the election are "no change" or "back to what caused this disaster in the first place." If you think either is priced in, you need to lay off the crack.
Vale: This Leading Commodity Producer Is 50% Below Analysts' Price Targets [View article]
No reflection on the rest of your thesis, but if you don't understand that analyst's make up their targets, you shouldn't be investing in stocks. Targets are a marketing tool, not an analytical tool. Don't pay any attention.
Will The Shorter Business Cycle Lead To Recession In 2012? [View article]
You're kidding, right? There will be no recession because the expansion hasn't lasted long enough yet? On your own chart I count 14 expansions that ended more quickly than the current one. What makes this one special? Anything?
Homes for sale now account for about 1 years worth of unit sales in most Chinese cities. Housing units started are still 2x the amount sold as late at October. Housing under construction is more than 5x the amount sold. Land purchased by contractors is the only thing that has come down, and even this is still growing at the same rate as sales. Unless there is a spectactualr surge in sales, it will take 8 years to clear the inventory in the pipe-line. If sales double, it would take 4 years, but sales are only likely to doubel if prices drop precipitously. People keep debating the property problem as if it has or hasn't already happened. It is only about to begin!
I'd be buying bank stocks "hand over fist," says banking analyst Dick Bove. "On a fundamental basis, it's almost impossible to believe that these stocks are not dramatically underpriced." As he sees it, investors should be taking advantage of the turmoil in Europe to buy, not sell every time the market "freaks out" over fears of the sovereign debt crisis spreading. His picks: Bank of America (BAC), Morgan Stanley (MS), State Street (STT) and US Bancorp (USB). [View news story]
Whoa! Where do you get the idea that American banks assets have been reset?
Why Europe Is Doomed: The Euro Crucifix [View article]
Your point seems pretty basic. If you really want to get to the core of the problem, ask how did we get to the point where there are so many people in charge who do not understand very basic economic concepts even after it is too late? We do not teach economics in our high schools. We don't even teach it to more than a small minority of under-grads. We teach physics and calculus and even Latin, but economics is either too dificult or not important enough?
The Household Debt Service Ratio And The S&P 500 [View article]
Not only is the R2 of .35 unimpressive, if I read correctly, you used data from 1980, which means you only have 6 non-overlapping periods of data. All those other dots on your chart are just repeating the same information. The correlation may still exist. It certainly makes sense. Unfortunately, we have no meaningful evidence from your data and it is extremely unlikely that a one factor model of this nature should be all we need to know. It would be better to look at quarterly returns so at least you have enough data to be meaninful. Then we could add this one factor to our many other tools, among which, the most obvious would be government debt levels.
Are Japanese Businesses Worth More Dead Than Alive? [View article]
I think anyone would agree that Japanese stocks are cheap, but more experienced analysts in Japan know that there is nothing more dangerous than a Japanese company with excess cash. Management has the cash because they cannnot find good investments even when their cost of capital is essentially zero and in most cases, if you took away the cash, you would not have an attractive business. Cash/Market cap is an important factor in our search for stocks, which, by the way, have led us to 27% returns in the past 4 weeks, but it is also important to focus on sustainability of returns on capital and market capital. Small companies in Japan do not have anywhere near the same access to capital in Japan that they do in the US. That cash they hold is not really "excess" in the world that they deal in. Saving it for a rainy day is rational behavior. Many of the stocks mentioned in your examples are companies I've never heard of before (and I've only been doing this for 25 years). There are about 75 companies in Japan that trade at a discount to their cash on hand and have a market capital of more than $1bn, but of these, only 20 have 5-year average returns on assets of more than 2%. Do you want to trust these managers to spend that cash wisely? They will make higher returns in the next economic upturn, whenever that happens, but until then, choose very carefully.
PIIGS Update: The Problem of Public Sector Obesity [View article]
Suggesting that the source of the world's problems is obese public sector debt is like suggesting that the source of a trauma patient's problems are too many band-aids. Rip the band-aids off and you will see that the patient is bleeding to death. The real problem is inefficient allocation of capital and this problem is just as pervasive in the private sector as in the public. Markets are crashing because we finally see that the doctor in the house is really going to rip off those band-aids and he doesn't have any idea what he is doing.
Equity Market Sell-Off Has Nothing to Do With Credit Downgrade [View article]
Incidentally, bear markets don't bounce because intelligent guys like yourself come in and buy up value. I agree, there is no value. But the fast-money shorts can't believe how much money they've made and are glad to take profits at this point. This will drive the slower-money shorts to panic and cover as well. Then, if you are really unlucky, the Fed will step in and make some meaningless gesture that will be mis-interpreted by panicky, but genuine buyers. Bear-market rallies have nothing to do with value, but you had better respect them.
Equity Market Sell-Off Has Nothing to Do With Credit Downgrade [View article]
If the market were a discounting mechanism, it would have already discounted the S&P's outlook. The S&P is irrelevant to anyone who does their own analysis.
Why Iran Thinks It Can Get Away With A Blockade [View article]
Edward Maran And Connor Browne Position For 2012: The Value Proposition For Equities Is The Best It's Been In Decades [View article]
Vale: This Leading Commodity Producer Is 50% Below Analysts' Price Targets [View article]
Will The Shorter Business Cycle Lead To Recession In 2012? [View article]
Hong Kong Real Estate Bubble? [View article]
I'd be buying bank stocks "hand over fist," says banking analyst Dick Bove. "On a fundamental basis, it's almost impossible to believe that these stocks are not dramatically underpriced." As he sees it, investors should be taking advantage of the turmoil in Europe to buy, not sell every time the market "freaks out" over fears of the sovereign debt crisis spreading. His picks: Bank of America (BAC), Morgan Stanley (MS), State Street (STT) and US Bancorp (USB). [View news story]
Why Europe Is Doomed: The Euro Crucifix [View article]
Why Europe Is Doomed: The Euro Crucifix [View article]
The Household Debt Service Ratio And The S&P 500 [View article]
Are Japanese Businesses Worth More Dead Than Alive? [View article]
PIIGS Update: The Problem of Public Sector Obesity [View article]
Equity Market Sell-Off Has Nothing to Do With Credit Downgrade [View article]
Equity Market Sell-Off Has Nothing to Do With Credit Downgrade [View article]
Equity Market Sell-Off Has Nothing to Do With Credit Downgrade [View article]
Why Loading Up on Precious Metals May Not Be Such a Good Idea [View article]