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Michael Nau

 
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  • It Is Not Different This Time - It Is Worse [View article]
    Out of curiosity, have you ever gone to socialist, er, public schools? That's a handout most people in our society have received.
    Apr 7 03:16 PM | 13 Likes Like |Link to Comment
  • It Is Not Different This Time - It Is Worse [View article]
    Do you have any moral objections to not working? I imagine that many on SA would totally leave the labor market if they could afford to. I might. Our society's word for it is "retirement".

    But I just couldn't pull it off if I depended upon government largesse. I'd get about $200 in food stamps, and that's it, and would be ineligible if I simply quit my job to get food stamps. I'd have to be laid off. No TANF ("welfare") because I don't have kids, no section 8 because of 2+ year wait list in my area and people without kids are ineligible, no unemployment because I am not an employee according to state law, are are a growing portion of workers. SSI/SSD ("disability") applications take 2+ years to process, even if I did have a disability, which I don't. Part of the rise of disability since the 1960s is that we as a society decided that insane asylums weren't the best way of dealing with the mentally ill. You sound like the people in the 1930s who blamed the Great Depression on soup kitchens.
    Apr 7 03:12 PM | 20 Likes Like |Link to Comment
  • It Is Not Different This Time - It Is Worse [View article]
    Have you ever been on SNAP (food stamps), TANF, unemployment, section 8? How strong exactly do you think those disincentives to work are? If they are so strong, why don't more economically rational people on SA live off the system if it is such a great deal?

    As investors, in principle we are ok with living off the work of others, thats where investment gains come from.
    Apr 7 02:58 PM | 14 Likes Like |Link to Comment
  • A Large Correction Coming? Ways To Profit On Volatility [View article]
    Contango between front month and second month futures is 8+%, a pretty hefty price for VIX longs. If you must hedge, I think SPXS or DPX are better bets: much cheaper and will still give you a nice pop if the market drops.
    Apr 7 02:36 PM | 2 Likes Like |Link to Comment
  • Why Won't Exxon Consider Valuation When Buying Back Shares? [View article]
    Interesting article, you raise a good point. Maybe part of the problem is with maintaining discipline once you get $50B+ sitting on the balance sheet. I'd prefer XOM's capital allocation record to AAPL's, 7% distribution yield every year is very attractive. If only AAPL did the same thing....

    Long AAPL
    WIsh I was long XOM
    Apr 6 06:07 PM | 1 Like Like |Link to Comment
  • Bank Of America Is Not Cheap [View article]
    Reniora, interesting point. I think that in some cases, loan restructuring would actually benefit both homeowners and banks/investors. Part of the problem seems to be that loan servicing companies have no incentive to restructure loans and the paperwork is totally missing in many cases. It is truly a gigantic mess that will take several more years for BAC to resolve.
    Apr 6 05:46 PM | 1 Like Like |Link to Comment
  • The Short Interest In XIV Is Misguided [View article]
    Good article, I totally agree. Volatility traders should restrict their strategies to 2 actions: 1.) shorting VIX 2.) not shorting VIX.

    If you don't want to short VIX when it is below 13, then close out your short positions and wait for a spike. Long VIX positions are a loser's game.

    Apr 6 11:49 AM | 2 Likes Like |Link to Comment
  • Medical Marijuana Isn't Cheap [View article]
    Thanks for the update, I still can't believe this thing hasn't tanked yet. I guess it is only a matter of time.
    Apr 5 02:44 PM | Likes Like |Link to Comment
  • Bank Of America Is Not Cheap [View article]
    Stanley, thanks for the info!
    Apr 5 02:37 PM | 2 Likes Like |Link to Comment
  • Bank Of America Is Not Cheap [View article]
    Nope, just avoiding it.
    Apr 5 02:35 PM | 3 Likes Like |Link to Comment
  • Bank Of America Is Not Cheap [View article]
    Sejd213, congrats on your good call. BAC may well turn out to be a good long term investment, I just think that uncritically looking at the p/b ratio leaves investors with the false impression that the company is a bargain.

    I'm actually not totally against all big financials, I hold a small AIG position because its balance sheet looks a lot better than BAC, in my opinion.
    Apr 5 02:34 PM | 1 Like Like |Link to Comment
  • Bank Of America Is Not Cheap [View article]
    It is true that many of these loans have collateral. The problem is that a very large percentage is not generating any interest payments because it is late or nonaccrual. Also, a large portion of the loans are larger than the value of the collateral, so write-offs are inevitable. As I see it, BAC doesn't want to write off too much garbage at once for a variety of reasons so the portfolio's yield will be low for quite a while while it siphons off profits from other business segments.
    Apr 5 02:30 PM | 2 Likes Like |Link to Comment
  • Bank Of America Is Not Cheap [View article]
    Mexcon, thanks for commenting. According to the figures from the 10-k above, the dollar amount of mortgage and home equity loans has decreased, and credit quality has only gotten a little bit better. Have loans increased in a different part of the portfolio?
    Apr 5 02:26 PM | 2 Likes Like |Link to Comment
  • An Open Letter To Bob Benmosche [View article]
    Todd, great article, I agree about AIGs potential and your recommended strategy.

    I'm not sure if the strategy is a totally free lunch, though, because a large buyback gives AIG a thinner equity cushion and could potentially lower the value of its debt to creditors because it is seen as riskier. I'm not too worried about this at the moment because AIG appears to have way more capital than necessary to run the business. But from a theoretical perspective shifting the capital structure from equity to debt does involve a transfer of value from prior creditors to prior shareholders. It would be interesting to see a discussion of the sweet spot in terms of capital structure and the obligations of management to creditors vs. shareholders.

    Long AIG common
    Apr 4 05:36 PM | 2 Likes Like |Link to Comment
  • Why Value Investors Are Going To Cash [View article]
    I agree that owning the whole market seems a bit riskier given the recent run-up, but some large cap energy companies and small-to-mid cap financials look cheap to me. I wan't in the market during the late 1990s, but I imagine that in every market there are a few bargains.
    Apr 4 05:19 PM | 3 Likes Like |Link to Comment
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