Mijka Samora - Seeking Alpha 'Mijka Samora' Tag RSS Syndication from SeekingAlpha.com SeekingAlpha.com http://seekingalpha.com/author/mijka-samora S&P 500: Who Needs a Hedge Fund? http://seekingalpha.com/article/81611-s-p-500-who-needs-a-hedge-fund?source=feed 81611 Warren Buffett has entered a bet with the principals of an asset management firm, Protege Partners, that the S&P 500 (SPY) index will outperform a portfolio of funds of hedge funds over a ten year period. Details of the bet can be found here.

Before we address the intricacies of this bet, let us emphasize the meaning of 'a portfolio of funds of hedge funds'. A hedge fund is a portfolio of securities. A fund of hedge funds is a portfolio of hedge funds. Therefore a portfolio of funds of hedge funds is a portfolio of portfolios of portfolios of securities. This layered cake of a construction suggests that Protege may not be as confident of the value-added of hedge funds as it should be.

]]> Tue, 17 Jun 2008 05:40:52 -0400 Mijka Samora Mijka Samora submits:

Warren Buffett has entered a bet with the principals of an asset management firm, Protege Partners, that the S&P 500 (SPY) index will outperform a portfolio of funds of hedge funds over a ten year period. Details of the bet can be found here.

Before we address the intricacies of this bet, let us emphasize the meaning of 'a portfolio of funds of hedge funds'. A hedge fund is a portfolio of securities. A fund of hedge funds is a portfolio of hedge funds. Therefore a portfolio of funds of hedge funds is a portfolio of portfolios of portfolios of securities. This layered cake of a construction suggests that Protege may not be as confident of the value-added of hedge funds as it should be.


Complete Story »]]> SPY Mijka Samora Expecting a PPI Shock http://seekingalpha.com/article/77872-expecting-a-ppi-shock?source=feed 77872 If you look at PPI (producer price index) inflation in the United States, you can see that the latest reading for the past 12 months is 6.9%. This number is bad enough, but the six months to the end of March were even worse, with inflation running at an annualized rate of 11%. The next two or three readings are likely to show an acceleration of this number because crude oil has risen 20% since the end of March.

PPI also includes weightings from agricultural commodities which have been on a tear in recent months but have somewhat retreated in April. A good measure of global food prices is an index produced by the Food and Agriculture Organization of the United Nations. The FAO food price index peaked in March and shows a very modest decline of less than 1% in April. Although some food commodities have seen bigger price declines in April, for example rice down 20%, overall food prices are unlikely to offset the surge in energy prices for April and May PPI figures.]]> Mon, 19 May 2008 13:42:28 -0400 Mijka Samora Mijka Samora submits:

If you look at PPI (producer price index) inflation in the United States, you can see that the latest reading for the past 12 months is 6.9%. This number is bad enough, but the six months to the end of March were even worse, with inflation running at an annualized rate of 11%. The next two or three readings are likely to show an acceleration of this number because crude oil has risen 20% since the end of March.

PPI also includes weightings from agricultural commodities which have been on a tear in recent months but have somewhat retreated in April. A good measure of global food prices is an index produced by the Food and Agriculture Organization of the United Nations. The FAO food price index peaked in March and shows a very modest decline of less than 1% in April. Although some food commodities have seen bigger price declines in April, for example rice down 20%, overall food prices are unlikely to offset the surge in energy prices for April and May PPI figures.
Complete Story »]]> Mijka Samora The Fed's Secret Guests http://seekingalpha.com/article/77260-the-fed-s-secret-guests?source=feed 77260 The market rallied 3.6% intraday on the day of the Fed's Wall Street lunch. Coincidence?

As reported by Bloomberg news, Federal Reserve chairman Ben Bernanke had a luncheon with a large number of Wall Street bigwigs on March 11, a few days before the Fed's unprecedented rescue of Bear Stearns.

]]> Wed, 14 May 2008 11:36:18 -0400 Mijka Samora Mijka Samora submits:

The market rallied 3.6% intraday on the day of the Fed's Wall Street lunch. Coincidence?

As reported by Bloomberg news, Federal Reserve chairman Ben Bernanke had a luncheon with a large number of Wall Street bigwigs on March 11, a few days before the Fed's unprecedented rescue of Bear Stearns.


Complete Story »]]> Mijka Samora The WSJ Is Wrong on the Housing Crisis http://seekingalpha.com/article/76109-the-wsj-is-wrong-on-the-housing-crisis?source=feed 76109 The Wall Street Journal editorial page had a piece yesterday titled 'The Housing Crisis is Over'. In my view, this assessment is premature by many years.

The article's main flaws, based on my own research, are its emphasis on pricing as the key driver of housing demand, and its sole focus on the inventory of new homes, ignoring existing homes. The author puts his faith in a rebound based on the issue of affordability: house prices have come down enough that people can afford them again. Fair enough but he treats the inventory of homes with a nonchalance that ignores underlying demographic trends, writing:

]]> Wed, 07 May 2008 09:56:00 -0400 Mijka Samora Mijka Samora submits:

The Wall Street Journal editorial page had a piece yesterday titled 'The Housing Crisis is Over'. In my view, this assessment is premature by many years.

The article's main flaws, based on my own research, are its emphasis on pricing as the key driver of housing demand, and its sole focus on the inventory of new homes, ignoring existing homes. The author puts his faith in a rebound based on the issue of affordability: house prices have come down enough that people can afford them again. Fair enough but he treats the inventory of homes with a nonchalance that ignores underlying demographic trends, writing:


Complete Story »]]> HD HOV KBH LEN LOW PHM TOL XHB Mijka Samora Is the Fed Bankrupting America? http://seekingalpha.com/article/74446-is-the-fed-bankrupting-america?source=feed 74446 Don't be mad, but I told you so!

Oh yes, I told you so, and more than once. Drowned by the robotic one-note din of market participants clamoring for more and greater Fed rate cuts since August, I and a few others have argued (for example here one September 4th and October 1st) that more rate cuts would open a clear road to disaster, a superhighway to the downfall of the American superpower.

]]> Mon, 28 Apr 2008 13:33:21 -0400 Mijka Samora Mijka Samora submits:

Don't be mad, but I told you so!

Oh yes, I told you so, and more than once. Drowned by the robotic one-note din of market participants clamoring for more and greater Fed rate cuts since August, I and a few others have argued (for example here one September 4th and October 1st) that more rate cuts would open a clear road to disaster, a superhighway to the downfall of the American superpower.


Complete Story »]]> Mijka Samora Should the Federal Reserve Remain Independent? http://seekingalpha.com/article/57037-should-the-federal-reserve-remain-independent?source=feed 57037 As the Federal Reserve prepared to slash interest rates again yesterday afternoon, it seemed a good time to point out that this was a move born out of either despair or favoritism: despair in the face of an intractable financial crisis, or favoritism to bail out some choice names among investment banks.

Either way, stepping back and considering the context is useful. So we will simply remind readers of the following:

]]> Wed, 12 Dec 2007 05:49:24 -0500 Mijka Samora Mijka Samora submits:

As the Federal Reserve prepared to slash interest rates again yesterday afternoon, it seemed a good time to point out that this was a move born out of either despair or favoritism: despair in the face of an intractable financial crisis, or favoritism to bail out some choice names among investment banks.

Either way, stepping back and considering the context is useful. So we will simply remind readers of the following:


Complete Story »]]> DIA QQQQ SPY Mijka Samora Emerging Markets: An Increasingly Poor Bet? http://seekingalpha.com/article/55023-emerging-markets-an-increasingly-poor-bet?source=feed 55023 On a recent visit to my dentist's clinic, this honorable man, entrusted with keeping thousands of teeth in New York City in good repair, asked me if I had discovered any new countries to invest in. Not stocks, not mutual funds, not even hedge funds, countries!

Over the years, this highly successful Doctor Tooth has invested in scores of companies and funds and has achieved better than respectable returns. In general, he has tended to invest in stocks of companies that he understood well in the dental or health care areas, or occasionally in the consumer technology sector. For example, he has done very well with Nobel Biocare (NBCHF.PK) and Stryker (SYK) and Apple (AAPL). In fact, when I think of it, he seems to have done better than most professional money managers that I know.

]]> Wed, 21 Nov 2007 07:48:54 -0500 Mijka Samora Mijka Samora submits:

On a recent visit to my dentist's clinic, this honorable man, entrusted with keeping thousands of teeth in New York City in good repair, asked me if I had discovered any new countries to invest in. Not stocks, not mutual funds, not even hedge funds, countries!

Over the years, this highly successful Doctor Tooth has invested in scores of companies and funds and has achieved better than respectable returns. In general, he has tended to invest in stocks of companies that he understood well in the dental or health care areas, or occasionally in the consumer technology sector. For example, he has done very well with Nobel Biocare (NBCHF.PK) and Stryker (SYK) and Apple (AAPL). In fact, when I think of it, he seems to have done better than most professional money managers that I know.


Complete Story »]]> ADRE DGT EEM EFA IOO VWO Mijka Samora Gisele Bundchen, Currency Trader http://seekingalpha.com/article/53162-gisele-bundchen-currency-trader?source=feed 53162 Never has an FX trader looked so good or been this sexy. And never has "buy me some Euro forwards" sounded more enticing. Top supermodel Gisele Bundchen reportedly wants her new contract with Pantene hair products (a Procter & Gamble (PG) brand) to be paid in a currency other than the US dollar. Gisele deems promised future dollar payments to be an unsafe store of value. A million dollars agreed to today but paid next year may be worth less when measured against other currencies in twelve months.

Leaving aside the obvious point that Gisele could easily put in place a forward sale of dollars to neutralize any fluctuations, we observe that asset revaluations in past cycles have sometimes reversed once a certain level of group-think absurdity has been reached. It would take a brave soul to affirm that the dollar has reached its nadir and that it would start rising from here. However, we live in an interlinked global economy and an isolated protracted decline of the dollar vs. other currencies is not a realistic scenario.

]]> Wed, 07 Nov 2007 04:28:26 -0500 Mijka Samora Mijka Samora submits:

Never has an FX trader looked so good or been this sexy. And never has "buy me some Euro forwards" sounded more enticing. Top supermodel Gisele Bundchen reportedly wants her new contract with Pantene hair products (a Procter & Gamble (PG) brand) to be paid in a currency other than the US dollar. Gisele deems promised future dollar payments to be an unsafe store of value. A million dollars agreed to today but paid next year may be worth less when measured against other currencies in twelve months.

Leaving aside the obvious point that Gisele could easily put in place a forward sale of dollars to neutralize any fluctuations, we observe that asset revaluations in past cycles have sometimes reversed once a certain level of group-think absurdity has been reached. It would take a brave soul to affirm that the dollar has reached its nadir and that it would start rising from here. However, we live in an interlinked global economy and an isolated protracted decline of the dollar vs. other currencies is not a realistic scenario.


Complete Story »]]> Mijka Samora Investment Bank's November Bonus Advantage http://seekingalpha.com/article/53159-investment-bank-s-november-bonus-advantage?source=feed 53159 If you listen carefully, you can hear the creaking stresses mounting in investment banks' balance sheets. The iron rivets are holding fast but is there a risk they will suddenly pop?

Many of the assets held by banks and by asset managers may need to be priced down to approach more realistic valuation levels after the subprime debacle. There is no compulsory reason to do this repricing before the end of the current fiscal year and the firms holding these assets may decide to postpone mark-to-market adjustments until after the end of the fiscal year, after bonus pools for 2007 have been secured.

]]> Wed, 07 Nov 2007 04:22:08 -0500 Mijka Samora Mijka Samora submits:

If you listen carefully, you can hear the creaking stresses mounting in investment banks' balance sheets. The iron rivets are holding fast but is there a risk they will suddenly pop?

Many of the assets held by banks and by asset managers may need to be priced down to approach more realistic valuation levels after the subprime debacle. There is no compulsory reason to do this repricing before the end of the current fiscal year and the firms holding these assets may decide to postpone mark-to-market adjustments until after the end of the fiscal year, after bonus pools for 2007 have been secured.


Complete Story »]]> KCE Mijka Samora Factors That Will Help the Next Bull Market http://seekingalpha.com/article/51070-factors-that-will-help-the-next-bull-market?source=feed 51070 The US stock market, as measured by the S&P 500 index, made a bottom at 102 on the 9th of August 1982. That is a level it reached for the first time on the 9th of July 1968, a full fourteen years earlier. Since the low of 1982, twenty-five years ago, the S&P 500 has risen 1370%. One dollar has become almost $15, equivalent to an 11.4% CAGR in 25 years, after a nominal CAGR of 0% for the preceding 14 years (significantly worse in real terms). Given the last 25 years and the preceding 14 years, the continuation of the bull market cannot be taken as a foregone conclusion, especially since the S&P 500 was already at its current level seven years ago.


In recent years, a new belief has taken hold among investors that 'there is always a bull market somewhere' and therefore, that it does not matter what the broader market does in general. This theory may be true and it has considerable appeal, in particular among individuals with a high degree of confidence in their stock-picking ability. However the sectors and stocks that continue to perform while the broader market is falling get narrower and fewer and only the very best long investors can expect to come out on top in a severe bear market. An easier and well-tested way to make money is to be an outstanding investor in a rising stock market.

]]> Wed, 24 Oct 2007 05:24:47 -0400 Mijka Samora Mijka Samora submits:

The US stock market, as measured by the S&P 500 index, made a bottom at 102 on the 9th of August 1982. That is a level it reached for the first time on the 9th of July 1968, a full fourteen years earlier. Since the low of 1982, twenty-five years ago, the S&P 500 has risen 1370%. One dollar has become almost $15, equivalent to an 11.4% CAGR in 25 years, after a nominal CAGR of 0% for the preceding 14 years (significantly worse in real terms). Given the last 25 years and the preceding 14 years, the continuation of the bull market cannot be taken as a foregone conclusion, especially since the S&P 500 was already at its current level seven years ago.


In recent years, a new belief has taken hold among investors that 'there is always a bull market somewhere' and therefore, that it does not matter what the broader market does in general. This theory may be true and it has considerable appeal, in particular among individuals with a high degree of confidence in their stock-picking ability. However the sectors and stocks that continue to perform while the broader market is falling get narrower and fewer and only the very best long investors can expect to come out on top in a severe bear market. An easier and well-tested way to make money is to be an outstanding investor in a rising stock market.


Complete Story »]]> Mijka Samora Ericsson's Outstanding Value: Patience is Key http://seekingalpha.com/article/49697-ericsson-s-outstanding-value-patience-is-key?source=feed 49697 There was a time in the late 1990s when Nokia (NOK) and Ericsson (ERIC) stocks moved in lockstep. Much has changed since then and Nokia has become primarily a mobile handset company, while Ericsson has consolidated its position as the world leader in mobile infrastructure. This divergence in strategic focus explains the different recent performance of the two stocks. Nokia is up 75% this year, while Ericsson is about flat. (Nokia trades in Finland while Ericsson trades in Sweden, but both have US-listed ADRs.)

In addition, analysts are falling over themselves pushing Nokia to new heights, while consigning Ericsson to the shame and neglect of a Hold recommendation, proving once again that analysts are more adept at reinforcing a trend (can you say momentum investor?) than they are at identifying outstanding value. And outstanding value is exactly what Ericsson offers at SEK27 per share ($1 = SEK6.4) or $42 per US-traded ADR.

]]> Fri, 12 Oct 2007 04:57:56 -0400 Mijka Samora Mijka Samora submits:

There was a time in the late 1990s when Nokia (NOK) and Ericsson (ERIC) stocks moved in lockstep. Much has changed since then and Nokia has become primarily a mobile handset company, while Ericsson has consolidated its position as the world leader in mobile infrastructure. This divergence in strategic focus explains the different recent performance of the two stocks. Nokia is up 75% this year, while Ericsson is about flat. (Nokia trades in Finland while Ericsson trades in Sweden, but both have US-listed ADRs.)

In addition, analysts are falling over themselves pushing Nokia to new heights, while consigning Ericsson to the shame and neglect of a Hold recommendation, proving once again that analysts are more adept at reinforcing a trend (can you say momentum investor?) than they are at identifying outstanding value. And outstanding value is exactly what Ericsson offers at SEK27 per share ($1 = SEK6.4) or $42 per US-traded ADR.


Complete Story »]]> ERIC Mijka Samora Who's Running the Fed? http://seekingalpha.com/article/49072-who-s-running-the-fed?source=feed 49072 The news media reported Wednesday that Fed Chairman Ben Bernanke had spoken on the phone with former Treasury Secretary Robert Rubin after the Fed's decision to keep interest rates unchanged in August. Mr. Bernanke also had conversations with Lewis Ranieri, founder of Hyperion Capital Management, and Raymond Dalio, president of Bridgewater Associates.

Mr. Rubin had a long career at Goldman Sachs and is now chairman of the executive committee and a director of Citigroup. Mr. Ranieri, according to Bloomberg News, is a former vice-chairman of Salomon Brothers (now part of Citigroup) and is 'a pioneer in the mortgage-backed securities market'. Bridgewater is the fourth largest US hedge fund with assets under management of $32 billion, according to HedgeFund Intelligence's Absolute Return magazine.

]]> Mon, 08 Oct 2007 03:30:00 -0400 Mijka Samora Mijka Samora submits:

The news media reported Wednesday that Fed Chairman Ben Bernanke had spoken on the phone with former Treasury Secretary Robert Rubin after the Fed's decision to keep interest rates unchanged in August. Mr. Bernanke also had conversations with Lewis Ranieri, founder of Hyperion Capital Management, and Raymond Dalio, president of Bridgewater Associates.

Mr. Rubin had a long career at Goldman Sachs and is now chairman of the executive committee and a director of Citigroup. Mr. Ranieri, according to Bloomberg News, is a former vice-chairman of Salomon Brothers (now part of Citigroup) and is 'a pioneer in the mortgage-backed securities market'. Bridgewater is the fourth largest US hedge fund with assets under management of $32 billion, according to HedgeFund Intelligence's Absolute Return magazine.


Complete Story »]]> Mijka Samora Is the Wal-Mart Era 'Drawing to a Close'? http://seekingalpha.com/article/49011-is-the-wal-mart-era-drawing-to-a-close?source=feed 49011 A front page article in the Wall Street Journal Wednesday argues that the Wal-Mart (WMT) era is 'drawing to a close'. The evidence diligently provided by the author of the piece is anecdotal and not entirely convincing. Since the stock has undergone a massive derating, we can perhaps count the WSJ story as part of the magazine indicator, which states that by the time a trend makes it on the cover of a major publication, that trend itself is about to reverse. Paraphrased below are some of the arguments presented in the WSJ article and our comments:

WSJ: Many shoppers are avoiding Wal-Mart because they are looking 'for greater convenience, more selection, higher quality, or better service'. Americans have grown richer and they are looking for more than just the lowest prices. Wal-Mart's focus on scale has turned from being its major strength to being a weakness. Consumers want more choice, freshness and service. Our comment: True for now, many people may prefer to shop at smaller more specialized stores, whereas years ago they could only afford to shop at Wal-Mart. But let us see what happens at the next recession, when a large segment of consumers will have to move downscale again, and refocus exclusively on price. It is risky to interpret what may be a cyclical development as a secular change in consumer habits.

]]> Fri, 05 Oct 2007 05:48:57 -0400 Mijka Samora Mijka Samora submits:

A front page article in the Wall Street Journal Wednesday argues that the Wal-Mart (WMT) era is 'drawing to a close'. The evidence diligently provided by the author of the piece is anecdotal and not entirely convincing. Since the stock has undergone a massive derating, we can perhaps count the WSJ story as part of the magazine indicator, which states that by the time a trend makes it on the cover of a major publication, that trend itself is about to reverse. Paraphrased below are some of the arguments presented in the WSJ article and our comments:

WSJ: Many shoppers are avoiding Wal-Mart because they are looking 'for greater convenience, more selection, higher quality, or better service'. Americans have grown richer and they are looking for more than just the lowest prices. Wal-Mart's focus on scale has turned from being its major strength to being a weakness. Consumers want more choice, freshness and service. Our comment: True for now, many people may prefer to shop at smaller more specialized stores, whereas years ago they could only afford to shop at Wal-Mart. But let us see what happens at the next recession, when a large segment of consumers will have to move downscale again, and refocus exclusively on price. It is risky to interpret what may be a cyclical development as a secular change in consumer habits.


Complete Story »]]> WMT Mijka Samora Bidding Farewell to the Dollar http://seekingalpha.com/article/48510-bidding-farewell-to-the-dollar?source=feed 48510 The fleecing of Main Street by Wall Street, it was declared last Tuesday, can go on unabated as the Federal Reserve voted unanimously to cut the fed fund rate and the discount rate by 50 basis points each. Consensus opinion had expected the Fed to cut only the fed fund rate and only by 25 basis points. The dual action therefore was bold and dramatic, and it received an equally bold and dramatic response from the community of paper millionaires around the world (otherwise known as financiers, bankers and hedge fund managers) who bid up global stock markets by 3% or more in less than 24 hours.

Going for the SuperPut

]]> Mon, 01 Oct 2007 05:37:00 -0400 Mijka Samora Mijka Samora submits:

The fleecing of Main Street by Wall Street, it was declared last Tuesday, can go on unabated as the Federal Reserve voted unanimously to cut the fed fund rate and the discount rate by 50 basis points each. Consensus opinion had expected the Fed to cut only the fed fund rate and only by 25 basis points. The dual action therefore was bold and dramatic, and it received an equally bold and dramatic response from the community of paper millionaires around the world (otherwise known as financiers, bankers and hedge fund managers) who bid up global stock markets by 3% or more in less than 24 hours.

Going for the SuperPut


Complete Story »]]> Mijka Samora