Oscar Sahlberg

DryClean/EnviroStar: Customers and Suppliers Reduce Risk

Management of this company is a horror to deal with. They simply refuse to talk to anybody by making up reasons like "SEC has banned us from talking to anyone" which is not true (I have confirmed this with the SEC) and if true I would be running away fast from a company that's been banned from communicating with their investors. On paper things may look good but I am not going and this stock may make money but I simply refuse to put my hard earned cash into managements that are antagonistic to their shareholders/managers that I do not believe in or wish to be associated with. Why risk it?

Trading the UltraShort China Hedge

If you want to short China, DO NOT use the FXP, instead go short the FXI directly (adjust your position depending on what your appetite for volatility is accordingly). For example, if you had gone short FXI vs Long FXP, you would have actually made money over the past 2 years (I have included the inverse of FXI) rather than being long the FXP (which completely would have destroyed your capital). This has to do with the underlying setup with the swap, which is basically an "double or nothing" structure. Please see the link below for the evidence of what I mean... (FXI inverted left axis rebased to 100 - so you're up when you are short it--- FXP right hand sight, you're long it).. Also note that if FXI halves to its all time low tomorrow, FXP will only go to 16 NOT the high of 170...

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What Happens If Roubini Is Right?

Roubini's predictions could indeed come true but how you get there is more important than whether you get there or not. One should always remember the power of the speculative flows and the reflexivity of the process (i.e. as more people sell, the lower dollar goes, making it more appealing). Of course the process will end at some point but is this the right time to call the trend reversal? There will be enough time and volatility at that point to give signal to all, in my view...

Also looking at DXY or the The Major Dollar Index leads into many fund managers salivating about oversold dollar but checking out the Broad Index dampens that a little (encompasses 90% of all imports and exports). You've had a massive 30 year run there, and we're only 7 years into the reversal (see graph link).


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Big Bear Rosenberg and the Great Rally

David is a great commentator but he's not really been disciplined by a daily P&L at ML. Maybe GS+A will be different. Also there is the time-portal fallacy (nicely delineated in DE Shaw's market insights in july 2009) which a lot of these sophisticated market strategies exhibit...

Clarium's Peter Thiel: The Credit Crisis Is Primarily a Crisis of Innovation

I think the analogy to the technological "ice age" is faulty in two respects. First is that it was highly specific to the western european culture and secondly with innovation occuring randomly for each person (probability of p for each person to invent something) then population growth will drive innovation so it is a bit of a stretch to assume a malthusian perspective where we hit a ceiling on growth and then face declining per capita wealth and doom&gloom(census.gov estimates show pop estimates until 2050 and US is still growing...). Also consider the quality of what $1 buys today versus historical purchasing power (technological improvements do not reflect on the dollar to dollar comparisons so the actual purchasing power of that dollar on a quality base is never captured). As mentioned, the issues with CPI (by fixing the base year goods, you are overstating the true cost of living by not allowing substitution etc) also have a large impact on the analysis.

As a side note, clarium apparently got whacked performance wise. I wonder how much of their rhetoric/thinking is shaped by their macro book rather than vice versa (sometimes people get too married to their positions).

Dry Clean USA: Deep Value in this Micro Cap

Hi John,

Just out of curiosity, have you ever tried to get in touch with the company? Having called the IR department, I was somehow passed onto M. Steiner who, upon my request to ask couple questions on the company flatly refused to even talk saying that SEC does not allow the company to talk to anybody (which of course is completely untrue - there is no ban towards ). Either the management has somehow been burnt before or are secretive to the level of paranoia.