Peter Iwanowicz

Ten Reasons for an Imminent Stock Market Crash

I always chuckle a bit when I read statements like this. Mostly because they are just that; statements with little to no contextual proof.

1. While its true that US manufacturing has dropped relative to services, this is not a bad thing. In fact, from a international finance textbook POV we want this to happen. It's gains from trade 101. Other countries can provide goods at a lower cost than we can, they specialize in it, we pay less for them, our real wage goes up.

2. The US can issue the amount of debt we can because the "collateral" on that debt (US tax dollars) is arguable the biggest in the world and the cash flow is pretty guaranteed. As long as the US continues to generate a $13T GDP and growing, we should be able to issue debt as we please.

3. Every time people say we run a MASSIVE trade balance I immediately understand how inept they are at understanding Int. Trade. First of all, the US CA is ~1.0% of GDP. Are you really saying that if we went from -1.0% of a drag on GDP to -1.5% our economic system would be a wreck?? Laughable. Second, contextually there is NOTHING wrong with a negative CA. It just means that (in the US's case) we didn't value savings very highly because the cost to spending and not save, the interest rate giving up by not saving, was very low for some time. The CA has recently begun to rebalance because Americans are saving again (I wonder WHY?)

4. Oh btw in economic classes, we usually breakdown output of various entities (countries, companies, etc.) into two groups, goods and services. Just because we don't produce goods doesn't mean we cannot have a growing economy. In fact, I would argue since Americans have one the most educated labor forces, we are benefiting by gains of trade by focusing on being the most productive in producing services (health care, financial, legal, etc.). Also reread point #1.


On Sep 24 10:26 PM ardon wrote:

> Excellent commentary! I'd like to ad that America has been coming
> to this moment in history for the past 30 years. You can't be a prosperous
> country if you outsource your manufacturing base, become the biggest
> debtor nation, run one of the biggest negative trade imbalances,
> make finance and health care your biggest industries. America does
> not make real things anymore, we just shuffle paper from one place
> to another and instead of the products we create financial "products".

Not All Dividend Stocks Are Overvalued

Looks like you need to open up that textbook and reread that section called "compound interest."


On Sep 10 02:08 PM axelrod608 wrote:

> I can see this is about as productive as the "health care debate".
> So tell me why, all you naysayers, every textbook on family finance
> has a section on annuities ? Why did Ben Bernanke put the majority
> of his net worth into annuities ? Is he a financial dummy ?
>
> People who don't know the depth and breadth of the annuity choices
> out there would be better served educating themselves rather than
> dismissing an integral part of the investing market.
>
> Or, perhaps the bad rap on annuities is the stockbrokers' way of
> discouraging business away from themselves.
>
> There are good and bad stocks, good and bad annuities. To say all
> stocks or all annuities are bad is just wrong.
>
> No mas.

Potash's Negative Price Implications

Interesting article. As a long term investor in the Ag play, I also believe any weakness in these names will be nice entry points.

Altria: Good to Accumulate for the Long Term

Because of all these domestic issues, I would rather own PM than MO.


On Jul 13 09:11 AM Mad Hedge Fund Trader wrote:

> The administration is proposing banning smoking in the military.
> About time! The Pentagon spends $846 million a year on cigarettes,
> and another $6 billion treating smoking related diseases. Few people
> know that the Bureau of Prisons banned smoking three years ago, precisely
> to reduce spiraling health care costs. The riots that followed went
> unreported. Not good for Altria (seekingalpha.com/symbo...).

CIT Group on the Radar

yea just let it fail. Reduce the glut.

Why the S&P 500's EPS Calculation Method Is Wrong

With AIG's reverse-stock split, they have TTM EPS of $-720.00. This value incorrectly values the Index by S&P's standard so badly it's almost funny.

Case in point, I think Seigel has the right idea.

Google Chrome: Redefining the Operating System

Browsers are apps that users will be able to switch easily to and from as they please. Entire companies, schools, universities, libraries, home networks, etc. have built entire systems around an OS and the time and effort to switch for them is huge.

I believe that Google Chrome will be similar to Apple OS in that it will quickly create a niche following but will be relegated to that status for some time. Even though I love running the Mac OS at home, my work would never switch as the time and cost required would be substantial.

Will the switch occur? I believe that like every market, efficiencies play out and the most efficient OS will dominate the market share. But to assume that a browser and an OS have the same optionality of being switched is naive.

Goldman Sachs: Thoughts on the Developing Stolen Trade Secrets Scandal

I agree that the main issue should be focused towards GS. If someone else were to use this software to "manipulate the market" it would have to be an entity with the size and resources to do it.

While I think it's fine for GS to be the size it is, to void free-market principles because of it is not right.

Great article.

Can the Fed Regulate Systemic Risk?

I agree with your comment on whether systemic risk should be regulated or not. The problem with the current crisis was more a build up of assets where the risk profile was not easily seen or correctly calculated.

Rather than trying to have a "Systemic risk czar" appointed to look for risk issues, the SEC should be forced to make these new "assets" and derivatives as transparent as possible so that the best pricing and risk management mechanism, the market, can handle things on its own.

Internet Explorer Loses 11.4 Percent Share to Firefox, Safari, and Chrome

I use Chrome at home and wish I could use it on every computer I use. IE is ridiculously slow, crashes multiple times and is all around just a terrible web browser.

Definitely doesn't take a rocket scientist to figure out why IE is losing so much market share. Good article.

Unwinding the Goldman Sachs Myth

A little too much conflict of interest going on here for my taste

Why the Dow Is Headed to 6000

Deleveraging is going to happen, but some of you think it is an awful thing that must correct to zero. Leverage is actually quite economically stimulative if done correctly.

The private sector will reduce their leverage to a more conservative level. Most of you are assuming it will be wiped out.

Google Trends as a Stock Market Indicator?

meh looks like a current indicator to me.

U.S. Economy Grows for Second Consecutive Month in June

Looking at how Industrial production pretty much fell off of a cliff at the beginning of this year was quite worrisome for the rest of the economy. Good thing to see it has started to look more positive.

How Well Correlated Are the Global Markets?

Agreed. Good info. Thanks.


On Jul 01 11:08 AM Larry House wrote:

> Thanks for some useful info.