Rakesh Saxena

How Much Downside Could Still Exist?

You make a very valid point--communism and socialism are not similar by any means, and the sooner we in the US realize this the better. - Rakesh


On Mar 04 10:44 AM plumstupid wrote:

> Soviet Union and E. Europe were Communist. Communism and Socialism
> are not the same thing.

How Much Downside Could Still Exist?

Dear Professor: You obviously need to go to history school where you will learn how to place statistics in perspective. - Rakesh


On Mar 04 11:56 AM Professorsnape wrote:

> Random, self-indulgent tripe! Of course the markets are going lower.
> However, to say the world is more interconnected today than in generations
> past is erroneous. World trade as a percentage of GDP was higher
> in the 1920s and 30s.

How Much Downside Could Still Exist?

Yes carey_jim, you are right about the various factors which shaped the 1929-1939 era. But the challenge remains to translate the political issues into economic terms. For example, was European fascism purely a political phenomenon or was it caused by the deterioration in economic conditions? Many thanks - Rakesh


On Mar 03 02:11 PM carey_jim wrote:

> Rakesh:
>
> Here are some forces that often minimize purely economic and financial
> explanations of human interactions, including the vicissitudes of
> the economy and the production of goods and services:
>
> Historical forces, e.g. grievances from past wars, revolutions, injustices,
> new wars, etc.
>
> Psychological forces, e.g. envy, greed, desire for power, lack of
> concern for one's own health, the health of others and the planet,
> etc.
>
> Sociological forces, e.g. racism, sexism, class consciousness, caste
> differences, language and cultural differences, mass hysteria, etc.
>
>
> Political forces, e.g. revolutions, newly elected governments, imperialistic
> wars, genocide, etc.
>
> Technological forces, or the invention of new devices which make
> the old way of life obsolete, e.g. railroads made rivers and river
> barges much less important for moving goods. Milking machines and
> other motorized and electrified farm machines lowered the demand
> for unskilled farm workers. Today, the internet makes brick and mortar
> stores much less important, etc.
>
> The Great Depression was caused by many things including the historical,
> psychological, sociological, political, and technological events
> mentioned above.
>
> Think of the rise of Hitler, the Russian Revolution, the German attack
> on European Jewry, the mass hysteria produced by fascism and communism
> and the dislocation produced by the electrification and motorization
> of Europe and America. And I've only mentioned the most obvious.
>
>
> Economics and finance are only part of the picture.

How Much Downside Could Still Exist?

Dear AntiCramer: The point I am making is that the systemic risks are fully priced with the S&P at 700, with the qualifier that risks emanating from the global marketplace have not yet been quantified. Many thanks - R


On Mar 03 09:11 PM The AntiCramer wrote:

> "From the prism of facts pertaining to previous recessions, the risks,
> including systemic risks, within the broad American financial framework
> are now fully priced."
>
> Please justify that statement.

How Much Downside Could Still Exist?

Dear Jim: Have you actually read the texts you are citing? These are either ideological documents driven by a particular world view or simply attempts to analyze the 1929-1939 period without any clear and fundamental knowledge of systemic risks in a capitalist economy. In any event, I will address the definition of self-serving in a forthcoming article and will await your comments---but, in brief, a self-serving document for our purposes is one which is planned and executed within the prism of a pre-determined vision of the where we are today and where we are (or should be) headed. As far as my article is concerned, it is indeed self-serving. Take it or leave it, but I stand by it and I invite cogent challenges. And do read the various previous articles before you rush to comment--you may not have the courage to admit it, but I have been right all along, on the mark. Many thanks - R


On Mar 03 01:56 PM Jim Hawthorne wrote:

> Sure!
> E. M. Jones & E. A Radice; An American Experiment, 1936
> J. M. Keynes; A Treatise on Money, 1930 (before fame)
> Caught Short! A Saga of Wailing Wall Street, 1929
> Only Yesterday; Harper, 1931
> Stock Exchange Practices, Washington Report, 1934
> The Liberty Digest, June1, 1929
> Bernard J. Reis; False security, 1937
> Federal Reserve Bulletins; monthly, beginning in 1929
>
> The list is long; but I can't wait to read your curious definition
> of ' Self Serving'! Let's see if it applies to yourself as well,
> shall we?

How Much Downside Could Still Exist?

Thanks Proximo: You are correct--this article actually summarizes the points made in previous months, in previous articles. I think people should be educated in how to use this information tool, i.e. SA. - Rakesh


On Mar 03 12:29 PM PROXIMO wrote:

> Rakesh--I enjoy all of your articles .Please keep posting. An observation.
> If a portion of the energy expended today attacking you and this
> article had instead been used to study virtually any of the 115 articles
> you have previously posted in the past 8 months(and your recommendations),
> there would be far less vitriol and far more gratitude. Thanks for
> what you write. Prox.

How Much Downside Could Still Exist?

Dear Jim: Can you cite me one text of the 1929-1939 period which you have read and which in your opinion is not self-serving? If we are to use this forum for a constructive discussion, then let's all do our homework. Otherwise, don't be ashamed to ask questions. Many thanks - Rakesh


On Mar 03 05:51 AM Jim Hawthorne wrote:

> I agree with Nikola;
>
> In addition you ask, 'How much more downside is there?' and claim
> there is lots based on a list of vague assumptions and generalizations.
> Yet, in spite of this you have exited your short positions because,
> based on your peerless research, the S&P reached the magical
> number of 700, coupled with those flaws in the banks' balance sheets
> that you oh so cleverly spotted!
>
> And after predicting more downside, you suggest that you will once
> again enter short positions if your once again vague set of conditions
> are met!
>
> You have the unmitigated gall to end this rambling river of drivel
> by slamming 1929-1939 authors as 'self-serving'! What hypocrisy!
> Your entire article is as self-serving as the proclamations of the
> lowest CNBC shill; or a Time's Square pimp, for that matter!

How Much Downside Could Still Exist?

Dear raytayzmd: I suggest you get out of the "plantation mentality" and let facts guide your investments. - Rakesh


On Mar 03 09:44 AM raytayzmd wrote:

> .....hmmm, he is a "risk pricing specialist" at Quote Platform Syndicate
> Group which "is part of an international network of risk buying pools
> engaged in the pricing of credit default swaps, synthetic collateral
> debt obligations, political risk insurance contracts, index put options,
> far-forward FX contracts and asset securitizations."...in other words,
> he helped create this mess to begin with...I vote we all get together
> for a good old fashioned lynching -- anybody know his address?

How Much Downside Could Still Exist?

Dear kruser53: You need to review my earlier articles and place the current one in context. Many thanks - Rakesh


On Mar 03 11:16 AM kruser53 wrote:

> Rakesh Saxena:
>
> You have written some good articles, but this is not one of them.
> There are too many unelaborated generalities. One example: "And,
> as far as systemic risk is concerned, Ben Bernanke’s definition is
> proving to be entirely academic, restricted by numerous, self-serving
> scholarly texts of the 1929-1939 era." What value does that statement
> have without an explaination of "self-serving"?
>
> You have enumerated a number of the important issues for the current
> time and coming years. But the value of the article stops there.
> It's like you started to make a sandwich and stopped when all that
> was done was to put out two slices of bread. Where's the beef?<br/>
>
> boats:
>
> You wrote: "There you go confusing freedom and capitalism. Capitalism
> makes slaves of 99% of the population."
>
> If I accept your statement, then I would add to it. Communism makes
> slaves of 99.9% of the population. But hunter-gatherers are 100%
> free.

How Much Downside Could Still Exist?

Dear morph: You raise a good point. The reason why I am reluctant to identify downside from these levels is that, in my opinion, there is likely to be gap between what the facts tell us on a "fully informed" basis and how investors trade in the midst of this ongoing discussion on the impact of rescues and bailouts. In brief, though I may consider 600 for the S&P500 as the next clear target based on facts, the market may not follow suit. Due to this "gap", I visualize a "trading" opportunity as opposed to a positioning. Many thanks - Rakesh


On Mar 03 10:26 AM morph366 wrote:

> Intrigued by the title to this piece I read through it but unfortunately
> I am none the wiser as to how much downside still exists.

How Much Downside Could Still Exist?

Dear Nikola: The details you are looking for have already been highlighted in previous articles posted on SA. The world being messy or not, we need to deal in facts, and many key facts have been cited earlier. Many thanks - Rakesh


On Mar 03 05:26 AM Nikola wrote:

> I liked the first two paragraphs. The rest is incoherent and non
> sequitur.
>
> The paragraph about emerging markets is wide sweeping and isn't supported
> by a single number.
>
> I suppose the argument is that the world is a messy place today and
> so.... S&amp;P will go down. But world's been a messy place for the
> last.... oh... twenty thousand years. Was the world more stable back
> during the Cold War? Around the two World Wars? In 1800s Europe?
> When?
>
>

Emerging Markets: Millions Returning to the Natural Economy

Nothing wrong with returning to our rural roots, omooc. At least we would not have to worry about stimulus packages and TARP funds. Many thanks - Rakesh


On Feb 13 10:24 PM omooc wrote:

> What's wrong with returing to your rural roots? In China, a few years
> in the city allowed one to save some money, thereby allowing one
> to build a house in the rural area, and to return there from time
> to time. In the Chinese-language paper I read, I saw a photo, a couple
> of days ago, on the front page, showing the backside of a bicyclist,
> returning home, with a big washing machine (by Haier) at the back.
> The general attitude seems to be positive -- a few years in the city
> is nice, but returning to the rural home with your spouse and family
> is nicer. With simple tastes and no debt, plowing the field is gainful
> employment.

Emerging Markets: Millions Returning to the Natural Economy

Dear Proximo: FYI, my main business in a bull market has been merger-arbitrage type transactions, which provide the window to go long one one stock and short another. I am not a value investor (long term) because, since the early 1908s I have not trusted the accounting and disclosure in the marketplace. So I have focused on trading "misalignments", a bit akin to spread (pair) trading. Many thanks - Rakesh


On Feb 13 10:10 PM PROXIMO wrote:

> Rakesh---You have indicated that your preferred investment style
> is short sales. Just curious, if conditions improved, say, several
> years out and a bull market in stocks likely, would you still be
> most comfortable focusing on opportunities in the short sector? Or
> would you look to go long? Just curious---if you happen to read this
> comment. Thanks, PROX.

Emerging Markets: Millions Returning to the Natural Economy

Dear Kay: You are correct insofar as certain rural areas in these markets are dominated by foreign remittances, criminal gangs and aid packages. In that sense, the term "natural economy" needs to be contextualized in today's reality. Many thanks for your comment. - Rakesh


On Feb 12 02:02 PM Kay Moseley wrote:

> "Regeneration of the natural economy"? Would that it were true!
>
>
> Unfortunately, more and more of the countryside in the "emerging
> markets" now resemble rural slums -- dependent on purchased food
> and other inputs and thus on either some sort of rural wage work
> (including massive narcotics markets, here and there), remittances
> from relatives with urban or overseas jobs, or on "humanitarian assistance"
> (surplus food + foreign NGOs). This is why food prices, poverty and
> protests figure (as in the last paragraph of this interesting article).

The Real Crisis: Collapsing Capital Accumulation Process

Very good brief David. Many thanks - Rakesh


On Feb 10 06:18 PM David Braunstein wrote:

> firstproman, I disagree that we are sowing the seeds of the next
> bubble excess. Those days are over for many years because everyone
> is overleveraged now: homeowners, businesses, hedgefunds, nations,
> municipalities. The era of low interest rates produced over pricing
> and stock and asset bubbles. The next ten years will be marked by
> delevering and no amount of government intervenion is likely to change
> that. The government has two choices: (1) do nothing and let our
> capital system restructure the system through bankruptcies and foreclosures,
> or (2) pump more money into the system by printing it. Of course
> there is a third choice which is a mixture of (1) and (2). Since
> printing money hurts older americans and those who are unemployed
> and underemployed, that option hurts the most people as inflation
> cuts them to the bone. Therefore, a mixture is most likely. There
> will be no inflation or deflation if the governemt gets it right.
> Some asset prices will deflate; some will inflate. There will be
> winners and losers. Stock prices are likely to remain stable after
> reaching an equalibrium which is somewhere between 600 and 700 on
> the S&amp;P 500 Index. From there it will rise, but most likely by
> only 5% to 6% annually for many years to come. Long-term interest
> rates will peak at 3% for the same number of years. Capitalism will
> coexist with socialism.