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  • Gold Confiscation - An Unlikely Scenario [View article]
    "Within the context of a global reserve currency - or some other manifestation of an SDR - prohibitions on speculative positions in gold is very reasonable to expect "

    I beg to differ, given the rampant amount of currency speculation on today's markets. Also, to expect that some international syndicate would be capable of restricting gold speculation worldwide is outlandish. If it is curbed in the US, it will probably thrive in China, as gold starts to pour out of the US and into tradable markets.

    In the end, the whole debate about gold speculation and confiscation is a symptom of a much more complicated problem, that of reducing deficits and reigning in profligate spending. If the latter happens, the former would disappear as an issue of concern.
    Nov 25, 2012. 09:43 PM | Likes Like |Link to Comment
  • Gold Confiscation - An Unlikely Scenario [View article]
    Good article.

    "If anything, a gold confiscation would display a vote of no confidence by the U.S. government with regards to the dollar."

    Very true. However, no confidence can also entail rampant inflation, not just deflation. The Fed's goal is price stability, and if it loses control in either direction then it may become motivated to do something drastic, like confiscate gold. More than likely a confiscation would first entail price fixing by the government, and would probably be a precursor to a major conflict - war is always a reliable tool for governments to pacify dissident sentiments, and there would be plenty of those with an uncontrollable currency.
    Nov 23, 2012. 10:36 AM | Likes Like |Link to Comment
  • Another Real Estate Bubble? [View article]
    It will make renting more attractive than buying, thus hurting home prices in the short run. However, if it results in rising rents, then home prices will rise in the longer term.

    Still, I doubt it will happen. You get more deductions owning investment property than owning your own home, even with the mortgage tax deduction.
    Nov 21, 2012. 08:02 PM | 1 Like Like |Link to Comment
  • Another Real Estate Bubble? [View article]

    Agree with most of your comment except this final line:

    "I will become optimistic when the banks lower the required down payment to 10%, unemployment declines to historical norms, and real wages begin to increase."

    In my opinion, one big reason for the sub-prime mess was loosening down payment restrictions. I would be for keeping down payment at 20% permanently, as it is easily the best way to keep home prices from going "nucular". The boom-bust would have never have happened if not for the zero-down nonsense that proliferated in the final years of the boom.
    Nov 21, 2012. 03:40 AM | 1 Like Like |Link to Comment
  • Another Real Estate Bubble? [View article]
    "Chairmen Bernanke wants a buying panic?? He wants to keep inflation at healthy levels by creating more house for sale. More houses for sale=inflation."

    Incorrect. I believe Bernanke is trying to stoke demand by creating more housing sales, not houses for sale. More houses for sale without a concomitant increase in demand = deflation, my friend. In this sense, I think Mr. Clark has a point, although I disagree with him on the severity of a buying "panic".

    "Would you like to borrow money, and then pay it back when the money is worth more than when you borrowed it?"

    This is interesting, but in my opinion doesn't matter. Japan is borrowing from itself, so if it is forced to pay back its own citizens in yen that has appreciated in value, its citizens probably won't mind. The problem is that as more and more of its budget is financed by borrowing, the probability of pronounced, uncontrolled inflation becomes a greater possibility. More than likely Japanese bondholders will be ruing the day they bought from their government.
    Nov 21, 2012. 03:28 AM | 1 Like Like |Link to Comment
  • Another Real Estate Bubble? [View article]
    " Lending standards and defaults are inversely related. The tighter the standards, the fewer defaults. Since the summer of 2007, there have been no more subprime loans and underwriting guidelines returned. The fact remains that after 5 years, new defaults continue to be high."

    There is a lull between underwriting and default. I've seen some studies show that this lull can be 3-5 years. This makes sense, as it takes 1-3 years for the adjustable period of a typical sub-prime loan to end, and it takes a year or two before the default occurs. In that sense, Bernanke is probably right, that lending standards are still too high amidst high levels of defaults.
    Nov 20, 2012. 09:58 AM | 2 Likes Like |Link to Comment
  • Wall Street Breakfast: Must-Know News [View article]
    "Massachusetts provides best economic opportunity - survey."

    "“The states that invest in their citizens...(have) better economies, which would go counter to the idea that we should strip down the size of government,” says one of the authors of the study." .

    Later in the article:

    "Massachusetts often ranks high in such reports because, while government spending might be higher, it has a concentration of top universities such as Harvard and the Massachusetts Institute of Technology, according to Alan Clayton-Matthews, professor in Northeastern University’s public policy and urban affairs school."

    I think whoever produced this survey failed to account for some significant outlier factors. It would be interesting to see whether data on % of college grads state by state would correlate higher with economic opportunity than the bogus claim about higher spending. My understanding is that California spends about the same per capita to Massachusetts,and both Massachusetts and California spend far less per capita than Alaska, yet California ranked 30th in this survey, and Alaska only 19th.
    Nov 19, 2012. 11:13 AM | 5 Likes Like |Link to Comment
  • Fiscal Cliff: The Can-Kick Scenario [View article]
    "Finally, another major issue: Near zero interest rates makes it virtually impossible for Pension Plans to reach their absurd target of 8% annual appreciation. Already they are a ticking time bomb. When does that cripple the system???"

    There was a strike in northern California, Raley's supermarkets - the parent company attempted to deal with a similar issue by denying retirees health care once they reach the age of Medicare/Social Security, among other retirement/pension issues. First strike in its 85 year history.

    I don't think this issue will cripple the system, but many future retirees may have cause for concern.
    Nov 18, 2012. 11:01 AM | Likes Like |Link to Comment
  • Fiscal Cliff: The Can-Kick Scenario [View article]
    I believe the lame duck Congress will kick the can to the incoming group in order to facilitate accountability and deal-making. I don't see any definitive game-changing deals until several months from now. At that point, I would imagine that pressure outside Washington will build steadily to the point where lawmakers will feel compelled to act, much like they did in 2011 during the debt ceiling debates.
    Nov 16, 2012. 01:06 AM | 1 Like Like |Link to Comment
  • Intel: The No-Nonsense Reason It's Down [View article]
    Title: Intel: The No-Nonsense Reason It's Down

    Stock price, 11/4/2011 - 23.74

    Buffett announces INTC stake on 11/14/2011 (more than likely bought months beforehand)

    Stock price, 8/10/2012 - 26.88

    Buffett announces dumping INTC stake, 8/14/2012 (more than likely months before)

    Stock price, 11/14/2012 - 19.94

    Stock price, 8/19/2011 - 19.19

    Throughout this time, INTC's outlook has changed little. It is still the dominant chip maker, it is still a quasi-monopoly, its earnings have grown as well as its dividend. P/E is below 10 again, and dividend yield is above 4% again, about where it was August 2011, before Buffett-mania touched this stock.

    IMO INTC has done quite well despite being given the shaft by the world's most famous investor. Tablet computing certainly has led to a demand shift away from INTC's bread and butter, high-powered workstations. I see this as a temporary trend - computing's long term future is not about slimming down and reducing speed and power. INTC easily has enough cash to weather this storm, and it has little to no debt.
    Nov 15, 2012. 09:48 AM | Likes Like |Link to Comment
  • Q3 Earnings Confirm Xinyuan Real Estate Well Positioned For Growth [View article]

    100% agree with your assessment.
    Nov 14, 2012. 12:53 PM | 1 Like Like |Link to Comment
  • Q3 Earnings Confirm Xinyuan Real Estate Well Positioned For Growth [View article]
    Mr. Friedland,

    Thanks for your well written article.

    I have 3 questions for you:

    1) Given your quote:
    "I remain impressed by the company's strong cash position, which, as of the end of the September 30th quarter, was $608.6 million."

    ...what is your opinion regarding a XIN privatization, and management's antagonistic attitude towards it?

    2) Are you familiar with Muddy Waters and Carson Block? Have you done and would you recommend that any investors looking into the US-listed-only China sector do similar due diligence as done by Block?

    3) Given the prevalence of fraud found amongst other NYSE-listed-only Chinese IPOs that went the ADR route, what comfort should an investor get from such a listing?
    Nov 14, 2012. 11:59 AM | Likes Like |Link to Comment
  • Is Xinyuan Real Estate Co. Too Good To Be True? [View article]
    "In addition, I would like to dispute the "prestige" and "goodwill" value for listing in NYSE. There are more than a dozen real estate developers listed in the Hong Kong Stock Exchange, and the difference in goodwill between listing in NYSE and HKEx is not that significant for mainland companies. "

    Thanks again yiktin for providing a voice of reason and healthy skepticism. I'm continually drawn to the prospects of this company, in no small part due to sustained, low valuations levels I have never seen before in my 10 years of investing.

    Personally, I see the NYSE argument as playing to the pride and hubris of its investor base, the US retail investor. After all, why would Chinese trust American institutions and safeguards more than Chinese safeguards, even though most Chinese can't even read English...? Only a wide-eyed, bushy-tailed, Bambi-faced American would believe that, I'm sorry to say.
    Nov 13, 2012. 11:58 PM | 1 Like Like |Link to Comment
  • Is Xinyuan Real Estate Co. Too Good To Be True? [View article]

    You're asking excellent and pertinent questions that I've asked in the past. From my prior research: (XIN Q3 2011)

    "CFO: If we bought back in current multiples and then listed it, let’s say a multiple of five times higher that would be profitable, but I have to reiterate the Chairman’s goal. Chairman’s goal is long-term, he likes being listed on the near expected exchange, it has its cost, but the parts he likes, he likes the discipline that comes with Sarbanes-Oxley (inaudible) he likes the – comes from the quarterly reporting like I'm doing right now. And he thinks it makes us a stronger company. "

    When I read this quote, I immediately smelled a gigantic bucket of bullsh*t nearby. XIN was less than half the price it is today, making a buyout last year much more attractive than it is today, and like you said, a buyout with stated cash flow would be a piece of cake for this company if its earnings were real.

    Anyone that has digested the P/E argument for this company needs to also consider historical cash flow. This company has taken in FAR MORE CASH than it has distributed during its life as a public company. Caveat emptor.
    Nov 13, 2012. 11:43 PM | 2 Likes Like |Link to Comment
  • A Grand Bargain: 8 Factors That Could Drive A Surprise On The Deficit [View article]

    I can answer your question. For someone who earns below the mean, a larger percentage of their income is non-disposable. For someone who earns above the mean, much more of their income is disposable and thus discretionary. Those at the bottom would feel a "flat tax" dis-proportionally compared to those at the top, even though those at the top would end up paying a lot more tax.


    A) earns $25,000 per year, spends $1500 a month on rent and food, insurance and other necessities, and $500 a month on transportation (car). Has about $1000 annually for discretionary income. After a 10% flat tax, is in the hole for about $1500 annually, zero discretionary income -- in fact, this poor soul is slaving his or her life away.

    B) earns $75,000 per year, spends $3000 a month on rent and food, necessities and etc, and $1500 a month on transportation (a nicer car). Has about $21000 annually for discretionary income. After a 10% flat tax, still has about $14000 annually for discretionary income, enough to send a kid to college if he or she so chooses.

    Generally speaking, there comes a point where the necessities of life take up less and less of a rising income, hence the justification of a progressive tax code. In order to prevent the lower brackets from drowning under an insensitive tax code, those at the higher brackets end up paying more.
    Nov 13, 2012. 09:50 PM | 1 Like Like |Link to Comment