Ricard

50 Four-Day September Expiration Option Ideas

If I were you, I would exit C now.

online.wsj.com/article...

Good luck with your trades.

67 Stocks Returning 50%+ This Past Month

Let's see, AIG, Citi, Freddie and Ambac...maybe this is a speculative CODE PINK stage...:)

While Citigroup Jumps on John Paulson's Investment, AIG Jumps on Anything

"Look you can either complain as a taxpayer or become rich off your fellow taxpayers and join the party - jump in!"

That's my quote of the day :)

Citi's Pandit Should Learn from AIG's Benmosche About Handling Government

I don't follow AIG that closely but I must agree in large part to the opinion on Pandit. It's somewhat worrisome to me as I have a long position on C. So far, it has been rising as expected.

Today May Be Markets' Turning Point

Well said.

Logan, your opening statement wasn't necessary. In the end it is your quality of analysis and, like Dave said, drawing lines in the sand and standing on the right side of it, that earn you respect. Many 'amateurs' proved themselves smarter than the 'smart money' last year.

That being said, I would get out of day trading, IMHO. There's a lot of commentary about 'sheeple' out there, and it's mainly due to momentum investing (again, IMHO). Trend lines are like statistics...they can be used to prove any point, depending on where you start and where you end. I could whip out a SPY chart from 1996 to 2000 and make a convincing argument that the trend favored selling all assets in 1998.

I for one think breaking resistance and using trend lines to spot patterns are contrarian indicators, mainly because of the incredible lag in what they indicate. The obvious right call would have been to invest BEFORE the trend materialized...that is the strongest argument to sell now rather than wait for the plunge first to 'break resistance' and then sell. However, now we are leaving the limited confines of technical investing and delving into the fundamentals.


On Aug 21 01:40 PM Dave Wrixon wrote:

> Well you might not be right but you will be close, and having the
> balls to put down a marker should earn you respect, provided you
> are not miles out.

CDS and the Looting of AIG

I understand your confusion.

For puts, you profit on downward movement.

For CDSs and similar products, you DO NOT profit on downward movement. You only profit from TOTAL COLLAPSE of the underlying instrument. This makes naked CDSs much more dangerous to the economy as a whole than just naked puts, which are not dependent upon total collapse, but only downward movement. Whereas puts are bearishly speculative, CDSs are bearish on an apocalyptic scale.

I hope this clears up your misunderstanding. This is why they are considered insurance products and not speculative instruments. Insurance is a highly regulated business, and CDSs also need similar regulatory oversight.


On Mar 04 08:40 PM cds ftw wrote:


> "This creates moral hazard because "A" has a financial incentive
> to undermine confidence in "C" or impair its operations in some way
> thereby increasing the likelihood that "C" will fail, triggering
> "A's" claim on "B"."
>
> I don't see why this moral hazard is any worse than that created
> by put options or short-selling (you might well object to short-selling,
> but look how effective the ban has been at supporting the indexes......)
>

Why Should Life Insurers Be Bailed Out?

After more than six months of bad news, I have to wonder whether or not this is becoming a self-fulfilling prophecy. It's quite possible that once the bad-news machinery gets up and running, it may take a long time (a lot longer than the market malaise, if you get my drift) before the machinery runs out of steam.

Seems the whole crux of the matter is whether or not the assets held are good. After six months, there has yet to emerge a consensus opinion on this one. That's bad. I'd feel a lot more comfortable if we had some sort of definitive answer on this one (like, say, a TARP that actually buys troubled assets). Maybe it was due to the political transition...the Geithner plan does seem to actually attempt to answer this question.

Why It's Better to Bail Out Borrowers than Banks

"Politically, it’s extremely difficult to pass a bill giving hundreds of billions of dollars to people who borrowed money and now find themselves incapable of repaying it. But then again, it’s politically just as difficult to give that money to the banks who lent it, too."

Politically, this is scapegoating at its best. Faced with the decision to vilify the banking sector or a large swath of the American population (who have jealous friends, relatives, etc), politicians found the expedient choice and laid the blame to an area where votes don't matter (as much).

Big Debt and Big Returns Could Be Spurring This Rally

I don't think CIEN deserves to be lumped with this crowd. I sold JDSU to add to my CIEN stake due to better financials, both income statement and balance sheet-wise. Fact is, it was posting a healthy profit before July of last year for a good six straight quarters, and given those earnings figures, is a downright steal at these prices. This translates to a full recovery from the dot-com bust IMHO. It has enough CASH on hand to retire its debt if it so chooses, but otherwise has years before its next maturity in which to weather this storm. It's holding quite well compared to competitors such as Nortel or ALU - the last earnings statement corroborates this viewpoint.

I realize that it's in your 2nd best decile of balance sheet performers, but I don't think it deserves to be lumped in a crowd to include BofA, Citi, and MBIA.

Mean reversion for this stock should be around $2/share pre-reverse split, or around $15. That would take it to the low that it reached in the dot-com bust, when it was hemmoraging capital. Tertiary industries such as Ciena's have been unduly hit by the outflow of capital in the past year.

Financials: Cleaning House Is Always Better

If this truly is an integrity problem pervasive in the financial industry, then God help us all.


On Mar 20 01:04 PM John Lounsbury wrote:

Why Investors Should Avoid State-Owned Companies

Good points, thanks again.

On Mar 19 10:08 AM William Gamble wrote:

Why Investors Should Avoid State-Owned Companies

Mr. Gamble,

Don't get me wrong - I think you're making an outstanding point. However, I've become rather jaded by the insistence upon a differentiation between nationalized companies and un-nationalized. To me, and in some of my experiences, government control has afforded stability in times of crisis, and IMHO, large discounts to market caps due to the pervasive fear of profit maximization being relegated to #2 priority.

Especially in China's case, they've actually put their money where their mouth is - I owned SNP several years back, and was elated that the government subsidized the price of petrochemicals due to runaway crude oil prices. It was not a small subsidy - it amounted to several billion yuan, or dollars, I forget which.

Your point is 'pure', in that the theory makes natural sense, and seems to be most supportive of the capitalist model. However, I've found that in practice, the theory gets muddied, as does the corresponding profit potential. One can take a good look at Korea's corporate sector, and see that there are many, many more factors at hand than simply profit maximization when it comes to privatization. At one point after their IMF crisis, their stock market was nearly majority owned by foreigners. I'm sure many nations are not envious of that fate.


On Mar 18 09:39 PM William Gamble wrote:

> Ricard
>
> Sorry for the long winded reply. To simplify
>
> Stalin, Lincoln, Mao, Rove and Obama all share one thing in common,
> They all wanted political power. Shareholders want something else.
> They want money. The Chinese government wanted CNOOC to buy Unocal
> to satisfy what it considered a political necessity, access to oil.
> (The Japanese had the same issue in 1940). The US Congress had to
> satisfy the political necessity of the negative image of an American
> company being purchased by a nominally communist country. Neither
> government cared that much for the investors in either CNOOC or Unocal.
> My point is that if you have a better chance of making money if you
> avoid political incentives of state owned companies and go for the
> profit of the private companies.

Why Investors Should Avoid State-Owned Companies

One thing I'd like to clarify, and which I struggled to differentiate above, is the difference between private ownership in a publicly traded company, and public ownership. Companies on the S&P 500, while publicly traded, are privately owned by shareholders, and not the government. AIG, on the other hand, is publicly owned by the government, and publicly traded.

In case this was slightly confusing in my prior comment.

Why Investors Should Avoid State-Owned Companies

This is a well-written and sober reminder to those that invest in government owned corporations.

However, I will play devil's advocate. Currently in the US, we are seeing who is ultimately the owner with responsibility in any sector deemed vital to national interests. Right now, those sectors happen to be the auto industry because of its massive presence in manufacturing, and finance, because of its pervasiveness in the entire economy. The owners are you and me. It is hard to distinguish between private and public ownership, when public corporations owned by private individuals are deemed as providing a vital public good.

Also, the case between Unocal and CNOOC comes to mind. I admit, this is a weaker example, given that CNOOC is a government-owned entity. However, CNOOC tried to purchase privately owned assets in the South China Sea. This is hardly the Gulf of Mexico. These assets were deemed by Congress as vital to national interests, and so the ultimate owners with responsibility (you and me through our elected government) exercised our rights and denied the asset purchase. However, Unocal is a private corporation...or is it? Why did the government get involved in this transaction?

After seeing the CNOOC purhcase fall apart, I looked at the US auto industry and saw a crisis forming, and surmised that this sector, although seemingly privately owned, is in fact a public entity, owned by you and me through Uncle Sam. This is true of any industry deemed vital to US interests. Sure enough, I was proven right this year.

So, the only difference I can see between state-run corporations and publicly listed corporations in the US is the degree of overt government control. In one hand, it is clear that electricity in France and Korea, aluminum in China, and oil and gas in Russia are deemed vital to national interests and are too important to be subject to the whims of the market. In the US, this has been true for decades in key sectors, but we have been able to conceal this fact by allowing the private sector to gamble with the fate of America until the failure is too great for words. Hence, our current predicament with nationalization.

I see little difference in government-run entities, and corporations deemed as providing a vital public good. Or, do you really think the military-industrial complex is ultimately a private good, and won't be nationalized if in jeopardy? I think not.

How to Not Pay the AIG Bonuses

John Thain comes to mind when reading this article.

He asked for a $10 million bonus for effecting the merger between Merrill and BofA. He was promptly denied, and then fired in short order.