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Rob Viglione  

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  • Household Wealth Back to Normal? [View article]
    We're going to see net worth crash through that mean value very soon. Let's hope that it doesn't fall further than 1974 levels, but my guess is that it will.
    Dec 14, 2008. 02:56 AM | Likes Like |Link to Comment
  • Forbes Says, Devalue the Dollar. Bad Idea. [View article]
    @Sheople, the baby boomers were the ones who created this system of punitive taxes and leveraged consumption from which we are all now suffering. The social engineering geniuses who created massive national ponzi schemes and righteously went about progressively punishing businesses and people who produce are all to blame for this. Right, not a single set of people onto which we can cast responsibility, but by and large these policies grew out of the boomer and post-boomer generations.

    On Dec 12 04:07 PM sheople wrote:

    > Chris B, It wasn't just "the self-serving budget-busting decisions
    > made by the baby boomer generation." The baby boomer generation
    > is not the one that decided they could make more money by sending
    > manufacturing out of our country. Albiet, the baby boomers have
    > sat quietly ny while it was done and then fell in line with the fiscal
    > spoon feeding that was generated by Wall Street and the Federal Reserve.
    > There is plenty of blame to go around, but the initiators were Wall
    > Street and the Federal Reserve. Now they'll just be running the
    > country openly. On all else, agree with you.
    Dec 13, 2008. 03:39 PM | 1 Like Like |Link to Comment
  • Equity Risk Premiums: Will History Hold True? [View article]
    Interesting how equity risk premiums rarely seem to form a plateau. I would love to see this spike up followed by one down.
    Dec 7, 2008. 04:30 PM | Likes Like |Link to Comment
  • Why Are Investors Lunging After Low Yielding T-Bills? [View article]
    I've already started shorting 30 year treasuries.think this is the next bubble.
    Dec 7, 2008. 04:05 PM | Likes Like |Link to Comment
  • Defining Deflation [View article]
    Keep an eye on the monetary aggregates, particularly M2 (fed compiled) and M3 (no longer fed compiled). Unfortunately, the Fed stopped publishing M3 statistics, but a good source I've found is:

    You can see a sharp drop in M3, but it is still well above reasonable expectations of's around 7% annual growth right now. Admittedly, I'm not sure how the last couple months have treated the aggregate, but there is still enough slack to keep from worrying just yet.

    At some point when asset prices cease crumbling, money velocity should pick up and then we'll be left with an excess money creation issue. I fully doubt central banks will be capable of absorbing excess liquidity.
    Dec 7, 2008. 03:56 PM | Likes Like |Link to Comment
  • Obama's 2.5 Million Job Stimulus: We Need a Scalpel, Not a Shotgun [View article]
    Two problems with Obama's economic "fix":
    1) The country can't afford it...debt-GDP was ~ 70% end of sep08. Tag on a bunch more ambitious relief programs and that figure jumps fast. When Hoover embarked on what was later termed FDR's New Deal, debt-GDP was 20%..lots of room for growth there.
    2) There's a good deal of evidence pointing to the New Deal prolonging the Depression. Job creation doesn't equal wealth creation, and there are consequences to widespread resource shifts from private to public sector.

    You can see Obama's actual broadcast and more commentary here:

    Dec 7, 2008. 03:36 PM | Likes Like |Link to Comment
  • Calculating a Housing Bottom: Volume vs. Price [View article]
    A big question I'm grappling with is how the inflation-deflation battle will end? It's undeniable that monetary aggregates, credit markets, and even commodity prices are telling us deflation is a serious short-term concern. Long term, though, I am skeptical...I find it hard to imagine that the velocity of money will remain permanently suppressed, and the trilions of fiat currency printed globally will remain idle.

    Nonetheless, short-term we must guard against deflation risk. In a deflationary environment, you want to be a net creditor. On the credit side, corporate debt is looking extremely interesting. I'd even venture to say that mortgage instruments-the high quality type-are favorably priced.

    Longer-term, I'd be scaling into gold. The fiat currency system is likely approaching its deathbed, at least without serious restructure in public finance.
    Dec 6, 2008. 03:27 PM | 1 Like Like |Link to Comment
  • Review of "100 Years of Corporate Bond Returns Revisited" [View article]
    Corporate debt has never been so interesting, from my experience. Great hedge on potential deflation with fixed payments, and lots of price appreciation potential given current spread variances from mean.

    Excellent article!
    Dec 5, 2008. 09:34 PM | 1 Like Like |Link to Comment
  • ETFs in 2008 - What Lessons Can We Learn? [View article]
    Exploiting correlation variances between indices, sectors, and other ETF combinations was a profitable business for me up until this year. I'd become complacent with what I thought was the power of diversification, spreading bets across nearly every possible asset class.

    The financial meltdown tore all that up, changing the rules of the game. De-leveraging the entire system has devastated nearly all asset classes, trashing the idea of decoupling and the dogma of diversification.

    In retrospect, I should have adhered to healthy hedging practices, which I claimed to consider but never fully implemented...they seemed too costly at the time. Boy was I wrong!

    All we can do is salvage what we can and look to the future. Here's a good article written by a colleague of mine that analyzes sector performance, comparing to earnings expectations in an attempt to discern a way to exploit potential variances:

    Dec 5, 2008. 02:36 AM | Likes Like |Link to Comment
  • The Fed's Potentially Very Bad Policy [View article]
    I'm hearing lots of calls for GOVERNMENT to DO SOMETHING. Well, we must ALL look to how we can take personal actions to ensure long run prosperity. What we are experiencing is broad, systemic rot that must be overcome by all economic participants, not just government.

    We should be questioning what "back on track" really means. Obviously, the previous financial order was untenable, so bailing out market participants who made bad decisions discourages systemic cleansing and restructuring, which is what is desperately needed.

    If government must play a role it's best courses of action should be geared towards:

    1) Conduct some DEEP soul searching...identify, and understand the BAD aspects of public policy that contributed towards this disaster, then take decisive actions to eliminate these policies, rather than creating new ones,
    2) Smooth the natural process of de-leveraging...don't try to stop it, but focus on softening the pain that must occur,
    3) Ensure all "smoothing" is equal and not targeted to some at the expense of others...government should not be creating economic winners and losers. A political-based economy is not an acceptable long run solution!
    Dec 5, 2008. 01:57 AM | Likes Like |Link to Comment
  • Looks Like We'll See Dow at 10K - Soon? [View article]
    If the contrarian mantra holds any validity it might make sense to think long on the market. Just look at the overwhelmingly negative perceptions on this article, for starters. Then turn on the news, listen to the radio, or stand by the cooler at work and eavesdrop on some of the conversations...those you'd never expect to think about the markets are all professing their despair and fears for the worst.

    It's in environments like this that we need to start thinking about incrementally buying long. There's a ton of bad news, but much of it is already priced into markets...there may yet be more to add to the list that surprises further towards the downside, but there are some great assets on fire sale right now.

    On this point, I suppose I would look to fundamental values on an individual level. One asset class to consider...corporate debt. Great hedge on deflation and yields are extremely attractive. If you don't know enough about picking individual bonds, consider BlackRock Corporate High Yield Fund (COY) with a forward dividend yield of 21%.
    Dec 5, 2008. 01:38 AM | Likes Like |Link to Comment
  • Less Negativity, More Inflation [View article]
    Trying to keep the party going indefinitely puts everyone at risk, particularly those who had nothing to do with our present state of over-leverage. This nonsense of privatizing gains and socializing losses inequitably rewards risk takers and punishes the prudent.

    The government should let reality sink in for those who put themselves at risk and enable the prudent to allocate savings in ways they feel make sense, such as buying distressed assets that hold promise. Government seizure and allocation of resources operates on the assumption that public officials are better capable of allocating savings than the savers.

    Government bailout programs, and fiscal stimulus packages effectively redirect private resources in ways that public officials deem appropriate. Why is this assumed to be more efficient than allowing those who have demonstrated the capability to execute productive activities (earn money) and save (demonstrate prudence) the freedom to allocate their own resources in ways that make sense to them?

    In this way savers are rewarded for their prudence when markets crumble. They can pick up discounted assets imprudent risk-takers are forced to liquidate. This natural bail-out the only equitable option, and is far more efficient. Enabling the productive and prudent of society to make decisions with their own resources for which they, alone, must bear the consequences ensures significantly greater circumspection. It also means that society is making lots of smaller investment decisions, versus massive, unilateral decisions from the top down. One mistake can bring us all down!
    Nov 16, 2008. 05:51 PM | 2 Likes Like |Link to Comment
  • Peak Oil's Bell Is Ringing [View article]
    Betting on peak oil is a risky venture. I've lost a good deal of money betting long on oil futures, thinking markets were nuts to discount the commodity so drastically following its $147 per barrel high. Trying to time this phenomenon can be disastrous.

    Politicians trying to socially engineer society can prove even more disastrous. Allowing markets to work will be the best approach going forward in optimally allocating energy resources to those uses which are of greatest value to society at large. Beware politicians claiming to be able to do this more efficiently!
    Nov 16, 2008. 03:33 PM | Likes Like |Link to Comment
  • Iceland: What It's Like to Live in a World Without Money [View article]
    I hope that we are not reading about how Iceland's default was a precursor to a broader global disaster in future history books.

    Lessons to be learned: leverage has its pitfalls and should be used in circumspect fashion.

    I am nervous that America is failing to understand the develeraging process unfolding globally. Increasing leverage at this point can lead to disaster, yet instead of attempting to cure the borrow-spend disease, the U.S. government is attempting to perpetuate it.
    Nov 16, 2008. 03:12 PM | 1 Like Like |Link to Comment
  • 100% Yields on Ecuador Bonds: A Sign of the Times [View article]
    And yet populism continues to drive power to defunct ideologically-driven policymakers. You'd think humanity has sufficient data at this stage to pass judgment on collectivist politics.
    Nov 16, 2008. 01:50 PM | Likes Like |Link to Comment