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  • In total, the FHFA has launched 17 suits against major banks that sold nearly $200B in MBS to the GSEs. No word yet on the value of the losses the agency is trying to recover. (PR) (individual filings)  [View news story]
    "Wall Street is amoral, and you really can't cast the discussion in terms of lying, cheating, stealing etc...."

    I suppose so, but there were an awful lot of people in communities and small-town America all over the US who were making a heap of money in commissions selling mortgages when the game was at its height a few years ago and who must have known perfectly well that the whole racket was crooked, because it was just a case of "sign 'em up, collect the commission, and be happy while it lasts--that's the American way."

    It has been going on for hundreds of years in one form or another. Author Charles Dickens was particularly angry about this aspect of the US in American Notes (1842). He commented that Americans admired rather than despised people who made money this way, because it was the smart thing to do.

    Not surprising that Dickens noticed this tendency, because he himself had lost money (a lot) by investing in a land swindle in Cairo, at the junction of the Mississippi and Ohio rivers.

    "In every stockjobbing swindle every one knows that some time or other the crash must come, but every one hopes that it may fall on the head of his neighbour, after he himself has caught the shower of gold and placed it in safety. [Karl Marx, Capital, Volume I, Chapter 10 (1867)]
    Sep 2, 2011. 07:33 PM | Likes Like |Link to Comment
  • Using Friday's Options Activity to Get Ready for Monday's Market (Part Two) [View article]
    Watching political events is crucial, particularly since most days the whole market moves in lockstep. For example today every single item in my portfolio was in red figures except for GLD and VXX.

    With the upcoming Obama announcement on the jobless program, the 2-day Federal Reserve meeting that could be related to QE3, and the horrible state of several European economies and their banks, how can one possible ignore the politics.

    I can predict one thing with absolute certainty, which is that the rest of September will be unpredictable.

    We also have the Committee of 12 getting to work, and their eventual decision or lack of a decision around Thanksgiving is bound to crucially affect several industries, not just defense.
    Sep 2, 2011. 04:19 PM | Likes Like |Link to Comment
  • Generate Income By Selling Puts Or Executing Option Spreads On These Stocks [View article]
    Basically all these spreads are a bet against disaster. As long as the whole market doesn't tank, Canada declares war, or Al Quaida names AAPL as official phone provider, it should all be good. You are often betting about $1000 to win $150, albeit in a pretty safe wager.

    I already have bull put spreads in place on AAPL and IBM, but at different prices and expiration dates. The others look like decent candidates.

    Personally, with the short 30-day spreads, I would enter some kind of stop-loss order or provision to roll the spread to a later date just in case the unimaginable ever happens.

    ******

    ""I don't think anybody could have predicted that ... they would try to use an airplane as a missile, a hijacked airplane as a missile," National Security Adviser Condoleezza Rice said Thursday."
    Sep 2, 2011. 10:06 AM | Likes Like |Link to Comment
  • Peabody Energy: Way Undervalued After 30% Sell-Off [View article]
    Doesn't BTU have rail access to a port on the west coast for shipping Wyoming coal across the Pacific?

    Anyway with Obama's determination to reduce dependence on oil, and the murky political future of nuclear power after this year's disaster in Japan, and the uneconomical nature of solar, wind, and tidal power, it sure does look like coal isn't finished as an economical and plentiful way of generating electricity and running blast furnaces.
    Sep 1, 2011. 01:33 PM | 1 Like Like |Link to Comment
  • Peabody Energy: Way Undervalued After 30% Sell-Off [View article]
    But is Obama really anti coal? See this:

    www.grist.org/article/...
    Sep 1, 2011. 10:54 AM | Likes Like |Link to Comment
  • Peabody Energy: Way Undervalued After 30% Sell-Off [View article]
    Agree with the above. Coal stocks are feeling their way in the dark, but there is light at the end of the tunnel, and any sign of a Republican victory in '12 could be the song of the canary.
    Sep 1, 2011. 10:50 AM | Likes Like |Link to Comment
  • Clorox Management Focused On Shareholder Value [View article]
    "No mat­ter how poor the eco­nomic times, peo­ple still have to clean and col­lect trash."

    True, but in hard times are consumers are more likely to buy the more expensive Clorox-branded products when generic or supermarket own-brand chemical equivalents are available for a bit more than half the price?

    Of course, for all I know the generics may also be made by Clorox.
    Sep 1, 2011. 08:49 AM | 1 Like Like |Link to Comment
  • 'Buying Dividend Stocks For Income' Arguments Don't Make Sense [View article]
    "Most hedge funds are run by gun slingers who are looking to one up their hedge fund buddies so they can get the most coke and hookers at the boys night out Friday nights."

    Excellent post, love it.
    Sep 1, 2011. 08:38 AM | 8 Likes Like |Link to Comment
  • 'Buying Dividend Stocks For Income' Arguments Don't Make Sense [View article]
    What about the last 10 years?
    Sep 1, 2011. 08:31 AM | Likes Like |Link to Comment
  • Why Can't The Cost Of Flood Insurance Rise? [View article]
    Flooding affects a lot of older homes in poorer neighborhoods here in Florida, as well as beachfront homes for the wealthy.

    Homes built in recent years have the lots built up higher from the road (like about 3 feet), making it much less likely that homes will flood. Many homes close to the water are built up on concrete pilings that keep them above the high water line.
    Aug 31, 2011. 11:10 PM | Likes Like |Link to Comment
  • The 'Supercommittee': What It Should Do And What It Will Likely Do [View article]
    Yes, you are right about health care costs as far as it goes. The problem with US medicine is that many medical practices regard patients as revenue centers, and once you get someone on a long term medicine, then you have a revenue center for life.

    A fine example is the kind of dental insurance that employers often offer, which is really a scam.

    The insurance will offer free checkups, and then "copayments" for procedures.

    But the insurance plan is not really insurance, it is just a discount plan, and the free check up are really sales visits that drive customers to the supplier (dentist) so that he can propose courses of treatment that make money for the dentist.

    One plan I had covered porcelain crowns for a "copayment" of $750 dollars. A few years ago a dentist in the Dominican Republic gave me 4 crowns for $800 without insurance. With "insurance" like that who needs to pay for "insurance"?

    However the interesting thing is that the whole of the US insurance-based medical system works on the same principle.

    Now there are many dedicated and ethical practitioners, and I know many of them, and have worked with them, and some are my dear friends, but most of them aren't working in private practice.

    Nothing will ever change much, because for some reason that is quite opaque to me, Americans like it this way.
    Aug 31, 2011. 10:37 PM | 2 Likes Like |Link to Comment
  • 'Buying Dividend Stocks For Income' Arguments Don't Make Sense [View article]
    No, I understand. If you are planning to retire in 20 years from now, buying dividend growth stocks makes a lot of sense. If you want income right now, you may have to resort to more desperate measures.

    I do actually have an short put options position in WMT as I think this is a fine company that gets a lot of business from me, and I would have no objection to buying the stock at $50 per share. But if I don' get the stock put to me in January 2013, then I get a lot more than 3% for my trouble, and if the stock appreciates in value to a significant degree then I get it quicker too.

    My timing is not that great, but if you buy into a dividend fund with, say, a 10% annual dividend return a month before the ex-div date, there is a good chance the stock will run up into the dividend period and allow you to take a profit. If not, then you can hold it and get then dividend, then sell when the stock price recovers. At least you get two bites at the cherry. Of course you should not put more than a small percentage of a portfolio into each position of this type.

    BP currently pays a temporary half-price dividend of 42 cents per share, but will probably restore the full dividend of 84 cents within a year or two. At that rate it will offer a return of 8.5% on today's share price of $39. Maybe worth a look, especially as there is no sign of oil going out of style just yet.
    Aug 31, 2011. 10:08 PM | 1 Like Like |Link to Comment
  • AT&T: The Safety Of Coke With A Higher Return [View article]
    The recent changes in the prospects of T stock just show how important it is not to put too many eggs in one basket and how every position needs to be hedged at least to some extent against downside occurrences. With a seemingly stable stock like T this is not easy, but perhaps selling out of the money calls on 7/10 of a position and at the money calls on 3/10 plus a few LEAP bear put spreads would give some protection at little cost.
    Aug 31, 2011. 09:34 PM | Likes Like |Link to Comment
  • 'Buying Dividend Stocks For Income' Arguments Don't Make Sense [View article]
    I have always wondered about this argument myself, especially with reference to stocks like WMT paying around 3% dividend. How is that even relevant?

    Last week I picked up about $40,000 worth of stock in three funds paying dividends of 10%, 10%. and 7% respectively. This morning I cashed out all three for an average gain of very close to 3%, which, if taken as a quarterly dividend, would be equivalent to the payments on a 12% dividend. I also picked up 1000 shares of NLY last week, which pays a quarterly dividend of 65 cents per share which is equivalent to 14% annual dividend . I was able to sell 10 calls which guaranteed I would get 70 cents at the end of September when the shares will be called away.

    Why on earth bother with something that pays a dividend of 4% when that is 1% per quarter and the stock may rise or fall by that amount any day?

    Of course I do understand that stocks held for many years may actually end up paying a huge dividend relative to the original investment.
    Aug 31, 2011. 04:17 PM | 1 Like Like |Link to Comment
  • The 'Supercommittee': What It Should Do And What It Will Likely Do [View article]
    "They appear oblivious to the fact that the government expenditure cuts they insist on will slow growth by even more than the tax increases suggested by others."

    Well, this is the nub of the matter, isn't it? The Republicans' calculations seem to be well off target, because they are not accounting for the jobs that will be lost by cutting government expenditure, most of which goes on contracts and salaries.

    Improbably as it may seem, the only hope is for the Committee of 12 to meet in private and for their members to park their party affiliations at the door and do what is best for America regardless of the opinion of crackpot radio and TV show hosts.
    Aug 31, 2011. 09:47 AM | Likes Like |Link to Comment
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