Thomas Sobon

Momentum, special situations
Thomas Sobon
Momentum, special situations
Contributor since: 2012
Eric,
Your statement that the Fed could prolong the time it gets for the market to reach its final low reminds me of Herb Shriner's line about the efficiency of the fire department in his home town. It could speed to a fire that could burn itself out in an hour and make it last all day. He, however, was kidding. You justifiable are not kidding and I agree with you. Good job.
Eric,
I may be modifying my bearish opinion on the stock market soon. I'll know better by the end of trading today. The market tends to trend up and collapse down. The price action in recent days has been sloppy. And the mid-caps have been outperforming the large caps, which is a departure from what was the norm during recent months. Also, the weaker stocks may have been washed out and are no longer under selling pressure. I took some profit in a 3X inverse ETF (SPXU) position I had. I don't have any long positions. The gold stocks have continued to perform well per your timely article about them. And you also pointed out that the utilities and consumer staples are performing well in another article. Mine would be a shot-term modification only. I still will be longer-term bearish.
Eric,
That was an outstanding presentation of the historical sweep of what the Fed has been doing. Interest rates on 5- 10- and 30-year Treasury issues have been weak of late. I thought that may have been the result of capital flight from foreign countries who looked as Treasuries as being a port in a storm and a way to preserve capital. Any thoughts on that?
Thanks, b.nimble, I appreciate the compliment.
E+L
There aren't many companies that have strong fundamentals like EXR.
Tom,
Adam Whitehead just posted an article about China. Have you seen it? He is very good on foreign economies.
That is exactly correct. In the 1960s, Professor Fellner of Yale advocated a business cycle theory he called , "The expansion path of dynamic equilibrium." That was the text book used in the business cycles course I took when I attended UConn. A key component of his thesis was steady interest rates at free-market levels. His goal was to get growth under non-inflationary conditions
They are all lost deep in left field. It was the blind leading the blind beginning with Bernanke.
Adam,
A very good article. It underscores the fact that sustainable economic growth is easier when the underlying secular growth trends are favorable and very difficult when those trends are ruptured (as in the U. S.) and even more difficult when they reverse negatively (as in Japan and China) and act on drags on the economy.
I just saw an announcement on Bloomberg that I thought was mind boggling. It read "Blackrock chief encourages corporations to not provide forward guidance." That tells me that the outlook for corporate profitability is so bad that he doesn't want investors to know about the bad news in the offing. His statement speaks reams about how bad the news flow is likely to be.
We would be better off if shysters like him took a course in ethical behavior.
Eric,
The title of your article indicates that you know something about Oliver and Mack the Knife. Good article.
I share the same opinion.
That doesn't surprise me. Guest had a remarkable ability to write measured verse like no other poet could. Many of them were song poems.
Thanks. That clarifies it for me.
Either one. I'm trying to figure out how the government will be able to fund its operations. If it was just the funds rate then the only ones to get screwed would be the bank depositors. For everybody else there could be the flight of capital. Maybe you know how this could work out
Lawrence,
Here is a thought about negative interest rates: Although Japan issues bonds at, say, minus 2%. That doesn't mean that the bonds will be sold at par. It may be that the bonds would have to sold at 5% below par with the minus 2% being based on par. In that case the bond would have a net yield of plus 3%. That may sound crazy but it's no crazier than going to negative interest rates in the first place. The more I think of it, the more i'm convinced that somebody over there has been smoking something illegal.
Here is a thought about negative interest rates: Although Japan issues bonds at, say, minus 2%. That doesn't mean that the bonds will be sold at par. It may be that the bonds would have to sold at 5% below par with the minus 2% being based on par. In that case the bond would have a net yield of plus 3%. That may sound crazy but it's no crazier than going to negative interest rates in the first place. When I think of it, the more i'm convinced that somebody over there has been smoking something illegal.
D. Rock,
One area that I have on the backburner in the event of sharp drop in the market is self-storage. It is probably the strongest sector in the market. It is noncyclical, recession resistant, the 4 principal companies - EXT, CUBE SSS, & PSA have pricing power and amply opportunity to grow by acquiring mom and pop operations in this fractionated industry. And there are barriers to entry which shield the 4 companies from price competition. In the even that we see indiscriminate selling in the market, they could drop to bargain price levels. I wrote an article on EXR in January of 2014 when the stock was out of favor in the market. It went from 42 to 90 and still trades there. If you want more information on the industry, start by reading that article.
tampat,
Thanks for the correction. Now that you mentioned it, I got it mixed up with another one of his that starts out, "When strange philosophers declare, their dismal doctrines of dispair, walk around your garden and behold, the constancy of marigold."
Guest was prolific and wrote many great poem. I think he and Alexander Pope were the best there ever were.
Hadi,
I'm tired of all the things you cite also. But I have to deal with the market extant and not one that I would prefer. But this too shall pass away, The world is not going to come to an end. Read Edgar Guest's poem called "Constancy." It starts out with these words: "Hello tulips don't you know, stocks today are very low." You should have no trouble finding it on the internet. Go for a long walk and you'll see that there are many things going on that normal.
relax,
I don't do anything with puts because (1) it takes too much time to follow and figure what kind of premium makes sense and (2) more importantly at $10 plus $2.50 per put as commission I think that is too expensive for me.
MrStoner,
We are living in a time period of discontinuity. And there is no telling how bad things can get. But all each of can do is get up in the morning and put one foot in front of the other and do what we can do. Worry is interest paid on trouble before it comes do. What ever is fated to happen will happen.
Thanks Eric, I appreciate that immensely. You may have noticed that I made reference to you and Lawrence Fuller and recommended that others follow the advice given in your articles.
Eric,
Good and timely article. You are probably right that the idea of buying should be put on the back-burner for now. But there may be a flight from fiat currencies in the not too distant future. If that happens, gold could be the place to be. Capital flight from Japan to U. S. treasuries is going on new. If Mario Draghi does something stupid European countries could be next.
Lawrence,
The Fed keeps tilting with windmills in the statements that the officials make. What they doing is based purely on wishful thinking and that undermines confidence in the institution. But maybe some of Fed officials belong in another kind of institution and I let you figure out which one it should be.
Lawrence,
Very well done. Especially the last paragraph which says it as well as rt could be said.
Trento,
If you read my article you should have noticed that I did just that when I estimated a price target for the SPY and also a time period of short- to longer-term time period. Such a time period was defined by me as being a couple of weeks to a couple of months. I'm sorry that such wasn't good enough to meet your expectations. Like Seeking Alpha says with every article it posts that if the reader disagrees with the article a contributor wrote, he should write his own article and show that he can do better. Have a nice day.
Adam,
Thanks for the comment. The more I think of what you wrote and what I see happening, Japan is in bad shape. I heard on Bloomberg this morning that with negative interest rates the government will not be able to fund its operations. With the aging population, the savings pool is diminishing. Insurance companies won't buy government bonds. And capital flight is going on as money in Japan is being shifted to U.S. Treasuries. But you know more about that than me. Have a good day.
brainleft,
Thanks for the comment. I am able to see things with some clarity because I get clearly summarized readings from the oscillator about which I can make educated guesses. Without such, I'd have to shoot from the hip and make uneducated guesses about what is going on in the market.
newbeach, I'm pleased to see that you too have an oscillator. I'll be interested in seeing how your reading pan out.
ron cabe,
Good reply. Ralph Waldo Emerson wrote an excellent essay on politics about 200 years ago. And he wrote, among many other things, that people have their ways of doing things and Mother Nature has its way of doing things. And when it's time for change Mother Nature will see that change will happen one way or another. His view dovetails with what you concluded.