JS, thanks for your kind words and support. I try to proceed on a logical basis, and I still think the various analyses I've published over the past several years are fundamentally sound.
There is still tremendous potential in the US, its economy, its businesses, and its markets. But the financialists and the politicians hand in glove create risk that can't really be quantified in any rational manner.
The best I can do right now is, VIX is in its lowest quartile, under 14.62. When it gets back up to its highest quartile, over 24.18, maybe there is enough fear in the market to get prices to where they need to be to compensate for the risk that's hiding out there in plain sight.
I think I leave put my horses out to pasture for a while, let them browse, give them some oats in their stall at night. I can see them now, the rolling meadow, the white fences, just like Kentucky bluegrass country.
Every once in a while I let them canter around the track, once or twice.
easyrob, I'm glad you would like to see more articles. I don't usually write about anything unless I have a position, plus there are already enough perma-bears hanging around preaching doom, no need to add my voice to their chorus.
Hopefully I can come up with something constructive, maybe some cherry-picking, try to pick up another 1% or 2% on small positions, opportunistic.
Blackstone (BX) will keep most of the $550M invested in SAC Capital with the hedge fund for another three months as the private-equity firm awaits developments in the government's insider-trading probe into SAC. Blackstone's decision came ahead of a quarterly deadline yesterday for SAC's clients to decide whether to keep their money in the hands of Steve Cohen, who had warned of withdrawals of up to $1B. [View news story]
Maybe Blackstone was able to get some inside info on how Steve is going to make out. They're awful close to the government.
The Justice Department's $5B lawsuit against S&P (MHP) over its mortgage-bond ratings may be weakened by inconsistency between the DOJ and the SEC. For example, the latter blamed the failure of AAA-rated Delphinus CDO 2007-1 on Mizuho Financial, and said the Japanese bank gave faulty information to S&P. Mizuho paid $127.5M to settle a lawsuit. The DOJ, though, puts blame on S&P. [View news story]
Easy. Co-conspirators. Magnetar (a heavy contributor to Obama's campaign) an additional co-conspirator, unindicted, like Paulson. The saga continues, and the guilty go unpunished.
Assured Guaranty: Resolution Of Uncertainties Should Continue To Improve Stock Price [View article]
CDS are insurance, and should be regulated as such, with a requirement of insurable interest for the buyer and adequate capital for the seller.
As the situation stands, most CDS are not supported by an insurable interest, and create moral hazard, similar to the situation that would prevail if it were possible for me to insure my neighbor's house and burn it down.
Further, the requirement of collateral on CDS contracts makes the seller a guarantor of market value, which destabilizes the system, as occurred with AIG.
How Congress Could Fix Its Budget Woes, Permanently [View article]
SoCalNative,
You don't need to resort to conspiracy theory to explain the connection, nor do you need to find someone along the lines of Professor Moriarty.
Economic thinking has been contaminated by Neoliberalism (which I call "Financialism"), to where there is nobody with any real power in the financial system who doesn't subscribe to the basic mode of thinking.
I've done a number of longish articles on the topic, perhaps the clearest statement of my point of view is here:
It's a closed system, everybody who's in the loop makes an awful lot of money, and a man tends to believe whatever puts bread on the table. Even more will he believe something that will buy him a house in the Hamptons. It works for them, right through the financial crisis to the present day. It just doesn't work for the the other 99%.
From their point of view, the Fed is doing the right thing, the banks have recovered and paid back to Treasury, it's too bad Dodd-Frank is muddying the waters, but if the Federal Government really wants to get the economy going they need to give the big banks free rein to do their thing and restore prosperity, just like it was in 2007. Nobody could have predicted that all those fraudulent mortgages were worthless. It was like a comet or a meteor, or an Act of God or the Common Enemy, nobody could have predicted it. Any subordinates who raised the topic wound up demoted, marginalized, and/or unemployed and ostrasized.
The point is, none of this money that is being created and handed out is reaching the people who make $7.25 per hour. Obama suggests raising the minimum wage to $9.00 per hour, which might help, but the people will have to work for it. Please tell me how Blankfein, overseeing the outfit that gave us the Fabulous Fabrice and Abacus, creates value for the real economy. While you're at it, explain how Dimon, who fathered the London Whale, lost $5.8 billion dollars, without doing anything for the man in the street, hat in hand, and jobless.
I am still as angry now as I was in 2008 and 2009. It's just that the public's attention has moved on and there is not going to be any corrective action. So I stopped writing that type of article, and have limited my left-wing political comments, in the interest of not wasting time and energy battling trolls.
I have spent 4 years of my retirement making back the losses caused by these financial fraudsters. You can read my articles and see the amount of work I did, if you care. None of them have served any time, or paid any fines. At this point I'm back where I should have been, and I'm in the process of taking my ball and heading for home.
They will cause another crisis, worse than the one before. And I'll be back, with plenty of dry powder.
How Congress Could Fix Its Budget Woes, Permanently [View article]
The author has correctly identified the problem. The Fed, which is not controlled by the Federal Government, but rather by big banks, serves its masters well. Big banks get cheap money, lend it to hedge funds as representatives of the rich who have too much money to begin with, and it is used to game the system, driving up the cost of commodities and destabilizing markets.
I'm not sure just printing the money and handing it out is the best answer. But I'm very sure that what we are permitting the Fed and its masters to do now is counterproductive and will cause more financial crises in the future. The middle class can't survive another financial crisis.
How Does DuPont's Balance Sheet Measure Up Against Competitors? [View article]
David,
I've been concerned that DD has quite a bit of pension cost in AOCI, discount rate and exected returns not unrealistic but they are borrowing money and GAAP earnings don't reflect pension costs.
How do they compare with their competitors on this item?
Investors Get A Second Bite At Aflac [View article]
berloe,
I'm not sure I understand your question. I paid $10.35 for the Jan 2014 call and received $1.85 for the Aug 52.5 call. The stock stood around $50.15 when I made the trade, so I paid 20 cents time premium for the long call and received $1.85 time premium for the short call.
The thinking is, the short position earns time premium a lot faster than the long position spends it, meanwhile, if you are patient the stock will eventually go up.
Assured Guaranty: Resolution Of Uncertainties Should Continue To Improve Stock Price [View article]
Tim,
It's possible that the bond insurance business model will evolve to where Moody's and S&P are irrelevant. After all, they created the model that assigned AAA ratings to anything that was insured by AAA bond insurers.
Then they sabotaged the business by giving out AAA ratings to RMBS and CDO's containing RMBS that were in point of fact junk and imploded within the year. S&P is being sued for fraud, by the government, and Moody's needs suing too.
The whole ediface rested on the credibility of S&P and Moody's, which is laughable, in retrospect, since both of them are untrustworthy, dishonest, and greedy. Their main defense against accountablility for their actions is absurd: they claim their opinions are protected under a constitutional privilege of freedom of speech.
The constitution can't be interpretted in ways that provide protection for fraud. It doesn't work that way.
Finally it will come down to, what will the market pay for bonds insured by MBIA and AGO? When they have collected from the fraudulent banks and credit rating agencies, while paying their claims in full, that will be their credibility.
Having someone protecting you from the fraudulent acts of banks and credit rating agencies is valuable - very valuable. The marketplace will recognize it, in due course.
Confirmation Bias, Your Investments, And The Seeking Alpha Counterpunch [View article]
Not really, I follow David Van Knapp and David Fish, and have contributed a number of articles on the strategy, primarily backtesting it against the S&P 500 or other investment strategies.
DGI is a viable strategy, with considerable strength in the area of reduced volatility and drawdowns. I recently converted to the faith, although I have yet to become perfected in orthodoxy.
Mostly the comments and discussions strike me as very earnest and civil, without a lot of contentious debate.
The only really strong objection to the method that I'm aware of is, it's too slow, you have to save a fair amount of money over a longish time frame to get to where you can retire on the dividend stream.
Confirmation Bias, Your Investments, And The Seeking Alpha Counterpunch [View article]
Ray,
Another similar idea is cognitive isolation. Retail investors may not have anyone in their immediate circle of acquaintences that cares to talk about stocks. My wife is pretty sick of the topic, that's for sure.
So by putting your best thinking out there for comment and criticism, you get feedback that improves the overall quality of your process, for stocks and maybe in other areas.
Wrapping It Up For 2013 [View article]
There is still tremendous potential in the US, its economy, its businesses, and its markets. But the financialists and the politicians hand in glove create risk that can't really be quantified in any rational manner.
The best I can do right now is, VIX is in its lowest quartile, under 14.62. When it gets back up to its highest quartile, over 24.18, maybe there is enough fear in the market to get prices to where they need to be to compensate for the risk that's hiding out there in plain sight.
Wrapping It Up For 2013 [View article]
Every once in a while I let them canter around the track, once or twice.
Wrapping It Up For 2013 [View article]
Hopefully I can come up with something constructive, maybe some cherry-picking, try to pick up another 1% or 2% on small positions, opportunistic.
Blackstone (BX) will keep most of the $550M invested in SAC Capital with the hedge fund for another three months as the private-equity firm awaits developments in the government's insider-trading probe into SAC. Blackstone's decision came ahead of a quarterly deadline yesterday for SAC's clients to decide whether to keep their money in the hands of Steve Cohen, who had warned of withdrawals of up to $1B. [View news story]
The Justice Department's $5B lawsuit against S&P (MHP) over its mortgage-bond ratings may be weakened by inconsistency between the DOJ and the SEC. For example, the latter blamed the failure of AAA-rated Delphinus CDO 2007-1 on Mizuho Financial, and said the Japanese bank gave faulty information to S&P. Mizuho paid $127.5M to settle a lawsuit. The DOJ, though, puts blame on S&P. [View news story]
How Congress Could Fix Its Budget Woes, Permanently [View article]
Assured Guaranty: Resolution Of Uncertainties Should Continue To Improve Stock Price [View article]
As the situation stands, most CDS are not supported by an insurable interest, and create moral hazard, similar to the situation that would prevail if it were possible for me to insure my neighbor's house and burn it down.
Further, the requirement of collateral on CDS contracts makes the seller a guarantor of market value, which destabilizes the system, as occurred with AIG.
How Congress Could Fix Its Budget Woes, Permanently [View article]
You don't need to resort to conspiracy theory to explain the connection, nor do you need to find someone along the lines of Professor Moriarty.
Economic thinking has been contaminated by Neoliberalism (which I call "Financialism"), to where there is nobody with any real power in the financial system who doesn't subscribe to the basic mode of thinking.
I've done a number of longish articles on the topic, perhaps the clearest statement of my point of view is here:
http://seekingalpha.co...
It's a closed system, everybody who's in the loop makes an awful lot of money, and a man tends to believe whatever puts bread on the table. Even more will he believe something that will buy him a house in the Hamptons. It works for them, right through the financial crisis to the present day. It just doesn't work for the the other 99%.
From their point of view, the Fed is doing the right thing, the banks have recovered and paid back to Treasury, it's too bad Dodd-Frank is muddying the waters, but if the Federal Government really wants to get the economy going they need to give the big banks free rein to do their thing and restore prosperity, just like it was in 2007. Nobody could have predicted that all those fraudulent mortgages were worthless. It was like a comet or a meteor, or an Act of God or the Common Enemy, nobody could have predicted it. Any subordinates who raised the topic wound up demoted, marginalized, and/or unemployed and ostrasized.
The point is, none of this money that is being created and handed out is reaching the people who make $7.25 per hour. Obama suggests raising the minimum wage to $9.00 per hour, which might help, but the people will have to work for it. Please tell me how Blankfein, overseeing the outfit that gave us the Fabulous Fabrice and Abacus, creates value for the real economy. While you're at it, explain how Dimon, who fathered the London Whale, lost $5.8 billion dollars, without doing anything for the man in the street, hat in hand, and jobless.
I am still as angry now as I was in 2008 and 2009. It's just that the public's attention has moved on and there is not going to be any corrective action. So I stopped writing that type of article, and have limited my left-wing political comments, in the interest of not wasting time and energy battling trolls.
I have spent 4 years of my retirement making back the losses caused by these financial fraudsters. You can read my articles and see the amount of work I did, if you care. None of them have served any time, or paid any fines. At this point I'm back where I should have been, and I'm in the process of taking my ball and heading for home.
They will cause another crisis, worse than the one before. And I'll be back, with plenty of dry powder.
How Congress Could Fix Its Budget Woes, Permanently [View article]
I'm not sure just printing the money and handing it out is the best answer. But I'm very sure that what we are permitting the Fed and its masters to do now is counterproductive and will cause more financial crises in the future. The middle class can't survive another financial crisis.
Time for new answers.
How Does DuPont's Balance Sheet Measure Up Against Competitors? [View article]
I've been concerned that DD has quite a bit of pension cost in AOCI, discount rate and exected returns not unrealistic but they are borrowing money and GAAP earnings don't reflect pension costs.
How do they compare with their competitors on this item?
Investors Get A Second Bite At Aflac [View article]
I'm not sure I understand your question. I paid $10.35 for the Jan 2014 call and received $1.85 for the Aug 52.5 call. The stock stood around $50.15 when I made the trade, so I paid 20 cents time premium for the long call and received $1.85 time premium for the short call.
The thinking is, the short position earns time premium a lot faster than the long position spends it, meanwhile, if you are patient the stock will eventually go up.
Assured Guaranty: Resolution Of Uncertainties Should Continue To Improve Stock Price [View article]
It's possible that the bond insurance business model will evolve to where Moody's and S&P are irrelevant. After all, they created the model that assigned AAA ratings to anything that was insured by AAA bond insurers.
Then they sabotaged the business by giving out AAA ratings to RMBS and CDO's containing RMBS that were in point of fact junk and imploded within the year. S&P is being sued for fraud, by the government, and Moody's needs suing too.
The whole ediface rested on the credibility of S&P and Moody's, which is laughable, in retrospect, since both of them are untrustworthy, dishonest, and greedy. Their main defense against accountablility for their actions is absurd: they claim their opinions are protected under a constitutional privilege of freedom of speech.
The constitution can't be interpretted in ways that provide protection for fraud. It doesn't work that way.
Finally it will come down to, what will the market pay for bonds insured by MBIA and AGO? When they have collected from the fraudulent banks and credit rating agencies, while paying their claims in full, that will be their credibility.
Having someone protecting you from the fraudulent acts of banks and credit rating agencies is valuable - very valuable. The marketplace will recognize it, in due course.
Confirmation Bias, Your Investments, And The Seeking Alpha Counterpunch [View article]
DGI is a viable strategy, with considerable strength in the area of reduced volatility and drawdowns. I recently converted to the faith, although I have yet to become perfected in orthodoxy.
Mostly the comments and discussions strike me as very earnest and civil, without a lot of contentious debate.
The only really strong objection to the method that I'm aware of is, it's too slow, you have to save a fair amount of money over a longish time frame to get to where you can retire on the dividend stream.
Confirmation Bias, Your Investments, And The Seeking Alpha Counterpunch [View article]
Confirmation Bias, Your Investments, And The Seeking Alpha Counterpunch [View article]
Another similar idea is cognitive isolation. Retail investors may not have anyone in their immediate circle of acquaintences that cares to talk about stocks. My wife is pretty sick of the topic, that's for sure.
So by putting your best thinking out there for comment and criticism, you get feedback that improves the overall quality of your process, for stocks and maybe in other areas.
Not to mention, it's fun to talk shop.