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Tom Lindmark
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About a year ago, a company asked me to write a daily blog for them. I told them that I’d never read a blog and had absolutely no idea how to write one but sure, if you want to pay me for it, I’ll give it a shot. It was either my good or bad fortune to start at the beginning of the credit... More
My blog:
But Then What
  • Two Lost Decades
     This one has been making the rounds today. It's the sales history for a house in Palm Springs, CA. Further editorial content is not needed.DateEventPriceAppreciationSourceApr 30, 2009Sold$32,500-87.1%/yrPublic RecordsFeb 08, 2008Sold$399,479-8.3%/yrPublic RecordsSep 22, 2006Sold$450,00028.4%/yrPublic RecordsSep 20, 2005Sold$350,00063.3%/yrPublic RecordsJul 30, 2004Sold$200,00089.0%/yrPublic RecordsOct 06, 2003Sold$119,00024.3%/yrPublic RecordsOct 11, 2002Sold$96,000114.3%/yrPublic RecordsJun 28, 2001Sold$36,000-26.2%/yrPublic RecordsApr 16, 2001Sold$38,250--Public Records
    Jul 26 6:59 PM | Link | Comment!
  • Calpers Shows No Fear Of Risk

    I don't see any reason that this shouldn't work out well.

    Calpers, the giant California pension fund, is planning to make up some rather substantial losses by increasing its portfolio allocation to the investment sectors that were chiefly responsible for the losses. Got that?

    From the NYT:

    The fund, known as Calpers, lost nearly $60 billion in the financial markets last year. Though it has more than enough money to make its payments to retirees for many years, it has a serious long-term shortfall. Meanwhile, local governments in the state are pleading poverty and saying they cannot make the contributions that would be needed to shore it up.

    Those problems now rest largely on the slim shoulders of Joseph A. Dear, the fund’s new head of investments. He is not an investment seer by training, but he thinks he has the cure for what ails Calpers, or the California Public Employees’ Retirement System, the largest in the nation with $180 billion in assets.

    Mr. Dear wants to embrace some potentially high-risk investments in hopes of higher returns. He aims to pour billions more into beaten-down private equity and hedge funds. Junk bonds and California real estate also ride high on his list. And then there are timber, commodities and infrastructure.

    That’s right, he wants to load up on many of the very assets that have been responsible for the fund’s recent plunge. Calpers’s real estate portfolio has tumbled 35 percent, and its private equity holdings are down 31 percent. What is more, under Mr. Dear’s predecessor, Calpers had to sell stocks in a falling market last year to fulfill calls for cash from its private equity and real estate partnerships. That led to bigger losses in its stock portfolio.

    OK, to give the guy his due, it's not entirely crazy to put some money into really beaten down sectors. The economy will recover in some manner and there probably is an upside to them given the depressed prices that they now command.

    Still, it seems like a bet on the world returning to the status quo ante. Instead of hoping for a home run maybe they should think about restructuring their gold-plated pension plans to cut their future liability. Then the numbers would let them buy boring things like Treasuries and high quality equities.

    But I forget, this is California and they always rise from the ashes, don't they? 
    Jul 26 6:57 PM | Link | Comment!
  • The UPS View Of The Economy
     There are a couple of companies in this country that possess as much real time economic intelligence as any government agency. One I Walmart and the others are UPS and FedEx. You can save yourself a lot of time researching economic trends if you just listen to what they say and what kind of numbers they post.

    In that regard, UPS didn't exactly deliver the best news today. For the quarter UPS reported a profit of $445 million on revenues of $10.83 billion. That compares to a profit of $873 million on revenues of $13 billion for the same period last year. Yikes, those are ugly numbers but they're backward looking. So do things look better going forward?

    Well, not really. Here via Calculated Risk are the words the CEO used to open the conference call today:

    “On our last call we told you economic conditions for the second quarter would be slightly worse than the first and UPS performance would reflect those conditions. And that's what happened. The results we announced today are a clear indication of the tough economic environment. As you're aware, the rates of decline of some key economic indicators, like GDP and industrial production, have slowed. Other indicators, like manufacturing and service sector indices, are exhibiting signs of improvement. Most forecasters are saying that we may be at the bottom.Whether or not we're at the bottom is not the main issue; what is important is how long we remain here and what type of recovery we will have. Remember, all these indicators are still well into negative territory, illustrating the challenges that lie ahead. We will continue to manage the Company under the assumption that the economy will stay at this level until definitive signs of improvement materialize.

    That message was repeated several times in other comments. The company remains optimistic about the economy eventually improving but at this point in time doesn't see any indication that's happening. The company has reduced headcount and indicated that unless business picks up, further reductions are likely.

    Their message was carefully worded, but I think pretty clear that they don't see all that much improvement in the economy. Given that their business gives them as good a real time view of overall business activity as you're likely to find, their observations would seem to indicate an economy that hasn't recovered much at all yet.

    Jul 26 6:56 PM | Link | Comment!
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