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I could put on this bio my education, work experience, investment strategy, and a nice thin (if I can find one) picture of me in a suit looking *smart*. Sorry but that's not my intent here. Sure I invest, help family make financial decisions, and make a ton of mistakes along the way. But my time... More
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Interesting Times For All Commodities And Investments!! CHAPTER 4......
  • Interesting Times For All Commodities And Investments!! Chapter 8.......... 160 comments

    Where do commodities go from here, are stocks and bonds still sound investments? Oil. Etf's Physical metals..

    Folks.. we are growing and posters like it. If you are new to investing then this site is for you.

    I am going to be the first one to admit that I haven't a clue when or if Gold and Silver will ever take off in price. I expect they will though. Additionally I don't see much coverage or articles pertaining to the other commodities. So I would like to start up a blog where every commodity, and every investment is on the table for discussion. Even political questions. I only ask that you be courteous!!

    Someone posted the difference between being smart, foolish, and a moron. Well I have been all of the above and I will "man up" and admit it! However I came away from those experiences with both battle scars and knowledge.

    For years I have been reading basically any day now Gold and Silver will explode. Yet somehow the can gets kicked down the road and I live to learn another lesson. Then Sprott's ETF'S are talked about as being safer then others. (PSLV) is the silver ETF.

    With all the QE'S basically not creating any new jobs what will be the consequences in the future?. Will we be "CYPRUSED "?, are we in a serious stock market bubble? Obviously we read daily about these concerns but what about other commodities? Here is where most of us are uninformed and relish an education.

    Stocks are fine to discuss as well. All of us know that commodities should only be a % of your portfolio. I owned (PSEC) and liked the dividend. Others may not ! So please feel free to entertain your picks and why!

    REE'S have been an interest for a few of us over the last couple of years. I had exposure to Lynas (OTCPK:LYSCF). Some posters might have questions about this group as well.

    If you disagree with a post please bring proof and display your argument. If you agree with a post, find one interesting, or have questions please feel free to respond. We must remember were all in this together. So if you want to talk (GLD) or (SLV) that is fine.

    Now if some have an opinion on Copper, Zinc, Palladium, etc. Do not hesitate to post that. Most of us might not understand the post but I am sure well be open to learning. Lumber might interest someone and I would like to learn why I should invest in it. PLEASE bracket any symbol you use so that I can include that in the topic forum. It also allows a reader to click on it and get some data as well.

    My part time job is a college and high school official so I can sit here and referee all day long. I honestly hope that ALL will be professional with their comments. So lets see who comes on board. Looking forward to what can become a nicely knit group of diversified investors.

    I have invited a few Authors whose work I admire to bring their expertise to the forum here as well. Tom, Eric, Hebba, Doug, Chris, Focal Point, Tack, to name a few in no particular order. I am sure they will drop in once in a while to voice their opinions. Please feel free to ask your favorite Authors to join in the discussion as well.

    These are highly recommended people that I suggest you follow as well. I have learned a ton from them and find their work both challenging and engaging. Two areas that I hope inspire people who normally don't post to now feel free to do so !!

    Now I also feel compelled to encourage the use of the like button. It is human nature that once someone posts and see the like button add up they will feel they made a valid point. Upon that feeling they will post again! So if you do like what someone posted, either a question or an answer PLEASE use it ! It might help our core grow exponentially as well.

    As you see I have stopped adding any new symbols as they were growing way too fast for me to keep up !!

    We are living in some very INTERESTING TIMES !!

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.


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  • Author’s reply » A brutal sell-off in Japan (previous) weighs heavily on Asian markets as stocks fall 2.8% in...
    Wednesday, June 12, 10:39 PM ET
    A brutal sell-off in Japan (previous) weighs heavily on Asian markets as stocks fall 2.8% in Hong Kong, 3% in Shanghai, and 1% in Seoul and Sidney.


    Is this going to hit us in the morning? I say yes!!!
    12 Jun 2013, 11:28 PM Reply Like
  • I cheated again :) futures turned around after retail sales numbers, but overall sentiment has now changed , we could be in for more volatility and further downside probing. Good time to step back, watch and wait.
    13 Jun 2013, 09:30 AM Reply Like
  • IT & FG:


    The big numbers this morning weren't unemployment or retail sales, but the import/export price numbers. They were decidedly red and far below expectations. This, not the other two, was the big catalyst for today's action because it put a stake through the heart of any realistic notion that the economy is facing any inflationary scenario or serious upward pressure on interest rates. For a refreshing change, data was more powerful than hysteria. That's why beaten-down yield issues went to the moon today, and all else followed along merrily.


    There may be more volatility, merely because people energized to nervousness require more time to settle down, but, for any thinking person, near-term rate phobia should be dead as a door nail.
    13 Jun 2013, 06:09 PM Reply Like
  • Tack,


    Excellent analysis, your call on the 'rate hysteria selling" in the last few days was perfect..


    Now as u stated " for any thinking person, near-term rate phobia should be dead as a door nail."


    Let us give thanks to the non thinking "fear" traders for presenting investors with opportunity.
    13 Jun 2013, 06:23 PM Reply Like
  • @Fear&Greed & Tack


    Okay so I'm not a thinking person :). Actually, I'm new enough that I can't follow what you've both said. Only that it's important. I'm wondering if either of you are thinking of authoring an article to lay all this out? Or have already? I'm sure I'm not the only person who'd be interested.


    Questions in my mind:
    - What are import/export numbers (has to do with forex or actual amount of importing & exporting)? By US?
    - And how does being red & below expectations make less pressure upward on interest rates or inflation? This is totally beyond my scope of knowledge.
    - Why was there worry about rates last fews days in particular anyway? Because of QE tapering hints? If they buy less bonds, rates go up (supply & demand)?
    - No rate increases make bonds still safe (from declines for being at lower rates as rates increase). How does that make equities go up?


    And the big topic, the future implication:
    - Does that mean market will be more "lighthearted" & dancing upward more readily?
    - What about other factors, like hints of QE tapering. And good (or bad is good) economic data?
    - So we're back to investing in equities sincebecause ZIRP continues?


    13 Jun 2013, 09:05 PM Reply Like
  • curls:


    I don't have time for too lengthy a discourse on this, presently, so permit me the capsule version.


    The market had a hysterical episode, fearing that rising rates were here and going to compress spreads of all businesses that borrow short term and lend long term. This was a misplaced fear for a raft of reasons: 1) in the early going, when short-term rates rise, long-term rates usually rise even faster, increasing spreads; 2) QE is flowing to excess reserves, so its reduction would not actually decrease the money supply or curtail lending; 3) rates can only rise through increased demand.


    The foregoing was being ignored by the market, which first started selling bonds and yield issues, then progressed to full-scale panic selling every kind of issue, apparently thinking the entire economy was going to fail. In particular, this made no sense because if the economy were weak, there would be no demand to increase interest rates, ergo, bonds and yield investments would be very attractive. And, if there were demand, causing pressure on prices (inflation) and lending rates, then, that would be a sign that the economy was expanding, not contracting, and that would be bullish, not bearish, for equities.


    In any case, this morning's price data made in clear that there exists no pressure on prices; therefore, there is inadequate demand to get all excited about either inflation or rate pressures. Therefore, in a nut shell, the whole recent panic was a waste of time. Apparently, the market seemed to come to its senses with publication of this data this morning.


    Now, none of this price data says the economy is about to increase or to decline, but it does say the rate hysteria was silly. The other data today, retail and unemployment, appears to suggest the economy remains on a positive track.


    Now, we should be turning attention to the impending Q2 reports, not wild nightmares about interest rates that have no bearing on reality.


    I hope this little dissertation helps.
    14 Jun 2013, 12:54 AM Reply Like
  • curls,


    Not much I can add to Tack's explanation of the recent data points that you questioned. Excellent details.


    I will just throw out some general statements regarding using these data points.


    I never draw any conclusions from a single data point. One blip up or down doesn't make a trend. One data point is usually just "noise" for the media types to dwell on.


    I'll take a series of different data points in concert to come to some conclusions regarding the specifics about a company, sector or the general state of the economy. Above all I try to avoid the "noise" and the associated emotion.. 


    If you are going to concentrate on being a short term trader, I would suggest getting proficient at reading charts. The only way to measure supply demand in a given time frame. It's a skill, I've met people that can sit down & in a week start to produce results, and then there are those that have literally spent a lifetime and haven't figured it out.
    There are no magic formulas.


    As a long term investor the data points will help you come up with a macro view of the markets and how and where you need to allocate
    funds. Then deploy the charts to assist in developing entry and possible exit points.


    Just an additional .02
    14 Jun 2013, 03:09 PM Reply Like
  • Thank you so much Tack & F&G! That does help elucidate it all.




    From Tack:


    I'm still confused about "In any case, this morning's price data made in clear that there exists no pressure on prices; therefore, there is inadequate demand to get all excited about either inflation or rate pressures."


    Which prices? US exports to imports ratio stayed the same? Stable prices would limit inflation. Is it inflation / price increases that cause rates to go up? I'd expect it's supply & demand. So increased demand to supply would increase rates & inflation. is it that lack of price increases *indicates* demand to supply is stable (not is a cause of whether rates & inflation increase)? I think I was missing a step there - did I fill it in correctly?


    The import/export numbers then weren't about forex, is what I gather. ?


    I thought all the downward fuss was about QE fears. Particularly after BOJ had the "gaul :)" to reduce it's program. What indicated it was about rate fears? Did I miss a news event?


    Tack: "ld be no demand to increase interest rates, ergo, bonds and yield investments would be very attractive. And, if there were demand, causing pressure on prices (inflation) and lending rates, then,... the economy was expanding,...that would be bullish... for equities."


    I find that very clearly elucidating. Also ironically funny.




    From F&G:


    F&G: "One blip up or down doesn't make a trend."
    Very true, but apparently the markets do sometimes act on a blip?


    F&G: "If you are going to concentrate on being a short term trader, I would suggest getting proficient at reading charts. The only way to measure supply demand in a given time frame. It's a skill, I've met people that can sit down & in a week start to produce results, and then there are those that have literally spent a lifetime and haven't figured it out."


    That's very encouraging that it can work. Also, I've been thinking I need to learn the details. Then I'll do some paper & see if it works for me.


    F&G: "There are no magic formulas. "
    Wouldn't chart reading be a magic formula. Not remotely 100% effective, but more eye-opening then merely staring at the chart & guessing.


    F&G: "As a long term investor the data points will help you come up with a macro view of the markets and how and where you need to allocate funds. Then deploy the charts to assist in developing entry and possible exit points."


    Nice summary of what I really need to put my time into... something worded well for me to keep my eye on the ball.


    Thank you both for taking time to explain!!
    14 Jun 2013, 04:57 PM Reply Like
  • Curls,


    Yes as you have seen the market does react to "blips"
    Learning the technicals and looking at charts, then paper trading is one way to advance your skills.


    Guess what I was trying to say about "no magic formula" is that even successful chart reading is not 100 % foolproof as you stated, however it can be viewed by some as putting the Odds in your favor.


    It all comes down to a lot of time , effort, and it helps to have some luck. :)


    One of my favorite slogans -- "Luck is preparation meeting opportunity"--
    14 Jun 2013, 05:54 PM Reply Like
  • curls:


    1) Yesterday's import and export prices were substantially below expectations and well in the red. This suggests deflationary pressure, not inflationary. One gets inflationary pressures when demand is expanding faster than supply. Increasing demand increases loan demand and price pressures, both of which elevate rates. Since, we're not seeing that, there's no reason to expect any sustainable uptrend in rates and, ergo, the panicky sell-off of rate-sensitive issues has been unwarranted.


    2) None of this is about forex, per se, except that a strengthening dollar is usually another deflationary sign, again suggesting no rate pressures.


    3) The fuss about QE is that the "cw" is that reduced or eliminated QE would result in higher rates, but, in fact, the "cw" is all wrong because rates get increased when demand swells versus supply, and we're not seeing demand pressures, as shown by prices, and reducing QE has no adverse effect on the supply side, if the QE has all been rolling into excess reserves.
    14 Jun 2013, 06:08 PM Reply Like
  • TACK: Do you have an opinion on what has caused the slide in the Dollar Index since 5/17/12 when it closed at 84.25. Today it was down once again, indicating USD weakness, against a basket of 6 currencies weighted in the EURO.



    You can also find this one at Bloomberg:


    This take was interesting:

    14 Jun 2013, 07:07 PM Reply Like
  • south:


    It is ironic that the dollar slide coincided almost identically with the slide in many yield-related issues, which also commenced in mid-May. Usually the dollar rise with higher rates, so, who knows? I just write it off to more irrationality that accompanied the rates fears.


    Frankly, I don't pay much attention to the dollar.
    14 Jun 2013, 10:31 PM Reply Like
  • Tack: I have to pay attention. I own a lot of assets priced in foreign currencies. Back in January, just an example, I sold 100 of AUNZ, an ETF that owns primarily Australian bonds, after making this comment:


    "I am somewhat concerned about a potential correction in the Australian Dollar-AUD-that could easily wipe out the meagre interest payments made by this fund, currently less than 3%." One AUD would then buy over $1.05 USDs and not will buy .9578. With the double whammy from the AUD currency decline and the rise in bond prices, the subsequent decline in AUNZ just over the past few weeks has wiped out almost three years in interest payments.


    AUD/USD (AUDUSD=X);range=1y;comp...


    One way that I deal with that currency risk is to simply to wait for an opportune time to buy the foreign currency and then use the foreign currency bought opportunistically when the USD was strong to buy stocks and bonds in the host country, which is what I have been doing in Canada for years now, mostly buying Canadian ETFs and some stocks on the Toronto exchange with Canadian Dollars. So I am getting ready to take my show to Australia and become a long term holder of AUDs.


    Australia Government Debt to GDP:


    U.S. Debt to GDP
    14 Jun 2013, 10:52 PM Reply Like
  • south:


    I own a lot of foreign positions, too, especially in Europe, presently. However, as here, I use valuation and yield criteria separate and aside from Forex considerations, when making those buys and sales. Attempting to judge short-term Forex moves would turn my longer-term value investments into short-term trading speculation, and that I choose to avoid.


    Another reason I avoid such speculation is that the entities I usually hold (e.g., SAN, ING, TEF, TOT, etc.) are global in nature themselves, so it's impossible to speculate on the effects of myriad currency changes on their combined businesses.


    I can see how Forex would apply to a low-yielding single-currency bond fund, but such an entity would never be found in my portfolio.
    15 Jun 2013, 06:44 AM Reply Like
  • Tack: I will use periods of dollar strength to time my purchases of foreign stocks or bonds, particularly when combined with a dive in the share price, which just seems appropriate to me. I do not understand what you are saying in that regard.


    The foreign currency risk is priced into the stock fluctuations irrespective of whether you buy an ADR using USDs or the ordinary shares in the foreign market priced in Euros, Swiss Francs, Canadian or Australian Dollars or any other foreign currency.


    So you are not escaping currency risk in buying ADRs of ING or SAN. The ADR price will reflect the price of the ING ordinary shares priced in Euros when converted back to USDs whenever you buy or sell that security.


    I discuss that very fact whenever I purchase a foreign security, either in ADR form or converting my USDs to buy the shares on a foreign stock exchange.


    One of my posts that discuss how currency fluctuations will impact stock returns is this one:


    International Trading and Currency Risks


    15 Jun 2013, 09:01 AM Reply Like
  • south:


    I didn't say anything about ADR's vs, local buys, just that I don't try to guess currency moves in looking for and making undervalued buys. I make that assessment on their own fundamentals.


    When companies have massive global exposure in multiple currencies it's impossible to calculate what the change in exchange rates for myriad currencies will do to the whole, bot their revenues and earnings and how they'll be priced, so I don't try to add currency hedges to investments. For global companies it's far more complicated than merely looking at euros and dollars.


    Also, because my holding periods tend to be long (>1 year), it's also difficult, if not impossible, to calculate forward exchange rates. To me, it's simply like market timing in another form.


    That said, I can see how a trader with a shorter horizon and dealing in single-currency issues would need to consider likely short-term currency moves.
    15 Jun 2013, 09:12 AM Reply Like
  • Tack: Your stock price is determined to some extent, perhaps significantly, by currency fluctuations. The recent significant decline in the AUD/USD exchange rate, for example, makes Australian stocks a better option now than earlier this year for an investor with a long term time horizon, either purchasing the ADR using USDs on a U.S. exchange or converting my USDs into AUD's now and buying the shares in Sydney.


    And, Australian stocks have declined recently, making it even better for a USD investor.


    I would suggest reading at least my previously cited post before commenting again.
    15 Jun 2013, 09:18 AM Reply Like
  • south:


    It doesn't have anything to do with reading or understanding; it's simply that we have different views on the matter.


    I make value judgments based on a company's performance and its security price independent of currency speculation. Let me cite a hypothetical example, as to why:


    If Company A is not undervalued, based on its own fundamentals, and therefore, I expect no upward reversion to some normative value, and I buy it's shares, merely because they are priced cheaper in dollars, then, in fact, I am making an almost pure currency speculation because what that trade says is that one expects to make money because the dollar is high and the other currency is low, and since one doesn't expect value change based on the company's own internals, all of the gain, if any is to be achieved, must lie in future reverse changes in exchange rates.


    You cite Aussie stocks being a good buy because the exchange rate improved. To me, this says nothing about whether the stocks themselves would be good values. I hold lots of European issues because I believe them undervalued, as against their own performance, even though the euro has remained at relatively high values.


    Currency hedging is simply not a game I play. And, as I hold a globally diversified portfolio or companies that are also globally diversified, I have found that it all balances out on a currency basis, leaving me free to focus on fundamentals.


    All your hedging strategies, whether you realize it or not, merely make you a speculator in currency moves, no matter in which currency you choose to play. It's wholly independent of what one expects the underlying investment to do unless such investment is a narrow issue, like government bonds, that don't have operational performance.


    You like what you do, and I am satisfied with what I do. No problem.
    15 Jun 2013, 09:38 AM Reply Like
  • >south-


    Re: Trading in foreign currencies


    Do you have actual accounts in Canada and Australia? I wasn't clear on that. I can see where I would like to be holding Australian or Canadian currency but wouldn't know how to have the currency and use it to purchase a stock in that country.


    I have purchased on the Toronto exchange with Fidelity but pay a heavy commission. Could you kindly go through the mechanics?




    Windwood Trader
    15 Jun 2013, 09:47 AM Reply Like
  • Tack: I did not say Aussie stocks were a good buy independent of valuation. I said something different. I do not have time to continue this discussion since I am way behind in writing my weekly blog that is due for publication today. So I can not reply to anyone's comments here or anywhere else until tomorrow after I finish up here.


    I am saying that using the strength of the USD to buy a security priced in a depreciating currency when that stock has significantly declined in value, and presents a compelling investment case, is how an investor can maximize their total returns in foreign investing either as a short term trader or a long term one. I am both depending on the stock.


    Anyone interested in this topic can be the foregoing linked post and a few other posts may be relevant to others:


    Strong U.S. Dollar + Weak Market=Time to Start Looking Overseas


    For those who are interested in learning about this approach to foreign investing, I would also recommend reading several posts where I apply those three conditions to buying a particular foreign stock: valuation, strength of USD against the relevant foreign currency and a decline in the ordinary share price.


    I will just drag and drop a discussion about AXA, a French company here, from a post written in July 2010. Note the links provided in that discussion will not be transferred so a reader will actually have to go to the post to follow a link:


    3. Bought 100 AXA Financial ADR at $14.69 (AXAHY)(see Disclaimer): AXA is a large insurance company based in France. Its host market is the Paris stock exchange, where the ordinary shares trade in Euros. CS.PA: Summary for AXA The shares closed yesterday morning at €12.31. AXA ADRs use to trade on the NYSE but the company volutarily delisted them. The AXA ADR now trades on the pink sheet exchange under the symbol AXAHY. One ADR equals one ordinary share. When I placed the order yesterday morning, the ADR had fallen in price, the Euro had risen in value against the USD by around 3/4%, and the ordinary shares trading in Europe were up about 1.9%. This created a small advantage to buy the AXA ADR at a more favorable price than the one then prevailing on the Paris exchange. Some would call this arbitrage, but I am not playing with enough money to arbitrage anything. I was considering buying AXA, and I saw a brief opportunity to buy it at a slightly better price.


    I have been using 11/25/2009 as the date to compare ordinary shares priced in Euros with U.S. exchange traded ADRs for European companies. This was the day the EURO peaked against the USD. AXA was then trading at €16.91. AXA Share Price Chart | CS.PA And that represented a decline from a €19.69 share price on 10/15/2009. Measured just from the €16.91 price from 11/25, the ordinary shares had declined 27.2% in local currency terms to the close yesterday of €12.31. For a security that I have some interest in buying based on the long term fundamentals, this decline interests me.


    The decline in the ADR has been more severe during this same time period falling from USD 25.92 on 11/25 to $14.69, my entry point from yesterday. AXA SA ADR Share Price Chart | AXAHY.PK This is a 43.33% decline. The additional decline is due to the fall in the Euro. Of course, I still face the risk of further declines in the currency. {for anyone interested, I can loosely track these pricing issues by setting up a Yahoo Finance portfolio. I use the currency ETFs as surrogates for the exchange rate (FXF, FXE, FXC, FXA), the primary symbol for the exchange where the foreign firms shares are traded, and then the U.S. ADR price. I sometimes have to check the pink sheet price directly rather than using the YF quotes}


    The price of AXA has already been crushed particularly in USD terms. If it continues to fall, I do not have a problem holding it.


    I have been following AXA for a long time. This does not make me an expert of course, but it does cut down the time needed to do research before rearching a comfort level sufficient to make a small purchase. Morningstar has one of the few analyst reports available to me, and this service rates it four stars with a fair value at $33 currently. Dividends are paid annually, generally based on a 40 to 50% payout Individual Shareholders/Dividends. The dividend for 2010 has already been paid but sometimes there is a special dividend later in the year. P/B is around .6 and P/S is approximately .2. The PDF version of its annual report, which is over 500 pages, is linked at this page at the AXA web site: Annual Reports. Unless otherwise noted, all amounts are expressed in Euros in this report. AXA is shown to have have had an E.P.S. of 1.51 in 2009 on 90 billion in revenues. Shareholders equity per share was shown at 20.4 per share as of the end of 2009.


    S & P also has an analyst report dated 5/19/2010. Its rating is 3 stars with a 20 USD target on the ADR shares.
    S & P estimates USD earnings of $2.13 in 2010 rising to $2.36 in 2011. If that occurs, the stock is cheap based on a P/E multiple of just 6.22 on the 2011 estimate at a $14.69 price.

    15 Jun 2013, 10:32 AM Reply Like
  • Windwood: I use Fidelity and pay that $19CAD commission.


    When I want to buy something, I am not that particular on buying on a Monday or a week from now or next month, once I have my entry price range established. So, if possible, I will simply wait for a day that the security is falling in price to account for that commission which has been easy to do for Canadian securities recently.


    I understand that TD Ameritrade has a better commission rate for its customers for the purchase of Canadian securities. While I have a significant position in Canadian securities at Fidelity, I may look around for another broker before starting my AUD or Swiss Franc buying campaign.


    I am diversifying into assets priced in certain foreign currencies given my long term views about the USD and the comparative fiscal responsibility level of our government compared to a few others like Australia. So once I make the move into the foreign currency at an opportune time hopefully, I will use the foreign currency so bought to buy dividend or interest paying securities on the foreign exchange that will pay me in that foreign currency, thereby increasing my stash over time without having to do any further currency conversions and paying a fee for that privilege. If there is a time when 1 CAD buys $1.25 USD, I may consider converting some of my CADs back into USDs.


    My largest CAD positions are in Canadian government and investment grade corporate bonds.


    For example, I own 700 shares of a Canadian ETF that uses a ladder approach to buying 1 to 5 year Canadian government bonds and has a low expense ratio.


    Sponsor's website:


    CLF - 1-5 Year Laddered Government Bond Index Fund



    I have bought individual Canadian energy and REIT stocks and will occasionally speculate on special situations such as a 600 share purchase of Opta Minerals:


    Bought 600 of OPM:CA at $2.65 CADs-Toronto


    If someone does not want to fool with exchanging USDs into a foreign currency and buying on a foreign exchange, my points also apply to buying foreign securities in ADR form. Many investors do not realize that the currency issue still applies when buying the ADR using USDs.


    If someone wants to avoid the actual currency conversion and wants to avoid picking the individual ADR too, then a security like EWA may be a security to use which I have owned in the past.


    Sponsor's Webpage:


    There is an article discussing Australia in this week's Barrons:

    15 Jun 2013, 10:47 AM Reply Like
  • south-


    OK, you buy CAD and hold say $10,000 CAD.


    Now you buy a Canadian stock for $7,000.


    How do you tell Fidelity (my broker also) that you want to pay from your CAD holdings? Or is it just an option at the time of purchase?


    How do proceeds get into the CAD holdings?




    Windwood Trader
    15 Jun 2013, 06:07 PM Reply Like
  • Windwood:


    (1) If you do not own CADs when purchasing that Toronto listed security, then Fidelity will automatically debit your MM account holding USDs when the order is filled, covert those USDs into CADs to settle the trade, and charge you an exchange fee built into the conversion price. You will receive the exchange rate at the time of purchase whatever that might be.


    Last Friday would be a better time to exchange USDs into CADs than say July 18, 2011. Last Friday, my USD could buy C1.0173, whereas on 7/18/11, that USD would buy only C$.9438 Buying less of that foreign currency with your USDs is not the object of this exercise. You want to buy as many CADs as you can with each USD. OBJECT: MORE BANG FOR THE BUCK.


    So when you do a currency exchange based on whatever the rate is at the time of your purchase, you may be diluting the value of your USDs at an unfavorable exchange rate. So I will look at a chart and pick my spots for the exchange and then use USDs to buy CADs even if I do not want to buy a security.


    USD/CAD (USDCAD=X);range=2008061...


    So in this chart, you do not want to be a buyer for sure when the number is below 1. The most optimal time to be a buyer was in late 2008 and early 2009 when you could buy over C1.2 for 1 USD peaking at over 1.28 to 1.


    2. If you already own CADs, then you can elect to settle the transaction out of your existing CAD stash, which is what I do. If you do not have enough CADs, then you are back to settling the trade with USDs that Fidelity will automatically convert into CADS when the order is executed with the conversion rate determined at that moment in time adjusted for Fidelity's exchange fee


    When you are at the order box, you have to choose whether you want to settle in CADs or another currency.


    See Order Box at How Do I buy..


    You can not enter the order without selecting the settlement currency. Since the trade has to ultimately be settled in CADs, you will see a warning from Fidelity after selecting settlement in USDs that your USDs will have to be converted into CADs. If you select CADs and have enough, then your CAD stash will be debited by the amount of the purchase.


    My CAD stash builds up every month since most of my Canadian securities pay monthly. As I recall all of the REITS do as do all of my stock and bond Canadian ETFs.


    There are several providers of Canadian ETFs which you may want to look at, including Vanguard Canada


    Ishares Canada:


    BMO Canada


    Vanguard Canada:


    I also own 200 shares of a Canadian CEF that is selling at a very large discount to its net asset value:



    Current NAV Per Share: C$21.55
    Market Price 6/14/13: C$15.68
    Discount: -27.24%


    Fees for the foreign currency exchange are 1% of the principal amount for less than $100,000, which fee is built into the conversion price.



    I see that I will have to find another broker for Australia. The Fidelity commission is A$32 which is way too much for me.
    15 Jun 2013, 07:14 PM Reply Like
  • Author’s reply » 10:20 PM Stocks plunge in Tokyo as the Nikkei (EWJ, DXJ) tumbles 5.6% touching a two-month low of 12,543. The USD/JPY slides 1.4% at last check to ¥94.69 (FXY).


    WOW. BOJ really screwed this up. Shows you how easy it can happen!!
    12 Jun 2013, 11:35 PM Reply Like
  • IT, sorry to read about your accident on the previous blog.


    You're right, tomorrow is going to be volatile.


    I'm not buying the theory that whenever the market goes down, money on the sidelines comes in. Over the next month or 2 it's going to be very volatile. The only thing we know for sure is that we can't predict anything for sure!


    Thank you for this blog, I'm learning a lot from everyone here.
    13 Jun 2013, 12:30 AM Reply Like
  • Author’s reply » @BSF


    I am sure we will learn from you as well. I hope you stay with us !!


    Football is closer then we think! lol


    The thanks goes out to all of you for making this possible. It is amazing how well it is working out.


    13 Jun 2013, 01:14 AM Reply Like
  • panic selling offers great opportunity! what has changed in the last two weeks, other than headline driven hysteria?!?!


    maintain and add to positions in long standing producing companies, and seek value in oversold stock. Friday should produce nice buying opportunities.


    WFC, CY, MS, AIG, NSC, LTD, EBAY just to name a few.
    13 Jun 2013, 12:35 AM Reply Like
  • Author’s reply » @GAP




    I also feel that nothing fundamentally changed. If you can do me a favor in the future just bracket stocks your interested in as you then can click on them and see info.


    Looking forward to you posting !!


    (WFC) (CY) (MS) (AIG)(NSC)(LTD)(EBAY)
    13 Jun 2013, 09:42 AM Reply Like
  • @Gap123


    Have you gotten into any of those positions as you wanted to in these last up/down days?
    14 Jun 2013, 05:01 PM Reply Like
  • I'm still expecting it to go down more. It's not time to buy yet imho. I'll wait till after June 19th to see the mood.
    13 Jun 2013, 01:35 AM Reply Like
  • curls,


    I agree with you, too early to buy, much more downside available.
    Next weeks Fed meeting should be interesting. If markets are tumbling I wonder how the Fed will react. My guess is they downplay the talk about 'tapering' and reinforce the QE activity to try and stabilize things.
    13 Jun 2013, 06:41 AM Reply Like
  • curls


    today is the 13 my lucky number
    13 Jun 2013, 07:27 AM Reply Like
  • Futures were slightly negative 9am, now 9:30 positive. Might be an up day?


    @Rin - can some of that luck rub off on me?


    @ Gap123
    Are you following those symbols? What's your favorites?


    @ Tampat & QE
    I don't know? I think they're being more straightforward than not. Their mandate isn't the market, it's the economy. So I don't think down market will drive them. Rate changes & unemployment & inflation will. There's been hawkish announcements from Greenberg & whatwashisname... those are good indicators of what they want the market to know...
    13 Jun 2013, 09:30 AM Reply Like
  • IT,


    Actually, I think the market is part of the mandate. Its part of the creating the wealth effect theory, if the markets rise people feel like they have more money and will spend more which will help the economy. I think a down market does influence commentary from officials.
    The tapering talk may have, in part, been introduced to slow the market down a bit, to prevent a blowoff top.
    13 Jun 2013, 11:08 AM Reply Like
  • Author’s reply » @TAMPAT


    I agree with you on this. However I try to bring information to this format. So I will ask this of ALL. If this is correct how does it affect your investing strategy??


    I have my opinion but like to hear others !!
    13 Jun 2013, 11:26 AM Reply Like
  • Tampat,


    Fully agree , the "wealth effect " has a huge impact on how we feel, Think of all the baby boomers that have now watched their Ira, 401k plans appreciate. I see and talk to a lot of them , they all "feel" better.
    Its' a huge psychological diff that is hard to quantify..
    13 Jun 2013, 05:55 PM Reply Like
  • Stock market back up looks good but......Too bad we went from having 14000 red chips to having 14000 white chips now. Dollar is becoming worth less and less. Wealth effect is a head fake that many are falling for. It will hit them full force in the wallet at some point.
    14 Jun 2013, 06:41 AM Reply Like
  • >DG


    Right on, Brother-


    As I recently posted, too many 'investors' are getting all their investment decision information from the front page in a tabloid and never looking beyond that or a sound bite on the evening news.


    Lambs heading for the shearing stock.


    Windwood Trader
    14 Jun 2013, 07:20 AM Reply Like
  • Double & Windwood,


    Respectfully cannot buy into that premise or thesis, for a variety of reasons that I have stated here on SA. That difference of opinion is what makes a market..


    Windwood , love your picture , very cool..


    Happy Investing..


    IT , please note that I am not taking the day off today -- LOL


    F & G
    14 Jun 2013, 09:05 AM Reply Like
  • wind,


    Doggie looks like he's in jail.
    Couldn't get parole?
    Whats he in for?
    14 Jun 2013, 01:02 PM Reply Like
  • Author’s reply » @PAWS


    Rumor has it he voted against BO and has voiced his displeasure by barking when BB speaks!!


    Markets looking sad as well today eh?
    14 Jun 2013, 01:09 PM Reply Like
  • F&G,


    I agree of course, though I think its a pretty stupid thesis.
    I spend what I am going to spend regardless of whether my IRA is going up or down.
    I don't think the 'wealth effect' feeling really works to generate more spending by consumers. They might 'feel better' and I know thats the theory, I just disagree with it.
    14 Jun 2013, 01:42 PM Reply Like
  • @Rin
    Well if you were in the market yesterday - I'd bet it was indeed lucky for you!
    14 Jun 2013, 05:02 PM Reply Like
  • So DG & WWT


    You're both expecting markets to depreciate considerably? Why so? How far out?
    14 Jun 2013, 05:05 PM Reply Like
  • @F&G


    This article from Hulbert shows those advisors who time the market best in the past, are also more bullish right now. Those who time it the poorest are more bearish now. So you may fit in with the best :).
    14 Jun 2013, 05:09 PM Reply Like
  • >Fear&Greed




    The picture reminds me of how I feel some days just trying to get out of first gear- I did have a dog once that ran full tilt into a cattle fence chasing a rabbit and managed to get his head stuck in a 3" X 4" fence opening. Had to cut out the section and get him to the vet to put him under while we cut the section loose with bolt cutters. Almost lost him.


    Re: Wealth Effect I do feel that a lot of media hype has many convinced that all is well in the land of good and plenty while such is not the case. The average American family living standard has dropped every year for the last 11 years. Something's not right with that.


    The US dollar represented 72% of the reserve currency held by other nations at the end of 2001. At the end of 2012 that number was 62%. Concerns over stability over the future. Our ongoing trade deficit contributes to this concern.


    In 1999 the euro first became a reserve currency. Today 25% of the world holds the euro as its reserve currency.


    Today the Chinese deal directly with Iran for their oil bypassing the dollar.


    When I travelled to Great Britain years ago they were one of the few European countries to require pound sterling- not US dollars. Today many others want either euros or their own local currency- not $US.


    The BB printing presses may be necessary but sure do cloud the future outlook.


    14 Jun 2013, 05:42 PM Reply Like
  • He gets in jail mostly for stealing my brownies. One sly critter!
    14 Jun 2013, 05:43 PM Reply Like
  • >curls


    I feel the market is terribly overbought without much justification. Our long range growth expectancy is from 2-21/2% for the next ten years. Unless BB continues to create fiat money into the next decade where will the support come from to hold up the indexes? Even a whisper of taking the country off the sauce causes palpitations. Now Japan is trying the same deal. Hoo boy!


    The Chinese growth projection has DROPPED to 8% for 2014. Mexico is probably looking at 5-6% while many if not most emerging markets and frontier markets may easily exceed that. Northern Europe will be looking at 3-4% growth once they get on the same page with each other.


    The dilution of our dollar and the sticking of the FatCat screwups to the US fixed income tranche with inflation reduced incomes will lower our GDP potential considerably. Don't forget that 70% of GDP comes from consumer spending- If you don't have it you can't spend it.


    Two trillion of increased debt since 2002 have made other countries wary and our government's non-recognition of the real unemployment rate in the country is the elephant in the room.


    I may be in the minority in these thoughts but a bevvy of bubble bursts, recessions and accelerating loss of purchasing power over the last 4 or 5 decades have helped form my feelings.


    14 Jun 2013, 05:58 PM Reply Like
  • Author’s reply » "It's not just talk," says Morgan Stanley's Stephen Jen of the Fed's recent chatter. "My...
    Thursday, June 13, 7:52 AM ET
    "It's not just talk," says Morgan Stanley's Stephen Jen of the Fed's recent chatter. "My understanding is the Fed is determined to start tapering early ... Markets are not ready for this ... If the Fed does indeed move toward tapering, I fear this may be a long and dangerous summer."


    Do we believe this????
    13 Jun 2013, 08:55 AM Reply Like
  • I'm still staying with my no tapering in '13.. Well maybe in Dec ?


    We shall see.


    I had a conversation with Southgent, his take on tapering is Sept '13, and his opinion is one that I have great respect for ......
    13 Jun 2013, 09:31 AM Reply Like
  • IT


    I don't understanding all this fuss about tapering; to me it sounds more tampering than anything else
    13 Jun 2013, 09:59 AM Reply Like
  • @Rin
    It is tampering & I've had enough. Time to let normal happen. We're no longer in economic states of utter doom pending, so let's let capitalisim do it's thing again.
    14 Jun 2013, 05:13 PM Reply Like
  • Author’s reply » @RIN


    I just don't see tapering happening yet ! Others???
    13 Jun 2013, 10:05 AM Reply Like
  • Author’s reply » I am taking a copy of a PM from Tom Luongo as we spoke last night about Japan's sell off. I asked if it should effect our markets. Here is his answer.


    "Most likely. the Yen is below 95. there is a whole lotta unwinding of leverage and carry trades going on right now as the market has really taken the Fed's tapering BS seriously.


    Friday's Fed credit numbers and TIC report will be very important."


    Anyone have a comment on this??
    13 Jun 2013, 10:45 AM Reply Like
  • IT,


    "... the Yen is below 95"


    Huh? Are you sure you got that right, the Yen has been rising like crazy, way way above 95.
    Am I misinterpreting something?
    13 Jun 2013, 11:15 AM Reply Like
  • Author’s reply » I just copied what was written. Maybe Tom mistyped?
    13 Jun 2013, 11:38 AM Reply Like
  • Author’s reply » @TAMPAT


    Tom sent this back as I questioned him on it.


    "I looked at the ticker recently. Latest quote is 94.49" This was last night btw...



    Did this help??
    13 Jun 2013, 01:20 PM Reply Like
  • Thanks IT, I see it now.


    I was looking at the Yen futures, now about 1.05, not the USD/JPY cross that Tom was referring to.
    Of course Tom was right.
    13 Jun 2013, 01:45 PM Reply Like
  • IT,


    Just a note about the blog. When these threads get over 100 comments it becomes a bit unwieldy, too much scrolling needed to view new comments.
    Generally on articles I read once it gets near 100 comments I stop following it. Up to you how to deal with, just letting you know as others may feel similar.
    BTW, nice problem to have.
    13 Jun 2013, 11:12 AM Reply Like
  • It's getting to the point where you need a daily blog. IT be careful what you ask for.
    13 Jun 2013, 11:29 AM Reply Like
  • Author’s reply » Your points are noted. I try to wait until I get 150 comments. But I will try to cut it down some and find time to create a new one quicker.


    Thanks for the input. Keep in mind that even though I create a new one I still get people reading the old ones and commenting on it.


    But I will try to do a new one quicker for sure!!
    13 Jun 2013, 11:37 AM Reply Like
  • (SJC) Japanese small company index up 2.6% at 13:20 although the Nikkei is DOWN over 6%-




    Can you spell arbitrage?
    13 Jun 2013, 01:25 PM Reply Like
  • @WWT


    If it's not too time consuming to explain... how would they arbitrage that?
    14 Jun 2013, 05:15 PM Reply Like
  • Go long on the (NKY) and short the (SCJ). They should normally move pretty much in tandem. when there is that much spread and you have the cash you can make quick money.


    Good luck-


    14 Jun 2013, 06:54 PM Reply Like
  • On the road again, I am glad to be on the road a miracle all is green's becoming so predictable
    13 Jun 2013, 02:26 PM Reply Like
  • krusty et al,


    Took a gamble on a little (IWSY) today.
    New 52 wk high today.
    13 Jun 2013, 02:30 PM Reply Like
  • tampat-


    What is your thesis for that purchase?
    14 Jun 2013, 07:23 AM Reply Like
  • Hello Windwood,


    I came across an article about it the other day so checked out the chart. I like how the technical indicators were turning up and where the price was at. New 52 week highs yesterday and again today.


    This is a short term trade for me so I don't care about the fundamentals of the company, only the technical aspects of the chart.


    Will watch carefully for the momo to slow and then be out.
    14 Jun 2013, 01:10 PM Reply Like
  • tampat-


    I think you have the right approach.


    I quite often just have a hunch and maybe it's subconsciously influenced but I just pull the trigger. Works more often than not.


    Good luck!


    14 Jun 2013, 06:11 PM Reply Like
  • Thanks WT.
    I got at out at the end of the day today. Anytime I can
    get up to 20% or better for a 1 1/2 day trade I'll take it.
    It could continue up of course, but 4 up days in a row are enough for me as it could also see a nice size drop when the 'traders' decide they have had enough.
    Volume today was huge, I expect to see a big red line (instead of green or gray) in volume very soon.
    The companies fundamentals are not good, I think this is a pure momo play by traders.
    14 Jun 2013, 06:35 PM Reply Like
  • The sun finally came out today. I have been out and about. I expected the markets to be down big but ... about even for the day. PM's one day then they drag things down the next.
    13 Jun 2013, 03:31 PM Reply Like
  • A couple of links to the (PPO) stock I mentioned yesterday.., PPO was down today and this might explain ...



    Again be sure to do your own DD.
    13 Jun 2013, 03:38 PM Reply Like
  • Author’s reply » Thomson Reuters gives it's paying customers a 2 second advance feed on certain non government reports before they release them..


    This is legal, but is it ethical? Just had a report on FBN about this. Two seconds is a lifetime in today's trading ...
    13 Jun 2013, 03:42 PM Reply Like
  • IT:


    I have a problem with it. It's not info available to common folks. We can not have the big computers or subscription.


    We can't even pool together & genuinely get the same access. So it's a variation on insider trading.


    The test -- if retail traders bought a subscription collectively & set up to use the data --- it'd stop being advance feed. There'd be a cry of unfair in the form of a lawsuit to bankrupt the retail group.
    14 Jun 2013, 05:22 PM Reply Like
  • Ops, typo. I meant in the test - if retail traders collectively bought a subscription, Reuters would stop advance feeding it.
    14 Jun 2013, 06:42 PM Reply Like
  • IT,
    In response to your query on blog #7. It was your post from the person that had $3000 and was young enough to have it make a difference in their life.


    Back in 1979 I had $10,000 from a bonus. I kick myself every day knowing what that would be worth today if I had just put it in something like any of my stocks I hold today and forgotten about it. Even the worst would have been worth $250,000 without dividends, the best over 3 million.


    So basically, I try to help anyone who thinks they don't have enough money to get started investing in their future. All you really need is time and to sock away $50 a month.
    13 Jun 2013, 03:53 PM Reply Like
  • Author’s reply » @NOTRUB


    I agree with you 100%.His concern was reading about potential bubbles, was it better to wait, dollar cost average, or buy all of it now. He knows it isn't much money but is smart enough to want to start at his age.


    Then he was asking about ETF'S, Mutual Funds, etc. That is why I threw it out for discussion. He appreciates every ones help and hopefully will feel comfortable to post. He does have a full time job and a family so he asked me to do some of the legwork for him.


    You folks did that for him!
    13 Jun 2013, 04:00 PM Reply Like
  • Author’s reply » Per Tom Luongo...


    "And there it is, the latest Hilsen-Rumor, right on schedule. All taper-talk is just talk. It is all theater to put stress on China's banking systems, drain liquidity from emerging markets that are aligning with China and resetting the table.



    Now, we can begin the real QE and the Fed will accelerate bond buying again which everyone will try and front-run. Yields are going to drop mildly from here and you have the opportunity of a lifetime to buy more gold."


    No wonder the markets took off late today!!
    13 Jun 2013, 05:35 PM Reply Like
  • I need a little help here folks. Have accumulated about 15 lbs of physical silver over the past 6 months, various forms of which I am very pleased looking at. My IRA is loaded with PM miners, GBG, JAG, GPL, AUY, and EXK. My EXK & AUY holdings are roughly the same in dollar amounts. Itinerant just sent out a great article favoring EXK, which is the favorite of my holdings. I have been considering [even before that article] selling the AUY at a loss, and doubling down on EXK. What do your opinions say? Yes, they are just opinions, not advice.
    13 Jun 2013, 07:35 PM Reply Like
  • @nocnurzfred-


    If you've been accumulating silver for the last six months you have watched it go from $30 down to $21 at present.


    The stocks you cite with the exception of Yamana (AUY) are all very thinly traded and down about 50% since the beginning of the year. What makes you think that (EXK) will outperform (AUY) ?
    14 Jun 2013, 09:37 AM Reply Like
  • Windwood; Will sit tight for the while. Those are the only decent stocks I own. I do believe silver will be the better performer, so go gold [as my track record has been quite abysmal]. Am too deep now to throw in the towel, will go double or nothing at this point. Shirley you have read EXKs PR on their exploratory drilling a couple days ago.
    14 Jun 2013, 01:56 PM Reply Like
  • " Am too deep now to throw in the towel"


    If you took the same money & it was in cash... where would you go to make it grow? That's where you should be.


    There's no "learned skills" invested in a stock. It's not like a career where you learn specifics & really may not make as much elsewhere. The cash is the same in every stock. So YOU get to pick where you want that cash to grow.


    The only investment in a stock that's value added beyond the dollars, is you get to know the business & company, so you can judge more readily. But if the judgement is that somewhere else will do much better... it's good to listen to your judgement.


    If the PMs ever start moving, you can jump back in & ride up. It's psychologically hard to move on, is the problem. Only reasons to stay are dividends. Dividends can be had many places, so it's still a choice.


    "will go double or nothing at this point."


    More loss can lead to need for bigger risk for bigger lower probablity payout for sure. It can also be a slow but steady growth elsewhere does well. It's something to weigh out for yourself.
    14 Jun 2013, 05:33 PM Reply Like
  • nocnurzfred,


    if the list you stated represents all or a vast majority of the holdings in your IRA , my humble opinion is that u need to diversify ..
    13 Jun 2013, 07:42 PM Reply Like
  • Yeah, I know. Too late at this point though. If any of them come back to near break even, will certainly do as you suggest.
    14 Jun 2013, 06:08 AM Reply Like
  • nocnurzfred,


    Respectfully note It's never too late , I suspect from your comment you are looking to get back to even , before making changes..


    I have sat on positions for far too long and learned from that experience,, some never even getting close to break even.. I don't churn my portfolio, but I do review constantly to see if i made a mistake, It can be a fine line.


    A simple suggestion, go back over the reason(s) that you made the purchases and see if that thesis is still intact both with the company and with the current environment.. if the answer is Yes , then all is well. I also gather that you are in you positions for the long term , which is good, then next question is how long are you willing to wait..
    Another suggestion,Forgetting about current funds that you may have or not have to invest, Just ask yourself , would i buy this stock , now ...


    Best of luck !
    14 Jun 2013, 09:18 AM Reply Like
  • >nocnurzfred


    I agree totally with Fear&Greed-


    One of the first rules of trading is that if the investment didn't do what it was supposed to do get out of it. You may have given it a 7-10% leash but you need to have a predetermined number as to when to bail if it's not working.


    By holding on to a money drain you are saying 'This is the best stock I could own.' Is that true?


    14 Jun 2013, 06:19 PM Reply Like
  • Author’s reply » @FEAR &GREEED


    Just noticed you got 5 LIKES ! He must have 4 other monikers he uses. Just sayin...
    15 Jun 2013, 08:29 AM Reply Like
  • To everyone:


    Please take a minute and have a look at (TAN) and (KWT)) which are solar ETFs. I just had a look at various charts (1, 2 and 3 years) and the entire sector seems ready to lift off for the mid term IMHO. THE place to be for 2013-2014 IMHO.


    Tampat: Any technical comments?


    Second choice: Nat Gas. (FCG) as an example.


    13 Jun 2013, 09:31 PM Reply Like
  • Hi krusty,


    KWT, TAN- I see support right where KWT is at from the Feb high and the lower bolinger band. I dont like to buy when the MACD and stoch are heading down like they are now. They are just starting to turn down on the weekly also, Probably some more support at the 50 day MA for both.


    It depends on what you are looking for. If its to be a 1-2+ year hold this stuff isn't quite as relevant. I dont know anything about the fundamentals of those companies. If its to be a longer term hold and you believe in solar I would buy 1/3 now and look to fill the rest on price declines.


    If you like solar look at (GTAT). Its one on my list of stocks I monitor all the time and I have made money trading in and out of it a few times and its getting close to being a buy again. I am looking to see if the 50 day MA holds now where its at and for the indicators that are now still going down to bottom out. Its had a nice run since the March double bottom.
    But again, for me it will be a trade, not a long term hold


    FCG - I dont like the chart, dont know much about the NG market.
    One interesting thing I see is the 50, 100, 200 day MA's have all converged right where the price is now on the daily. That doesnt happen very often.


    Years ago when I traded much more than now I was trying to develop a theory that when all the MA's converged like that, a big price move was imminent. I found it to be true much of the time but could not find a way to determine if the move would be up or down. It was so long ago I can't remember if I had any success with that theory but probably not much or I might remember, or it may just be old age forgetfullness :)


    It appears that NG doesn't respect any of the MA's, I can't find a pattern to focus in on. Cant help you much on that one.
    14 Jun 2013, 02:10 PM Reply Like
  • Krusty:


    I took a quick look. Unless there's definite movement happening now for the solar market, it could easily be 6 months out. Then it's winter slow season, so 1 year out. That was my first reaction, for better or worse.


    With economy where it is, people are looking to save, but going solar seems like a luxury type purchase in people's minds. It's a high outlay for years of return. The g'vt isn't supporting any longer. I'd tend to expect all this to take a while.


    Longer term, possibily even next year.. it will be taking off. Solar is coming. (Disclosure: In chart reading things happened faster than I expect. Maybe so with industries too.)


    On narrow scope ETFs - what's the expense ratios vs picking industry leaders? Some sector ETFs trade with low volume. A small amount in several firms a better choice?


    What's the competition to solar for people's money. I can't think of any, but I'd want to know. There's a new Heat Pump for temperate climates that gets heat from underground.


    For quick trade, I have no idea... there's this book this krustyman recommended to me where I'm learning about such things...


    Can you post on (GTAT) as you watch it? I'd love to see what you see.
    14 Jun 2013, 05:48 PM Reply Like
  • curls,


    As mentioned above I wanted to see the 50 day MA hold and it broke down today. The 50 and 200 day MA's are both at the same point now so it broke through both. Since the indicators are still going down it may go visit the 100 day MA at 3.50, which also has some price support.


    I would be very interested at $3.50 if it shows any bottoming signs there though it could stall now where its at because right now is also just about a 50% retracement from the March double bottom low up to the May/June highs. That being said, if we get a hard fall below the 50 day MA in the DOW/SPX I would stand aside for a while.
    RE: the 50% retrace, Google Fibonacci studies for more info if you aren't familiar with it.


    One more thought for you. When I view a chart I look at different moving averages, usually 10, 20, 50, 100, 200. I look for a situation where the price conforms or reacts to one or two of the moving averages. Different stocks react to MA's of different times frames, some conform to a 20 day, some to a 10 day, etc, so you cant just use one set of MA's to evaulate it.


    FYI, look at a 1 year chart of (GTAT) and look at the May/June highs and draw a horizontal line to the left all the way across. Notice the May/June highs match up with the lows of June and Oct of 2012. Thats just one way to identify some price support and resistance levels.
    Last year that price level provided support until the end of Oct and then when it broke through that support number it quickly fell hard.


    Tech indicators work ok in a reasonable market, but when it gets chaotic the technicals are meaningless. The tech stuff isn't foolproof either, sometimes they just dont work, but since there are so many technical traders they often do work.


    Patience is important. I have a pretty long list of stocks I check and look at tons of stock charts every day looking for the right setup. Sometimes I go a week or two and can't find anything to trade. You just gotta wait for the right setup to present itself.


    There are some other technical indicators I monitor also but this is already longer than I thought it would be so will stop here.
    14 Jun 2013, 07:04 PM Reply Like
  • tampat:


    Thank you. I will add (GTAT) on my list. I did not know that one. :-)




    14 Jun 2013, 09:33 PM Reply Like
  • curls:


    So I guess the timing is good to gradually accumulate solars then.




    14 Jun 2013, 09:35 PM Reply Like
  • I promised someone that I would discussion my time tested valuation criteria. I am a cautious value investor that focuses on income generating securities throughout the capital structure. I am not going to discuss anything other than common stocks. My bond discussions can be extremely boring and very long.


    I am simply expressing my opinions.


    For every investment decision, my goal is provide a real rate of return after taxes at greater than 6% per year. This is one tough bogey to hit, but I have successfully manage to hit it most of the time. Please notice that I am focusing on after tax returns adjusted for inflation.


    To accomplish this task, I can not buy absurdly valued securities and hope to sell them to a greater fool. That is ultimately a loser's game. Instead, I follow traditional value measures to decide when to buy AND to sell.


    I had a discussion with a number of gentleman in another article who believed that an investor needed to hold KO stock in 1998, as one example, when the price was at $42, well over 40 times for a company growing earnings in the high single or low double digits. The same would be true for selling GE at near 50 or as high as $57 in 2000. The P/E as I recall was near 50 at that high price in 2000 and is actually at 31.32 times forecasted earnings for 2014!!!!!!!!!



    I pointed out that an investor would recognize that virtually every large cap, if not all of them, were at absurd valuations which could not last. Without question, the market would compress that multiples in short order, just like it did the bubble in housing prices.


    I could have sold 200 shares of GE at $55 in 2000 realizing $11,000 in proceeds and then bought the shares back when valuations returned to something near rational at $25 in 2002 using that $11,000, except now I would have sold for a big profit after a parabolic up move and at a ridiculous valuation level and would now own 440 shares bought at less than 1/2 the sales price. Very hard concept for some people to grasp.


    Virtually all investors can not follow their reasoning and path unless you have a rich mom and dad leaving you a million or so or have a couple of million to stay with irrationality priced stocks because of the income. I would add that 440 GE shares pays more now than 200 shares, which is an obvious point or so one would think.


    So it is important to recognize when valuations become stretched to the point of breaking. Both buys and sells need to be disciplined and based on valuation and an analysis of the firm's prospects.


    As a general rule, I prefer large cap blue chips that increase their dividends every year and have dependable earnings streams and reasonably predictable earnings stream. I will also venture outside that area, buying stocks like GE, EMR and UTX that are more cyclical based on valuation criteria. I will also buy a large number of smaller regional banks that pay good dividends and are reasonably priced. I recall that F & G mentioned one that I own, UBSI, that I bought at $16.56 in November 2009 as part of my regional bank basket strategy and still own it for its income generation.


    For stocks like KO, PEP, GIS, SYY, PG, UL, CL, and similar companies, I want to buy as close to 15 times trailing earnings as I can and close to a 2 five year estimated P.E.G. Those opportunities are rare for those companies. I was buying these kind of stocks in March and April 2009 which was one of those rare opportunities that have to seized whenever they occur.


    I will for those stocks have a reasonable value range for trailing earnings of 15 to 20 for potential purchases and for reinvestment of dividends. I will cease buying shares with dividends when the TTM is more than 20, sometimes I will quit a little lower. I will then add up all of the cash dividends and buy an odd lot when the TTM falls back into a 15 to 18 range. I have quit reinvesting my KO dividends. I am continuing to reinvest dividends paid by GE with a TTM of 17.54:



    Intel is one my positions where I just quit reinvesting the dividend after the last payment, even though the TTM is 12.49. I already own enough shares with an average cost near $17.8. If I am going to buy more with the dividend, the price needs to be under 20.


    I will also focus on the rate of dividend growth, the average number of years that it takes to double the dividend, the payout ratio, free cash flow and free cash flow yield. In a prior instablog, number 7 maybe, I calculated the FCF yield of 4 techs companies with Microsoft coming in first place, Cisco in second, Intel in third and Qualcomm bringing up the rear by a significant amount.


    I will also use a wide variety of stock mutual funds, ETFs, andCEFs to increase my sector, region, country or market cap exposure over and to increase my stock allocation, both over an above my significant number of individual holdings.


    I will post a list about every six months in my blog and this is a link to the last one (Just Click the Tables to Enlarge)


    Updated Stock Fund Table as of 6/6/2013


    When I want to change my stock allocation up quickly, I will frequently go to low cost ETFs and have been trending recently to those that can be bought commission free.


    And when I want to reduce my stock allocation based on fundamental reasons, I will sell those ETFs. I liquidated all of my stock ETFs in 2007 and sold virtually every stock mutual fund or pared the ones kept to just 100 or 150 shares. The only one surviving in tact was the Permanent Portfolio that lost 8% in 2008.


    I will use the Matthews mutual funds as my primary vehicle for Asian stock exposure, but I will trade country ETFs frequently in that region. I recently sold all of those ETFs after the BOJ announcement and the parabolic rise in Japan's stock market.
    13 Jun 2013, 10:04 PM Reply Like
  • Southagent-


    Thanks for sharing your thinking.


    I also began investing as a young teenager advising my parents at age 14.


    I note that you have a very large list of holdings, and from your posts you expect at least a 6% return from each. Why so many? Don't you feel that you could evaluate and critically remove a significant number of lower level performers? Only in Garrison Keilor's world are they all above average.


    Do you intend to remain fully invested at present? Or are you reducing exposure based upon the current world economic and political arena?


    Windwood Trader
    14 Jun 2013, 07:51 AM Reply Like
  • Windwood: I am looking for an aggregate return in my taxable accounts of 6% per year after inflation and taxes. I am looking for an aggregate return after inflation of 7% per year in the retirement accounts. I have met those goals most of the time with a diverse and esoteric mix of securities.


    I did post snapshots of my returns for the 3 and 5 year periods ending in October 2011 for my main taxable account at Fidelity which has over 200 positions and my regular IRA at that firm. Both accounts smashed the returns of the S & P 500 with the IRA being up 100% over a 3 year period:


    Main Taxable and Regular IRA Accounts Performance Numbers Calculated by Broker


    I invest some funds in whatever appears to me, at a particular point in time, to be the best income generating security. The choices were much better in 2008 and 2009 than now. This kind of approach leads me to a wide variety of securities including Trust Certificates, Trust Preferred, exchange traded bonds, synthetic floaters, individual bonds, common and preferred stocks, etc and so on.


    See Gateway Post on Exchange Traded Bonds That Includes Brief Descriptions of Some of Those Securities:



    So part of what I do is opportunistic investing based on my assessment of relative values and balances between risks and rewards.


    I also have a large core of holdings which barely change except for what I call nips and tucks. I will eliminate a position in KO which I reiniated in March 2009 only when valuations become clearly stretched as they did in the late 1990s as I explained in multiple comments from yesterday.


    Another driver of my asset allocations, which are in constant flux due to what I call tactical or dynamic asset allocation, is my Big Pictures views, by far the most important determinant. I sold out in 1999 and bought in March 2009 and throughout 2009 and 2010 as shown by my daily blogs from that period. I will also pay attention to my Vix Asset Allocation Model that has successfully called the approach of cyclical bear markets.


    As to my number of holdings, I have no problem managing them due in large part to being retired and having a store of knowledge extending back 40+ years. Actually, since I am given the task of managing money for Right Brain relatives, and my late father's testamentary trust, I have close to a thousand positions. This is not recommended for anyone else.


    One reason for the large dispersal is that I limit my personal exposure to the securities of one company to $10,000. This would include their common, preferred stock and bonds. For KO, I hit that number with the stock. For Citigroup, I came close enough to that number with a number of exchange traded bonds, with $10 par values maturing in 2014, that pay the greater of a minimum coupon (3%) or the percentage increase in some stock index, gold or the DJ-UBS commodity index. I discussed earlier this year the status of some of those instruments:


    Stocks, Bonds & Politics: Status of Citigroup Funding PPNs: MOU, MBC, MKN, MKZ


    For other companies, I may have a mix of common stock, equity preferred stock and bonds. If I am concerned about a company, I may set a limit of much lower than $10,000 for my total exposure. The limit is one means that I control risk.


    Sometimes my exposure to the senior debt will be in ETNs. An example would be the MLP ETNs issued by Morgan Stanley where my only other exposure is in its equity preferred floating rate stock MSPRA:


    Advantages and Disadvantages of Equity Preferred Floating Rate Securities


    That is all that I can say for now, since I have to get back to work.
    14 Jun 2013, 08:58 AM Reply Like
  • SG51:


    Enjoy reading about your investment strategy! You are certainly diversified regarding unsystematic risk but I was curious if you make any effort to manage systematic risk. Do you ever hedge or convert to cash or some other technique to help manage systematic risk? What draw down is acceptable to you?
    14 Jun 2013, 09:18 AM Reply Like
  • Author’s reply » @EXTREMEBANKER


    WELCOME, great question you asked! Can you take the time to explain what *hedge* means to our newbies lurking??


    Maybe someone else could answer as well...


    This market is still all about BEN . WSJ says the FED isn't going to get out of the way anytime soon..
    14 Jun 2013, 09:30 AM Reply Like
  • Interesting times:


    Systematic risk is risk that can't be diversified. Business risk, legal risk, liquidity risk, credit risk and many others are unsystematic risk that can be diversified by buying many different positions in different companies.


    Systematic risk are things such as government risk, interest rate risk, tax risk or things that impact all securities. Political unrest or the FED raising interest rates is a good example of systematic risk. It can't be diversified so it must be hedged. A hedge can be something as simple as moving to cash when certain conditions are met or it can be more complicated such as selling future contracts on the S&P 500. Inverse ETF's have been created to offer the individual investor easy access to a hedge product. Personally, I am a fan of market timing and will adjust allocations based on conditions that exist in the market. Market timing is one way to manage systematic risk.


    Hope this helps!
    14 Jun 2013, 09:39 AM Reply Like
  • Extreme: I have decide to do nothing for the first hour of trading today.


    In 2007, I raised my cash allocation to close to 30% and established a new position of close to $50,0000 in investment grade bonds maturing at a weighted average 5 years yielding slightly over 5%, rated A or AA and a sprinkling of AAA. That was based on my Big Picture views including my VIX Asset Allocation model that had been developed in a few minutes after opening for the first time a long term VIX chart going back to 1990s sometime in June 2007 as I recall. I sold almost all of those bonds in February 2009 at or near par value and used those funds as the initial source to buy stocks starting in early March 2009 and pretty much exhausted that amount by April 2009 requiring me to then dip into my cash allocation. I only kept one of those, a senior Prudential bond that paid monthly interest and matured in 2012, the rate was around 5.6% or so.


    Cash was an acceptable alternative in 2007 and into early 2008 since the yields were close to 4% as I recall. It was an acceptable alternative when I went all in cash in 1998-1999, possibly keeping an extremely limited number of positions. So cash is an important part of my allocation scheme. It still is important but I am not earning anything on it. I would have a higher cash allocation now if I was receiving 4%. I am a very cautious and conservative person.


    Some of this is explained in a 2008 post:


    Buy High & Sell Low /Retrospective on the Good & Bad


    After re-reading that old post,I forgot that my current position in the Janus Balanced fund was initiated in 2007 after selling a pure stock fund. So I need to add that one to the Permanent Portfolio position which was left unchanged.


    In 2008, I was using the double shorts stock ETFs to hedge my stock position and did profit from them. I was using the Vix Asset Allocation Model to time the purchase and sell of those positions during what I call the Unstable VIX Pattern. A decline below 20 would call for the purchase of a double short and a move back into the high 20s required its disposition. I did not do precisely what I was supposed to do and became extremely disillusioned with those products due to their many problems, most importantly the lost of tracking after one day.


    Instead, I will someday open a margin account that will allow me to short long ETFs and to buy out of the money options to use as hedges. For now, I have only cash accounts, never having bought any security using borrowed money.
    14 Jun 2013, 10:07 AM Reply Like
  • Author’s reply » @EXTREME


    Yes, thank you. Now if a poster has a question I am sure they will ask you directly though post. Thanks for taking the time to educate some of us!
    14 Jun 2013, 10:17 AM Reply Like
  • SG51:


    Thanks for your reply! I have also tried the double short products and I am no big fan! I guess I need to improve my timing technique. I also use cash and extra bond positions to hedge during severe downdrafts.
    I went down 12% during 2008 and less than that during 2000. I agree with you it was obvious we were overvalued during 2000.


    I started market timing in 1987 after the mini crash. Computers were not readily available and the internet did not exist for the public at that time. Newspapers were the primary source of financial news for me so I developed a timing signal to get out of the market during bad bear markets. If the Dow Jones Average fell to where it was less than 90% of it's 52 wk hi,I sold. If it moved back to where it was greater than 90% of the 52 wk hi I bought back in. Basically, I wanted to stay invested all of the time except during the bad periods. I used no load mutual funds to execute my strategy. I paid cash for three farms using this technique and it worked well for a long time. It only took a few minutes per week to execute. Today, I pay more attention to moving averages and asset allocation. I use multiple strategies.
    14 Jun 2013, 10:33 AM Reply Like
  • Southgent,
    Thanks for sharing your strategy and thoughts. Especially like the FCF analysis. Your results and wealth of knowledge are impressive.


    I also have cut back on my DRIP strategy because of size of position and/or present price.


    When I asked you for the (MSFT) FCF analysis , I wanted t see how it fit in with my overall views on the large cap tech names that I follow. These names have traded sideways for a long stretch, but I suspect we may be on the verge of a major shift in sentiment here. First I believe with names like (MSFT), (CSCO),(INTC) there is plenty of room for dividend growth over the long haul, making them more attractive. In addition to that, these names have built a long term base over the past 12-13 years . In the case of (MSFT) (throwing out the extremes in '08 & '09) the range has been approx 20-32 and one can now make an argument that we have or are on the cusp of a breakout that will take the stock much higher. Without going in to all of the specifics the same can be said for the long base building period for (INTC) & (CSCO). While thy have not broken out yet , it is these type of names that along with others that have similar chart characteristics that could lead us higher down the road.. Of course this plays into my long term bullish views , which I have shared here on SA . My caveat as always, there will be bumps along the way. All should do their own DD.


    Full disclosure : I own INTC & CSCO, I will initiate a position on MSFT on any weakness..


    Some random rumblings on a Fri morning.
    14 Jun 2013, 11:22 AM Reply Like
  • F & G: I have to admit to a lack of understanding about technology in general, and list that lack of knowledge as one of my many knowledge gaps:


    OG's Qualifications and Lack of Qualifications (OG=Old Geezer)


    Consequently, I have to have a huge value advantage before I buy which was the case in 2009. I started buying MSFT below $18 in what later turned out to my annual buying campaign, buy and then sell, buy and then sell, etc.


    My Intel position was started on 10/14/08 with a 50 share purchase at $16.04, then a 30 share at $14.73 and so on. This is what I call cash flow purchases, putting money to work after receiving dividend and interest payments in what I perceive as the best income generating security taking into account also potential capital appreciation:


    Snapshot at


    Since I have limited knowledge in this area, I will expand my exposure by buying a low cost ETF like XLK:


    Bought 100 XLK at 21.89


    I currently own 150 or 200 shares of another ETF TDIV which appeals to me and is discussed in these three posts:





    Sponsor's Website:


    First Trust NASDAQ Technology Dividend Index Fund (TDIV)


    This one has done well since my purchases late last year.


    I have also bought the CEF STK. In one of posts describing that CEF, I listed several large cap tech stocks and showed that P/E ratios at the time:



    As for individual positions, I own Intel and Cisco. I bought 50 of GLW as part of my "$500 to a $1,000 Flyers Strategy"


    Bought 50 GLW at $11.98


    Andrew Bary wrote an interesting column in 2010 that I discuss in this blog:


    Explaining Low Valuations of Large Cap Tech Stocks
    14 Jun 2013, 12:35 PM Reply Like
  • Author’s reply » I am going to add my personal opinion here. I read and read and read comments coming from the FED EVERYTIME the markets are either going up too fast or seem ready to take a drop too fast.


    It sounds like that saying from years ago. "When E F HUTTON talks , people listen"


    To me, just an investor, I feel way too many decisions are made by what the FED might do, not what a companies financials tell you. I might be alone with this thought. But I think the old days of looking at a company, digging in, and then making an investment decision are over for a while.


    Too much volatility for my blood. TACK pointed out how people just react to daily noise. For those doing this for years alone making investment decisions am I off base?
    14 Jun 2013, 12:28 AM Reply Like
  • IT:


    The noise has always been there, but it's been greatly amplified ever since the advent and broad adoption of the Internet, which now allows 24/7 real-time communication, as well as myriad sensationalistic reporting sources, many with an agenda that may completely discordant with the facts.


    However, in the end, noise still remains noise, and the facts always win. Those that remain calm and filter noise to their advantage will perform much better than those who do not.
    14 Jun 2013, 12:36 AM Reply Like
  • IT,
    Your comment "I might be alone with this thought. But I think the old days of looking at a company, digging in, and then making an investment decision are over for a while."


    Those days are over for only those that want instant gratification from the market, want to use algorithmic trading , twitch at every headline, and the like..


    The time tested theories and strategies are sill here and being deployed. Agree wholeheartedly with Tack's reply in that once one can grasp the concept of using the noise to his/her advantage the better the returns.. A concept that I struggled with for quite some time before using the "fear " of others to find value and opportunity. Conversely using the "greed " cycles to become cautious and wary. hence my moniker. I use that as one part of my investment strategy whether it be a single position or the macro environment.


    I learned in part from my experience from the greed of 2000 , to the Fear of 2008 ..
    14 Jun 2013, 10:52 AM Reply Like
  • Author’s reply » @TACK


    Thanks, that makes a ton of sense to me. I was old school, and I will admit not savvy enough to learn years ago on my own. So I relied on Mutual Funds to make my investments.


    So I guess with a company as I mentioned above just giving people a 2 second head start is very important just to trade maybe for a few minutes. Very Interesting times . That is why I started this because I am sure I am not alone, or am I ??


    Glad we do have posters who can explain all of this to us , and don't mind doing it either. I appreciate it for sure. Old age makes you just question your decisions because the downside is you don't have many years left to recoup your mistakes...


    My 2 cent's.
    14 Jun 2013, 12:45 AM Reply Like
  • Author’s reply » Folks


    I had a very bad few hours with my back and kinda fell asleep after dinner. Pain was pretty bad. Expected to see a ton of posts but I guess CURLS keyboard was finally stolen (guy took me for a ton of money to take it) .


    He will return it in a few days though.. Ok, we shall see what tomorrow brings.


    For those still lurking please feel free to either follow me or post as a few have done this week. I hope they feel comfortable and have brought some great ideas to the table already. Keep it up fellow posters as the stocks and investment ideas being bantered around are priceless. My humble thanks to all..
    14 Jun 2013, 12:53 AM Reply Like
  • Ha! I got my keyboard back. The "m" is no worse for wear. Though there were these guys from the stock market that took a ton of money for my use of it to trade...


    The pain is to be expected considering your recent activities to help someone. Frustrating, but still glad you were able to help him.
    14 Jun 2013, 05:52 PM Reply Like
  • This is sure very interesting times, and scary times as well, checkout what no one talks about "NSA Leaks Can Damage US Tech Companies In Long Term"
    14 Jun 2013, 01:18 AM Reply Like
  • @Kvatchik


    Good points. I'd counter that most companies with sensitive data don't use public clouds. They use secure private clouds like IBM's. They use protocols to ensure security. They'll increase those protocols which = equals more money for those tech companies catering to quality companies.


    So the leaks add a whole new level of money for selective techs.


    No one's going to stop doing business in order to avoid the security issues. Tech isn't wholy dependent on public clouds for businesses.


    Companies like Amazon trying to get into public clouds may be effected, if they were counting on small or non-security-worried companies' business.




    Excellent issue to keep in mind when assessing tech companies. Thanks! It hadn't crossed my mind.
    14 Jun 2013, 06:15 PM Reply Like
  • Sure, Curls, According to the recent ZH article, the companies involved been benefiting from info otherwise non available to them.
    14 Jun 2013, 10:20 PM Reply Like
  • @Kvatchik
    Do you have the ZH article link?
    From your article a company like FB would definitely be effected. Did anyone really think they weren't using all that data? Google made an actual statement a few years ago that they'd be collecting everything. One would have to be a private company with protocols in place so it's limited number of people with access to descrambled data & legal contracts around it. Definitely changes the situation. That it made it to NSA (government) is a bit of a shocker.
    14 Jun 2013, 10:59 PM Reply Like


    Curls, here is the article, it seams, that plenty of companies are involved, so given the nature of they relationships with gov it is really hard to translate it into a short term tradable call. (FB) although looks terrible on weekly chart.


    Longer terms, reputational damage is obvious to any observer. In fact, I already seen calls to boycott those companies, on TV and on the Internet.
    15 Jun 2013, 04:01 AM Reply Like
  • @kvatchik


    Thanks. It's computers so everyone panics. I agree, none of this is shortterm tradeable. Couldn't predict which companies would take a hit. There will be price declines. Longer term, there'll be costs to answer to it all.


    Yes, public is already squirming (I manage a DB & already experienced that this week). It's a matter of assessing which companies will get hit & the whole sector will go downward by association to this, for as long as the attention span lasts.


    Reading the article, the facts support that a lot less is revealed & this is much less of a big deal, than will be made. Most of it is access to network architectures & firewall-type issues for foreign country cyber spying issues. Nothing to do with individuals. We all knew this existed; it's been implied in past news stories.


    The Verizon & related were specific records. But the article says "Because if the companies demanded a waiver, they obviously were wiretapping," That's complete b.s.. It wasn't a waiver. It was a business as usual verification that the activities were limited.


    It all needs more transparency, & there'll be pressure to. But practically all this stuff was known to anyone with a computer background listening to the news over last few years.
    15 Jun 2013, 09:51 AM Reply Like
  • So question - up or down today?


    I'm betting up at the beginning, continued sentiment. But no guesses after that. How will good or bad reports expected today influence?
    14 Jun 2013, 09:14 AM Reply Like
  • Author’s reply » WOW!! EVEN THE GOVERNMENTS ADMITS WE DO HAVE INFLATION...Whats next saying unemployment is really above 7.6% ?
    14 Jun 2013, 09:25 AM Reply Like
  • Was that admission with or with out the volatile food and energy segments? I don't trust the numbers and I don't trust the reporting of the numbers. I use my own system of observation and weekly shopping to tell me if prices are up. They are sneaky in the grocery asile. New packaging with smaller amounts. They are tricky that's for sure.
    14 Jun 2013, 09:44 AM Reply Like
  • Author’s reply » Any thoughts on these points!!!


    8:30 AM May Producer Price Index: +0.5% vs. +0.2% expected and -0.7% prior. Core PPI +0.1% vs. +0.1% expected and +0.1% prior


    9:13 AM While producer prices may have risen more than expected and the most since February last month, don't expect anyone to get too bent out of shape. Stripping out food and energy — which rose 0.6% and 1.3% respectively thanks to a spike in prices for the always dangerous combination of eggs, imitation cheese, and gasoline — wholesale prices rose only 0.1% (nicely in line with estimates) and just 1.7% Y/Y. The accepted interpretation from Reuters: "Underlying inflation pressures remained muted, which could argue against an early scaling back of QE."


    9:15 AM May Industrial Production: 0.0% vs. +0.2% expected, -0.4% prior (revised). Capacity utilization 77.6% vs. 77.9% consensus; 77.7% prior (revised).


    9:56 AM June Reuters/UofM Consumer Sentiment: 82.7 vs. 84.5 expected and 84.5 prior
    14 Jun 2013, 11:31 AM Reply Like
  • Author’s reply » "Stripping out food and energy — which rose 0.6% and 1.3%"


    Making flippant statements like this is what gets me going!!! Like we don't use food or energy?? WOW..
    14 Jun 2013, 12:00 PM Reply Like
  • All
    Did anybody buy (PWE) and (CHUY)? going up lately


    any opinion on this article contrarian of our oil/gas production

    14 Jun 2013, 10:15 AM Reply Like
  • @Rin


    I like (CHUY). Seems like a solid company plan. A little different to make itself stand out. It's trading thinly (not relative to it's regular, just a slow stock). I wanted to wait till it was more solid & then consider for longer term. It has been going up... I missed that ride.
    14 Jun 2013, 05:55 PM Reply Like
  • Author’s reply » Ok, for the PM folks. Here is a PM that was approved for me to post from one of our authors that has a different view on the effect QE has had !!


    " Not all of the QE is going to excess reserves. It's not multiplying, however b/c the shadow banking system is broken. The same conditions that led to QE1 and QE2 tripling the price of gold exist -- low lending, low real rates, high xs reserves -- but has changed is a radical debasement of the Yen creating an artificial demand for USD. Mix that with the speculative froth coming off the gold market and a behind-the-scenes liquidity scare in May as all things point to that. And the Gold market was easy to contain and control. But, make no mistake, the Fed while passively tightening from Aug 2011 to Dec 2012 could not break the price of gold below 1525.
    For QEIII to not cause a runaway in the gold price was the Yen draining the FX markets of USDs. It's really that simple.


    That trade is over and now the physical market will begin to assert itself. Gold at 1380 is signaling deflation. Do you think the Fed wants to portray the image that it can't control/contain everything by stopping that from occurring?


    The noose is tighter on the Fed, but Gold will be blasting off from a lower base. That is all."


    Thoughts on this !!!
    14 Jun 2013, 10:20 AM Reply Like
  • IT


    In my humble opinion, the Fed uses deflation as an excuse to print money and scare people
    14 Jun 2013, 11:12 AM Reply Like
  • Author’s reply » POLITICAL.. Do we really need to spend 100 million for the POTUS to visit Africa??



    Man, I can think of better use for that type of spending for sure..
    14 Jun 2013, 11:55 AM Reply Like
  • I wonder how much of that is for entertainment for security. Sorry I couldn't resist.
    14 Jun 2013, 01:16 PM Reply Like
  • IT:


    It would be well worth it if he made a one-way trip.
    14 Jun 2013, 01:38 PM Reply Like
  • Author’s reply » @BDU


    BINGO !! I did not want to even post that. Glad you did though.


    Get ready for an AUDIT now..
    14 Jun 2013, 01:34 PM Reply Like
  • The IMF's Staff believes the FED will continue "asset purchases until the end of this year"


    "Staff’s baseline projections assume that the general government deficit will decline by over 2½ percent, subtracting between 1¼–1¾ percentage points from growth in 2013, the debt ceiling will be raised without any disruption to the U.S. and the global economy, and the Fed will continue asset purchases until the end of this year. The unemployment rate is projected to remain around 7½ percent throughout 2013. Employment growth is projected to pick up late this year and in 2014, fostered by an acceleration of output growth. With labor force participation projected to recover somewhat in 2014 as discouraged workers return to the labor force, the unemployment rate is projected to decrease (on average) to 7.2 percent next year. Given the wide output gap, inflation is expected to remain relatively subdued over this year and the next. As the legacy of the financial crisis wanes further, private domestic demand is expected to continue recovering, but weak growth in a number of trading partners is projected to weigh on export growth."

    14 Jun 2013, 02:01 PM Reply Like
  • southgent,
    very interesting, We'll see how it plays out .
    At the end of the day when all is said and done we may just see Ben stick to the 6.5 % Unemployment target that he set last Dec. All of the rhetoric that has been bandied about in the interim may just turn out to be "noise".
    14 Jun 2013, 03:18 PM Reply Like
  • F & G: I just wrote a section in my weekly blog on this subject that references John Hilsenrath's blog, who is the guy at the WSJ connected into the Fed.



    I thought that this article once again made the clear distinction between QE and ZIRP. The FED will taper and then end QE long before raising the federal funds rate, which is what I have been saying for a long time now.


    I am reading between the lines, but it seems like Bernanke is getting ready to prepare the market for tapering.
    14 Jun 2013, 03:23 PM Reply Like
  • @SG


    From your link:
    " The Fed, he said in March press conference and again to Congress last month, expects a “considerable” amount of time to pass between ending the bond-buying program and raising short-term rates. He seems likely to press that point at his press conference next week, given that the markets are telling him they don’t believe it"


    I've been thinking BB wouldnt' mention tapering unless he was prepping us for it. From the article's quote, can't have time between them, if they don't start tapering soon.
    14 Jun 2013, 06:09 PM Reply Like
  • Curls: ZIRP will likely continue well into 2015. ZIRP stared in December 2008 so almost seven years of confiscating saver income and redistributing those huge sums to other people including those who helped engineer the crisis requiring ZIRP and QE.


    I am keeping my forecast for now that the tapering will start small in September and will end by the 2014 second quarter.


    The guy who wrote that article is connected to the FED and would most likely not be writing it that way unless someone had called and provided him with that information.
    14 Jun 2013, 07:19 PM Reply Like
  • @SG


    My thought was about your "reading between the lines that tapering will begin soon." I was supporting that by pointing out that Hilsenrath wouldn't be saying there'll be time between tapering & rate increases unless tapering will begin soon. Otherwise if tapering starts later, there won't be enough time for there to be much "between."


    When his article came out, I saw some people interpreted it the opposite, as "QEs continuing for a while more."


    I've heard of Hilsenrath by now :).


    Yep, on ZIRP's effect. I've been frustrated for a long time. I saved. I made limited sensible decisions including in housing. I didn't wrack up credit card debit. My taxes & lack of interest are paying to supplement all sorts of banking, several big businesses, random g'vt supported programs instead of our infrastructure & individuals with less integrity. I've been saying for a while... this is bad for America. When you reward the less hard working & less thoughtful & less self-empowered... and reward everyone else.... you aren't growing the best & it will come back to haunt you.
    14 Jun 2013, 07:44 PM Reply Like
  • Curls: Bernanke want talk too much about the negative impacts of both ZIRP and QE, but most of the ongoing negative effects on GDP originate from ZIRP. It is ZIRP that holds down the short rates that have caused money market funds to pay .01%, and certificate of deposits or savings accounts paying so little it is hardly even worth the effort. I have referenced many times a study that estimated GDP was being decreased by 1.75% annually and 2.4 million fewer jobs due to reduced income from risk free savings, including treasuries, that has negatively impacted income that would otherwise be available for spending.


    Summary in the "Big Picture" Blog


    There was $6.7507 T in just savings accounts as of 6/3/13:



    Household and non-profit MM funds are another trillion+ earning nothing:



    Average CD rates can be found at the ST LOUIS FED:


    The average 5 year CD rate is .5% from national banks.
    14 Jun 2013, 08:04 PM Reply Like
  • @SG


    I wasn't aware of the estimates on GDP, & jobs, but it really brings the point it home. For one instance, it's true, many people reachig retirement or in it are limiting their spending in their "golden years of relaxing with what they always wanted to do" because of money worries.


    Where is your weekly blog? I'm not finding it from the SA profile.
    14 Jun 2013, 09:27 PM Reply Like
  • Curls: I will soon pass 1800 posts. Prior to November 2012, I posted daily since early October 2008. I will now post a weekly blog on either Saturday or Sunday:


    This is the heading for the last one:


    Saturday, June 8, 2013


    Pared Trade: Sold in a Taxable Account All 459+ Shares of VFICX and in ROTH IRA: Bought 300 MIN at $5.6, 50 GHY at $17.55, 50 SGL at $9.89, 50 GDO at $16.7, 50 ARCC at $16.9/ Sold 50 GJS at $17.14-Roth IRA/EFAV Add at $57.46



    I will have another one tomorrow, probably later in the day.


    I also post on the last Monday of each month updated information on my Lottery Ticket and Regional Bank Basket Strategies since a number of long time readers are interested in those baskets. Link to last update:


    Monday, May 27, 2013


    Update for Regional Bank and Lottery Ticket Basket Strategies/Sold LT Basket Strategy: 50 SIMG at $5.41, 30 BYD at $12.68, 40 BNCN at $10.02, & 35 DTLK at $10.93/SUTR, KEY, BHLB, BHB, PCBK, MNRK, UMPQ



    I will post once every three or four months my CEF Portfolio. LInk to last one:


    Closed End Fund Portfolio as of 5/8/13


    I will post about once every 6 months my stock fund table. LInk to last one:


    Updated Stock Fund Table as of 6/6/2013


    I am an obscenely diversified investor, which is just one way among many that I hedge against the unknowables and the inherent uncertainties about the future.
    14 Jun 2013, 10:22 PM Reply Like
  • ZIRP was Paulson's way of paying back his FatCat buddies with our money- Such a deal-
    15 Jun 2013, 09:57 AM Reply Like
  • south
    If the GDP has been decreasing 1.75% per year, are you saying that the claimed $16T is actually lower by 10%-15% inflated US$?
    15 Jun 2013, 08:59 PM Reply Like
  • RINA: The estimate comes from William Ford, a former FED governor, that the "projected annual impact of this loss of interest income on just $9.9 trillion of rate-sensitive assets translates into $256 billion of lost consumption, a 1.75 percent loss of GDP, and about 2.4 million fewer jobs" That estimate is based on a what if scenario and assumes increasing yields to the average level observed during the past nine recoveries from recessions. In other words, a really big drag on GDP originates from the low rates on risk free savings.


    I am not saying anything in this regard other than there is a huge decline in income resulting from abnormally low interest rates on risk free savings and that decline has had and will continue to have a substantial negative impact on spending and hence GDP.


    Nominal GDP is around $16T


    So if Ford is correct, then the GDP and jobs numbers would be much higher now, and the FED's policies, while having a positive influence on risk asset prices, is actually causing harm to the real economy.
    15 Jun 2013, 09:49 PM Reply Like
  • south
    thank you for explanation and specially coming from a former Fed; I have read articles that the GDP is actually lower by an estimated 25% if inflation were not included as growth
    16 Jun 2013, 10:43 AM Reply Like
  • Rina: Real GDP is far lower than nominal GDP. I suspect Ford is using nominal GDP. REAL GDP is $13.7462 compared to nominal at $16,


    Chart 1947 To Date: Real Gross Domestic Product
    16 Jun 2013, 10:59 AM Reply Like
  • south
    woah thanks for chart
    16 Jun 2013, 11:25 AM Reply Like
  • Well, that was depressing. I took a big hit on (MUX). Decided at $2.08 (16%) that the pain will get better fastest if I cut & run. I'm sure it will come up & I'll be frustrated...but I can't have my emotions playing with this.


    So hopefully, I'll make profit one of these days, to counter this. Maybe even see good signals in ( & get back in & get profit. Meanwhile, my lessons learned... (I'm writing them to vent, but maybe they'll be interesting.):


    > When you enter a position, have an out plan **for when it doesn't go as expected at all**. It's easy to picture the success picture. Make sure to picture the "unexpected" & the out point.


    > If the fundamentals, or news, or charts, aren't positive or are wushy-washy, then for longer time term position reconsider, and for a short term trade get out at a loss right then. Even if potentially positive, if it's run away from you get out. ...which leads to:


    > It's better to lose on a trade & then look elsewhere to make up the money than stick with a poor setup. (I knew this already, didn't follow it though.)


    > The bigger the lose the more tempting to look for positives in the stock... and the more important to leave & find another stock.


    > Hold thing takes patience. For something that blinks rapidly & makes a fast racket on TV, things can sit for a while & require patience or attention for long times while you wait for the shift. Have to decide before getting in a position whether it's for a few hours, a few weeks, or mid-term. Then take the *lost* or gain in that time. If your patience & expectation are set for a short time, but you extend it -- your patience will run out while your judgement still needs it. Plus your emotions won't in pre-checked to the backburner & will come back out.


    > Even for a really short term trade, take a look at the essentials of the stock first. Are there any new items recently? Any gut sense (or Alpha articles) that it's hitting a tough stretch, which means the "up signals" have more chance of not being accurate. If it's an index EFT, look for the macro news. Look for that anyway since these days it effect most everything (around the world).


    Yep, there ( goes on it's usual end of day lift. Much weaker lift than last days. So it's only going down from here over time.


    I'm sad :( My first few short trades went very well. I was up 6% on several short trades. Now I'm down 16%. (This is only portion of my portfolio.) I think I'd better read before deciding what to do next! Thanks for letting me vent.


    I lost $215 in VOO too today. But got out before the plumet down, so at least I used sense there. Should have sold sooner, missed sticking with my very short moment plan that would have worked.
    14 Jun 2013, 04:05 PM Reply Like
  • Curls, What's your take on shorting Walter Energy? I've traded it long and short before. It has big swings, but haven't been following it for almost a year. I just can't jump into something w/o doing any research. Made some good money shorting CHK last year.
    15 Jun 2013, 01:54 AM Reply Like
  • Tradewin - I asked in Chapter 9 of this instablog & got some feedback. See you there :).



    I also posted about the NDLS Noodles & Co upcoming IPO.
    15 Jun 2013, 03:53 PM Reply Like
  • curls


    sorry for your losses; I understand your pain; I got out of all my short ETFs last year after some losses and that was the best decision that I did since everything is up
    15 Jun 2013, 08:45 PM Reply Like
  • Author’s reply » @CURLS


    as you know that is why I am sitting with dry powder and gave up a while ago day trading. Not good on the ole ticker!!


    But you will hit a 10 bagger one day and look back at this loss as a learning point. When I did trade daily I set up a trailing stop so that I either locked in a profit or took the hit. Starting out although most seasoned guys don't use them I think it might be prudent if you do.


    It takes the emotion out of it somewhat. You accept the potential loss BEFORE you enter the trade. Now if it goes up your a happy camper
    15 Jun 2013, 10:42 PM Reply Like
  • Rite Aid (RAD) is releasing earnings Thurs after hours. Anyone in RAD? Any expectations?
    15 Jun 2013, 12:45 AM Reply Like
  • I have (RAD) and it is moving up slowly; let's hope for good results
    15 Jun 2013, 08:36 PM Reply Like
  • Slowly :) ? There's been some 5% up days...looks like it's been doing well :). Hoping for good news results on this one for you...
    16 Jun 2013, 11:45 AM Reply Like
  • Author’s reply » I was out of pocket most of the day and came home to review 60 posts!!


    You guys were busy today for sure. I will try to find time tomorrow to begin a new chapter before Fathers Day..


    Some great banter going on today. I have to admit that some posts are getting real technical, so maybe some explanations can accompany them for the newbies? Just a thought.


    Anyway , I should have the new chapter up and running but I was a little disappointed in the lack of the LIKES again. I hate to harp on it ,and I know a few people have used it. But it really only takes a few minutes at the end of the day to just pull up the chapter and hit the like button.


    If you notice above DG, AND A FEW OTHERS I had asked to post here get 5 likes very quickly. It was just a given to do it for EVERYONE POSTING in our other chatroom. So those crossing over just do it out of habit..i ALWAYS thought it was a good motivator to get posters but I can be wrong.


    But I have beat this point to death, just wished all this free information had a reward for the poster building up their LIKES. This way when they post in another article it surely helps people reading it and then following the person.


    But I think I am done asking all to do it for each other as it hasn't slowed down the knowledge being passed around. But again, a ton of posts are flying over my head so can we try to make a few posts a little simpler. I know , easier said then done, just keep in mind newbies won't post if they feel intimidated.


    PLEASE do not slow down anything, buy maybe an explanation here and there might help. Just let me know if I am worrying too much.


    15 Jun 2013, 01:37 AM Reply Like
  • Author’s reply » My last point on the LIKES button. We seem to have about a dozen posters regularly. Can you imagine if every post got at least 10 likes?


    I can show you a link where this happens as those posters take it as a responsibility to do it. Just look up and down Chapter 8 and see how many post got a zero. !!


    Then look at all the info on those posts. I am trying to build ALL of us up at the same time as passing info on..


    No, I did not drink today. But I am sleeping at a Holiday Inn !!



    15 Jun 2013, 02:02 AM Reply Like
  • InterestingTime: After three hours of continuous typing, written in a stream of consciousness, I finished by weekly post a few minutes ago. I will generally put the links into the post before I start or afterwords so that I can focus on the content.


    I did discuss PSEC which you asked me about earlier:


    IRS Refunds/Bond Fund Risks/Sold 100 LF at $10.01/Bought 100 of the Municipal Bond CEF BKK at $15.93-Then Sold BKK at $16.82//Added 50 TICC at $9.85/Added 50 PSEC at $10.15/ROTH IRA: SOLD 50 GJT at $18.9/Bought 100 FAX at $6.35



    If you are interested, just scroll down until you see this line item:


    2. Added 50 PSEC at $10.15


    I would add another comment about foreign investing. A foreign stock is priced in that foreign currency irrespective of whether the U.S. investor buys the ADR using USDs or converts their USDs into Euros, AUDs, CADs, Brazilian Reels, Swiss Francs, etc. and then uses that foreign currency to buy a stock or a bond on a foreign stock exchange where the settlement needs to be in the currency for that exchange.


    So if I bought AXA with Euros on the Paris exchange, the same price would be available to the American using USDs to buy AXA 's ADR on the U.S. pink sheet exchange AFTER REFLECTING THE THEN CURRENT VALUE OF THE EURO VS. THE DOLLAR.


    I talked today in my post about optimizing my dollars as an investor. For a U.S. investor looking at any foreign stock to buy, the best time to buy is when these two events collide:


    (1) a serious correction in the ordinary shares and


    (2) a significant rise in the value of our currency, the USD, against that foreign currency.


    This is not that sophisticated or difficult point to understand.


    You want to use a strong currency to buy an asset priced in a weak currency, making selections based on the same valuation criteria used for purchasing US companies on the NYSE using our USDs.


    I going to give a homework assignment. A hint would be to look for periods when the EURO was really weak.


    In this assignment, I am going to give anyone interested 3 charts and the goal is to identify simply the better times to buy the French Company AXA for either a long term hold or a short term trade.


    Use Maximum Period Charts:


    AXA Group (CS.PA) (ordinary shares chart);range=my;compare=;ind...


    AXA Group (AXAHY) U.S. Listed ADR;range=my;compare=;ind...


    EUR/USD (EURUSD=X);range=my;comp...


    A currency converter may help:;_ylt=AoHBskUVAYWo2t3O...
    15 Jun 2013, 02:52 PM Reply Like
  • SG51:


    You can buy American companies on foreign exchanges so isn't it advantageous to buy American companies on foreign exchanges with foreign currency when the dollar is weak?


    Are there tax implications for foreign trading?


    Some people view gold as the ultimate currency. Any thoughts from anyone?
    15 Jun 2013, 10:26 PM Reply Like
  • Extreme: This Old Geezer is getting ready for some sleep time. I found two brokers that will give me a far better deal than Fidelity on both currency conversion and commission rates for foreign securities. I will look into one of them, TradeStation, whenever I get the time.


    When I use CADs to buy a security, I create a tax event based on whether the sell of those CADs was at a profit or loss. I thought that was odd, but that is what Fidelity tells me, so I include their calculation in my tax return. Last year, I had something over a $100 profit generated in that way. No big deal given the amount of trading. It has something to do with my status as a U.S. taxpayer. The gains and losses are not calculated by the actual gains and losses in CADs. I buy in CADs and receive the proceeds in CADs. Instead, Fidelity will convert my buy and sell price into USDs for tax reporting purposes. So I can actually reduce my tax liability to below zero by selling a Canadian security that has gone up when the value of that security in USDs has gone down into loss territory. I have sold some where I had a tax loss with that computation when I actually had a gain in reality.


    I view gold as the non-government currency that unfortunately has no intrinsic value. I sold some gold and silver in September 2011 and in January 2012, invoices included in blogs, and will simply buy back when prices fall further. I view precious metals as a hedge against Black Swan events such as the failure of a treasury action. I view owning securities priced in CADs, AUDs or Swiss Francs as providing me some protection in the event my main assets, all priced in USDs, are radically impacted by a plunge in the dollar's value which might occur for example after a failed treasury auction or the loss of reserve currency status.
    15 Jun 2013, 11:29 PM Reply Like
  • SG51:


    Thank you very much for your reply! I deal with interactive brokers LLC and you can denominate accounts in different currencies and trade on different exchanges. Commission rates are very cheap and margin rates are fed funds plus 1.5% on the first million or so. I have owned Aussie dollars before but did not hold very long. I have bought some foreign stocks in dollars and they often get a different tax treatment from my broker. (i.e. dividends reduced by the amount of taxes). I know very little about buying foreign securities other than buying a country ETF when it is doing well but I do believe it will become more important in the future. Country ETF's with reasonable management fees seem to be a good vehicle for me and let them worry with the tax and currency issues.


    Thanks again for all of your insightful and gracious remarks!
    16 Jun 2013, 07:32 AM Reply Like
  • Extreme: I have to pay a 15% Canadian tax on the dividend irrespective of whether I own the ordinary shares bought on the Toronto exchange with CADs or the ADR on the NYSE using USDs. There are two differences.


    (1) The ordinary shares will pay me dividends in CADs after that 15% withholding tax while the ADR will pay in USDs. One reason for owning dividend paying Canadian securities is to generate more CADs so I want the CADs rather than more USDs. I have enough USDs already.


    (2) Conversion Rate: The dividend for the owner of the ADR will be converted into USDs at the exchange rate then prevailing. If the CAD is strong (e.g. 1 CAD buys 1.05 USD) then that helps the the ADR owner. If the CAD is weak (1 CAD buys .75 USD), then you are diluting the value of your Canadian dividends through that conversion process. I eliminate that issue by owning the ordinary shares and timing my conversion back into USDs to one more favorable to me, assuming that I am inclined to do it which is doubtful.


    Interactive Brokers is the other one that I looked at last night.


    For those who have paid less than $300 in foreign taxes on dividends, it is really easy to take a tax credit on your U.S. tax obligation without filling out another form. I am not one of those fortunate people and I prepare my own returns. Consequently, I have to file Form 1116 which is far more complicated.



    Although I have not tried it yet, I could use some of my CAD stash to settle a trade in AUDs. The main reason for using another broker is the differences in currency conversion fees and brokerage commissions on foreign transactions.
    16 Jun 2013, 08:53 AM Reply Like


    This one takes too long to load for some people..
    16 Jun 2013, 12:36 PM Reply Like
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