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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 14.........  218 comments
    Jun 21, 2013 2:16 PM

    What happens to stocks, bonds, gold, silver, oil, OUR ECONOMY?

    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. (NYSEARCA: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 (NASDAQ: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 (NYSEARCA:GLD) or (NYSEARCA: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, 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.

    Additional disclosure: Every investment is open for discussion.

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Comments (218)
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  • Interesting Times
    , contributor
    Comments (13056) | Send Message
     
    Author’s reply » MARGIN INCREASES OR DECREASES !!

     

    Is this good for the markets? Is it a form of manipulation?
    21 Jun 2013, 02:19 PM Reply Like
  • Notrub
    , contributor
    Comments (656) | Send Message
     
    IT,
    The reason I asked what I did before about margins was I couldn't understand why anyone buying physical would use it??? But, what do I know, lol.
    21 Jun 2013, 04:38 PM Reply Like
  • Interesting Times
    , contributor
    Comments (13056) | Send Message
     
    Author’s reply » @NOTRUB

     

    I always questioned why it was needed to control a free market. I guess it is like a covered call. You pay a vig hoping you bought low.. I just don't like the idea of any force being used to control what is suppose to be a free market that's all.

     

    But that is why I asked the question, I am confused as well..
    21 Jun 2013, 04:53 PM Reply Like
  • Notrub
    , contributor
    Comments (656) | Send Message
     
    You will like it when prices start going up and all those on margin have to start covering their margins and make it go up even more. Kind of like what you are seeing with bonds interest rates right now.
    21 Jun 2013, 06:07 PM Reply Like
  • Interesting Times
    , contributor
    Comments (13056) | Send Message
     
    Author’s reply » @NOTRUB

     

    Not sure that is the case. If you are going long and the price goes up you DON'T get the margin call. It works in reverse, just like buying a stock. Here is a post from another article talking about the shorts ..

     

    "This beat down may be the final elimination of J P Morgan's short position in silver, something I thought would never happen.

     

    Last week's C.O.T. Report had them 5.000 contracts net short. Six months ago they were 60,000 contracts net short. This has to be the best slight of hand maneuver in our lifetime, all while the price was falling and the specs were going short.

     

    If they are finally net long in silver as well as gold, the next few months could be very exciting.

     

    For the shorts, not so much."

     

    This is why the margin requirement is raised. THEY KNOW people are now going to go long and they don't like it !!
    21 Jun 2013, 06:19 PM Reply Like
  • Rinascimento
    , contributor
    Comments (1123) | Send Message
     
    Notrub/IT

     

    In future markets, the contract size is a minimum of $100,000 (I think) and the trader has to put down a cash collateral of something like $7,000 and this is what it was raised; I hope this helps; if you want the gold contract delivered you need the $100k
    21 Jun 2013, 09:24 PM Reply Like
  • Tom Luongo
    , contributor
    Comments (1315) | Send Message
     
    @IT No, it's the other way around. Now that the specs are masively short and they are long, they will raise margin reqs to clear the path for a quick rise in price. They don't want to have to fight the shorts on the way up. Margin reqs work both ways.

     

    This is a very bullish sign as I noted in my article on Friday morning.
    22 Jun 2013, 01:32 PM Reply Like
  • Interesting Times
    , contributor
    Comments (13056) | Send Message
     
    Author’s reply » @TOM

     

    This is why I don't understand margins at all. I never bought using them, so I never got it straight...Thanks for fixing my booboo...

     

    I am way better handicapping horses that's for sure !!
    22 Jun 2013, 11:53 PM Reply Like
  • Interesting Times
    , contributor
    Comments (13056) | Send Message
     
    Author’s reply » Tom wrote me a simplified version for those of us ( maybe just me ) who fully did not understand .

     

    "@IT Everyone in the futures market is on margin. To play that game you have to have a certain amount of equity in your position per contract you are selling. As the price moves in the direction you are on your equity goes up and your margin cushion rises. If it goes up enough for you to take on a 2nd contract then you can do that, now having just enough margin for both contracts, for example.

     

    If the price moves against you, then you either have to add money to your position (pure cash) to hold your position or sell the contract at a loss to you.

     

    Raising margin requirements in a rising market forces margin calls on those leveraged to the limit of their equity and gives the advantage to the short seller. If the price drops even a little they have to sell or face a margin call. Raising them in a falling market thins the equity cushion of short-sellers.

     

    And, now that the commercials (bullion banks, bad guys, pick your name) are likely net long this will make it easy for them to raise the price and force short sellers to buy to cover, thereby raising the price faster."

     

    Does anyone have a comment on this?
    23 Jun 2013, 12:34 AM Reply Like
  • Fear & Greed Trader
    , contributor
    Comments (6481) | Send Message
     
    IT,

     

    That is a logical scenario, if it does indeed play out, I believe you will need to see Gold price retake the 1325 area (quickly) as I mentioned a couple of days ago.. , I believe Tom mentioned that area here or in his article, not sure where. (See if he concurs ) I look for the possibility for the price to trade back to the 1350 area before coming under pressure again,,

     

    Understand that I am viewing this as if it was a stock chart and not taking into account any fundamental backdrop..

     

    But if it was a stock, I would want to be sure i had the fundamental picture in tact before i step in ..

     

    Just my .02
    23 Jun 2013, 09:42 AM Reply Like
  • bd4uandu
    , contributor
    Comments (2034) | Send Message
     
    From Bloomberg ... http://bloom.bg/1aF4EbV
    23 Jun 2013, 10:47 AM Reply Like
  • tampat
    , contributor
    Comments (999) | Send Message
     
    Is this good for the markets?

     

    It is for some, not for others. Best I could come up with.

     

    Is it a form of manipulation?

     

    Of course.
    What markets are not manipulated, other than supermarkets?
    21 Jun 2013, 02:44 PM Reply Like
  • Rinascimento
    , contributor
    Comments (1123) | Send Message
     
    IT

     

    An example I can give is during the tech bubble when the margin was very high, if I remember correctly; but I think that the Fed has a say about the margin
    21 Jun 2013, 02:52 PM Reply Like
  • Tom Luongo
    , contributor
    Comments (1315) | Send Message
     
    Guys, Mexican yields have moved nearly a full point this week alone, making the carnage in Singapore and the U.S. look like an full frontal assault by hari krishnas. If you don't think there are IR swaps blowing up all around the world right now then I don't know what to say.

     

    This stuff is really beginning to scare me. Bond yields should not be moving this quickly and if the selling has truly begun in the UST market All Bernanke can do is act like Dan Ackroyd in Trading Places... "Buy 'em!" And if you think the Fed's balance sheet is big at $3.4 trillion, just think about what 6 will look like.

     

    Where are the gold trolls now? Oh, that's right we're having a recovery.
    21 Jun 2013, 02:57 PM Reply Like
  • Rinascimento
    , contributor
    Comments (1123) | Send Message
     
    Tom

     

    I am glad that you mention about IR swaps; I have been posting about IRS but nobody wants to talk about them; these swaps have a mind of their own and JPMorgue and Morgue Stanley are the gatekeepers, I believe, for the Fed
    21 Jun 2013, 09:03 PM Reply Like
  • Tom Luongo
    , contributor
    Comments (1315) | Send Message
     
    http://bit.ly/10837He
    21 Jun 2013, 02:58 PM Reply Like
  • South Gent
    , contributor
    Comments (4375) | Send Message
     
    Barron's just published a chart showing the flight from bond funds:

     

    http://on.barrons.com/...
    21 Jun 2013, 03:09 PM Reply Like
  • Notrub
    , contributor
    Comments (656) | Send Message
     
    I think a lot of it is shorts being covered as yields climb, computer trading kicking in as it hit old resistance levels (like 2.4 on the 10Y) and finally people getting nervous and pulling their money out till things settle down.

     

    You have to admit, the rate increase the last 2 months is pretty extraordinary. What was it 1.6% on the 10Y back in May? But, now that I think about it I guess I shouldn't be surprised. Kind of like what we talking about things going back to mean eventually. And, yields have been suppressed for almost 5 years now.
    21 Jun 2013, 04:48 PM Reply Like
  • South Gent
    , contributor
    Comments (4375) | Send Message
     
    Notrub: The 10 year yield was at 1.66% on 5/1/2013. The close today was at 2.52%.

     

    It is the first time in my life that interest rates have moved up so fast without inflation expectations accelerating. In fact, inflation expectations have fallen significantly over that period.

     

    The average annual inflation forecast embodied in the 10 Year TIP closed today at 1.93%. It was close to 2.5% at the start of this year.

     

    So rates are rising fast as inflation expectations decline, proving that the cause of the rise is nothing more or less than an ongoing process of interest rate normalization.

     

    The treasury yield curve is steepening as the short rates remained anchored near zero due to ZIRP.

     

    You can compare the curve now with the one as of 5/1/13 by going to this treasury webpage:

     

    http://1.usa.gov/wxWTJ2

     

    I noted in the chapter 13 that my regional banks were rising in prices during the recent carnage and opined that the reason may be net interest margin expansion due to the rise in the yield curve, as they continue paying their depositors nothing and are able to lend money out at higher rates. Maybe that idea will break down in the coming weeks but my regional bank basket rose 1.35% today and I was close to break-even with Thursday's large decline. I have generally 40 to 50 stocks in that basket:

     

    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

     

    http://bit.ly/17msiuD
    21 Jun 2013, 05:07 PM Reply Like
  • Tom Luongo
    , contributor
    Comments (1315) | Send Message
     
    @southgent Yes the breakeven rate keeps falling and at 1.9% is now pushing into 6 sigma event territory. As I've been banging on about the liquidity draining from EM bonds/equities is creating a mess and Bernanke is confused????
    21 Jun 2013, 08:02 PM Reply Like
  • Rinascimento
    , contributor
    Comments (1123) | Send Message
     
    south

     

    thank you for the technical data on bonds; I have been posting about IR swaps for the reason of 10 yr rates been up; we'll know for sure if reports come out that JPMorgue has another whale like loss or bad earnings report; I have been forgetting to mention about LIBOR rates manipulations in my postings; I think all these events in Europe, Asia, Mexico, and 10 yr are all related; earthly debt bubbles are getting aligned
    21 Jun 2013, 09:45 PM Reply Like
  • Krustyman
    , contributor
    Comments (938) | Send Message
     
    Rinascimento:

     

    Regarding the margins and the techno era, you are raising an interesting point that I wanted to stress.

     

    The margin debt level reported by the NYSE (latest data available in April) shows levels similar to 2000 and 2007 just before the crashes.

     

    I do not like that info. Makes me kinda nervous.

     

    Excellent write-up here by Doug Short (who is also a great SA contributor IMHO).

     

    http://bit.ly/12gjPAx

     

    Krustyman
    21 Jun 2013, 06:05 PM Reply Like
  • Interesting Times
    , contributor
    Comments (13056) | Send Message
     
    Author’s reply » @krusty

     

    I posted this a few chapters back that we were margined to the hilt again.. Now when prices drop the calls go out and the selling accelerates!!
    21 Jun 2013, 06:22 PM Reply Like
  • Rinascimento
    , contributor
    Comments (1123) | Send Message
     
    krusty

     

    thank you for your reply; I must have some good brain cells yet!!
    21 Jun 2013, 09:11 PM Reply Like
  • Fear & Greed Trader
    , contributor
    Comments (6481) | Send Message
     
    Krusty.

     

    I've seen that report before,, while it shouldn't be ignored & may raise a yellow flag in short term

     

    Pe ratio Jan 2000 -- 29

     

    Pe ratio June 2013 --- 17
    21 Jun 2013, 06:17 PM Reply Like
  • Krustyman
    , contributor
    Comments (938) | Send Message
     
    Fear&Gread:

     

    Agreed. p/e was higher in 2000 but still, we have to keep that info in mind IMHO.

     

    And when I instinctively feel nervous, it is always a good sign! :-)

     

    Krustyman
    21 Jun 2013, 06:50 PM Reply Like
  • Fear & Greed Trader
    , contributor
    Comments (6481) | Send Message
     
    Krusty,

     

    yes no doubt , we have to pay attention,, its one of many that can give us a clue in short term ,, then put that in perspective...

     

    your feeling nervous as a good sign makes me feel better--- :)

     

    Hey its a full moon this Sunday, if you dont think that has an affect on emotions --- think again,,, :) My rule -- three days before and three days after are the worst.. :)
    21 Jun 2013, 07:16 PM Reply Like
  • Interesting Times
    , contributor
    Comments (13056) | Send Message
     
    Author’s reply » "My rule -- three days before and three days after are the worst.. :) "

     

    Agree, are we talking about a divorce ???

     

    That settlement had me crying those days for sure!
    21 Jun 2013, 07:24 PM Reply Like
  • Interesting Times
    , contributor
    Comments (13056) | Send Message
     
    Author’s reply » F&G

     

    DOES THIS make you shake in your boots??

     

    6:06 PM State Street (STT) put a halt Thursday on redeeming shares of its municipal bond ETFs for cash - limiting to in-kind redemptions only - and still hadn't resumed cash swaps on seven ETFs today, with the exit doors jammed. The move comes in the wake of this week's muni-bond selloff, but has little direct effect on end investors who can sell in the open market. (Related ETFs: BABS, INY, VRD, SHM, TFI, CXA; more redemption difficulty)
    21 Jun 2013, 06:27 PM Reply Like
  • Fear & Greed Trader
    , contributor
    Comments (6481) | Send Message
     
    IT,

     

    since i'm not anywhere near the muni's , or any bonds for that matter,, -- no -- i'm not shaking..

     

    its fear at its best.. -- does it have an effect on how many hamburgers (MCD) will sell , or how much oil/gas profits (CVX)will make next qtr.. ??
    or impact the (RDS.A) i bought today ? -- IMO not really...

     

    makes for great storylines though.. of course if you are involved that's a totally diff. story..
    21 Jun 2013, 06:37 PM Reply Like
  • Interesting Times
    , contributor
    Comments (13056) | Send Message
     
    Author’s reply » F&G

     

    Sorry, I think too many people own muni's and thought they were safe investments. You and I might not own them, but it does not bode well for the security of others!!

     

    Some of those folks won't be going to Micky D's SO QUICKLY NOW :)
    21 Jun 2013, 06:42 PM Reply Like
  • Interesting Times
    , contributor
    Comments (13056) | Send Message
     
    Author’s reply » "The selloff causes stress cracks in ETFs, with many tumbling below NAV. Worst hit are emerging markets ETFs like the EEM which yesterday slipped to a 6.5% discount. "We are unable to take any more redemptions today ... a very rare occurrence due to capital requirements - we are maxed out on the amount of collateral we have out," emailed a Citi trader to counterparties. ETF losses were "far beyond what the most sophisticated financial risk models could have predicted," says Bryce James of Smart Portfolio. Where have we heard that before? "

     

    This just smells bad to me!! Sorry, someone is losing money here !
    21 Jun 2013, 07:29 PM Reply Like
  • South Gent
    , contributor
    Comments (4375) | Send Message
     
    IT: Emerging market bonds have been crushed in local currencies.

     

    The USD has been gaining significant strength against emerging market currencies, making the losses even greater for emerging market ETFs priced in USDs.

     

    Just to highlight the issue, assume you owned a longer term Brazilian government bond whose price is determined in Brazilian Reels. This bond was worth say $1,000 on 5/1/13.

     

    Assume just for a moment the bond has done gone down in Brazilian Reels since 5/1, just to illustrate another problem.

     

    What is the bond worth on 6/21/13 in USDs?

     

    $1,000=2001.5 Reels 5/1/13
    $1,000 =2253.4 Reels 6/21/13

     

    USD Value of 2001.5 Reels as of 6/21/13= $892.73. The bond has depreciated in value against the USD even if the price remained constant in Reels.

     

    Between 5/1/13, that $1,000 Brazilian bond has lost over 10% due just to the decline in the Brazilian Reel's value against the USD:

     

    The conversion chart looks like the Reel has jumped out of a window:

     

    BRL/USD
    http://yhoo.it/16Ui9C2#symbol=;range=1y;comp...

     

    So foreign currency risk is very important when owning foreign bond funds priced in local currencies. These type of events happen from time to time. It goes with the territory. Money could have been made on the conversion from early 2009 to mid-2011 and lost pretty much since that time.
    21 Jun 2013, 07:48 PM Reply Like
  • Land of Milk and Honey
    , contributor
    Comments (5418) | Send Message
     
    So with the dollar rally, nows the time to buy foreign bonds (or maybe equities in foreign dollars)... to weight for dollar to decline. Not that I'm going to, but seems a big opportunity.
    21 Jun 2013, 08:35 PM Reply Like
  • South Gent
    , contributor
    Comments (4375) | Send Message
     
    Curls: You will get a migraine reading what I am about to say.

     

    When you buy a foreign security, you are creating two additional risks. One is the currency risk explained above in connection with the Brazilian Reel's decline against the USD. The other is "country risk". To understand country risk, try to bring forth an image of Hugo Chavez into your head and what can happen to your assets whose existence is subject to the whims of some dictator or a populist demagogue, with the later possibly even outnumbering the former.

     

    But there is a lot of currency risks in countries like Australia where the value of the Australian Dollar has declined significantly in value.

     

    It can be treacherous. But I will step into this fray myself looking for foreign stocks that have declined in value to attractive levels in their local currency and that local currency has declined in value significantly in value against my USDs. When those two events collide, I do receive so to speak more bang for the buck.

     

    I have two main posts discussing this approach, and several more discussing the purchases of foreign stocks like Novartis, Nestle, AXA, Roche, Sanofi, Heineken, and National Australia Bank.

     

    The buy of the ADR for National Australia was made at USD $19.51 after a swift decline in the AUD starting in April 2010 making the stock more attractive to me:

     

    USD/AUD
    http://yhoo.it/12gxozT

     

    As shown by this chart, the most recent ideal time to buy an Australian stock with USDs was when those stocks cratered in value late in 2008 and into 2009, as did our own market, but my USDs would have bought a lot more AUDs too. In October 2008, I could have bought 1.6 Australian Dollars for 1 USD.

     

    Always a good idea to get the most bang for the buck.

     

    As I mentioned earlier, an investor does not escape currency risk by buying a foreign stock in ADR form on the NYSE using USDs. The price of that security will track the ordinary share price in the foreign currency converted back into USDs.

     

    This kind of playing field is what I would call advanced. But anyone buying a ADR needs to understand currency risk issues and take advantage whenever possible USD strength against a particular currency when a good foreign company is shellacked to an attractive price in local currency terms.

     

    The two main posts discussing the subject in general are:

     

    Sunday, July 11, 2010
    International Trading and Currency Risks
    http://bit.ly/W6yJZj

     

    Tuesday, June 1, 2010

     

    Strong U.S. Dollar + Weak Market=Time to Start Looking Overseas
    http://bit.ly/1bHeBDo
    21 Jun 2013, 09:03 PM Reply Like
  • South Gent
    , contributor
    Comments (4375) | Send Message
     
    Sometimes it helps to look at the USD conversion chart into the foreign currency to get one's head around the issue:

     

    USD/BRL (Brazilian Reel)
    http://yhoo.it/1270N3Q;range=1y

     

    On March 11, 2013, 1 USD bought 1.9419 BRLs.

     

    On 6/21/13, 1 USD bought 2.2534 BRLs.

     

    Always a good idea to buy more, rather than less, with your USDs.
    21 Jun 2013, 09:20 PM Reply Like
  • Land of Milk and Honey
    , contributor
    Comments (5418) | Send Message
     
    @ SG

     

    I think I understood most of that. (Till I ask a question that shows I didn't :). )

     

    I was picturing buying foreign bonds, not stocks. That way you get interest, & when dollar comes down, you gain principle too. I have no idea if any developed countries have reasonable rates of return, which is probably the stopper. Hum, there's the hitch.

     

    I did read people were buying in Rwanda g'vt for 6%, but then you have to wonder "what are you thinking."? And don't come crying to me when you have no money.

     

    Israel's offering 4% for 10 years, sold in US dollars, though I'm sure you can do a Shekel version too, & have never defaulted. I'm not committing to only 4% for 10 years, in case of inflation risks.
    23 Jun 2013, 08:00 PM Reply Like
  • South Gent
    , contributor
    Comments (4375) | Send Message
     
    Curls: There are a number of foreign bonds that are priced in USDs that would eliminate the currency risk issue, but the other important risks, including country, interest rate and credit risks, would remain.

     

    With a foreign bond price in a local currency, you are acquiring two additional risks: currency and country risks. Those risks exist irrespective of whether you buy a USD denominated fund that owns those bonds or convert your USDs into a local currency to buy those bonds on their home foreign exchange.

     

    There are several ETFs that own only bonds issued in local currencies and all of those funds would have currency risks.

     

    See Discussion in this ETFTrends Article:
    http://bit.ly/14rxibV

     

    There is another emerging market bond fund that apparently owns only USD denominated emerging market government bonds.

     

    http://bit.ly/14rxgRj

     

    Currency risks can work both ways.

     

    At the moment, the USD is gaining strength against emerging market currencies and the currencies of many developed nations, which is bad for owners of USD priced foreign bond funds. This may continue for awhile given the rise in U.S. interest rates.

     

    The losses for USD investors is made worse when the value of those bonds are also declining in local currency terms, which is also happening.

     

    Look at it as a double whammy for the owner of a U.S.D. denominated foreign bond fund. Lose on the bond going down in value and lose again on the local currency losing value against the U.S.D.

     

    The triple whammy is when you buy a CEF bond fund that invests in foreign bonds, and the discount to net asset value per share starts to expand due to the first two Whammys, as individuals become heavy net sellers of those funds due to the price declines.

     

    Bond in most developed markets are not appealing:

     

    Germany 10 Year 1.74:
    http://on.mktw.net/14r...

     

    Canada 10 Year= 2.44%
    http://on.mktw.net/14r...

     

    France 10 Year 2.33%
    http://on.mktw.net/14r...

     

    Australia ten year government bonds have one of the higher rates around for AAA rated securities:

     

    http://on.mktw.net/14r...

     

    WSJ Global Government Bond Yields:
    http://on.wsj.com/14rxic3

     

    I am not interested in any of them.

     

    Anyone owning a foreign stock, either in ADR form or through purchasing the ordinary shares, faces currency risks too.

     

    I would add that the value of a dividend paid by a ADR holding is impacted by currency conversion rates. The value of the dividend decreases as the USD gains strength against that foreign currency.

     

    Say I received a 100 AUD dividend in February 2009, near the maximum time of USD strength against the AUD, I would have actually received about $64 USDs. But a payment of 100 AUDs around 7/25/11 would have been worth about $110 USDs. Another point to keep in mind.

     

    For all of my Canadian securities, I use CADs to buy them on the Toronto exchange, and I receive the dividends in CADs after the 15% withholding tax. I therefore avoid that particular currency conversion issue, and I increase by CAD stash without having to pay Fidelity a 1% conversion fee.
    23 Jun 2013, 08:47 PM Reply Like
  • Land of Milk and Honey
    , contributor
    Comments (5418) | Send Message
     
    @ SG

     

    I think I'm miscommunicating. I'm talking about buying a foreign straight bond. Not an ETF. A gvt bond that can be held to maturity. There's country risk of course.

     

    If US$ is high vs. their currency, then you're in improved risk of gaining not just interest but exchange rate benefits if you sell sometime on the 2ndary market (if it's desirable to buy).

     

    I hadn't considered importantly, dividend payouts are in foreign dollars, i.e. exchange rate dependent. That's a big factor to consider that trumps possible gain in principle...

     

    I'm pretty sure the Israel bonds are set up by an American company in American dollars & aren't exchange dependent. The selling company takes that hit up front. I'd have to check more, if I was interested.

     

    Thanks for the links too - nice to have.
    23 Jun 2013, 09:05 PM Reply Like
  • South Gent
    , contributor
    Comments (4375) | Send Message
     
    Curls: If I wanted to buy an Australian government bond denominated in AUDs, I would have been able to buy more bonds with my USDs last Friday, when 1 USD could buy 1.08 AUDs than when my USD could buy only .95 AUDs in mid-April.

     

    So if the bond is priced in the local currency, it is a better deal for an owner of USDs when the buck buys more of the local currency. The yield would improve too.

     

    Say I bought a A$1000 par value Australian 10 year government bond last Friday at a 3.98% yield using USDs. Assuming I had a broker that would not mark up the conversion to any significant degree which would exclude Fidelity and its 1% commission, I could have bought that A$1000 par value bond for $920 USDs. My yield becomes 4.32% rather than 3.98% for the Australian buyer using AUDs to make the purchase. However, while I am doing fine as of that moment, I have potential future problems.

     

    When the bond matures in 2023, let's say the AUD buys $1.05 USD and I would then receive for that one bond which cost me $920USD a total of $1050 USDs assuming I have a broker that charges almost nothing on the conversion. That worked out fine.

     

    However, what if the AUD continues to fall so that 1 AUD buys $.8, then I will receive only $800 for that $1000 par value bond at maturity.

     

    If the value of the AUD is falling most of the time from my original conversion price, then the value of each interest payment declines when converted into USDs, and I would no longer be earning the 3.95% coupon in AUDs but something less based on the percentage decline in the value of the AUD against the USD.

     

    23 Jun 2013, 09:43 PM Reply Like
  • Fear & Greed Trader
    , contributor
    Comments (6481) | Send Message
     
    IT,
    agreed , the warnings have been out there, i liken it to those that decide to stay and WATCH the hurricane !

     

    When folks see their statements first week of July they will be calling their brokers asking how could this be.. ?? I'm glad i wont be dealing with those calls..

     

    Now play it out , will they redeem & sit n cash , maybe -- but after the dust settles in 3- 4 5, 6 months whatever -- where is the one place to be ? - IMHO - it will again be equities..

     

    I'm advising to keep a calm head & stay the course..

     

    21 Jun 2013, 07:11 PM Reply Like
  • Interesting Times
    , contributor
    Comments (13056) | Send Message
     
    Author’s reply » "State Street (STT) put a halt Thursday on redeeming shares of its municipal bond ETFs for cash"

     

    Maybe I am missing something here, they CAN'T redeem their shares for cash. Fear isn't the word I would be yelling at my computer if I wanted to sell and was told "NICE TRY"

     

    If that happened to me I would not be *staying any course*, I would be getting the hell out of Dodge !!
    21 Jun 2013, 07:16 PM Reply Like
  • Fear & Greed Trader
    , contributor
    Comments (6481) | Send Message
     
    IT,
    Yes if i or anyone else was in that situation , I agree. Wanna get out of Dodge real fast..

     

    My reference to "stay the course" was to anyone with LT positions in equities.
    21 Jun 2013, 07:42 PM Reply Like
  • Land of Milk and Honey
    , contributor
    Comments (5418) | Send Message
     
    Tells me to read the prospectus more carefully. Wonder where does it say they can't opt not to cash you out (even if it means they have to leverage, i.e. borrow money)?

     

    This is a "safe" investment in safe bonds? Those investors will be spooked for a long time. And this was only a small or moderate drop, not a mega huge run.
    21 Jun 2013, 08:41 PM Reply Like
  • Tack
    , contributor
    Comments (14288) | Send Message
     
    IT:

     

    Yacht was in for service. Had to settle for a late-day swim. :-)

     

    Actually, I made a few posts here and there today, but it was a rather unremarkable day.

     

    Regarding STT funds, investors were not prohibited from selling funds, just dealers:

     

    "NEW YORK--A flurry of selling in municipal bond ETFs this week prompted one of the market's largest exchange-traded fund sponsors to temporarily stop redeeming shares for cash. The move underscored how hard-pressed frantic sellers became in the heat of this week's selloff.

     

    State Street Global Advisors, the asset management arm of State Street Corp. (STT), told market participants Thursday that it would only accept so-called "in kind" redemptions for its suite of muni-bond ETFs, according to Tim Coyne, State Street's global head of SPDR ETF capital markets. Mr. Coyne said that State Street hadn't resumed allowing dealers to swap seven of its ETFs for cash on Friday.

     

    The move doesn't directly affect end investors who are selling the ETF shares in the open market.

     

    In bouts of strong selling, certain broker-dealers deliver blocks of ETF shares to their issuer, who then retires unwanted shares from the market. In return, dealers generally take ownership of the underlying bonds from State Street, Mr. Coyne said. For a fee, dealers can instead take cash from State Street, which then sells the bonds back into the market.

     

    On Thursday, selling bonds became so difficult and expensive that State Street disallowed the option for dealers to take cash. For State Street, the risk was that unloading bonds could eat into investor returns, or cause the ETF's price to veer from its underlying index, Mr. Coyne said.

     

    Allowing only in-kind redemptions let ETF traders sell shares easily despite an underlying market caught in gridlock.

     

    For dealers, in-kind only redemptions could potentially pinch those forced to take illiquid bonds onto their books.

     

    Mr. Coyne said State Street's portfolio manager alerted dealers of the change, stressing that redemptions were available at all times on an in-kind basis.

     

    "Our priority is to protect the existing shareholders in our product," Mr.Coyne said. "Redemptions were not stopped at all. Our standard procedure worked perfectly," he said. "
    21 Jun 2013, 09:02 PM Reply Like
  • Interesting Times
    , contributor
    Comments (13056) | Send Message
     
    Author’s reply » TACK

     

    Glad you took me comment in jest. So do you do the butterfly or breast stroke?

     

    Thanks for the above info...
    21 Jun 2013, 09:39 PM Reply Like
  • Rinascimento
    , contributor
    Comments (1123) | Send Message
     
    IT
    Any counterparty in STT?
    21 Jun 2013, 09:56 PM Reply Like
  • Rinascimento
    , contributor
    Comments (1123) | Send Message
     
    FG

     

    Yes, I will stay the course like Warren Buffett
    21 Jun 2013, 09:58 PM Reply Like
  • Interesting Times
    , contributor
    Comments (13056) | Send Message
     
    Author’s reply » RIN

     

    I am still learning what happened. But I am jealous of TACK'S Olympic size heated pool with a Cabana boy in his backyard. One day well all get invited I am sure !

     

    me, I am blowing up my pool right now.. This pump takes forever!
    21 Jun 2013, 10:00 PM Reply Like
  • Land of Milk and Honey
    , contributor
    Comments (5418) | Send Message
     
    Thanks Tack - so it's not an end-user impact & therefore not a big deal phenomenon for safety. Very good to know.
    21 Jun 2013, 10:08 PM Reply Like
  • Tack
    , contributor
    Comments (14288) | Send Message
     
    IT:

     

    Let's get one thing straight.... Cabana Girls!

     

    Have a good weekend.
    21 Jun 2013, 10:34 PM Reply Like
  • Interesting Times
    , contributor
    Comments (13056) | Send Message
     
    Author’s reply » TACK

     

    Nice , and plural I see as well.... You 1% ers ...

     

    Enjoy your weekend too.
    21 Jun 2013, 10:49 PM Reply Like
  • Interesting Times
    , contributor
    Comments (13056) | Send Message
     
    Author’s reply » F&G

     

    Only bustin your chops. I am sure you had a tough week...lol

     

    Every time your phone rang I am sure you jumped a little..
    21 Jun 2013, 07:48 PM Reply Like
  • Fear & Greed Trader
    , contributor
    Comments (6481) | Send Message
     
    IT,
    Not a problem, I like the sparring :) , keeps me on my toes and the occasional KO i get , sets me straight.. :)

     

    I keep the clients at bay , E-mail , is my preferred method of communicating.. , it was crazy , comes with the turf..

     

    another chapter starts on Monday ! but first the weekend , some due diligence and chart reading , in between cool, relaxing Vodka & tonic, where I have conjured up some great ideas !! LMAO !

     

    21 Jun 2013, 07:58 PM Reply Like
  • Interesting Times
    , contributor
    Comments (13056) | Send Message
     
    Author’s reply » F&G

     

    Sounds like a plan. Enjoy your weekend. I have family plans tomorrow all day as well. I will be back in the late evening though to check out if anyone posts..

     

    I guess TACK was out on his Yacht today eh??
    21 Jun 2013, 08:10 PM Reply Like
  • Fear & Greed Trader
    , contributor
    Comments (6481) | Send Message
     
    Same to you, will drop in here from time to time
    21 Jun 2013, 09:14 PM Reply Like
  • Interesting Times
    , contributor
    Comments (13056) | Send Message
     
    Author’s reply » TO GREAT QUESTIONS JUST ASKED FOR THE WEEKEND WARRIORS. Looking forward to seeing some thoughts when I get back home late tonight.!!
    22 Jun 2013, 10:51 AM Reply Like
  • Asbytec
    , contributor
    Comments (6721) | Send Message
     
    Something bugging me, how about some thoughts. Some have asked if an economist should run the central bank. Others think Bernanke has lost control over "the markets." (I think they mean equities and maybe bond markets.)

     

    I keep hearing how the Fed should be concerned with equity markets taking a nose dive (usually from those wanting more free money before the world ends.) "Ben doesn't understand, "the markets." I sometimes ask, is that nose dive caused by flailing economic data the Fed reviews and broadcasts?

     

    Then I assert the Fed does not target equities, they provide liquidity and set the term structure of interest rates. Private sector investors, traders, and debtors do the heavy lifting across all asset classes as a result. Hopefully it's a good result...to the economy, not any particular asset class.

     

    Sure, the central bank ensures the smooth and viable operation of the financial markets, but equity markets do not (or do?) fall under this umbrella - an umbrella than includes commercial and non banking institutions and the money market. I think equities are not part of the financial system under the Fed's purview. Ya?

     

    Capital requirements?
    22 Jun 2013, 09:40 AM Reply Like
  • Interesting Times
    , contributor
    Comments (13056) | Send Message
     
    Author’s reply » It's "total capitulation" in fixed income (AGG, BND), says BAML's Michael Hartnett. The "blood bath" includes the largest-ever three-week rush of bond-fund redemptions, $2.6B leaving (2nd largest outflow ever) the Emerging Markets Bond ETF (EMB), and mortgage-backed securities (MBB), municipal bonds (MUB), and TIPS (TIP) funds each now showing net outflows

     

    I am not buying that bond funds losses are over with. My due diligence says rates still have a ways to go .

     

    Thoughts??
    22 Jun 2013, 10:50 AM Reply Like
  • South Gent
    , contributor
    Comments (4375) | Send Message
     
    IT: Rates have a ways to go up before the process of interest rate normalization ends but the decree of increase is subject to market dynamics, the most important now being the market's inflation forecasts.

     

    The rise in treasury yields is taking the entire bond complex up, but that rise will be restrained by the market's current inflation expectations embodied in the TIPs prices (5, 7, 10, 20 and 30 year maturities).

     

    If those expectations continue to float down, due to the market's increasing concerns about deflation risks after QE ends, the normalized treasury yields will likewise decrease.

     

    A normalized rate on a ten year treasury after the end of QE, with the last Friday's inflation estimate embodied in the 10 Year TIP of 1.93%, would be approximately 4%, a low rate by historical standards.

     

    The normalized rate will come down, provided inflation expectations continue to be lowered by the market.

     

    The spread in yield, required by the market over its inflation forecast, for the nominal 10 year yield can be drastically reduce when deflation fears become even more dominant than now. This could actually temper the disruptive effects anticipated now from rate normalization. The worst scenario for normalization would be significant increases in inflation expectations.

     

    The inflation forecast embodied in TIPs of all maturities is something to watch daily now in my opinion, because it could trigger an increase in my bond allocation focusing on higher quality bonds.

     

    And, another less significant restraint on the rise is simply that QE has not ended and tapering will likely start slowly. Why less significant? If you own a 10 year treasury now, it is not going to matter to you that much whether QE ends in the first or second quarter of 2014, or even next summer. The potential loss by hanging on to the security, even after the carnage over the past several weeks, could be as high as 18% to 20% at a 4% rate in two years. Why hold a 2.5% bond when there is at least a probability of that kind of loss? Watch them try to squeeze through the door at the same time!

     

    ********

     

    I noted in an exchange with ExtremeBanker that my regional banks were up in value last week, one of my few bright spots. The increase on Friday was 1.42% for the basket compared to the .27% rise in the S & P 500. I suspect that the reason for this anomaly is the current belief that net interest rate margins will expand. Depositors will continue to be paid next to nothing while new loans, particularly new mortgage loans, can be priced at higher rates creating a larger margin spread.

     

    There is a negative impact from rising rates on a bank's profitability. To varying decrees, large financial institutions are more dependent on profits derived from their "securities available for sale"

     

    An article published in Bloomberg noted that the decline in treasury prices has reduced the profits in those securities available for sale by about 18% for the 25 largest banks.

     

    http://bloom.bg/14pe7Q9
    22 Jun 2013, 11:41 AM Reply Like
  • Notrub
    , contributor
    Comments (656) | Send Message
     
    For your consideration:
    http://seekingalpha.co...
    22 Jun 2013, 01:22 PM Reply Like
  • Fear & Greed Trader
    , contributor
    Comments (6481) | Send Message
     
    Not,

     

    Chuck writes some great stuff.. Must see for LT value plays..
    22 Jun 2013, 02:55 PM Reply Like
  • extremebanker
    , contributor
    Comments (1755) | Send Message
     
    There was a good article by "Ploutos" regarding ten investment themes for 2013 and the importance of asset allocation as compared to stock picking. It stresses that it is more important to have the allocation right than to be able to pick winners. At least, that is my take.

     

    http://seekingalpha.co...
    22 Jun 2013, 01:41 PM Reply Like
  • South Gent
    , contributor
    Comments (4375) | Send Message
     
    ExtremeBanker: I have always viewed asset allocation to be the most important component, recognizing that most investors are at best inconsistent in their stock picking skills and would be better off buying the lowest cost and broadest ETFs for the various asset classes and then moving the allocations up and down.

     

    Many financial advisors engage in what I call static asset allocation that will assign various percentages to each asset category based primarily on the investor's age and risk tolerance, without regard to how the real world will impact results in that allocation scheme.

     

    It would not be helpful to assign certain weighting to stock and bonds when both of those major asset classes were failing between 1/1/1966 to 8/1982, producing significant inflation adjusted losses over a 16 to 18 year period. Many of the stocks topped out in 1964 and bonds had already been in a bear market since around 1950.

     

    CHART: The 10-Year US Treasury Note Yield Since 1790
    http://read.bi/18ocZi4

     

    The amount of my stock allocations can not be determined solely by my age or any other factor relating to me. If the market is in a long term secular bull pattern (e.g. 1949-1965), I need to overweight stocks, and then underweight them in the long term secular bear pattern. This places a premium on being able to analyze what period the investor is attempting to navigate and why.

     

    Nor would it make any sense to even keep much of a stock allocation when P/E ratios hit 1999 levels.

     

    If I believe interest rates are likely to move up, I need to pare my bond allocation and reduce my bond duration.

     

    If I believe that commodities are going to be weak for at least another year, I may not want to have any allocation to commodity ETFs.

     

    Ploutus is attempting to look at the Big Picture and to make some asset allocation decisions based on those views. This is a lot more difficult and requires considerably more knowledge than anyone practicing static asset allocation that will produce bad results when one major asset class is in a long term bear market and worse when both of them are producing negative real rates of return before taxes.

     

    Dynamic, sometimes called tactical asset allocation, has to be done in order to be successful long term. And that can be an overlay to a static asset allocation scheme based on an investor's risk tolerance, age and situational risks, with the recognition that some smaller asset catergoies may need to be eliminated at times (e.g.TIPs when the 5 and 10 year maturities were deeply into negative yields signaling the bond equivalent of stock prices in 1999)

     

    The dynamic asset allocation process also recognizes that correlation among asset classes change based on real world events, and nothing can be assumed for example that one asset with a negative correlation to another will not change into a high positive correlation based on external events.

     

    My Vix Asset Allocation Model is just one example of my dynamic asset allocation process for stocks.

     

    General Discussion in a 2008 Post:
    Static and Dynamic Asset Allocation
    http://bit.ly/18JXPaH

     

    Instability & Volatility in Asset Correlations
    http://bit.ly/10rKLRo

     

    Typical Asset Correlation Matrix:
    http://bit.ly/10rKOwz

     

    Vanguard Article: Dynamic Correlations

     

    http://bit.ly/10rKOwr

     

    An small example of the charts viewed here at HQ in making dynamic asset allocation decisions:

     

    Richmond FED
    National Economic Indicators
    Published 6/17/13
    http://bit.ly/10BKMVr
    22 Jun 2013, 02:23 PM Reply Like
  • extremebanker
    , contributor
    Comments (1755) | Send Message
     
    SG51: Your comments are spot on! A blogger named "Mercenary Trader" stated one time that most trades could be classified as trend trades, reversion to the mean trades or carry trades. I tend to agree with his analysis and try to use each of these techniques to help diversify my portfolio. I believe good portfolio management should involve diversified strategies as well as diversified asset allocations.

     

    I consider myself a growth and income investor. My growth investments are usually trend trades. I buy sectors and indexes based on relative strength and moving averages. When these trends are broken I usually go to cash or another sub asset class.

     

    My income investments are reversion to the mean investments since I usually buy them after a substantial price decline and they are selling below trend lines and other value indicators. It is often called a contrarian approach. Likewise, if they move up in value substantially (beyond reasonable levels) then they are sold. I usually intend to hold these income investments for a longer period of time. They include individual bonds, preferred stock, closed end funds and dividend stocks.

     

    I use relative strength, moving averages and some broad economic indicators to determine how to allocate asset classes. For example, this year I have been reducing bond allocations (at nice profits), increasing cash and stock allocations. My fixed income allocation is lower than it has ever been.

     

    The nice part of using different strategies is they can compliment each other. When stock trends fail I move positions to cash and reduce exposure to equities. This gives me a lot of extra cash to buy beaten up dividend stocks and bonds if that is appropriate. Likewise, when the market gets pricey I usually purchase trend investments (everything is in an uptrend then) which I do not mind selling if the markets start to tank.

     

    I am sure it sounds convoluted however it does seem to work for me. I have a much bigger pile than I ever anticipated. My main concern with investing is managing risk. I know I could not sit through a full fledged bear market with 100% stock or bonds so I try to make dynamic allocations to meet current market conditions.
    22 Jun 2013, 11:22 PM Reply Like
  • Fear & Greed Trader
    , contributor
    Comments (6481) | Send Message
     
    South,

     

    Maybe I am saying the same thing here by commenting that one cannot use a "cookie cutter" approach to allocations ..

     

    Investor's risk tolerance, age and situational risks are keys in determining a plan.. In a general context, what works for investor A may not be in the best interests of investor B.
    22 Jun 2013, 03:21 PM Reply Like
  • South Gent
    , contributor
    Comments (4375) | Send Message
     
    F & G: Those factors are used by me when doing my asset allocations, but I view them as more of a starting point or a foundation to be built upon. Allocations can shift based on those factors and may even remain fairly constant over extended periods until some external requires a shift independent of those considerations.

     

    Dynamic asset allocation requires shifts based on an analysis of real world events that can often cause major changes in the asset allocation scheme constructed from age, risk tolerance and situational risks factors.

     

    Bonds were a very risky asset class between 1950 to 1982.

     

    Both stocks and bonds failed between 1966 to August 1982.

     

    Long term secular bull markets have returned on average 14% annualized returns in the S & P 500 after inflation and with dividends reinvested, while the long term bear markets have a -1+% annualized returns, a remarkable symmetry.

     

    As an investor, trying to maximize my returns through asset allocations, I need to try and figure out whether I am currently attempting to navigate a long term secular bull market or the other kind.

     

    In the dynamic asset allocation approach, I take into account my situation only as a starting point.

     

    Major shifts in allocations can occur based on events unrelated to anything connected to me. That is the major difference. I have always done that kind of analysis.

     

    And this process goes far beyond stocks and bonds. One of my major shifts was into band CDs in 1978-1982 even though I was a young man and an allocation scheme would have me deep into stocks, going nowhere at that time, based on my risk tolerance, situational risks and age. Stocks would have got me nowhere during that period and would have lost ground to inflation.

     

    In the fall of 1982, I took advantage of a recession and low land prices to buy a lot and to build a home using cash. I still live in that home free and clear of a mortgage.

     

    I also shifted cash into stocks in July 1982 after opening an account with Charles Schwab.

     

    I eliminated stocks in 1998-1999, something that would not be in any traditional allocation model for someone like myself, but entirely consisted with tactical asset allocation based on my views about the relative valuations of stocks versus the alternatives including cash. That would be characterized as a massive tactical re-allocation. I may never have to do that again.

     

    Since I do not have to explain what I am doing to family members or why, I have an easier task in executing my plans.

     

    It would be far more difficult to do my thing, so to speak, in your shoes, calling everybody up (regardless of their age, risk tolerances, or situational risks) and saying I am going to reduce your bond fund allocation by 70% because of my views on interest rate normalization and the impact that will have on bond prices, and I will reduce the duration of your individual bonds.

     

    The push back would be significant I suspect.

     

    And, then I would say something like-when I believe that process is about over, I am moving you back to the original allocation number. That is what I call dynamic asset allocation. Some major change has occurred based on an event external to the investor.

     

    The same would happen after a Trigger Event for stocks in my Vix Asset Allocation Model, for example, a mandatory reduction in the stock allocation with the amount based in part on age, risk tolerance, and situational risks. But, everyone in my family would have their allocations reduced irrespective of any factor unique to them.
    22 Jun 2013, 03:57 PM Reply Like
  • Fear & Greed Trader
    , contributor
    Comments (6481) | Send Message
     
    South,

     

    Understand your unique position & where you are coming from in this regard.. Yes it can be difficult for me at times , the asset allocation issue goes easier than one would think. Most clients don't have an idea what a "return to normalized interest" means , therefore shortening duration & trimming overall bond exposure in your example was no big deal.
    SInce I am independent, I keep the number of accounts managed to a limited number. I give up the quantity and try to provide quality with individual & personal approach. It goes a long way when things get tough.. Plus at this stage of the game , I'm not looking for hassles , just doing what I like and hopefully make some people happy & add some wealth to their bottom line. And the bottom line is what its all about..

     

    Some , but not all, are "front runners "or as I like to say "fair weather" types.. Portfolio can be loaded with winners, but when they call or e-mail , the first thing they mention is that one position that is under performing.. :) Human nature , Heck i do it myself when i look at my own portfolio..

     

    22 Jun 2013, 06:06 PM Reply Like
  • South Gent
    , contributor
    Comments (4375) | Send Message
     
    F & G: I am way past a willingness to deal with hassles, particularly ones originating from clients.

     

    My dynamic asset allocation approach would be more analogous to money management by certain hedge funds, except I am far more conservative in the selection of securities and do not use borrowed money to buy anything. I would also not be engaging in arbitrage activities, nor would I use option or futures contracts for any reason.

     

    I simply focus on long positions in income generating securities and attempt to achieve that 6% annualized real return after taxes (7% in the IRAs), with less volatility than the market. I do not need to get too complicated to achieve that goal. I do need to know a lot about a vast array of income generating securities to make evaluations on the ones presenting the best opportunities for current income, income growth and/or capital appreciation balanced against known risks.

     

    Important aspects of this dynamic approach are applicable to anyone in my opinion:

     

    This is just a few examples:

     

    1. Paring stock allocations is a must in 1928-1929 or 1998-1999 scenarios when even blue chips reach valuations that can not be justified by any rational explanation. Investors just need to realize that a crash in prices is inevitable and will soon follow those types of unjustifiable price periods.

     

    It is odd that those periods are easy to spot for anyone living through one of them. It is always a form of mass delusion and the Madness of Crowds.

     

    I recently discussed the 1999-2000 period in reference to GE's stock price, which hit 57 in 2000, or over 30 times the current estimate of 2014 earnings!!!

     

    I could just as easily discussed 100 other well. An investor could have sold in 2000 and bought back more than twice as many GE shares two years later with the sales proceeds.

     

    2. Stocks need to be bought after the catastrophic phase of a long term bear market, manifested by at least a relatively swift decline of more than 45% (1975; September 2008-2009). The 1929-1932 period went much further down, but there was a good snapback rally between 1933-1937.

     

    3. Some effort needs to be made to identify whether the market is in a long term secular bull or bear pattern. Static stock allocations are likely to generate negative real rates of returns during a long term bear market. More up and down movements need to be made during those long term bear periods than in the long term bull cycles.

     

    I have about 20 long posts on that subject. I have cited many of them already and went looking for some new ones that I have yet to link. I found two that I have not previously linked in my SA comments:

     

    Buy and Hold or Dynamic Asset Allocation/Trading: Long Term Secular Bull and Bear Markets
    http://bit.ly/132GwzJ

     

    More Discussion on Asset Allocation in Unstable Vix Patterns
    http://bit.ly/14OH2h2

     

    4. Inflation is always a key. Problematic inflation, such as that experienced between 1966-1982, requires a substantial reconsideration of a person's asset allocation scheme, as in starting fresh.

     

    Relatively low inflation, moving around 2%, is an ideal inflation number for stocks and would be rewarding for dividend growth investors receiving much higher percentage increases in their dividends. Given the current inflation outlook, I would not be selling my dividend growth stocks unless they became ridiculously valued, similar to the what happened in the 1998-2000 period, when 40+ P/E ratios were commonplace and a 35+ ratio for a large cap growing earnings at high single digits was viewed as some kind of bargain by many. Instead, I am looking to buy more on dips using my long standing valuation criteria for those names which are not the same as the ones used by James.

     

    I view the inflation numbers embodied in the TIP prices to be so important now that I am monitoring it daily rather than weekly.

     

    5. Long term bond bear markets do exist and are generally much longer than the ones for stocks. The last long term term bear market lasted about 32 years. They will generally start out really slow, like suffering through a number of paper cuts for maybe a decade or so, gradually gain momentum, followed by a series of deeper and deeper cuts to the bond's investors net worth and culminating in a coup d'grace.

     

    Before the current bull run which started in the early 1980s when the 30 year treasury went briefly over 15%, there was a saying which would not be understood by the youngsters who started investing after 1982: How do you become a millionaire investing in bonds? You start with $2 million and before long you have $1M.
    22 Jun 2013, 07:22 PM Reply Like
  • Fear & Greed Trader
    , contributor
    Comments (6481) | Send Message
     
    South,

     

    All very important points,, In aggregate they show the importance to understanding the environment and most important being flexible...

     

    #3 , I believe u have an idea where I stand relative to current market environment.

     

    # 4 & #5 -- are keys at the moment,,

     

    Div growth in this environment will work well, as valuations in that arena aren't anywhere near the 2000 time frame and can be argued are quite reasonable.

     

    I cut and pasted some S & P stats on dividends from recent reports.

     

    Aggregate dividend payments amounted to $76.3 billion for Q1 2013 (April 2013) and $319.8 billion over the trailing twelve-months, which marked a ten-year high. On a per share basis, the payout of $32.35 represented 15.1% growth year-over-year.

     

    Another reason there may be further increases down the road:

     

    The S&P 500 aggregate payout ratio amounted to 31.5% as of Q1 2013. The historical percentage for the S & P is 52% ..... There is plenty of runway to advance

     

    The Information Technology and Financials sectors led the index in growth of year-over-year dividends per share (49.5% and 20.2%, respectively) for the second consecutive quarter, and both sectors have logged greater than 10% growth over nine consecutive quarters. These are areas where we may see further div growth.

     

    Balance sheets like CSCO and the like leave plenty of room for increased payouts. As financials rebound and rebuild , the recent div. increases stand a good chance to continue their uptrend .

     

    #5 as for bonds, your comments sum up everything.. And it goes back to understanding the present environment..
    22 Jun 2013, 09:02 PM Reply Like
  • Krustyman
    , contributor
    Comments (938) | Send Message
     
    To Everyone:

     

    We have a new bull market! It is in the solar stocks. Again, I encourage you to have a look at (TAN). Its asset base was at $64M in April. It is now at $100M. Money starts flowing in the sector again.

     

    Also, (TAN) has a 35% exposure to China (including Honk Kong) and 47.7% to the US. These countries are the 2 worldwide leaders.

     

    The chart is a screaming buy and I have no doubt we are in the presence of a new bull market IMHO. Being a recent stockholder of (FSLR) which I started accumulating in the $45-46 zone, I will now start accumulating this ETF as well.

     

    Any weakness we have in the stock market would be an opportunity to gradually build a position for the mid-long term.

     

    I have the same feeling now with the solars that I had with gold in 2002. Why? Nobody seems interested by the solars while they are performing very well. It is a typical behavior in a young bull.

     

    Oh, and don't forget, you read it here first! ;-)

     

    Krustyman
    22 Jun 2013, 10:26 PM Reply Like
  • Interesting Times
    , contributor
    Comments (13056) | Send Message
     
    Author’s reply » @KRUSTY

     

    Thanks for the symbol.. CURLS.. Uh you can roll over the symbol for more info ..hehe
    22 Jun 2013, 11:58 PM Reply Like
  • Fear & Greed Trader
    , contributor
    Comments (6481) | Send Message
     
    Krusty,

     

    cant argue with the chart set-up on (TAN) :)
    23 Jun 2013, 09:48 AM Reply Like
  • Krustyman
    , contributor
    Comments (938) | Send Message
     
    Fear&Gread:

     

    I start the accumulation process tomorrow for (TAN). Then, the $18-$19 zone will be my next buying zone.

     

    As for (BRK.B), (WAG) and (INTC) I need a 14,000 Dow.

     

    Krustyman :-)
    23 Jun 2013, 02:37 PM Reply Like
  • Land of Milk and Honey
    , contributor
    Comments (5418) | Send Message
     
    Krusty :)

     

    I've been starring at the chart for several days. I see it's touched MA20 & bounced off it once & is posed to again. What's looking great in the chart set-up? If it goes down to $18-19, it will have moved below MA20.

     

    What's your sell plan, if it does well, & if it doesn't behave as expected. ...Uhm, I've learned recently, you've gotta have a plan :).

     

    For Solars, you're looking 1-2 years out for gains from a bull market?
    24 Jun 2013, 09:15 AM Reply Like
  • tampat
    , contributor
    Comments (999) | Send Message
     
    IT,

     

    Have you seen this article yet?

     

    http://seekingalpha.co...
    23 Jun 2013, 07:49 AM Reply Like
  • Notrub
    , contributor
    Comments (656) | Send Message
     
    tampat,
    I read the article earlier. What I got out of it was fear. I am a facts and numbers kind of mentality and the piece was mostly other peoples opinions. What strikes me most when I read pieces like this is to start looking for places to buy, because past experience has taught me that people are tossing the good with the bad. The first place I start looking is the areas that have been beaten up the worst. My focus has begun shifting outside the US. As SG pointed out in another post Australia has taken a pretty big hit. But, then I have to start considering the currency risks and adding all that entails into pricing. Add to that the "unrest" potential in each country that could affect your investments which is why I steer clear of investing in the BRIC, EU countries or Japan right now. Cyprus was a wake up call for me in that a government would beyond even consider freezing bank accounts.

     

    In the US, there is still a caveat to everything still in place. Despite all the worry about the FED scaling down it's purchase of bonds in the future that is not the reality in the here and now. In 2011 and 2012 the FED came back in and crushed those who jumped on the higher rates bandwagon. What is stopping them from doing so again in the current market? The mantra "Don't fight the FED" has gained a lot of credence since 2008. They have shown time and again they are willing to take extraordinary measures no matter the long term consequences.

     

    No matter where you turn there is a lot of worry/risk in the world right now. So the question becomes knowing all of that where do you put your money? I believe that no matter what happens there are always opportunities. Each person just has to do their own work to find them.
    23 Jun 2013, 08:37 AM Reply Like
  • Fear & Greed Trader
    , contributor
    Comments (6481) | Send Message
     
    Tampat,,

     

    Before I "buy in" to a particular prediction, scenario, I like to review how that individual has seen things in the past..

     

    In Dec 2011 Mr Snyder called for the "collapse and death of the euro"
    He has called for a financial collapse since 2011 in numerous articles,
    here is one title of many " What will happen when the market crash of 2011 turns into the recession of 2012" ,

     

    I think u get the idea.. anyway -his cry now would be this all takes time to play out, so sooner or later , well we know the rest ...

     

    Maybe so....................

     

    Again i will be kind and diplomatic..

     

    Caveat emptor regarding his advice :)
    23 Jun 2013, 10:03 AM Reply Like
  • Interesting Times
    , contributor
    Comments (13056) | Send Message
     
    Author’s reply » @PAWS

     

    Thanks for the link. I believe Tom already pointed out how rates have been rising faster then what BB EXPECTED or was hoping for.

     

    I had posted my opinion as well as the dramatic effects that I also envision. However a few here don't think that the rate rise will hurt anything. So I guess we will see within a year who is correct on their assessment.

     

    My position in the market has been laid out ( like out of it mostly now ) in anticipation of rising rates. I DO believe it will have a nasty whipsaw effect on the markets as well. I am also sure the FED is going to do everything in their power to try and control this deterioration from happening..

     

    They have been able to kick the can down the road for so long I am guessing they will be able to do it again. However if they can't , WATCH OUT !! Checkmate !

     

    I am prepared for the checkmate option, have others ??
    23 Jun 2013, 10:27 AM Reply Like
  • Interesting Times
    , contributor
    Comments (13056) | Send Message
     
    Author’s reply » Folks

     

    Everyone is making taking the word FEAR and making it sound like it's a good thing. It isn't. If FEAR strikes investors they sell, they curtail their spending, they can effect corp bottom lines, they can cause unemployment , etc.

     

    So maybe for long term holders FEAR is a buying opportunity that may take YEARS to reap the rewards. Some must understand that FEAR can also drive older people OUT of the markets for good, If they made up most of their losses from 2008/9 THEY MAY say no mas and be done with the markets.

     

    Now you need to convince the younger generation to invest and I can tell you from my daughter's group of friends (23 TO 27 ) that graduated within the last few years the furthest thought from their minds right now are buying stocks. They are struggling with just paying their bills.

     

    I had a long talk with a bunch of them at yesterdays family outing am I must add although it wasn't a scientific study It opened my eyes once I mentioned maybe buying some stocks on the dip and they said what will be left of my weekly check for gas to get to my cheap paying job that I did not go to college to work at?

     

    Add to that their student loans that all were trying to pay off. I GOT THE IMPRESSION were sitting on a nasty bubble with student loans to boot!

     

    Actually listening, and I mean listening to their concerns for healthcare being forced onto them, higher prices for almost everything ( yes we do have inflation) they don't have much to risk and quite frankly the parents who just went through the last 2008/9 fiasco aren't encouraging them to buy any stock related items either.

     

    Just my take from an Very Interesting Saturday out on my paddleboat !!
    23 Jun 2013, 10:40 AM Reply Like
  • extremebanker
    , contributor
    Comments (1755) | Send Message
     
    It would appear the middle class continues to get "squeezed" and the rich get richer and the poor get poorer. More people are moving from middle to lower class instead of middle to upper. The question that needs to be answered is why. I believe the problems of today require multiple solutions. One thing to me is certain. The more government interference we have the worse things become. Improvement in our economic future will be based on productivity because our population growth is stuck around 1% and in a downtrend. Our population is aging and we are having less children. Immigration could help if we could adopt a reasonable program. If better productivity is part of our answer for the future then how do we accomplish this feat?

     

    One immediate step that could improve industrial and corporate productivity is to reduce or eliminate corporate income taxes. This could reduce prices or improve profits which would both be more productive. Of course, tax revenues would have to be replaced with something and my personal choice would be a higher tax rate on the really wealthy.

     

    A second improvement could come from better government management of expenses and spending. After all, they are the biggest consumers in the country. A small improvement in government performance could translate to much improved productivity.
    23 Jun 2013, 11:14 AM Reply Like
  • South Gent
    , contributor
    Comments (4375) | Send Message
     
    Notrub: Regarding Australia I am keeping my powder dry since I do not yet see a bottom in the AUD.

     

    The disruption that is occurring in a variety of markets is due to a rise in U.S. interest rates that makes the USD even more attractive compared to the AUD, CAD, BRL and most emerging market currencies.

     

    Oddly the Euro seems to be doing just fine.

     

    USD/EUR
    http://yhoo.it/LCto65#symbol=;range=5y;comp...

     

    I note in this week's post how the value of the Euro will impact the price of Royal Dutch ADRs.

     

    Since I expect that intermediate and long term interest U.S. interest rates will continue to reset across the entire bond spectrum, the downward pressure on several foreign currencies relative to the USD is likely to continue, though I would anticipate some counter rallies in those currencies.

     

    The only questions now for US interest rates is how quickly will intermediate and long term rates return to normal levels, given the current inflation outlook.

     

    It is certainly possible that the FED will lose control over the speed of normalization.

     

    Why?

     

    If you owned a 2% coupon ten year treasury, would it matter to you whether the FED starts to taper in September or December, or ends QE in the 2nd or 3rd quarter of 2014?

     

    It would not matter to me, time to GET Out of Dodge before the sheriff returns to town.

     

    A 4% 10 year treasury rate in 2 years will cause a substantial loss in value for that 2% coupon treasury, wiping out the value of several years of interest payments.

     

    I would be more inclined myself to hold until maturity a 5% coupon 10 year when rates go to 7% than a 2% coupon with a rise to 4%. That 2% yield is likely to produce no inflation adjusted return before taxes even if the market is correct about low inflation rates continuing for the next 10 years.

     

    There is only so far rates can go, however, given the average annual inflation forecast of 1.93% embodied in the 10 year TIP pricing. And that forecast is falling.

     

    I am actually considering upping my bond percentage at some yet to be determined point during this rate reset process due to the inflation forecasts putting a lid on the currently ongoing carnage.

     

    It is odd that some SA authors believe that stocks are in trouble when the 10 year resets to a 4% rate, possibly lower if inflation expectations fall some more.

     

    Historically, and this can be easily determined by anyone, a 4% 10 year treasury yield is benign for stocks, and stock have done just fine at higher rates.

     

    The 10 year was mostly fluctuating between 4% to 5% during the 2004-2007 period when stocks were advancing, and between 5% to 7% during the robust 1991-1999 period.

     

    St. Louis Fed Data 10 Year Treasury Yields 1962 to Date:
    http://bit.ly/10biS0q

     

    And, I would add that the 10 year was around 4% for the bull move in 1962-1966 and much higher in the 1982-1987 period.

     

    It is always interesting to me that some SA authors make categorical statements that are actually disproven by decades of recent history.
    23 Jun 2013, 11:18 AM Reply Like
  • Fear & Greed Trader
    , contributor
    Comments (6481) | Send Message
     
    extreme,

     

    couldn't agree more on corp taxes and of course the gov't management of expenses.. I may get an argument on this but the other affect i see on lightening the corp tax load is improved employment with improved profits.

     

    and maybe we can get the trillion or so that is parked offshore repatriated back here with a reduced tax or complete tax holiday.. it's NOT coming back here under the current rates, IMO its worth trying ...is there anything to lose ??

     

    I rarely get into any political discussions , but those two things solicit a reaction form me all the time

     

    23 Jun 2013, 11:28 AM Reply Like
  • Fear & Greed Trader
    , contributor
    Comments (6481) | Send Message
     
    South

     

    your comment
    "It is always interesting to me that some SA authors make categorical statements that are actually disproven by decades of recent history."

     

    Perhaps they don't take the time to logically research their arguments and predictions.. They rather take a "headline" and run with it ...
    23 Jun 2013, 11:31 AM Reply Like
  • Notrub
    , contributor
    Comments (656) | Send Message
     
    SG thanks for the reply and I agree.

     

    I also see a few caveats entering the picture as rates increase at whatever momentum.

     

    1) With a strengthening dollar and rising interest rates there is a good chance that US bonds will again become a safe haven pushing everything back down again. There is a lot of instability in the world right now. China's fiscal problems, it will be hard on the world economy if China isn't buying. Thus the current collapse in commodities. Then you have a lot of countries like Brazil where the 99% are fed up with government and don't see the ballot box as a viable alternative for change. These types of conditions lead to flights to safety in the short term.

     

    2) IF the yields on US treasuries were to get back to the 4-5% range I have a feeling that a LOT of the cash sitting on the sidelines will came back into the market to buy and hold long term bonds. There are a lot of people, like my wife. who would have no second thoughts on buying 30 years US bonds and holding them to maturity.

     

    So, I guess in my mind US bonds will have a few headwinds along the way getting back to "normal".
    23 Jun 2013, 11:35 AM Reply Like
  • Interesting Times
    , contributor
    Comments (13056) | Send Message
     
    Author’s reply » @EXTREME

     

    Read my posts of what our younger generation woke me up to yesterday and as you will see I presented the argument to support what you feel the problems are and possible solutions may be.

     

    But were on the same page and traveling down a scary road to be honest. Those young one are looking to just survive, forget about investing !! This will snowball into much bigger issues as the years pass.. They are hearing their parents complain about their 401k's and they don't like it one bit..

     

    Most small companies don't match any investments anymore either so you lose that component as well. Times are changing and for the worst was my take. Like I said you don't READ, OR SEE this on the media sites that some feel cause HYSTERIA..

     

    No, this is the nuts and bolts , average run of the mill family kids I spoke with. I came away with a ton of information on just fundamental thinking they have right now.. Simple.. SURVIVE !!
    23 Jun 2013, 11:37 AM Reply Like
  • Tack
    , contributor
    Comments (14288) | Send Message
     
    ex:

     

    "More people are moving from middle to lower class instead of middle to upper. The question that needs to be answered is why."

     

    The answer to that question is rather simple, when one examines things in pure economic terms. The Government continues to make it more attractive to fail than to succeed. Taxes, fees, regulations and mandates are raised for those that aspire to success, and myriad "rights," entitlements and benefits are increased for those without similar ambitions. The combination of added penalties on upward movement and increased subsidies for downward movement leads, unsurprisingly, to the only economic result possible.
    23 Jun 2013, 11:38 AM Reply Like
  • Interesting Times
    , contributor
    Comments (13056) | Send Message
     
    Author’s reply » TACK

     

    Your dead wrong. The Govt made it worse for these kids to get jobs in their field. The POTUS talks about education being important but in my area we have schools closing because of a lack of funds. Then my daughters teaching degree seems wasted as she has 100 apps for ONE job opening.

     

    Then how about my neighbors who lost their 100k jobs a few years ago only to maybe be lucky making HALF of that now. Or my brother in law who is in his 50's that worked his whole life in computers yet NO COMPANY will hire him full time now because they do not want to pay him benefits, so he is an independent contractor working full time for the SAME company for 2 years.

     

    So that entitlement stuff you so conveniently mention is really getting old, Some honest, hard working people do need it to survive. They are all not deadbeats. If you did not have them you know what. WE would be in a Depression right now. BB saw to cover that up nicely.

     

    Truth hurts sometimes !! Sorry but that comment just got under my skin. I have stated we might be on opposite sides of the spectrum here, but I am tired of hearing if someone needs financial assistance then they are deadbeats. They aren't, they are hurting and most I know WANT to support their families.

     

    Where did all that QE money go for infrastructure work anyway, or education? I know it was wasted on a few companies that the POTUS owed favors to that went belly up. Solar companies ??

     

    Please don't group all of these folks together as I see you are. Now just take note of who the investors are right now. FEAR can probably answer this the best. Do you have a bunch of clients under 29 years old or are they older??

     

    Forget the RICH kids, I mean the average joe of years ago...My guess is not many!!
    23 Jun 2013, 11:57 AM Reply Like
  • extremebanker
    , contributor
    Comments (1755) | Send Message
     
    Tack: Totally agree! When you want more of something just spend more money on it and you will get it. Spending on non productive activities will do very little to improve the economy.

     

    We should have a basic social safety net for everyone but our current commitments are high. There are many I know who refuse to give up their "benefits" for minimum wage jobs. They cut a little grass or some other service for cash and draw benefits rather than working 40 or 50 hours per week at minimum wage. Our underground economy is in full force. They are looking at the best choice for them to survive.
    23 Jun 2013, 12:17 PM Reply Like
  • South Gent
    , contributor
    Comments (4375) | Send Message
     
    Notrub: When I was a young Stock Stud, I frequently turned my nose up at bonds, and that was rational up to a point, due to my observations in the late 1970s.

     

    I did not appreciate in 1982 that both stocks and bonds were ending their long term secular bear markets. It would have been far easier to navigate the next thirty years by simply buying a 30 year treasury at 14% and watch those stock investors have anxiety attacks in 1987, 2000-2002 and 2008 as I clipped my coupons and played golf. In retrospect, I made a wrong turn by focusing just on stocks and not including some of those 14+% 30 year treasuries in the mix.

     

    Rob Arnott wrote an interesting paper in 2009 in response to Professor Siegel's stocks for the long run thesis, pointing out the inconvenient fact that an investor in a 20 year treasury beat the investor in the S & P 500 between 1969-2009 and noting further that bonds collapsed in the 1970s just to make a point.

     

    http://bit.ly/Izt60H

     

    The problem going forward is simply that the starting point in yields is just too low for bonds to beat stocks over the long term. A different result is most likely to happen when the starting point is a 30 year bond at 3.5%, compared to 14% in 1981.

     

    As long as inflation expectations remained subdued, I do not see even the 30 year treasury hitting 4.5% and that is a positive for stocks in my opinion. The 30 year TIP is pricing an annual rate of inflation at only 2.11% .

     

    Daily Treasury Real Yield Curve Rates
    http://1.usa.gov/yFD89A

     

    1.45%

     

    Daily Treasury Yield Curve Rates
    http://1.usa.gov/oLC2C9

     

    3.56%

     

    Break-even=2.11%

     

    The break-even on the 20 year treasury TIP, as of last Friday's close, was 1.93%, same as the 10 year! Assuming that proves prescient, dividend growth stocks look more attractive long term compared to a moderate to high inflation environment.

     

    The market will of course change its inflation forecasts based on subsequent events and part of the recent downtrend was caused by the FED significantly lowering its core PCE and CPI forecasts:

     

    http://1.usa.gov/12bfva9

     

    2013 2014 2015 LT
    PCE inflation 0.8 to 1.2 1.4 to 2.0 1.6 to 2.0 2.0
    March projection 1.3 to 1.7 1.5 to 2.0 1.7 to 2.0 2.0
    Core PCE inflation 1.2 to 1.3 1.5 to 1.8 1.7 to 2.0
    March projection 1.5 to 1.6 1.7 to 2.0 1.8 to 2.1

     

    On 1/3/2007, the real yield on the 20 year was at 2.36%, with the nominal at 4.87%., creating an inflation forecast of 2.51%.
    23 Jun 2013, 12:23 PM Reply Like
  • Tack
    , contributor
    Comments (14288) | Send Message
     
    IT:

     

    Allow me to state it equally bluntly, since you make your own points so adamantly. You simply have no idea what you're talking about. In fact, your very rebuttal simply supports what I have stated.

     

    Economics doesn't contain piles of heart-felt emotions, feelings and other assorted politically-slanted views. It just functions from some very simple supply-demand laws. All those poor older talented folks, as well as new young graduates, you mention, that can't find jobs, cannot find them because the Government has made it unattractive for companies to hire individuals, especially in this country. Consequently, companies are doing more with technology, more with foreign employees and more with temporary workers, by which they can sidestep onerous mandates.

     

    This is the part that's damaging those actually inspired to attain more, so I don't know why you're accusing me of suggesting that they'r deadbeats. They are the ones, who aspire to success, but are denied by these Government policies designed to reward to lazy and punish the industrious. Welcome to liberalism.

     

    On the other side of the coin, there are growing legions of folks, maybe not your neighbors and relatives, who are quite happy to function in a world of free food stamps, free housing assistance, free services, freedom from taxes, fraud-ridden 'disability' insurance (for life!), etc., etc., ad infinitum.

     

    Statistically, the consequences of the foregoing policies are entirely predictable. In fact, the results of such policies are immutable. It serves to worthwhile purpose to attach personalities and human forms to these statistics and try to make value judgments about fairness. The consequences of the policies are statistically unavoidable, no matter who you might think is to blame. (Of course, the blame rests with politicians, pandering for votes.)

     

    I detect a class-warfare component in many of your posts. Economics doesn't care about class. It's a simple numbers game. You make it more attractive to engage in one behavior and less attractive to engage in another, and, sure as the sunrises, you get more of the former and less of the latter.

     

    You think I'm taking sides. I'm not. I'm just telling you how it all works, and you can scream from the hill tops, but it won't alter reality one iota. You had stated, somewhere back, that you started this blog to learn. I'd suggest that you pay much more attention to facts and factual relationships and much less to ingrained emotional biases.

     

    P.S. I am a retired private investor. I don't, nor ever did, have clients.
    23 Jun 2013, 12:33 PM Reply Like
  • extremebanker
    , contributor
    Comments (1755) | Send Message
     
    IT: Of course not all people who receive assistance are deadbeats. But many have chosen the only way they can see to survive and that is to receive benefits and do whatever they can to generate cash and a better living for themselves. However, I emphatically insist a better future for them does not lie at the hands of government. It could be argued we are subsidizing the problem when we provide long term benefits to them. I have many customers and friends who import Mexicans each year to work for them. They pay them total benefits of about $14 per hour and give them a place to live. They can't find Americans to do the work because it is hard work doing landscape work and farming. It would give the appearance that Americans are too good to do these jobs. Jobs that I started my career with such as pulling tobacco in hot southern fields for $7 per day. What do you think is happening when you go down the road and see a crew of Mexicans laying cable or installing guard rails?

     

    There are many people who want to do better but the tried and true method of the past is not working for them. Getting an education is not an automatic road to prosperity that it use to be. Especially at the cost of education today! Kids need to be more in tune with the requirements of the workplace. We use to house exchange students from Russia during the Clinton years and everyone of them was fluent in four languages. Imagine what an advantage this would be to our students and I have mentioned it to many young people looking for work but they don't do it because it is hard. We live in a global workplace. The U.S. will not be the growing consumption machine of the past based on our population growth.

     

    Become fluent in Chinese and job offers may improve!
    23 Jun 2013, 12:37 PM Reply Like
  • Fear & Greed Trader
    , contributor
    Comments (6481) | Send Message
     
    While i may not be the best gauge of the "average" investor here , given my "independent status and limited clientele, I still have contact that are in the "real corp" world as financial advisors..

     

    In my case its all baby boomer types.

     

    Talking to friends,. associates , it's roughly the same, keeping in mind these are the folks with real money to invest..

     

    We all know how the market is distrusted and to some degree "hated" , so its difficult to get anyone off the fence to just jump in..
    I understand that part of the equation.. (I still use that as my contrary indicator- though )

     

    Let me throw this out there without getting into , jobs, POTUS , whatever.. I s there really a change with the 30 and under crowd? How many were really active in the markets at that age, pre 2008 , yes passive investing with company savings plan , 401k , etc..
    but opening a brokerage account and seeking advice ?-- not sure about that...

     

    last time i saw an active role in that crowd was 1999 - 2000 , when all thought it was EZ ,money..

     

    Anyway , from where I sit , not a lot of folks want into this market at any age.. However glad there are some :)
    23 Jun 2013, 12:41 PM Reply Like
  • Land of Milk and Honey
    , contributor
    Comments (5418) | Send Message
     
    @IT
    Sounds to me like what you learned, is the same state that age range has been in for the many decades of my life. It's typical. Money is tight at first. That's why all the advice about saving, because it's not possible at first & by the time it is possible, it's not on the mind anymore. I had the same conversations with my first co-workers. We were in what were considered high-paying jobs.

     

    From what I read there's more student loans. That's because more people are making it through college, & using loans to get there. Everyone I knew was heavy in debt on loans when we started working.

     

    I know people in the lower paying entry professional jobs, who didn't pay taxes because they couldn't afford to eat too & wound up making IRS deals later.

     

    It's my recollection of those days.

     

    Sounds like a lovely family get together!
    23 Jun 2013, 12:41 PM Reply Like
  • Notrub
    , contributor
    Comments (656) | Send Message
     
    IT,
    Part of the problem is the "mentality". First people will have to learn the hard way that debt is NOT good. It boils down to selling your future for what you want in the present. Like I said before, I come from depression era parents who tried to explain that concept to me. I was young and thought I knew it all. So I had to learn the hard way.

     

    Why did they take out student loans? My daughter has a master degree in accounting and never borrowed money to get it. She worked and went to school at night. Now those that chose to take out student loans are learning a hard lesson. One I am sure they will pass on to their children. Just like I have to mine. I am not saying all this out of spite. I am just pointing out that there are other alternatives to reach goals than borrowing money.
    23 Jun 2013, 12:43 PM Reply Like
  • Land of Milk and Honey
    , contributor
    Comments (5418) | Send Message
     
    @Tampat

     

    I found the article unrealistic. I wrote my opinions in a comment there. It's looks like the writer grabbed every negative view he could find & strung them together to create a panic image.
    23 Jun 2013, 01:01 PM Reply Like
  • Land of Milk and Honey
    , contributor
    Comments (5418) | Send Message
     
    Puzzlement over QE tapering:

     

    What time lag is likely between when QE tapers & that effects the stock market? Or other aspects of the economy?

     

    Actually effects, not this panic reaction effect in the minute after announcement when clearly, obviously, to the 9s, nothing was actually effected yet.

     

    My (non-macro-experienced) view is tapering starts let say in Sept. By later Oct the money flow is changed enough for actual effect to minor start. It's slowly absorbed. By end of year, tapering is happening in earnest. So it's 3-4 or more months into 2014 when that effect is really felt.

     

    More vague for me: So if tapering will be negative...it will be later down the road. The biggest panic over tapering will be when effects first start getting felt later in the process.

     

    Meanwhile, actual market betting needs to take into account the unrealistic reactions that simply are happening.

     

    ....lots to catch up on the instablog, so my apologies if this already got discussed.
    23 Jun 2013, 01:13 PM Reply Like
  • Interesting Times
    , contributor
    Comments (13056) | Send Message
     
    Author’s reply » @EXTREME

     

    I wonder if you would change your tune if you got laid off from that nice paying job you have now?

     

    Shows you how many people just don't get it until they are forced to get it!!

     

    Let me know when you lose your six figure job and start flipping burgers. I bet you will fill out those unemployment papers within hours.
    23 Jun 2013, 01:20 PM Reply Like
  • Interesting Times
    , contributor
    Comments (13056) | Send Message
     
    Author’s reply » @NOT

     

    I agree with most of your comment. However as you know College costs have skyrocketed where to go to some schools you cannot work full time and get a 4 year undergraduate degree in 4 years without loans or parents help..

     

    If some can god bless them because I know how much my daughter had in loans yearly and she would not have made that on an hourly salary.

     

    Masters are a whole different education where you can work and go to school at the same time. May take years to get the Degree but it is doable..
    23 Jun 2013, 01:33 PM Reply Like
  • Interesting Times
    , contributor
    Comments (13056) | Send Message
     
    Author’s reply » @FEAR

     

    I agree, I starting in my 20's with what is called passive investing , which was mutual funds. Had my money taken right from my checking account weekly and dollar cost averaged.

     

    However I still don't consider that passive, as some funds do way better then others. Until I decided after research to just own the S&P 500 INDEX fund through Vanguard. So as you see it wasn't all passive.

     

    Your answer about the baby boomers was what I expected..

     

    Thanks
    23 Jun 2013, 01:37 PM Reply Like
  • Interesting Times
    , contributor
    Comments (13056) | Send Message
     
    Author’s reply » TACK

     

    Let you state something bluntly? You really think this is your first blunt statement?

     

    Really? Ok

     

    "You had stated, somewhere back, that you started this blog to learn. I'd suggest that you pay much more attention to facts and factual relationships and much less to ingrained emotional biases."

     

    Oh, I always willing to learn.. Facts are part of the process and I continue on looking for them as well.

     

    Thanks for the advice..Now

     

    Let me ask you, who does your gardening? Who mows your lawn? I won't even print who I think does..
    23 Jun 2013, 01:48 PM Reply Like
  • bd4uandu
    , contributor
    Comments (2034) | Send Message
     
    I agree the underground "Cash" economy is bigger then most want to admit.
    23 Jun 2013, 02:34 PM Reply Like
  • Krustyman
    , contributor
    Comments (938) | Send Message
     
    Notrub:

     

    ''Despite all the worry about the FED scaling down it's purchase of bonds in the future that is not the reality in the here and now. In 2011 and 2012 the FED came back in and crushed those who jumped on the higher rates bandwagon. What is stopping them from doing so again in the current market?''

     

    You are reading in my mind. What is stopping the FED from doing the same thing? Nothing. The FED fighters are at risk of becoming insolvent before the FED does.

     

    Krustyman :-)
    23 Jun 2013, 02:43 PM Reply Like
  • Krustyman
    , contributor
    Comments (938) | Send Message
     
    Fear&Greed:

     

    ''and maybe we can get the trillion or so that is parked offshore repatriated back here with a reduced tax or complete tax holiday.. it's NOT coming back here under the current rates''

     

    This is something I really don't get. What the politicians in Washington are waiting for? There is nothing to lose. It could even be politically rewarding in the end.

     

    Krustyman
    23 Jun 2013, 02:49 PM Reply Like
  • Krustyman
    , contributor
    Comments (938) | Send Message
     
    South:

     

    14% treasuries...whew! Unfortunately I was a kid at that time. If one day we are reaching these double-digit interest returns on treasuries or bonds, I will be very tempted to convert at least 60% of my portfolio into these two asses classes.

     

    If I may ask you a question. Why you did not buy at 14%? I am curious.

     

    krustyman :-)
    23 Jun 2013, 03:08 PM Reply Like
  • extremebanker
    , contributor
    Comments (1755) | Send Message
     
    IT:

     

    I will be leaving my "cushy job" in a couple of more years so if I was fired at this time I would probably just retire.

     

    I have no problem flippin burgers but I would do it for myself. Plenty of businesses for sale out there. If I wanted to continue working I would do as I have advised others, become specialized and try to be the best I could be at something. You look and think I have a cushy job but the fact is I perform in the ninety percentile (actually 99) when compared to my peer group of 835 other competitors. I get paid for what I know and not for what I do.

     

    The key to success in a captalist society in large part revolves around competition. If you are the best at what you do you can get paid well for it. I have known several multi millionaires who only had a grade school education but they could sell and they knew how to manage their money. They bought car dealerships like you would buy lunch. They had common sense and they were street smart. I know successful people who are good at leveraging people. I invest in timberland and occassionally I need to have trees planted when I am reforesting. I have successful friends who work Mexican crews and travel the country planting trees. He gets a small piece of every tree they plant. He is good at managing people and makes his living that way. He only has a high school education. Nobody ever said it was easy.

     

    So, I believe I do get it! Best wishes to you!
    23 Jun 2013, 06:36 PM Reply Like
  • Rinascimento
    , contributor
    Comments (1123) | Send Message
     
    extreme/tack

     

    I think people spend in nonessentials that tend to not inprove their lives; I saw estimeted numbers of more then $1 Trillion that people spend on tattoos, drugs, alcohol, hair salons, motorcycles, motorboats, boats, lotteries, iphones, etc..... if just some people had the common sense to do themselves a favor and improve their llives, this country would be in better shape; I totally favor a safety net who truly need it but not for people who expect because they are special
    23 Jun 2013, 06:39 PM Reply Like
  • South Gent
    , contributor
    Comments (4375) | Send Message
     
    Krustyman: The answer is simple: Brain Malfunction.

     

    Chart: 30 year Bond:
    http://bit.ly/TNYG12

     

    Data 30 Year Bond Yields Since 1977
    http://bit.ly/14RQkdz

     

    1981-08-20 14.08%
    1981-08-21 14.14
    1981-08-24 14.57
    1981-08-25 14.61
    1981-08-26 14.60
    1981-08-27 14.59
    1981-08-28 14.49
    1981-08-31 14.78
    1981-09-01 14.70
    1981-09-02 14.70
    1981-09-03 14.82
    1981-09-04 14.84
    1981-09-08 14.99
    1981-09-09 14.73
    1981-09-10 14.68
    1981-09-11 14.49
    1981-09-14 14.51
    1981-09-15 14.44
    1981-09-16 14.42
    1981-09-17 14.26
    1981-09-18 14.22
    1981-09-21 14.09
    1981-09-22 14.33
    1981-09-23 14.61
    1981-09-24 14.69
    1981-09-25 15.08
    1981-09-28 15.01
    1981-09-29 15.20
    1981-09-30 15.19
    1981-10-01 15.14
    1981-10-02 14.80
    1981-10-05 14.62
    1981-10-06 14.60
    1981-10-07 14.54
    1981-10-08 14.44
    1981-10-09 14.26
    1981-10-13 14.36
    1981-10-14 14.48
    1981-10-15 14.39
    1981-10-16 14.55
    1981-10-19 14.52
    1981-10-20 14.66
    1981-10-21 14.94
    1981-10-22 14.91
    1981-10-23 14.81
    1981-10-26 15.21
    1981-10-27 15.09
    1981-10-28 15.03
    1981-10-29 14.66
    1981-10-30 14.36
    1981-11-02 14.41

     

    I did foresee a rally in stocks and started to buy again during the summer of 1982, but viewed bonds then as just another name for some kind of old man's disease.

     

    23 Jun 2013, 06:55 PM Reply Like
  • Krustyman
    , contributor
    Comments (938) | Send Message
     
    South:

     

    ''but viewed bonds then as just another name for some kind of old man's disease.''

     

    :-)

     

    Krustyman
    23 Jun 2013, 06:57 PM Reply Like
  • Interesting Times
    , contributor
    Comments (13056) | Send Message
     
    Author’s reply » @EXTREME

     

    I have already apologized for a few comments I made. One directed towards your post was one of them. Sorry you did not see it and I was typing too fast to get my point across.

     

    So here, I will say I was out of place with my comment and I won't delete mine to show my mistake.

     

    My bad, and you had a reason to answer how you did. It will not happen again as I posted I broke my own rule of being polite.
    The post I made was not, and uncalled for. No excuse, just thought you were owed a personal apology.
    23 Jun 2013, 07:01 PM Reply Like
  • Rinascimento
    , contributor
    Comments (1123) | Send Message
     
    notrub

     

    I agree with you about mentality; it is all about supply and demand; student loans are increasing the supply of students and costs will increase; my son will be starting college this fall in accounting with a merit scholarship but he studied his butt off to get it.

     

    I think a lot of brain capital is wasted every year in this country when students are not ready for the real life after high school; why not use trade schools? technical people in Germany are encouraged by companies and government to continue education but with conditions and that's why corporations are world class
    23 Jun 2013, 07:09 PM Reply Like
  • Interesting Times
    , contributor
    Comments (13056) | Send Message
     
    Author’s reply » @RIN

     

    Funny you mention trade schools, a bunch of parents were talking and even the students felt with todays economy a trade school in the USA might be better than a four year college.

     

    You have more work if your an electrician, plumber, carpenter then in years past. However my friend who works in NYC has been laid off a few times as a plumber over the last 3 years.

     

    Plus he is from Poland and swears he left his Country over 30 years ago for the reasons he feels we are experiencing now with our Governments. He said it is a carbon copy of what he was born into. In fact left Poland as a pretty famous band to lead a simple life.

     

    According to him he sees things he doesn't like coming out of Washington.

     

    Interesting concept!
    23 Jun 2013, 07:18 PM Reply Like
  • Rinascimento
    , contributor
    Comments (1123) | Send Message
     
    bd4

     

    I know for sure the politcians get paid in cash and it most be the biggest...do we include them in the club?
    23 Jun 2013, 07:19 PM Reply Like
  • Land of Milk and Honey
    , contributor
    Comments (5418) | Send Message
     
    Thanks IT for stepping up & apologizing to @Extreme, & standing behind your goals for this blog.

     

    I think we all need to just remember that we don't really know anyone else's circumstances... and not to make anything personal....

     

    ....you never know what you can learn from what initially seems like even the most ridiculous idea. One thing I've noticed on this blog, is though I don't agree with every idea....every single person contributes what I believe are some brilliant additions & insights. So there (as my niece would say). There are topics that matter, that wouldn't have even dawned on me to consider, if someone didn't post them.

     

    ...and it's all more entertaining then reading articles out there, & often better than trying to decipher what in the world the author was thinking. (One this morning kept saying Emerging Market's have been hot spots flooded with money. Another that people fled bonds because yield's increased.)

     

    So that's my 2 cents. I've been really appreciating & enjoying everyone's contributions.
    23 Jun 2013, 07:23 PM Reply Like
  • Land of Milk and Honey
    , contributor
    Comments (5418) | Send Message
     
    Entitlement programs:

     

    I've heard media comments about an increase, but haven't seen any evidence based in numbers, that people really are opting for easy money over actual jobs. It's sounds as much like fluff as many of media's economic claims.

     

    For insurance programs like SSDI & SSI, it's a 2-4 year effort & not easy at all, with medical testing having to show concrete impairments, so that's not a place for people to "hide" so quickly.

     

    @ Rina
    I'm all in agreement that if people spent more wisely, we'd all as a society be better off & richer. The amount of stuff we have access to & feel entitle or even obligated to have, is much higher than in prior decades. I stood behind a family buying a TV in Walmart during a snow storm because they couldn't live 2 days without TV.

     

    @ Tack

     

    You've said saving money is not a noble contribution to society. You're also saying that having to go on entitlement programs (often happens because of lack of savings) is not good. Those are contradictory goals. Am I understanding you correctly, or am I missing something?
    23 Jun 2013, 07:35 PM Reply Like
  • Interesting Times
    , contributor
    Comments (13056) | Send Message
     
    Author’s reply » @CURLS

     

    I got carried away with my emotions, it happens, and I want to move on. I will always admit when I step over the line.

     

    But at some point enough is enough. I hate to remove a post, but I did what I needed to do to continue this dialog.

     

    Doesn't mean that the poster has to stop , if that is his choice so be it. But I hold no grudges against anyone. Everyone in life makes mistakes, I made one and I admitted it.
    23 Jun 2013, 07:36 PM Reply Like
  • extremebanker
    , contributor
    Comments (1755) | Send Message
     
    IT:
    No apology necessary however it is very much accepted. Very big of you and I am not being sarcastic!
    23 Jun 2013, 07:36 PM Reply Like
  • Interesting Times
    , contributor
    Comments (13056) | Send Message
     
    Author’s reply » EXTREME

     

    You handled yourself probably more professionally then I would have. Thanks for understanding as it was a tough weekend for me personally and I should of just stayed away from posting to be honest.

     

    But I work hard on trying to build a foundation here that is unique and I was out of line.
    23 Jun 2013, 07:48 PM Reply Like
  • South Gent
    , contributor
    Comments (4375) | Send Message
     
    RINA: There is more value per tuition dollar in trade schools than colleges.

     

    There are a large number of recent college graduates still looking for a job.

     

    Just as an example, a local trade school in Nashville charges $5,934 total for training a practical nurse who would have no difficulty finding a job after completing that three term program.

     

    When I started Tulane in 1969, the tuition was around $2,200, equivalent to $13,964 in today's dollars after adjusting for CPI:

     

    http://1.usa.gov/tj5h8X

     

    Tuition for the 2012-2013 year was $46,930. Total expenses were estimated by the University at $61,166:

     

    http://bit.ly/13kitZY

     

    I would have to say that the cost of a private college education is simply not worth it anymore. The rich from the U.S. and increasingly from foreign countries can afford to pay full freight. It is certainly not worth borrowing money to pay those expenses and saddling a young person with a boatload of student debt that will likely impoverish them for decades.

     

    Why has the cost increased almost 4 times faster than the rate of inflation?

     

    The availability of student loans is just one of many reasons.

     

    When I attended college back in 1969-1973, sports scholarships were given out only to football and men's basketball players. Now, they are given out in all sports including golf, baseball, tennis, track, soccer, and lacrosse, all for both the women and men. A private school may have no more students than four decades earlier but will have a far larger number of students attending for free. Those sports programs are costly in other ways including the hiring of coaches and none of them make money for the colleges other than football and basketball. Consequently, there are more expenses to be spread over a fewer number of students having to pay ful freight.

     

    Another reason is that there is no incentive to restrain expenses as long as there is a money available to pay whatever is being charged by the college. Increasingly, that money source is coming from foreign students. For the last school year, there were 764,495 foreign students enrolled in U.S. colleges with double digit growth coming from China.

     

    http://bit.ly/143pKx0
    23 Jun 2013, 07:58 PM Reply Like
  • Notrub
    , contributor
    Comments (656) | Send Message
     
    Actually Curls,
    The government calls them entitlement programs. And, even ones we have to pay into with every pay check like Social Security and Medicare are part of the "entitlements". If I remember correctly it comes from the "Title" programs like Title 1 for education back in the 1960s.

     

    If you actually got down to brass tacks the Supreme Court has already ruled that we are NOT entitled (the strict definition of the word) to Social Security. Thus why I will start collecting mine at 62, before someone comes up with another rule why I won't qualify or why they need to take more money out of the check. I figure something is better than nothing.
    23 Jun 2013, 08:00 PM Reply Like
  • Land of Milk and Honey
    , contributor
    Comments (5418) | Send Message
     
    @ Notrub

     

    I was trying to specific the different between programs like good stamps, & programs like SS which you pay into & get back based on your personal pay-in. I've seen the wording used to differential is "entitlement programs" vs. "insurance." I was trying to get at that.

     

    So the court has decided SS is not strictly insurance... that will effect a good deal down the road. I run my retirement numbers without SS. My salary is better with, but i need to be able to retire without counting on anyone else.
    23 Jun 2013, 08:10 PM Reply Like
  • extremebanker
    , contributor
    Comments (1755) | Send Message
     
    Rina:

     

    Yes , people waste money on everything! But everyone does not have to be successful. Capitalism needs workers to do the work and if everyone is wealthy then we have no one to do the work.

     

    I want to add a few thoughts since I have seen and dealt with a lot of successful people in my lifetime and I often try to study what they do to become successful.

     

    1. Most of them can tell you why they are successful in just a few sentences.
    2. Most of them are competitive.
    3. Many of them leverage money (investments). I am one of these. I worked hard, saved a high percentage of my income by living frugally the first twenty years I worked and invested well.
    4. Many of them leverage people. I believe this is called the division of labor in Adam Smith's book "The Wealth of Nations".
    5. Many of them leverage property. I believe this is called the theory of rents by the same book mentioned above. I had one customer who owed 7 million dollars but he owned 15 million dollars of rental property. Mostly commercial buildings. He paid us about 9% interest at the time but he was earning 15% on his real estate investments. You can do the math.
    6. Many successful people have a knack to sell, especially themselves. This is a very successful trait to have. This is almost a lost art and you see very little attention paid to it in the school systems. They are even going to quit teaching writing now.
    7. By and large, most of the successful people I have known did not make a lot of money. They were very frugal with their money and invested well. Many never came close to making $50,000 per year. They believed very much in deferred gratification. Real estate was usually their preferred method of accumulating wealth. The book "The millionaire next door" was very accurate in my opinion.
    8. A lot of successful people will do well by charging subscriptions for their services, another concept mentioned in "The Wealth of Nations". I travel 200 miles round trip to see my dentist because I believe he is that good. He makes a very good living!

     

    Kids coming out of schools today will have a tough time becoming successful especially those who have accumulated a lot of debt, however a lot of them will take advantage of the same concepts mentioned above. I believe "the Wealth of Nations" was written in the sixteen hundreds but it still is applicable today.
    23 Jun 2013, 08:13 PM Reply Like
  • Interesting Times
    , contributor
    Comments (13056) | Send Message
     
    Author’s reply » @SOUTH

     

    "When I attended college back in 1969-1973, sports scholarships were given out only to football and men's basketball players. Now, they are given out in all sports including golf, baseball, tennis, track, soccer, and lacrosse, all for both the women and men."

     

    You are correct on this and I might add the scholarships back in the 70's had way stricter guidelines. I umpire high school softball and was talking in between innings with the short stop from one team. Girl was average at best. So I asked her, knowing she was a senior what her plans were?

     

    She said she got a 75% free ride to the SUNY school in Binghamton NY. I said how good were your grades, and she said "oh no I got it for playing softball!". Now I have known this player for 4 years now and no way would she ever been even considered for a sports scholarship years ago. I mean she was average at best and I saw her at least 2x a year. I was not impressed at all with her skills, her decisions, her mechanics. etc.

     

    So it seems they have reduced the bar here as well.
    23 Jun 2013, 08:25 PM Reply Like
  • South Gent
    , contributor
    Comments (4375) | Send Message
     
    IT: I forgot about softball and swimming. I also forgot to mention bowling.
    Vanderbilt won its first national sports title a couple of years ago in woman's bowling after offering scholarships to the best bowlers from around the country.

     

    It is great deal for a parent of the scholarship athlete, but bad for everyone else.

     

    It falls under the heading of life is unfair when a neighbor's daughter receives a full scholarship to play Lacrosse for Columbia and another is paying close to $70,000 per year after tax to send their daughter to Vanderbilt who is much brighter, more motivated and harder working, and a far better student.

     

    But knowning this ahead of time can be of some benefit for parents who are plugged into the world as it is.

     

    Start taking that young person at age 3 to the bowlilng alley or perhaps start training them for to be a cross country runner as soon as they can stand on their own two feet.
    23 Jun 2013, 09:01 PM Reply Like
  • Rinascimento
    , contributor
    Comments (1123) | Send Message
     
    IT

     

    Yes interesting concept indeed; this country will be facing the same problems like Eastern Europe and the Soviet Union went bust when the music stops and can't kick the can no more no matter how special we think we are
    23 Jun 2013, 09:15 PM Reply Like
  • bd4uandu
    , contributor
    Comments (2034) | Send Message
     
    Of course ... could I see that unmarked envelope please?
    23 Jun 2013, 09:22 PM Reply Like
  • Rinascimento
    , contributor
    Comments (1123) | Send Message
     
    south

     

    thank you for your reply and providing all that information about value; I think that the value of money has lost its meaning in a easy money environment; school funding for high school should be reduced to finance bored students to participate in trade schools programs to better prepare them for a real and productive life
    23 Jun 2013, 09:27 PM Reply Like
  • Interesting Times
    , contributor
    Comments (13056) | Send Message
     
    Author’s reply » @SOUTH

     

    You were close to what is really happening in sports. Parents are spending big bucks to have their kids play travel ball, have instructors, videos, etc at such a young age it is frightening. All because of college tuition.

     

    The Colleges actually start scouting the girls when they are in 9th grade and follow their progress. I KNOW they are restricted to talking directly to the kids until a certain grade but I see radar guns out for pitchers who are so young.

     

    This leads parents on as well. Of course the paid instructors try to convince the parent they have the next best college pitcher ever to play to keep the money rolling in.

     

    Now I will give out a little secret. If you want the best chance to get your kid a scholarship is softball, and that sport is huge in College , and you kid is NOT a pitcher. MAKE THEM A CATCHER.

     

    The good ones are hard to find, and they get the free rides right behind the pitchers. Been doing this for over 20 years so I do have experience when I am asked by the scouts after a game my opinion of both the pitcher and the catcher.

     

    Questions like was the pitcher hitting the corners, did the catcher call for certain pitches or was the coach sending in the signals. My answer has always been the same. "You were here what do you think?"

     

    So what I do does have serious ramifications for a kid's future and I try to stay out of it if I can. I know we have a high school coach who could also shed some light on this as well.

     

    But money saved is money used for something else!!
    23 Jun 2013, 09:44 PM Reply Like
  • Rinascimento
    , contributor
    Comments (1123) | Send Message
     
    Extreme

     

    I appreciate your reply with all detailed points which I agree; yes, me too I saved for a long time and only buy things when only needed; but the savings has not earned anything with 0% interest and that's why I got into stocks a decade ago; my kid will not be taking any loans because he studied in high school and will be starting college in fall with a merit scholarship in accounting/finance....... wants to follow on my path that I started but not finished
    23 Jun 2013, 09:51 PM Reply Like
  • South Gent
    , contributor
    Comments (4375) | Send Message
     
    IT: I was a catcher for many years and loved the dirt. You see a lot of dirt as a catcher, collisions at home plate were always one of my favorites. I would smile after that runner gave me their best shot and I still held the ball in my hands. And, diving for wild pitches was another enjoyable experience along with having a really good fast ball bounce before reaching home plate and careening into my private area which had a cup that provided in theory some protection from such known hazards. What I enjoyed most of all though was the sweat, caused by 95 decree heat compounded by wearing all of that gear and then the real fun began with all of that sweat got mixed up with about five pounds of dirt, the aroma was actually a weapon that could be used against hitters. Yep, those were the days and I remember them often. Sometimes, I post a picture of that young catcher as my blog profile picture, the youngster looks like he just ate a baseball and spate it out, just to show the opposing players that he meant business.
    23 Jun 2013, 10:13 PM Reply Like
  • Interesting Times
    , contributor
    Comments (13056) | Send Message
     
    Author’s reply » @SOUTH

     

    Then being a catcher you will hate this new rule for softball. Been around for 10 years now. If the catcher has control of the ball no more mowing the catcher down. You MUST slide!!

     

    If you don't you out and out. Out on the tag and thrown out of the game as well. Those days of collisions at the plate for girls is over. Safety issues and lawsuits saw to that one..

     

    I know we are off topic but it is the weekend !!
    23 Jun 2013, 10:21 PM Reply Like
  • extremebanker
    , contributor
    Comments (1755) | Send Message
     
    IT:Forgive me for being sarcastic but this is just another example of how we have "dumbed down" our society. If somebody gets hurt then we have lawsuits and TV shows to protect the innocent and the victims unless you are a veteran with both legs missing then you are just a victim of war and are expected to deal with the VA for the next thirty years.
    23 Jun 2013, 10:33 PM Reply Like
  • Interesting Times
    , contributor
    Comments (13056) | Send Message
     
    Author’s reply » EXTREME..I agree 100% and I have family who did come back from Vietnam in one piece. I could talk to you about other stupid rule changes just to stop lawsuits. Trust me they sue quickly when Sally gets hurt !!

     

    It disgusts me seeing this unravel for years. Forget as an ump even assisting a player by the hands off the ground anymore. Nope, can't touch them...If a player is hurt we use to help them up, no more, call the coach and trainer out.
    23 Jun 2013, 10:38 PM Reply Like
  • deercreekvols
    , contributor
    Comments (6697) | Send Message
     
    Hey guys,

     

    Great discussion on colleges and scholarships. I have coached HS Varsity football and basketball for 25 years. I have been fortunate to have some of our players attend college aided by either a scholarship or some creative financial packages (at the Division III level, as there are no athletic scholarships granted). We had two brothers attend Davidson College on football/academic scholarships a few years back. Most of our athletes attend Division II or III schools. We had a girl get a full scholarship for softball a number of years ago. She pitched in HS and led our team to a state title. She ended up playing OF in college and was quite good with the bat.

     

    My oldest son is going through this process as I type. He plays soccer and basketball and has the athletic ability to play either in college. We have approached his college selection process by telling him: Picture yourself at this school and NOT playing a sport. What do you think of it?
    We are in a wonderful position because he does well academically and has already received an academic scholarship to Clarkson University (Potsdam, NY). Once other scholarships and grants are added in, going to Clarkson will be as affordable as attending a SUNY school. No soccer scholarships at Clarkson or the other Division III schools he is looking at, however.
    We have told our 6 year old daughter that she "gets to learn how to play golf this summer." Plenty of golf scholarships for girls out there. Title 9 opened the door for girls athletics in many colleges and we intend to take full advantage :)

     

    Not sure if I added anything to the discussion other than my personal situation.

     

    Have a great day. Time to get ready for summer league basketball season! The life of HS coach is not glamorous, that is for sure.
    24 Jun 2013, 09:34 AM Reply Like
  • John Wilson
    , contributor
    Comments (1602) | Send Message
     
    IT
    Those hardships you describe are because of government making it difficult for businesses to hire. I think that is what Tack was referring too. Just try to start a business or ask someone who has tried to do so. The govt strangles businesses

     

    Then the govt and PrezBO pits the "have nots" against the "haves" (the upper 49%).

     

    Agree that they squadered stimulus money. Interstate highways are still crumbling apart. Infrastructure spending did not happen.
    24 Jun 2013, 01:44 PM Reply Like
  • Interesting Times
    , contributor
    Comments (13056) | Send Message
     
    Author’s reply » JW

     

    I agree with small businesses. My coin dealer is closing his doors after 20 years because he told me our County has just made it too difficult to keep his doors open. NY is making it tough besides what the Fed is doing

     

    When I asked what he plans on doing he answered just doing all the coin shows on weekends will suffice compared to the *paperwork* now required of him.

     

    Scary thought .
    24 Jun 2013, 02:01 PM Reply Like
  • tampat
    , contributor
    Comments (999) | Send Message
     
    And some in Govt want to raise minimum wage yet again and again.
    For businesses that hire those types of employees the govt doesn't seem to realize the effect that has. Its part of the redistribution theme.
    24 Jun 2013, 02:18 PM Reply Like
  • Notrub
    , contributor
    Comments (656) | Send Message
     
    For your consideration of the week ahead with some facts and figures to draw your own conclusions:

     

    http://seekingalpha.co...
    23 Jun 2013, 08:47 AM Reply Like
  • Fear & Greed Trader
    , contributor
    Comments (6481) | Send Message
     
    Not.
    Also
    2nd quarter "window dressing" will provide crosscurrents for markets this week

     

    Fund managers usually disclose their holdings after each quarter. Because they want to look competent, they deploy this strategy known as "window dressing." Near the end of the quarter, they may buy the strongest stocks for that quarter and sell their weakest holdings. So when their positions are published, clients and potential clients see a portfolio of outperforming stocks. As an example do u want to show (GOOG) now or (AAPL) .. ?

     

    This isn't money management, its "packaging" and IMO adds no value at all.

     

    23 Jun 2013, 10:23 AM Reply Like
  • Notrub
    , contributor
    Comments (656) | Send Message
     
    F&G,
    I agree. I expect a lot of the same for the earnings reports coming up. Which is why I forsee a lot of hours coming up going through financial statements to see who is actually a good buy even with declining growth, EPS, etc. I will also be monitoring the 10Y yield and VIX. The VIX bumped up over 20 this past week, which to me says start paying attention to what is going on, then fell back to 18 and change.
    If the 10Y continues to rise it will make it more important to concentrate on companies with lower debt.

     

    The earnings reports that came out this past week pretty much fell in line with my expectations for earnings season. But, who knows, there is always the possibility of surprises???
    23 Jun 2013, 10:47 AM Reply Like
  • Interesting Times
    , contributor
    Comments (13056) | Send Message
     
    Author’s reply » @NOTRUB

     

    I have read a few of his articles and personally he has no clue what the average person is doing!! Relying on charts today only just won't work.

     

    Go talk to the individual investors and get the real scoop. I stopped reading his take a long time ago. Seems like a broken record to me and had added little significance in foresight but a great Monday morning quarterback...

     

    Think zerohedge make no sense? I don't , They have made some bad calls but mostly report what is happening in the real world. imo this guy talks a great game, but doesn't add much substance either way..
    23 Jun 2013, 10:51 AM Reply Like
  • Tack
    , contributor
    Comments (14288) | Send Message
     
    IT:

     

    One of the most important things successful investors learn, even if it takes time and scars, is that information sources that appeal to emotion and one's biases are bad for one's economic health. Fox, Zero Hedge, and Huffington, among others, all fall into this category.
    23 Jun 2013, 11:01 AM Reply Like
  • bd4uandu
    , contributor
    Comments (2034) | Send Message
     
    And what are the good emotion free sources?
    23 Jun 2013, 11:05 AM Reply Like
  • Interesting Times
    , contributor
    Comments (13056) | Send Message
     
    Author’s reply » TACK

     

    I agree with you up until when the truth starts to get reported and not the hype!!

     

    IRS, BENGAZI, DOJ, NSA, GUN CONTROL, RISING INTEREST RATES WORLDWIDE, etc may make it look more real, but it is real, and I am guessing this young generation doesn't like what it is hearing, reading, or living thought right now.

     

    I can't tell you how many young grads aren't working in their chosen field yet, if ever. Don't think that has an impact? I found out yesterday speaking to about 20 of them for over two hours it does. These were the average family kids, no silver spoons that I could see laying around .

     

    Technology IS a good thing , and if I recall that is what our Country should be working on for new jobs. The mail being delivered my pony express days are over with !!

     

    You keep those young ones from investing, they don't trust it right now, and the older ones bailing out, they don't trust it either, and one can imagine where were heading !!
    23 Jun 2013, 11:14 AM Reply Like
  • Notrub
    , contributor
    Comments (656) | Send Message
     
    IT,
    I posted the article because of the resources to check out to make your own decisions. I could care less about his opinion. Like I said, draw your own conclusions...:o)

     

    Tack,
    I agree. I read listen to all the available information no matter where it comes from. It doesn't take much time to see if something is obviously biased and move on. Getting my emotions out of my investing is my #1 goal. I can't do that unless the decisions I make are based on the best information I can get.
    23 Jun 2013, 11:17 AM Reply Like
  • Interesting Times
    , contributor
    Comments (13056) | Send Message
     
    Author’s reply » FEAR

     

    What I learned yesterday LISTENING ot the younger generation is basically distrust. They could care less what corp, financials say. They don't trust this government one bit, not the POTUS, not BB, no one. So they are just trying to survive.

     

    I get the feeling we have more of them then we think. Sure you will always have the investors of this economy , but if you don't inject new blood, then as the old blood dies so does the patient ( stocks and bonds )

     

    Just my take listening and poking around for answers !! Honestly I came away with a much different take that you DON'T READ OR SEE on the media's reports!!
    23 Jun 2013, 11:23 AM Reply Like
  • Fear & Greed Trader
    , contributor
    Comments (6481) | Send Message
     
    Not,

     

    I also will be concentrating on upcoming earnings season, leave a lot of the headlines for the media and perhaps day traders ..

     

    As u mentioned companies with lower debt and i will add "lots of cash on balance sheets" -- should be just fine ,,barring any "surprises"

     

    indiscriminate selling may produce opportunity.

     

    as far as the VIX , I will be taking my cues from the links Southgent has provided in past to monitor action . Drop back under 20 on fri was nice to see ...
    23 Jun 2013, 11:40 AM Reply Like
  • Fear & Greed Trader
    , contributor
    Comments (6481) | Send Message
     
    Tack,

     

    and you could add about a half dozen authors here on SA that fall into that camp.. lots of emotion but no results..
    23 Jun 2013, 11:43 AM Reply Like
  • Tack
    , contributor
    Comments (14288) | Send Message
     
    bd:

     

    Even SA is a good source. Just focus on the factual data in the Market Currents and not on lots of expressed punditry.
    23 Jun 2013, 11:43 AM Reply Like
  • Tack
    , contributor
    Comments (14288) | Send Message
     
    No:

     

    Good decisions are made from assessing factual data and making sensible conclusions therefrom. It's not benefited from lots of emotion, punditry and loud opinion from folks, who are either plain wrong or have their own agenda. A good start to avoiding emotional overload is to simply tune out such sources (I don't even turn on CNBC). These shrill sources offer no data not available elsewhere (like SA feeds); they just repackage it to get attention.

     

    I can't give you a simple formula for learning to make your own judgments. Maybe, it just takes time and experience, but I will say that trying to see how things relate to each other, from historical facts, is afar more useful than a bushel basket of opinions.

     

    Learn to trust your own common sense -- based on assessment of facts and history, not "feelings" -- and don't allow it to be skewed by other shrill voices. I guess that's the most valuable message I can offer.
    23 Jun 2013, 11:50 AM Reply Like
  • Fear & Greed Trader
    , contributor
    Comments (6481) | Send Message
     
    bd,

     

    Tack & Southgent,,

     

    But i am biased , tend to agree with them :)
    23 Jun 2013, 12:43 PM Reply Like
  • bd4uandu
    , contributor
    Comments (2034) | Send Message
     
    Tack I read everything I can but have a very good BS detector. There is a lot of opinion in the SA currents also. They are a good source though.
    23 Jun 2013, 02:43 PM Reply Like
  • Interesting Times
    , contributor
    Comments (13056) | Send Message
     
    Author’s reply » @BDU

     

    Lets see the *emotions* investors have if the markets drop another 5% over the next month?

     

    Yes, you have plenty of BS on here, you just need to weed through it as I do...

     

    What is an *emotion or feeling* to someone is indeed a fact to others.

     

    Sometimes investors don't need to read a financial statement to know which way the market is headed. QE'S surely have an impact on the markets. Japan just showed you what devaluing their dollar can do to their stocks.

     

    Like I said in 6 months the truth will come out, if not sooner. Now if BB decides to turn on the spicket again then all bets are off. But if he does indeed reduce the morphine watch out.

     

    CURLS HAS A REALLY NICE QUESTION on the next chapter and I am looking for someone to respond as it is the second time she has asked.

     

    Thanks to whomever helps her out with a response..
    23 Jun 2013, 03:42 PM Reply Like
  • Tack
    , contributor
    Comments (14288) | Send Message
     
    IT:

     

    "What is an *emotion or feeling* to someone is indeed a fact to others.
    Sometimes investors don't need to read a financial statement to know which way the market is headed. "

     

    Those are precisely the folks who were selling furiously in the first quarter of 2009.
    23 Jun 2013, 05:59 PM Reply Like
  • Interesting Times
    , contributor
    Comments (13056) | Send Message
     
    Author’s reply » @TACK

     

    I warned everyone that I will be removing comments that I feel are personal attacks. I personally apologized for my remarks but apparently you did not get it or ignored it.

     

    So as I read through the posts you kept posting agitating remarks and I removed your post. Personal attacks will not be tolerated and you just will not let up.

     

    So I removed it!
    23 Jun 2013, 06:47 PM Reply Like
  • Tack
    , contributor
    Comments (14288) | Send Message
     
    IT:

     

    I don't know what you are talking about, but YOU are the one who has resorted to making innuendos about individuals, including myself. I don't wish to talk about YOU. I wish to talk about the issues, but when those comments are not aligned with your own views, you seem to see it as "agitation." You censorship is hypocritical, at best.

     

    I believe I have a lengthy resume of experience and performance in investing. However, you can decide whether you can handle the adverse opinions. If you started a blog to play God and decide what's satisfactory to YOUR wishes, rather than SA's standards, then you are free to do so, but it will be without my participation.

     

    P.S. I missed whatever apology you issued and didn't see one made specifically to myself, but that doesn't change the issue at hand.
    23 Jun 2013, 07:19 PM Reply Like
  • Land of Milk and Honey
    , contributor
    Comments (5418) | Send Message
     
    @ FG
    I forgot about window dressing! That's goes on my running list of concepts I'd forgotten about. It'd good to consider that when looking at recent stock results to see what's doing well... That buying could skew the picture.

     

    Do people not compare their results, rather than look at lists of stocks for "feel good."? ...oh well, I know they do.
    23 Jun 2013, 07:51 PM Reply Like
  • Interesting Times
    , contributor
    Comments (13056) | Send Message
     
    Author’s reply » TACK

     

    I am leaving your post up just so that everyone can decide for themselves what should be acceptable. If you choose not to post no worries well be fine.

     

    Your post has been the only one removed. So I am not playing GOD, I am moderating...Hope you continue to post but it's your choice. My posts are about issues and I stepped over the line once. Go look back at your post and tell me how many do you think were "over the line"

     

    I work hard to stay within parameters and show both sides of a discussion. I am sure SA would be fine with it.

     

    PS. My apology was general as I did not feel I needed to make one specifically to you. So the ball is in your court, no hard feelings by me.
    23 Jun 2013, 08:39 PM Reply Like
  • Tack
    , contributor
    Comments (14288) | Send Message
     
    IT:

     

    I don't really want to engage in a high-school manhood contest. I try to make very direct comments about the subject matter/content of posts, not about the individuals who made them. I have strong opinions, and I express them. Sometimes, people think it's a comment about "them," personally, but it's not, nor intended to be. It's about an opinion offered.

     

    P.S. Frankly, I don't even know which post you took issue with, so you can give me the link, and I'll review to see if didn't follow my own standards.
    23 Jun 2013, 08:47 PM Reply Like
  • Land of Milk and Honey
    , contributor
    Comments (5418) | Send Message
     
    @ Tack, IT

     

    Now the talk about apologies is getting tense. Take it offline? Maybe easier to hash out.

     

    Tack - IT did post an apology that in my reading was mostly obviously focused on his responses to you. It's around here somewhere.

     

    I'm noticing the hot under the collar comes when someone feels like someone else commented about them personally either directly or judgemental words about a viewpoint. Both of you did so. So it's my turn next (stamps feet) & you can point it out to me!!! It was a very good discussion, so please, please make peace so we can get back to the discussion of how to make money.
    23 Jun 2013, 08:52 PM Reply Like
  • Interesting Times
    , contributor
    Comments (13056) | Send Message
     
    Author’s reply » TACK

     

    I already sent you a PM. I hope you put this behind for all of us. I do value your opinion and I am going to make every effort to not take offense.

     

    Like I stated I HAD the bad weekend. I possibly offended you as well. I did say I was wrong , and I hope we can move forward. I already put this behind me and will continue to bust your chops about the Cabana girls!!!

     

    CURLS is right, I guess this comes with the territory and we all learn from it. That is why I started a new chapter quickly. To get passed this.

     

    So consider staying aboard for all of us. Your thoughts are truly held in high esteem by many and sometimes I take to opposite side for others who do not want to post, or if I feel strongly about something.
    23 Jun 2013, 09:02 PM Reply Like
  • Tack
    , contributor
    Comments (14288) | Send Message
     
    IT:

     

    Received your PM. All better. Thanks.
    23 Jun 2013, 09:06 PM Reply Like
  • Krustyman
    , contributor
    Comments (938) | Send Message
     
    bd4uandu:

     

    ''And what are the good emotion free sources?''

     

    None! :-)

     

    Never mix investments and emotions.

     

    Krustyman
    24 Jun 2013, 10:26 AM Reply Like
  • Interesting Times
    , contributor
    Comments (13056) | Send Message
     
    Author’s reply » @KRUSTY

     

    Just got a PM from a person who says they are in a corner in a fetal position right now. Not happy with China inmploding !!

     

    Just wanted to pass that on...
    24 Jun 2013, 10:37 AM Reply Like
  • Krustyman
    , contributor
    Comments (938) | Send Message
     
    IT:

     

    ''Just got a PM from a person who says they are in a corner in a fetal position right now. Not happy with China inmploding !!

     

    Just wanted to pass that on...''

     

    I don't quite understand why you are posting this??

     

    Krustyman
    24 Jun 2013, 12:11 PM Reply Like
  • Interesting Times
    , contributor
    Comments (13056) | Send Message
     
    Author’s reply » @KRUSTY

     

    Because they feel China's markets might add more downside to our markets as well.

     

    Can it?
    24 Jun 2013, 12:16 PM Reply Like
  • Krustyman
    , contributor
    Comments (938) | Send Message
     
    IT:

     

    The Shanghai Composite Index was at 6,000 in 2007. It is a little bit under 2,000 now. What a nice bear market it was! It has lost almost 70% of its value since the 2007 top. And now, the headlines will be terrifying about China, watch out.

     

    We are probably at or near a very important bottom for the Shanghai Composite Index. The kind of bottom where nobody wants to endure the next couple of points toward the bottom. It is a typical behavior at the end of a bear. It is the opposite of a bull where nobody wants to miss the next couple of points toward the top.

     

    My 2 cents.

     

    Krustyman
    24 Jun 2013, 12:34 PM Reply Like
  • Land of Milk and Honey
    , contributor
    Comments (5418) | Send Message
     
    @ IT, Krusty

     

    If someone's going fetal over a 7% drop, or even 25% or 50%, they shouldn't be in the stock market. It's a long haul investment with lots of ups & downs.

     

    (Says the person who went to cash at end of May, & is worrying about figuring out the really hard 2nd trick, when to get back in.)

     

    I've been long term, through three crashes, & barely noticed the numbers changed on my quarterly statements. Long term, even through this decade - they did fine. So if he's got a 5- or 10 year horizon, this is nothing at all. Just look at Jan vs. now. It's still way up.
    24 Jun 2013, 12:49 PM Reply Like
  • Interesting Times
    , contributor
    Comments (13056) | Send Message
     
    Author’s reply » CURLS

     

    The person was concerned with a 5% drop (China) in ONE DAY !! Then asked if that would roll over an effect the US markets. Sorry if I did not make that clear.

     

    I posed that question so those who have an idea if it can, would, won't, have an impact would respond.

     

    Please don't shoot the messenger.. lol
    24 Jun 2013, 12:54 PM Reply Like
  • Notrub
    , contributor
    Comments (656) | Send Message
     
    I agree Curls.
    For your consideration:
    http://seekingalpha.co...

     

    One of the smartest people in the world, who became a billionaire because of his intelligence, once said:

     

    "If you are not willing to hold stocks though 50% loss, you should not be in stocks."

     

    Let that sink in. This person is Charlie Munger, the long-standing business partner of Warren Buffett. If Buffett had chickened out in 1974, when the price of Berkshire Hathaway (BRK.B) had fallen down by 50%, and put everything in Treasuries, he would have never become a billionaire.
    24 Jun 2013, 12:54 PM Reply Like
  • Land of Milk and Honey
    , contributor
    Comments (5418) | Send Message
     
    @ IT
    I didn't think I was shooting anyone. I was trying to be encourageing about riding it out - to whomever wrote it to you. Hope that came through :).
    24 Jun 2013, 12:59 PM Reply Like
  • Interesting Times
    , contributor
    Comments (13056) | Send Message
     
    Author’s reply » CURLS

     

    They just put on a flak jacket and went back into the corner... lol
    24 Jun 2013, 01:07 PM Reply Like
  • bd4uandu
    , contributor
    Comments (2034) | Send Message
     
    Man you guys got a great thread going. Power went down at home, Friday morning 3:30 AM and still hasn't come back yet. It's hit or miss when I can get the juice for a recharge.
    23 Jun 2013, 11:00 AM Reply Like
  • bd4uandu
    , contributor
    Comments (2034) | Send Message
     
    Bond Losses of $1 Trillion if Yields Spike .... http://bit.ly/14qNgDi
    23 Jun 2013, 11:12 AM Reply Like
  • Fear & Greed Trader
    , contributor
    Comments (6481) | Send Message
     
    The warning sirens for bondholders have been going off for quite some time now ....

     

    Guess they hung around to see just how high the waves will get from the hurricane or watch Toto get swept to the heavens in the tornado..

     

    The talk was about the retail investor in stocks, guess again ...
    23 Jun 2013, 11:47 AM Reply Like
  • South Gent
    , contributor
    Comments (4375) | Send Message
     
    Bd4: The $1T number assumes a 3% rise in rates and that is highly unlikely given the current inflation expectations. Another 1.5% rise in the 10 year yield would be close to a reasonably anticipated limit due to interest rate normalization. Even that number could come down in the coming weeks if inflation expectations continue to move down.

     

    While even a 1.5% increase in the 10 year yield will result in more losses, there will be winners too, including those who were shorting treasuries.

     

    For those investors who own individual bonds and bought below par value, simply electing to hold the bonds until maturity will result in no realized loss, but simply a loss of opportunity to earn a higher interest rate.

     

    I am in the camp that rate normalization may cause a lot of up and down movement in other asset classes, but is not likely to have any long term negative impact on stocks based on the prior 60 or so years of history demonstrating how stocks actually perform during periods of below average interest rates and inflation rates. And there are a lot of benefits, particularly to households, from higher rates.

     

    Just slap a 4% interest rate on the $9T or so earning nothing now and the benefit to consumer disposable income after tax would be obvious.

     

    Household wealth is rising too, see the FED's Z.1 Release:
    http://1.usa.gov/KDf0sF

     

    Household net worth increased to $70.3T in the 2013 first quarter, up about $3T from the 2012 4th quarter. Household debt edged down .6% as mortgage debt decreased by 2.3%. Households saw a $1.5T increase in the value of their stocks and mutual funds during the first quarter.

     

    Net Worth Chart:
    http://bit.ly/ZSpfVt

     

    Real Disposable Personal Income
    http://bit.ly/Z48N5f
    23 Jun 2013, 01:48 PM Reply Like
  • bd4uandu
    , contributor
    Comments (2034) | Send Message
     
    I was holding about 5-6 BDC's and REIT's but got out when rates started rising. About a month ago I see they have been drifting lower since then. I know a lot of people don't see them as interest rate sensitive but I don't see how they can't be.
    23 Jun 2013, 02:49 PM Reply Like
  • Tack
    , contributor
    Comments (14288) | Send Message
     
    bd4:

     

    You should use your good timing to be looking to re-buy at lower prices. You, now, have a sweetheart situation by not having ridden prices down.

     

    BDC's are sensitive to rates, but in the opposite way than imagined. BDC's have been issuing lots of long-term fixed rate debt at very low rates, as well as new equity issues, so they're both liquid and mostly immune from short-term rate increases on the borrowing side. On the lending side, the majority of BDC lending is done on a floating-rate basis, so they're happy to get out the pom-poms and cheer for higher rates.

     

    Most of the recent sell-down has been knee-jerk panic without regard to these facts. That just creates value, not a problem.
    23 Jun 2013, 03:16 PM Reply Like
  • tampat
    , contributor
    Comments (999) | Send Message
     
    IT,

     

    Just wanted to mention that this blog has turned into a really good blog. There is a diverse group of articulate, well-reasoned people here with a variety of experiences to draw from and share.

     

    Since most of what is written is opinion, blogs often degenerate with arguments but here everyone has generally been cordial even in disagreement when stating their views.

     

    There are times I think about writing a response to a post and find that after reading further what I was considering writing has, for the most part, already been posted.

     

    There is a lot of useful of information in these 14 chapters. Some of the posts are not only informative but sometimes even entertaining.

     

    What more could anyone ask from a blog on the markets, economic, financial and sometimes political issues addressed in both macro and micro views?
    23 Jun 2013, 01:32 PM Reply Like
  • Krustyman
    , contributor
    Comments (938) | Send Message
     
    Tampat:

     

    ''Just wanted to mention that this blog has turned into a really good blog. There is a diverse group of articulate, well-reasoned people here with a variety of experiences to draw from and share.''

     

    Yes sir!

     

    Group hug? :-)

     

    Krustyman
    23 Jun 2013, 03:24 PM Reply Like
  • South Gent
    , contributor
    Comments (4375) | Send Message
     
    IT: You asked someone who mows their lawn.

     

    For me, I know that three hispanics show up every Tuesday to mow my 1.25 acres. Two of them will mow, using really fast moving, large cutting radius lawn mowers, while the third uses a weed eater and then a blower. It takes them less than 15 minutes and then they move to a house down the street.

     

    Their employer is a young American who went into the landscaping business after graduating from college about 10 years ago who now speaks fluent Spanish. I pay him $42.

     

    Construction projects in this area are now manned mostly by hispanics even in the skilled trades like framing. When my father was building homes from 1950-1987, I never saw a hispanic crew working on home construction sites in this area. I suspect that it would be hard to find in my area a framing, brick, or block crew made up of individuals born in the U.S.

     

    I worked for my dad at $2 an hour back in the 1960s and early 1970s during my summer vacations, and earned every penny of that wage. There were many side benefits including a free workout in 95-100 decree heat which can turn just about anyone into a lean mean fighting machine. Nowadays, another benefit would be free Spanish lessons.

     

    I discussed my work experience with my Dad in a post, previously linked in these comments. I took a snapshot of my pay stub from the summer of 1971 when I was paid $2 per hour for 40 hours work, my Dad's response when I asked him for an additional .25 per hour (he was raised in the GD in near total poverty and was a WWII veteran who married my mother a few days before Peal Harbor) and further described the kind of work required to earn that princely sum:

     

    Learning the Value of a Dollar
    http://bit.ly/TrX6jQ
    23 Jun 2013, 02:11 PM Reply Like
  • Fear & Greed Trader
    , contributor
    Comments (6481) | Send Message
     
    South ,
    I also employed a young american this year, who started his business in my area late last year.. After my original landscaper - mexican gent who suddenly decide not to show up or return phone calls.

     

    After close to 6-7 phone inquiries to established landscapers with not one returning my call , I found this young entrenpenuer who called me back !

     

    I've since posted on Angies list & any other social media i could find in my area, and trashed the names of the folks who did not call back and suggested other perspective customers to try this newbie..

     

    By the way he is cheaper than the guy i had !
    So far, a more than adequate job..
    Go figure..
    23 Jun 2013, 02:24 PM Reply Like
  • bd4uandu
    , contributor
    Comments (2034) | Send Message
     
    I cut the grass a couple days ago. The people who cut grass.... My observation up here lawn care is the new blue collar small business. I see more with zero turns and pickups it's unbelievable. It's not collage kids or high schoolers cutting grass anymore. They plow snow in the winter. These seem the type who used to do manufacturing work previously.
    23 Jun 2013, 02:56 PM Reply Like
  • Land of Milk and Honey
    , contributor
    Comments (5418) | Send Message
     
    What grass? I have a lovely garden, but I've failed in the grass arena surrounding it. Oh well, next fall I'll work on it (myself - it's a small lawn.)
    23 Jun 2013, 02:58 PM Reply Like
  • bd4uandu
    , contributor
    Comments (2034) | Send Message
     
    It's a good year for grass up here. Couple days ago I planted some shrubs in the yard. I hope the bad rain didn't wash them out.
    23 Jun 2013, 03:03 PM Reply Like
  • Interesting Times
    , contributor
    Comments (13056) | Send Message
     
    Author’s reply » @BDU

     

    That's my point. I read where we have become a entitlement nation. But then I ask myself who can really live off of $400 per week unemployment? Or who can feed a family of 4 off of what they give you?

     

    They all have bills to pay. So I also agree that a lot of people work "off the books" to merely survive!

     

    But what do I know...
    23 Jun 2013, 03:11 PM Reply Like
  • Interesting Times
    , contributor
    Comments (13056) | Send Message
     
    Author’s reply » @FEAR

     

    Not even going to ask if you thought the Mexican was a citizen of this Country. That's another SA article for someone else.. lol

     

    My local car wash, no one speaks English and I know the owner. Most workers don't belong in this Country..

     

    SURE they work hard, but that isn't the point. We have local kids who would love those jobs. But they aren't even paid minimum wage and 6 of them live in a one bedroom apartment..

     

    Yet, full service car wash is almost $30 bucks and the owner is well off. Now is that a fair ??
    23 Jun 2013, 03:18 PM Reply Like
  • Interesting Times
    , contributor
    Comments (13056) | Send Message
     
    Author’s reply » @PAWS

     

    Thanks, I broke my own rule of answering a poster in a snide way. I may not have liked the tone, but we all have our bad days. I already extended the apology to the posters and I will cease with my argument.

     

    Most know where I am coming from, and time will tell who is right and who is wrong. But ALL have to realize that we do have people just reading along and deciding when or if to enter the discussion

     

    When I am knocked personally I will fight back, once we break away from thoughts and get personal ( calling people basically stupid ) either it should get removed or responded to, or ignored!. I reffed for quite a few years and I do have a point when enough is enough.

     

    I hit it today, maybe it's the heat in NY, Maybe it's the heat in my fingers. But I will not tolerate some wording in the future. Better to just remove it! Now moving on..

     

    "Central banks "cannot do 'whatever it takes' to return still-sluggish economies to strong and sustainable growth," says Bank for International Settlements head economist Stephen Cecchetti. In its annual report, the BIS blames unconventional monetary policy for delaying private sector deleveraging and for making countries especially vulnerable to rising interest rates which, "without an equal increase in the output growth rate will further undermine fiscal sustainability." Cecchetti also says that despite some high profile controversy, research suggests "Kenneth Rogoff and Carmen Reinhart are right in their original claims" regarding the effects of high debt ratios on economic growth."

     

    Anyone have thought on this?? I might add I have an animated personality and you can attack my posts all you want. Just watch the wording for all, I will do the same as well. I do not want to lose this core of people much smatter then I am. Yet I also want to keep those still learning interested as well.

     

    Doing this blog is for free, it does take up time, but I feel it is one of the better ones on SA.... THANKS TO ALL OF YOU. Lets get back to business now !!
    23 Jun 2013, 02:15 PM Reply Like
  • tampat
    , contributor
    Comments (999) | Send Message
     
    Where is the deflation I read about?

     

    Go grocery shopping, no deflation there.
    Certainly the housing market was deflated which hurt mostly the middle and lower classes, but where is the deflation in prices of things people buy regularly? As a home owner I can't think of anything related to the regular expense and upkeep that has gone down in price. Food has gone up or the packaging gets smaller for the same price, utility bills keep increasing, my health care premiums have gone up 2 times a year at 25% a pop for the past 2 years even though I have made no claims, property insurance-up every year, auto insurance-up, property taxes have declined based on the drop in value of the property yet the base rate keeps increasing. Auto repairs-higher prices. Dental care, higher prices. Just about everything that affects the average person continues to increase in price. If deflation is the fear, where is it? It isn't manifesting itself at the retail level.

     

    As a small business owner all the same holds true, costs of goods has continued to increase, payroll taxes have increased, workmans comp insurance premiums-up, unemployment insurance premiums-up.

     

    Even the markets have inflated significantly over the last 5 years.

     

    The statistics used to measure inflation change over time so comparing past and present rates isn't entirely accurate.

     

    Other than home values, where is the deflation?
    23 Jun 2013, 02:36 PM Reply Like
  • Rinascimento
    , contributor
    Comments (1123) | Send Message
     
    tampat

     

    yes, I agree with you; deflation takes place only were bubbles have deflated like houses; my opinion is that Bernanke uses the excuse of deflation to scare us off and print, print, and print to bail out his friends
    23 Jun 2013, 07:48 PM Reply Like
  • Interesting Times
    , contributor
    Comments (13056) | Send Message
     
    Author’s reply » http://seekingalpha.co...

     

    I think it's time to move onto the next Chapter !!
    23 Jun 2013, 02:53 PM Reply Like
  • South Gent
    , contributor
    Comments (4375) | Send Message
     
    IT: I do not question the central thesis of Rogoff and Reinhart that a point is reached when leverage causes more harm than good, a point equally applicable to governments and households.

     

    A problem with the R & R analysis is that it relies a great deal on historical data that is on its face unreliable.

     

    For a long time before 1985, the ratio of debt to disposable income for American households hugged 60%, give or take a few percentage points. Over the next 22 years, as credit became more freely available and then available in large amounts to anyone having a pulse, the ratio zoomed to over 130%.

     

    I found this chart that compares that ratio for several nations using pre-crisis data and the current ratios:

     

    http://econ.st/12jtQwV

     

    I would not have guessed, but the Netherlands consumers have the highest ratio now at 285%.

     

    And it is important to remember that the number was actually much worse when you exclude those households that owned their homes free and clear (1/3) and had little or no other debt. So among households that were expanding their debt loads during that 1985-2007 period, and going into overdrive in 2002-2007, the actual ratio in many cases would be over 200%.

     

    Eventually, that expansion in credit reaches a point that it can no longer be serviced by a large segment of the population.

     

    In the aggregate now, American households have successfully deleveraged as shown in the DSR and FOR ratios, due to a combination of bankruptcies for some households and the huge wave of mortgage refinancing at ridiculously low historical rates.

     

    See Recent Calculated Risk Blog with Charts:

     

    http://bit.ly/14LUvYz

     

    Long Term Chart Debt to Disposable Income for U.S.:
    http://bit.ly/12dTHpV

     

    This report from Moody's about the improvement in most households' finances is also on point:

     

    http://bit.ly/12jtQwW

     

    Up to a point, additional debt can fuel growth, which was the case in the U.S. between 1985 to 2007, but each additional dollar in incremental debt produces less growth, particularly for a large economy like our own.

     

    That effect was highlighted in a recent Fitch report on China that estimated that each additional Yuan of loans was currently increasing GDP by .15 Yuan, down from .85 Yuan four years ago.

     

    This is what happens in excessively leveraged economic systems. Additional leverage adds less and less benefits and raises the odds of a severe economic contraction as borrowers become unable to finance their debt load and/or are unable to roll the debt over due to a liquidity crunch. A liquidity crunch is apparently underway in China.
    23 Jun 2013, 03:11 PM Reply Like
  • Rico Kastilani
    , contributor
    Comments (172) | Send Message
     
    Cash is king in this kind of environment.
    23 Jun 2013, 07:57 PM Reply Like
  • Interesting Times
    , contributor
    Comments (13056) | Send Message
     
    Author’s reply » @VALUESEEKER

     

    WELCOME, could you explain your thought in the next chapter?

     

    Thanks.
    23 Jun 2013, 08:43 PM Reply Like
  • Fear & Greed Trader
    , contributor
    Comments (6481) | Send Message
     
    Value,
    curious - what environment is that ?
    23 Jun 2013, 08:58 PM Reply Like
  • South Gent
    , contributor
    Comments (4375) | Send Message
     
    F&G: Value must have a different MM account that pays more than .01%, the rate that I am now receiving from the low cost Vanguard Prime Money Market fund.

     

    I do not feel much like a King earning that sum, which is without question losing value to both inflation and taxes every day since the FED launched ZIRP in December 2008.

     

    And, I doubt that $1 in annual dividends generated by $10,000 in such an account will help me pay my future nursing home bills or anything else for that matter.
    23 Jun 2013, 09:50 PM Reply Like
  • Rico Kastilani
    , contributor
    Comments (172) | Send Message
     
    Fear&Greed,

     

    A very artificial time where essentially The Fed is the market. Uncertainties and warning signs everywhere that just cannot be ignored any longer. When you hear bad things in a market bottom, its time to be greedy. But not when the market is at an all time high and Goldman Sachs came out 3-4 weeks ago telling everyone to buy stocks, you might want to take a step back.

     

    I wrote a full in depth article here: http://seekingalpha.co...
    23 Jun 2013, 10:52 PM Reply Like
  • Rico Kastilani
    , contributor
    Comments (172) | Send Message
     
    Southgent1951,

     

    If the DOW goes down the toilet a couple thousand points in the next few weeks or months would you want to be invested and become homeless?

     

    Cash is King at least for the near term.

     

    Before you bash on me. Please read my article here: http://bit.ly/10cY5cz

     

    You invest because the economy is good, not because The Fed forces you into equities to get returns.
    23 Jun 2013, 11:07 PM Reply Like
  • Krustyman
    , contributor
    Comments (938) | Send Message
     
    Value:

     

    In your article you are stating the following:

     

    ''As far as I'm concerned the US economy is finished without the injection of QE of $85 Billion/month.''

     

    Can you please explain further on this? I just don't see why.

     

    Thanks.

     

    Krustyman
    24 Jun 2013, 09:27 AM Reply Like
  • Fear & Greed Trader
    , contributor
    Comments (6481) | Send Message
     
    Value ,

     

    I will disagree, unless you are a daytrader or very short term oriented,,
    swing trades, etc.

     

    Let me digest the comments here, and I'll reply more in depth later,,

     

    Best to you ...
    24 Jun 2013, 09:38 AM Reply Like
  • Interesting Times
    , contributor
    Comments (13056) | Send Message
     
    Author’s reply » @SOUTH

     

    Please be gentle !!!

     

    I already feel the heavy artillery coming>>>>
    23 Jun 2013, 11:31 PM Reply Like
  • South Gent
    , contributor
    Comments (4375) | Send Message
     
    IT: I am already fearful that the rise from the low of 666.79 is the devil's work.

     

    Since I own everything free and clear, and do not buy securities on margin, Mr. Value most be talking about someone else becoming homeless and living under a bridge due to the DJIA falling "a couple of thousand points in the next few weeks or months".

     

    And, if I started listening to people making those kind of predictions, I would not have bought a stock in my life, since doom and gloom is always being forecasted by a small army of people.

     

    The late Alan Abelson was positive about stocks for about 15 minutes in 1982 when the S & P 500 was hovering near 100 and was warning investors about stocks in the March 9, 2009 issue of Barrons, the day before stocks began a historic rally of 150%. In the same issue, David Rosenberg was forecasting further downside in stocks and later in 2009 that the S & P 500 would gravitate for a host of reasons to the 475-650 range "for an extended period of time"

     

    http://read.bi/WlbIQu

     

    Since the market started its bull run, there have already been two serious corrections, the largest was between May and August 2011 which was close to 19%. Another one was almost 16%. Yet the S & P 500 was up 146% since Barron's warned us about stocks in its March 9, 2009 issue through last Friday.

     

    The kind of decline predicted by Value, even if it comes to pass, is about a 13% decline from 15,318 close in the DJIA on 6/18, less than the two prior corrections in the current bull cycle. I managed to make it through those corrections without any help.

     

    I believe that a 15% decline from the high of 15542 would be healthy, taking the DJIA down to around 13,210. These corrections are very hard to time and even harder to time re-entry points. The end and beginnings of long term secular cycles are far more important on the timing issue.

     

    I do recall a day in October 1987 where the decli