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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 31.........  186 comments
    Aug 4, 2013 12:53 PM

    What started out as a small group discussing anything related to investing has grown extremely educational over the last few months.

    We have Authors, Financial Advisors, Seasoned investors, Experts in specific fields, and just the average Joe pitching in...

    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 invested thinking they will though. Additionally I don't see much coverage or articles pertaining to the other commodities. So I started 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. I am by far a gold or silver bug. Yet somehow the can gets kicked down the road and I live to learn another lesson. Then Sprott's ETF'S (PSLV) are talked about as being safer then others (GLD) and (SLV).

    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 INVESTMENTS? Here is where most of us are uninformed and relish an education.

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

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

    If you disagree with a post please bring proof and display your argument. If you agree with a post, find one interesting, or have questions please feel free to respond. We must remember were all in this together. So if you want to talk politics and how it affects everyday life, fine with me!!

    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 we'll be open to learning. Lumber might interest someone and I would like to learn why I should invest in it. PLEASE bracket any symbol as it also allows a reader to click on it and get some data.

    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. Eric, Hebba, Doug to name a few, in no particular order, will drop in once in a while to voice their opinions. Please feel free to ask your favorite Authors to join in the discussion.

    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

    LURKERS , we are waiting for you to post here too!

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

    Additional disclosure: and the beat rolls on !

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Comments (186)
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  • Author’s reply » QUESTION FOR ALL..


    We seem to talk about weekly reports, unemployment, CPI, GDP, FOMC chatter, ISM,


    Does any of this really matter if BB is printing? If it doesn't what are the long term downside effects, if any, with them doing all of this buying?


    I just don't understand all of this because if this THE way to stare a Recession down why hasn't been done before?
    4 Aug 2013, 12:57 PM Reply Like
  • The printing just makes the game last a little longer, with the intent of helping GDP and production. As we can see from the Japanese example, the game can last longer than most think. But the consequences can not be avoided forever with Japan leading the world in Debt to GDP.


    The Humpty Dumpty economy has many cracks. Some here don't see the cracks because they are pasted over with QE.
    4 Aug 2013, 02:03 PM Reply Like
  • Author’s reply » MARKET CURRENTS
    real-time news and commentary for investorsAll Market Currents Sunday, Aug 4
    1:55 AMBerlusconi's party threatens to bring down Italian government
    Silvio Berlusconi's People of Liberty (PDL) party is considering a mass resignation from parliament unless Italian President Giorgio Napolitano pardons Berlusconi for his conviction for tax fraud. Such a move would bring down the ruling coalition, of which the PDL is a junior partner. The PDL's threat comes after Italy's High Court upheld Berlusconi's conviction and a four-year prison sentence, which the former prime minister is anyway unlikely to serve. A pardon would also enable Berlusconi to avoid a possible ban on holding public office. Italian shares (EWI) closed -0.2% on Friday following the High Court's decision, although 10-year bond yields (ITLT, ITLY) fell 1 bps to 4.26%.


    You would think those Italians would not ruin their pasta Sunday??
    4 Aug 2013, 01:16 PM Reply Like
  • The underlying real economy (Aug/2013) is presently -2.8% as determined by TRI's gauging of Structural GDP. Via fiscal multipliers, Congress's current deficit is able to lift this to 1.9% (Real GDP). Normally this exercise in fiscal policy would be considered adequate but since the FRB's dual mandate includes aspiration for full employment, the FOMC keeps interest rates as low as possible to stimulate the economy further.


    Because current interest rates are insufficient in a balance sheet recession, QE is a special tool in such zero bound environments. The FOMC feels another $520 billion in QE purchases will be necessary to bring UR-3 down to the natural unemployment rate (6.0%). Upon attaining that target, it will raise (normalize) its key rates if & when Inflation approaches its mandate target of 2.0%.


    The only other time QE would have been perhaps necessary is the Great Depression. It was not used 'cuz Congress had lots of room left for Deficit fiscal stimulus. Albeit SGDP has been similar in both events (-10% in GD vs -8% in GR), Congress ran only a 2% Deficit in 1939-33 vs 6% federal Deficit in the recent event.


    Generally an activity like QE should be inflationary and problematic, but 'cuz the US has been mired in a Structural Greater Depression since late 2006, deflation is the dominant forcing at this time ... thus offsetting QE's derogatory effects.


    Congress chose to spend $6.5 trillion in Deficit enabled stimulus to avert another Greater Depression. It was a prudent exercise considering the low interest rates presently available. However each year these massive Deficits are continued brings the US that much closer to its tipping point for a treasuries bond yield surge (7%) and its own austerity crisis when further borrowing becomes unsustainable. Present modeling suggests this event occurs in 2024.


    GDP & SGDP outlook charts:
    4 Aug 2013, 02:10 PM Reply Like
  • Freddy, whether another depression was averted or not, is open for discussion. You seem to be in agreement with Bernanke as he thinks the problem with the Great Depression was not enough spending (or loose monetary policy by the Fed) as if the confiscation of gold wasn't enough. I don't believe the depression would have been as great if we followed what Harding did; nothing. Instead we loaded on programs and passed legislation that still haunt the system today.


    I think some major financial issues would have occurred in 2008, but the bad would have been weeded out (ala Lehman) and we would be flourishing economically by now. Instead, AIG was bailed out to help Goldman Sachs and some banks were forced to take on some bad assets (B of A and Countrywide).


    The low interest rates today distort reality and along with the $6.5 trillion of stimulus will have even deeper consequences moving forward. It has done nothing to improve employment and as you point out, the QE is being swallowed up by the deflationary forces.


    I know your models tell you 2024, and I have been under the impression things can stay afloat longer than most think since I wrote an article on it in September of 2008 about the Fed still being relevant. It's the only reason I am not 100% gung ho on gold (for now).


    But it just takes a couple of bigger cracks to bring the Humpty Dumpty economy to its knees. While I do think we see more deflation, lower rates and stronger treasuries over the short term, as we continue to contract, I see things imploding within 5 years, not 11 as your model suggests.


    If you would care to address more as to why you see things slightly different time-frame wise, I would be interested to know your criteria. Not sure if you are using cycles or patterns or what.


    Thanks for your thoughts.
    4 Aug 2013, 03:50 PM Reply Like
  • Doug, please don't confuse my agreement with the scale of the Keynesian stimulus with the political decisions on the various bailouts. The "purist" part of me has always wanted to see if "laissez-faire" works in the real world but I am resigned to the fact I will never see it attempted in a democracy/republic. The severe social costs would cause the ouster the governing administration at the earliest electoral opportunity. In short, voters expect mitigation regardless if it hampers ideal "healing" of the economy.


    I agree a lengthy low interest rate regimen causes distortions and collateral damage (especially to the investment dependent retirees) but the savvy ones can avoid this by employing generally longer term instruments or at least upon first signals of an economic downturn.


    I don't see lower rates. Dysfunction in Congress over the past two years has created an "Austerity Crisis Premium" in 10-yr treasury yields of 0.33% compared to sovereign peers. I am confident this will grow exponentially so long as there is no grand bargain to eliminate the massive trillion dollar entitlement-based deficits next decade.


    My projection of a 2024 yield surge is founded on tipping points for a series of ratings downgrades of the USA Gov't. This is founded on empirical observations ... not cycles.


    Debt Wall projections chart:
    4 Aug 2013, 06:04 PM Reply Like
  • Freddy, thanks for the reply. You said, "but the savvy ones can avoid this by employing generally longer term instruments or at least upon first signals of an economic downturn."


    How in your opinion, does one become "savvy?"


    As far as lower rates go, and even with the dysfunction in Congress (in spite of?), the "perception" is, we are the safest place to put one's wealth and I think as things unravel elsewhere, this will be born out.


    I click on your links, but I think your site wants me to sign up, lol. Appreciate your insights though.
    4 Aug 2013, 08:05 PM Reply Like
  • Doug, sorry but nobody but you Americans have had the "perception" of y'all being a safe haven these past two years. 10-yr yields are lower in Japan, Switzerland, Taiwan, Germany, Denmark, Finland, Netherlands, Austria, Sweden, Czech, France, Hong Kong, Canada, Singapore, Belgium, UK & Slovakia. Yes ... even Slovakia!


    I see nothing on the GDP horizon which warrants getting out of the stock market in the next twelve months. On the contrary, parked bondholders would be crazy not to migrate...
    4 Aug 2013, 09:31 PM Reply Like
  • Freddy, well, despite all the QE going on, treasuries have done nothing but get stronger each year and half are owned by foreigners, so it's not just us blokes buying.


    I agree and think bond holders will eventually try and find another home. This could have the potential for a higher stock market. Many have already moved there with the latest bump up in rates driving the stock market higher.


    I don't know about the idea of them being "crazy" as many who own the bonds are somewhat older and conservative. What do you think the Japanese holders of their government bonds should do? Hold? Sell? Put it in the Nikkei? Just curious.
    4 Aug 2013, 09:56 PM Reply Like
  • Doug, there is a large segment of bondholders that will never choose to migrate or are prohibited due to fund by-laws. I was referring only to monies which are temporarily parked. As for Japan, they are in uncharted waters and nobody knows how it will play out. Its Gov't Debt is nearer the yield surge tipping point than the USA and a collapse could be in the cards by decade end should inflation rise more quickly than nominal GDP. Japanese investors would be wise to migrate into non-Yen instruments.
    5 Aug 2013, 01:03 AM Reply Like
  • Agree Freddy.
    5 Aug 2013, 01:30 AM Reply Like
  • DE: "I click on your links, but I think your site wants me to sign up, lol."


    Doug, I appreciate the heads-up on the password pop-up. A new chart added to the page was residing off the FreeVenue. Should be fixed now. thanx...
    5 Aug 2013, 03:12 PM Reply Like
  • IT


    You are always ready for a silver and gold comment.


    Just read an interesting article that points out the fact that it was in this time frame one year ago, that the summer break-out of PMs occurred. The time frames are coinciding. The lows for SLV occurred almost to the day: 6/28 in 2012, and 6/27 2013. The author points out the symmetry of the bottoming patterns and suggests a completion of the bottom and an implied (possible) breakout to follow. Possible recommendation: short term swing trade.


    Article: Today's EchoVector Pivot Point Chart And Analysis: Silver


    Freddy: very good explanation of why inflation did not result from QE. I like that you are not afraid to use the word "depression" in your explanation.


    Okay, we've got 10 years max left before the wheels fly off this thing. I feel (animal spirits - paranoia) that's conservative, though that's what your data currently indicates.
    4 Aug 2013, 03:01 PM Reply Like
  • John, the model suggests 2024 based on $9.6 trillion of Deficits (2014-2023). Should Congress get involved in infrastructure projects or ObamaCare costs rocket more than predicted and there being no offset in revenues then the date for a Severe Recession would be hastened...
    4 Aug 2013, 06:14 PM Reply Like
  • The weekly reports do matter , as it has shown a slow steady recovery.


    Some have the notion that the economy can't and wont stand on its own , i am not one of them , All we have to do is look back and see how the market , earnings and economy have fared without QE.


    QE was initiated to restore liquidity, its not fed policy or any fiscal-stimulus program It accomplished what it was supposed to do, restore liquidity and re-capitalize banks. All can voice their opinion as to whether it worked , didn't work, the duration of the action, etc.
    The bottom line --it was implemented, it is here, there will be tapering at some point and a conclusion. In my view the economy will stand on its own , corp earning will slowly keep improving and the market will eventually be much higher that where it stands today..
    I would rather put the Fed involvement in it proper place and focus on corp earnings and their correlation to stock prices..


    The new earnings estimate for the S & P are around $120.. put a 15 multiple on that (lower then where it is today) and you have an S & P of 1800


    Not saying it will go up in a straight line , there may be bumps, but if earnings come thru and they slowly increase -- it means higher stock prices..


    I'm not of the belief that Europe will self destruct, there are now many reports that show otherwise. All the market wants to see is improvement & its happening , Japan is another that the experts have gotten wrong with dire predictions. Perhaps they need to stay focused here rather than suggesting that Europe, Japan or some yet to be named country will lead the world down. That is sheer conjecture at its best. Same with China , one day they growth is slowing , and they will slow the world down, next day we get a good Chinese PMI.


    One can choose to believe whatever they wish , However it may be wise to put those issues in their proper places and concentrate on U S corp. earnings . It has seemed to work for a long time with or without QE.
    4 Aug 2013, 03:19 PM Reply Like
  • F&G, last I checked, Japan's stock market and real estate markets are down 75% from their highs.


    BTW, in my Illusions book, I am sharing what investors need to look at before investing in particular companies.


    Another guy who was at FreedomFest was Steve Moore from the Wall Street Journal. He's very bullish moving forward, but for different reasons than you are.
    4 Aug 2013, 03:59 PM Reply Like
  • Just putting things in perspective , Perhaps one of the worst natural disasters to ever hit a country has something to do with the Japan numbers and where their markets stand today.
    4 Aug 2013, 04:07 PM Reply Like
  • That's part of why they have issues still today, sure. Their Debt to GDP issues were over 200% before that catastrophe occurred.


    For what it's worth, here's what I wrote about it in July of 2010, a 3 part article. The charts aren't working on my site for some reason though.
    4 Aug 2013, 04:29 PM Reply Like
  • It appears that the majority still has doubts about this market & that's a good thing !


    Commentary from Schaefers Research :
    Short interest on SPX component stocks is up 10% from its February 2013 low and recently hit its highest level since late 2012. If we are in the early innings of the next short-covering rally, the SPX could be on the verge of another huge advance.


    Now add to that, the percentage bulls in the American Association of Individual Investors (AAII) and Investors Intelligence polls fell last week. Additionally, equity exposure fell among those responding in the National Association of Active Investment Managers (NAAIM) survey.


    If anyone had the notion that everyone was piling in here , the "short" interest data tells all. Whether the short covering is part of this recent move or in the future, it represents a potential new wave of buying.
    4 Aug 2013, 04:00 PM Reply Like
  • @ FG


    How does short covering represent a potential new wave of buying?
    4 Aug 2013, 04:56 PM Reply Like
  • Curls ,
    at some point those that sold short will eventually have to buy those shares back, to cover --- creating more buy side demand .
    4 Aug 2013, 04:58 PM Reply Like
  • Isn't that short term buying... they're likely to get rid of it on the next ride up.
    4 Aug 2013, 05:10 PM Reply Like
  • Shorts are speculators who initiated a trade by "selling to open" a stock or the market index with the hope that they were selling at the top. They would later close their position by "buying to close" at a lower price.


    This is basically, "sell high to open, buy low to close" and pocket the difference.


    If they sold short one month ago, they now have a paper loss. If the market keeps going up their paper loss gets bigger. Eventually they "buy to close" at a higher price as the market goes up when they can't take it anymore. Short interest, is the volume of shares that are short and have to "buy" to close out their position. They can push the market higher as they close out. It's a positive for the market when the market is going up.
    4 Aug 2013, 06:36 PM Reply Like
  • What do you think of this author's assessment?


    He seems positive on the bull so far, and is basing that on earnings. But is now seeing slow down in earnings, and reason to be more cautious. If I read it correctly?
    4 Aug 2013, 05:16 PM Reply Like
  • He makes valid points that the market has outpaced the earnings growth. Which is why many, including myself think we need a correction to put things back in perspective. If we take 10% off of this market then things would be more in alignment..


    However looking at the example for $120 in earnings with a 15 multiple shows how the 1800 level may be in the cards.. Keep in mind the market is forward looking.. How the market decides to get there is anybody's guess, straight up from here or after we pull back .


    What it does demonstrate is that those that called the market "expensive & overvalued , riding on hope & illusion " missed the earnings factor. It was cited at S & P 1400, 1500, 1600.


    I suspect maybe we all might here that same cry at S & P 2000 , perhaps then it may be justified. Not now..
    4 Aug 2013, 05:57 PM Reply Like
  • F&G, regarding latest stock market article told people to start getting out of the bubble the way they got in, by dollar cost averaging out. This advice is sound. In fact, in my September 2012 article about the bubble forming I said the following; "Look at the chart below of the 10 year Treasury. My recommendation is to be completely out of the stock market once you see this rate go to 2%, if not before. The data I have written recently about tells me this is all fluff created by the Fed as to why the stock market is higher."


    I still hold that to be the case.


    I also wrote the following in that September article; "The S&P 500 is presently at 1435 and interest rates are at historic lows. Will history repeat? Is this another stock market bubble created by Fed intervention? How did that work out last time? While the stock market waits to hear the results from the Federal Reserve’s meeting on Thursday, what will happen if the stock market doesn’t get any QE3? Why does Bernanke have to do anything if he can just talk the stock markets and interest rates where he wants them to go? Well, one thing is for sure, he can’t talk up unemployment. And eventually, he will lose his grasp of talking up anything. Eventually, the Fed will become irrelevant. But for now, the Fed has the market fooled as the data speaks for itself."


    The Fed still has the market fooled and in May I suggested investors dollar cost average out of their stock investments. We're starting to see the cracks in the BRIC countries, Japan (after their run up) and now China.


    While the U.S. can still bump up a notch, and I am happy you can take the other side as I have with gold from time to time, there is no illusion in where we are with the P/E ratio work of Crestmont Research that even Doug Short utilizes as seen in this article;


    4 Aug 2013, 06:44 PM Reply Like
  • Doug ,
    your advice was wrong then & is incorrect now.. Here is a comment i made on the subject of "getting out" of the market if & when the time is appropriate..

    Southgent & user 741 have both laid out other ideas & strategies they use when it may be time to be defensive. There are many risk management techniques to avert losses.


    The idea that all who are in the market are going to get "caught' when it all comes tumbling down is frankly nonsense & absurd. These are the same "bears" that have missed this move up.. That argument is weak & plays like an old record. It s ironic isn't it that the people who subscribe to the Precious metals mantra don't seem to practice risk management.


    Yes i know u are among those that called this a bubble at S & P 1400.


    No one that has been in the market is "fooled" , its the folks that haven't participated while subscribing to the nonsense of "dire consequences absurdities" that has been promoted since s & p 1400 that are "fooled" .


    After all u need those absurdities to promote the PM's


    If I'm correct you may be saying the same thing @ S & p 1800 . some 400 points later ...


    I call things as i see them ...


    Its not an illusion.. & I'm happy for those that have gains and will practice risk management when the time comes.
    You are operating in a different sphere , one that hasnt quite panned out ,, I know -get ready its coming ! its surely coming ! It may be 5 yrs out or perhaps 7 - Eurpoe , Japan , China, Lions Tigers & bears -- Ohh my !
    Believe what u will, I'll choose to react quite differently.
    4 Aug 2013, 07:43 PM Reply Like
  • F&G, let me first off tell you that your way of communicating I find deploring. We are having a discussion, not a battle of ego's.


    Your background as a financial advisor, where you look at the history of charts and my comment on a defensive strategy is outdated theory just as the "stock market returns 10% annually" that so many other advisors believe. This isn't "nonsense and absurd" as you so righteously claim, but based on the work of one's I post like that of Crestmont Research for example.


    These aren't the same "bears" you hear of (I did mention some at FreedomFest are bullish right?) that you try and lump me with. I do my own research and "call it like I see it." Am I a "fool" for alerting people to a bubble as it is occurring, based on the data as I see it? Or are you the one who will have some explaining to do after the market falls from these lofty levels? Time will tell.


    But I am not so arrogant to say the other commentor (me) is so incorrect in such a fashion as you continually do, and go on to claim the other side is absurd and has an agenda to sell metals to the fools selling their stocks as you profess I do.


    No one who reads what I write has ever been so much on the attack as you.


    How is it you are afraid of a little back and forth discussion instead of the name calling, mocking, you're "wrong," "incorrect," "nonsense," and "absurd."


    4 Aug 2013, 08:04 PM Reply Like
  • Doug
    calling the s & P 1400 a "bubble" , . You just called the people that have been in this market as being fools or "fooled" & now u want me to have a "discussion" Your agenda is obvious. Sorry im not buying it,
    4 Aug 2013, 08:12 PM Reply Like
  • F&G, if you read what I said, it was that the Fed has the market fooled. Did you see what I wrote in that article F&G? No. You want to take the title of that article and claim that I call everyone a fool for getting out at 1400 when I never said such a thing. Didn't I say 10 year North of 2% I would be out? Are we there yet? I was clearly throwing out a cautionary bubble article. No hidden "agenda."


    But the Fed has indeed put money into the markets via the banks who have received the proceeds of the Fed's buying. You can't see this?


    I told investors in May to start getting out by dollar cost averaging. Was this an agenda to get people to invest in gold when I have always said to put 10% to 20% in gold and leave the 80% to the experts such as yourself? Even between those two articles I said the market could break to new highs and it did.


    Your only agenda is to "try" and discredit me. My articles stand on their own merit and I have plenty of followers who can vouch for what I say. This will only grow, despite those who try to mock what I say.
    4 Aug 2013, 08:26 PM Reply Like
  • @ Fear


    Being fooled isn't the same as being a fool. It's a fair comment to say investors are being fooled by something, if one believes so.
    ...all the ones who follow the big broker recommendations certainly are...


    @ Doug


    "75% drop in Japan." What time period? And when was the tsunami?
    4 Aug 2013, 08:28 PM Reply Like
  • The markets have already spoken and will continue to do the talking -- they will bring the "discredit" as you state.. "End of discussion"
    4 Aug 2013, 08:32 PM Reply Like
  • Or not...

    4 Aug 2013, 10:12 PM Reply Like
  • @ Doug


    I find that Crestmont P/E hard to use. It shows 70% above average at the moment. But you can be above the average for a good long while because a significant downturn happens. Also in 2009, it was close to the average when the upturn started. Am I missing something?
    4 Aug 2013, 11:55 PM Reply Like
  • @ Curls, 96th percentile of the highs (green shaded area) shows it has a propensity to return to the median. Doesn't mean it can't go above the 96th percentile first, which would be the blow-off top, "if" it were to come ala the gold shaded portion of the chart.


    Ed Easterling's first book, Unexpected Returns, explains his P/E research from Crestmont, as well as the bottom of the article. His book came out before the crash. I have not yet read his latest.
    5 Aug 2013, 12:08 AM Reply Like
  • Curls,The market and it's participants have used the "tried & true "PE to value the markets , over time.


    Now we have the "schiller, crestmont" and i guess others that are now talked about. They deploy metrics that skew the metrics,, possibly to prove their point. .. Schiller skews the "E" or the earnings factor in their calculations. It's apples and oranges.


    Fortunately these 'boutique" indicators are just that , nice to talk about, but market valuations are based and should be compared over time to the "original PE" metric.


    I.E. The cry is that we are at valuation levels like 2000 & 2007.. when that is shown to be false.. Here comes schiller & crestmont to show how overvalued the market is .. What's next.. ?
    5 Aug 2013, 09:21 AM Reply Like
  • @ Fear


    I'm new to P/E in general, so a lot goes over my head. I could see that crestmont was related to or created by schiller and changes the metrics. Though taking inflation into account, sees worthwhile, but it effects both P & E?


    This article, Philip Mause who I've liked as an SA author, looks at ways to put P/E into current context that, that really changes things. You may like it:


    The first commenter on supply and demand also has some great points!


    He takes into account the influence of liquidity, low rates, and related items...on how to look at P/E... and comes to conclusion they aren't overvalued right now. I'd be interested in opinions. Doug too may fine it interesting.


    What's bugging me on the crestmont is a stats-type issue. It can be "over valued" even at 96% for a very long time in months before that crest happens. It does ride nicely with the market, but it's not a great timing tool, because you still can't tell when the top is very well. I may not be seeing it accurately, but that's what I picked up. To say that this market is overvalued and will come down eventually, isn't all that helpful, because that's always true about the market once it's not at an obvious bottom & up quite a bit.


    On the other hand, everyone is saying caution right now. Including some of the technicals. So that correction is sitting around here somewhere... but when of course is the question.
    5 Aug 2013, 09:36 AM Reply Like
  • Curls, despite F&G's brilliant analysis on what others have said, with nothing but conjecture, here is what The Economist magazine says about Shiller's P/E analysis;


    Synopsis of article; "In short, if you don't like what Shiller is telling you, it is because you are a bull who thinks "this time is different"."


    Shiller's analysis on P/E ratios simply adds an inflation factor to the 1934 work of Graham and Dodd, which of course is what Buffet has used to find value in a company. Shiller's comments in 1996 were the basis for Greenspan's "Irrational Exuberance" statement.


    Ed Easterling, who created Crestmont Research, serves as a Senior Fellow and Advisory Board Member with the Alternative Investment Center in the Cox School of Business at Southern Methodist University (“Cox School”). He recently served for five years on the adjunct faculty in the Cox School where he developed the curriculum and taught the course on Hedge Fund Investment Management for graduate business school students.


    Here are his 12 rules of secular stock market cycles:


    1. Secular cycles are driven by the inflation rate (deflation, price stability, and higher inflation)
    2. Secular bulls occur when P/E starts low and ends high over an extended period
    3. Secular bears occur when P/E starts high and ends low over an extended period
    4. Cyclical bulls and bears are interim periods of directional swings within secular periods
    5. Cyclical cycles are driven by market psychology, illiquidity, or other generally temporary condition(s)
    6. Time is irrelevant to the length of secular stock market cycles
    7. Secular bulls require a doubling or tripling of P/E
    8. Secular bears occur as P/E stalls and falls by one-third to two-thirds or more
    9. When real economic growth is near 3%, there is a natural floor for P/E between 5 and 10, a natural ceiling around the mid-20s, and a typical average in the mid-teens
    10. If economic growth shifts upward or downward for the foreseeable future, the natural range moves upward or downward, respectively
    11. Inflation drives P/Es location within the range; economic growth drives the level of the range
    12. The stock market is not consistently predictable over months, quarters, or periods of a few years; the stock market is, however, quite predictable over periods approaching a decade or longer based upon starting P/E


    #9 is where we are today with the real debate over #10 (which I believe the data I write about gives me the truth - and keep in mind, the 1st quarter GDP was revised downward, just as unemployment data the last couple months).


    Curls, you bring up a good point about liquidity. Much of the liquidity brought about by the Fed with QE is being directly transferred to the stock market via the banks. Add to this, of late, bond liquidations where the proceeds need to be parked somewhere, it can put upward pressure on the markets. I don't discount that. But if we are indeed in the 96th percentile of the highs for the S&P, as Crestmont says, I believe it is time to cost average out of a position, as I suggested in my May article.


    But hey, the DOW is up only 1,439 points in 6 years, or about 1.6% a year. It has room to rise a bit more.


    5 Aug 2013, 12:52 PM Reply Like
  • Shillers PE argument stated that stocks were not cheap in 2009 and has further contended that they are expensive right thru to 2013 and the 100+ % S & P increase.


    Why it paid no to listen then , and pays not to listen now..



    So it really i'snt different this time


    We are in a secular bull market, that shiller has mis-diagnosed.
    5 Aug 2013, 01:27 PM Reply Like
  • Which is why I look at others like Ed Easterling from Crestmont Research to come to my conclusions, among many other factors.


    Another take on Shiller;


    "The CAPE currently stands at 23.6, according to Shiller. That is higher than 90% of comparable readings since the 1870s.


    The good news here, if there is any, is that valuations exert only a weak gravitational pull over the stock market’s near-term direction. So there is no reason that the bull market couldn’t continue for a lot longer.


    But the stock market’s long-term prospects certainly appear bleak: According to an analysis Asness recently conducted, the current CAPE level of 23.6 translates into a forecast that the S&P will produce a 10-year real return — between now and mid 2023, in other words — of just 0.9%."
    5 Aug 2013, 01:54 PM Reply Like
  • Doug, albeit we may disagree on the short-term outlook, I can concur the medium term outlook for the S&P sucks. As the US Govt's debt service rockets from $235 billion today to $1,020 billion in 2023, Congress should be paring back expenditures or raise taxes to offset. The resultant trajectory for Real GDP is truly dismal and this will be reflected in future S&P revenue guidance commencing in early 2015.


    2020 GDP outlook charts:
    5 Aug 2013, 02:56 PM Reply Like
  • @Doug


    To play contrarian...
    except the economy is likely to improve in that time, giving reason for better earnings and improved ratio, all possibly without hugely big hit.


    Is that a factor?
    5 Aug 2013, 03:38 PM Reply Like
  • Thanks Freddy. Came through.
    5 Aug 2013, 03:51 PM Reply Like
  • curls, if you throw enough money at something, it can improve. Does that money come from leverage or profits? What are the terms if leverage? There are 5 ratios I will be mentioning in my book in analyzing a company that will help investors know whether or not the current valuation is realistic.


    As far as the economy goes, what in your opinion would cause the economy to grow? What would cause it not to grow?


    Pulling an article here or there about what others say is a little different than what I do with my research of "their" research. And even then I look for others points of views. I just printed out 2000 emails I have sent to myself on these subjects that I am categorizing into the various subjects for my book. As I have said to others, it is like putting a 1000 piece puzzle together of the blue sky. You start from the edges, and you work your way in.
    5 Aug 2013, 03:56 PM Reply Like
  • Well, you both certainly have different views. I'm glad to see both. Gives me a chance to figure out what to even think about, as I assess things.


    I will say, Doug's been taking about gold going down. So that doesn't seem the motivation. I do believe there are people who genuniely believe the cautious view, based on how they look at the metrics. So it's not personal -- it's different conclusions & weighing of different factors.


    I've come the conclusion that the market needs to be assessed a new right now. It's not the same place as the last 4 years. But it's not the same place as 4 years ago plus QE beginning. It's a new spot. That's what I'm reading for as I go through articles...


    I really like the idea of defense strategies, that don't involve selling all out. I need to figure them out -- so thanks for the link!
    4 Aug 2013, 07:55 PM Reply Like
  • curls,


    Nikkei; 38,915.87 was the high in 1989. Closed at 7,054.98 on March 10, 2009—81.9% below its peak. About 75% lower today.


    Tsunami was March, 2011.
    4 Aug 2013, 08:35 PM Reply Like
  • Author’s reply » Didn't take long did it !!


    Goldman, LME are co-defendants in class-action suit
    A class action lawsuit has been filed against Goldman Sachs (GS) and the London Metal Exchange alleging antitrust violations in connection with the firms' aluminum warehousing practices. (full complaint)Superior Extrusion, a maker of extruded aluminum products, is the lead plaintiff.Both Goldman and the LME say the suit has no merit.This is the latest setback for Goldman as it tries to defend itself against allegations its aluminum warehousing activities have played a role in creating long waits for the metal and driving up prices for consumers. (previous coverage)
    4 Aug 2013, 10:12 PM Reply Like
  • I still am suggesting RICO in the case of Goldman, JPM, LME, COMEX, etc, etc. ad nauseum.
    4 Aug 2013, 11:27 PM Reply Like
  • Trading volume is deeply depressed. Is that short term indicator of anything?




    RICO sounds about fair. Hard to believe the ad nausem factor. Didn't we do immoral manipulation in 1999, 2007....
    5 Aug 2013, 01:48 AM Reply Like
  • curls,,


    lot of it may be summer doldrums .. usually lighter in Aug. also an indication that the "retail" investor still for the most part on the sidelines,, Hence the lighter volume through most of the recent run.
    5 Aug 2013, 09:23 AM Reply Like
  • Author’s reply » JPMorgan in talks to sell metals-storage unit. JPMorgan (JPM) is reportedly in negotiations to sell its metals-storage unit, Henry Bath, to London commodities broker Marex Spectron. JP Morgan last month said it would seek "strategic alternatives" for its physical oil, gas, power and metals trading division such as a joint venture, spin-off or sale. The move comes amid increasing regulatory and Senate scrutiny in the U.S. on banks' physical-commodity operations.


    5 Aug 2013, 08:41 AM Reply Like
  • Europe has a long road to travel in their recovery , but the "change" may have started. More evidence that the global economy is on the mend. Those that have touted the euro implosion ,leading to global economic woes may have to start looking elsewhere to support their case.


    The strength in the eurozone markets in the past month has been a large factor in adding to the gains here in the S & P . Markets hate uncertainty, for the moment Eurozone isnt on that list.
    5 Aug 2013, 09:40 AM Reply Like
  • I guess the Eurozone markets gave you the good ol' headfake. Very bad call.
    7 Aug 2013, 12:05 PM Reply Like
  • This may provide some answers to the "earnings and valuation" issues that have been constantly challenged by the skeptics.

    5 Aug 2013, 12:34 PM Reply Like
  • A bullish comment about the data from Merril Lynch?


    Isn't their motto, "We're Bullish on America?"


    5 Aug 2013, 04:13 PM Reply Like
  • Long YCS
    5 Aug 2013, 12:55 PM Reply Like
  • Doug, we could all learn something from your investing theories. You should join the portfolio challenge, put (YCS) into the portfolio as one of your picks. Nothing like putting money where your mouth is ; )
    5 Aug 2013, 05:35 PM Reply Like
  • Blue, trying to write a book and am only making a few trades here and there right now as I don't have time to really monitor except for swing trade now and then when I see opportunity.


    To be honest, I would be long the S&P right now. F&G reading this would be shocked, lol. But I would be out before October.
    5 Aug 2013, 08:45 PM Reply Like
  • That said, I like TLT at 105 now too.
    5 Aug 2013, 08:47 PM Reply Like
  • I got out of YCS with a nice little loss this morning. Should have got out yesterday when I sold my UPRO flat.


    Interesting to see the dollar somewhat getting hammered AND gold go down with silver. Something will break soon, and I'm afraid it's dollar stronger that will be the next move, putting more pressure on gold and silver.
    7 Aug 2013, 12:14 PM Reply Like
  • Doug,


    what do u see as contributing to the dollar strength in the short term..?


    (no criticism or controversy intended)


    7 Aug 2013, 12:25 PM Reply Like
  • Appreciate the comment F&G. I have followed the index for years and feel I have a good grasp on it from an intuition level (like I do gold). Doesn't mean I'm perfect by any means. But I have been doing much research on what Japan is up to (and what I believe the only thing they can do) which is what Abe wants them to do and the G20 approves of them doing; print.


    Couple this with the tensions between Japan and China over the islands they both claim with the Japanese increasing military spending at the worst of times and the fact that the Chinese are cutting some ties with Japan's auto industry, when the Japanese rely on China for so much, it can be a larger negative for the Yen and the Yen represents 13% of the dollar.


    The larger picture deals with the Euro. I have seen some of what you posted on the positives of Europe, but I have to consider the sources of such. It's really the South that bothers me. There really is no mention of anything Euro related in the media at present when before that's all they talked about. It's as if someone gave them all the memo.


    Yet everywhere I turn, there are still major issues with the Southern countries of Europe (banking and unemployment). I think by September, it will all be sorted out and I will more than likely write about it again.


    European banks:


    "Quarterly reports by three of the biggest banks in Europe on Tuesday showed how, five years after the beginning of the financial crisis, they continue to pay for the sins and excesses of the boom years."



    EU Unemployment:


    Jonathan Loynes, chief European economist at Capital Economics;


    "With unemployment high and inflation pressures weak, there is still a strong case for further policy stimulus in order to sustain the tentative signs of recovery in the region,"


    So when I say I am dollar bullish, I base it on the fact that I am Japanese and Euro negative overall, which represent 70% of the dollar.


    The Yen is getting an upswing right now and I was a little early in my trade (mostly because it was more an impulse buy than from technical analysis and I was going to take quick profit). I should have sold immediately with a smaller loss after looking at some of the people I follow's comments that I only read today, (silly). Just been too busy and I really shouldn't be trading right now.


    Abe has some policies that are Yen positive and still deflationary (raising taxes). I think that's what some are seeing at present. But raising taxes is going to kill the economy. And since we know what Abe wants, he will do anything he can to weaken the Yen to be more competitive.


    The Euro issue I wrote about in my latest article when I spoke with Axel Merk from Merk funds who is extremely bullish on the Euro (and personally has 50% of his wealth in gold). He simply told me, he can change his mind.
    7 Aug 2013, 01:02 PM Reply Like
  • Doug ,


    Guess this is best way to sum it up :


    "So when I say I am dollar bullish, I base it on the fact that I am Japanese and Euro negative overall, which represent 70% of the dollar. "


    7 Aug 2013, 01:16 PM Reply Like
  • Exactly...


    Most gold bulls don't understand what a dollar represents and thus are perennially negative on it.


    What the dollar is, and its purchasing power are two separate issues.
    7 Aug 2013, 01:30 PM Reply Like
  • Author’s reply » Funny how one word TAPERING can have such an effect on the markets. Does it really? Is it a myth?
    6 Aug 2013, 06:10 PM Reply Like
  • IT,


    market is ripe for a correction, media will now highlight any new headline as a cause for a decline.. That's how they keep people watching.. -- make it a story..
    6 Aug 2013, 06:21 PM Reply Like
  • @ IT, Fear


    Till now the market direction's turned sharply at the time of a Fed speak. This time, it evened out after they spoke. So this downturn seems to not come from the Fed talk.


    .... but is the Fed coming out about tapering to try and stop the market climb... all during Aug doldrums... in prep for a Sept/Oct taper so the market isn' that high when they start, so the deflation when they start isn't as bad as it would be.
    7 Aug 2013, 01:06 PM Reply Like
  • Author’s reply » FEAR


    Good call on shorting gold a week ago by you !
    6 Aug 2013, 06:23 PM Reply Like
  • IT




    So far so good..
    6 Aug 2013, 06:25 PM Reply Like
  • IT,


    Talk about good timing -i just ran across this quote


    "There is a room on Wall Street that has a big whiteboard. On the left side of the board is a list of reasons why the market went up today. On the right side there is a list of reasons why the market went down today. After the close, the experts go into the room and pick off a reason for what happened. After all, investors are always looking for the reasons why the market goes up or goes down. Any reason will do."


    - famed market timer James O. Rohrbach
    6 Aug 2013, 06:39 PM Reply Like
  • Here is a nice article showing examples of asset allocations , whether you are ready to retire or have 20+ years to prepare

    7 Aug 2013, 09:42 AM Reply Like
  • Author’s reply » Looks like we might be heading for a real correction this time !


    7 Aug 2013, 10:40 AM Reply Like
  • IT,


    I dont think so.


    This little down move is on low volume and small price moves, theres no panic at all, just some repositioning maybe, some small selling. VIX is barely reacting to this activity, compare it to June.


    On a chart look at the size of the bars the last few days, small moves. Compare that to the June down moves which saw more volatility and larger price swings as there seemed to be more genuine concern.


    This market isn't allowed to go down. This may be the 3rd consecutive down day but all year long there have only been a couple 3 consecutive down days.


    If we get a high close today, even if its red, look for a move back up tomorrow. As a matter of fact, I will bet on it.


    Dow needs a convincing break of 15400 to go down and test the 50 day MA.


    Market is just drifting right now.


    A real correction will be more like how the Supremes define porn, you know it when you see it.
    7 Aug 2013, 01:34 PM Reply Like
  • IT,,


    Yep,, S & p 1650 could be next stop. that would be another 2% from here. Not much , but i do see a good chance to go back & test June lows around 1560 or slightly above that level. That would represent a 7.5% drop form here or approx 8.6% from the top of 1707..


    Targets are well within the context of a "normal correction".. However it will "feel " like a "crash" given the nature of how we got here..


    I raised this caution flag a while back in my own portfolio, raised cash , wrote calls & now wait for opportunity.
    7 Aug 2013, 11:10 AM Reply Like
  • It's funny how quickly these little bulls claim they "raised the caution flag a while back and raised cash" once the DOW and S&P lose a few points.


    Guys like Fear always have to seem like they were ahead of the curve. He must APPEAR to always be successful. If not, how could he lure sheep to his website?
    7 Aug 2013, 11:55 AM Reply Like
  • Maverick,
    posts on my blog here speak for themselves as far as timing and advice.


    perhaps u need to read the information , before u speak .


    In reading the comment section of your profile, I see that you were calling for S & p 900, and shorting earlier in year.


    Maybe u can enlighten the readers here on your position on the markets


    Do not resort to personal attacks, regarding my profile,, I find it amusing u resort to that and yet provide no profile of your own.


    If you wsh to attack my positions on the market so be it --Talk to the information presented ---not to my "profile" page
    7 Aug 2013, 12:09 PM Reply Like
  • "posts on my blog here speak for themselves as far as timing and advice."


    Show me the post where you said you were raising the caution flag in your own portfolio, raising cash, etc...
    7 Aug 2013, 12:22 PM Reply Like
  • @ Maverick




    IT's set up to the blog to welcome all opinions! There is a standard here not to personally attack others. ...not always followed well :), but a goal.


    On bulls saying they've raising caution and cash... I've been around and seeing it since about mid this last rally since June. Fear's been definitely one of them, including in direct comments to me about whether it's a good moment to jump back in...


    While, there's been a lot of call for 10% correction, and I expect this is the start of down for a bit... I'm still going to hesitate to call 2 down days that meander a lot, and only lose about a week's gains... the definitive signal on what's going to happen from here. A correction is to my advantage, so I'm hoping!


    So what's your view on where it's all going, and how to do you come by your view? It'd be interesting to hear from a new person!
    7 Aug 2013, 12:59 PM Reply Like
  • Author’s reply » @MAVERICK


    First I want to welcome you and appreciate any opinions you have. But as stated by CURLS we try ( not always successful, including myself) to make our points about comments and not the commentator.


    Glad you have posted and hope to hear you points of view where the markets are heading and why. BTW we are running a portfolio challenge and you are welcomed to join in if you'd like?


    Just let me know and I can give you the link to the chapter.


    FEAR has made a few posts expecting a correction on this blog already as well.


    7 Aug 2013, 01:35 PM Reply Like
  • I can vouch for Fear throwing up some caution. Of course bullish positions too. Not sure it is fair to judge by one post someone's point of view. Fear has had many posts.
    7 Aug 2013, 01:40 PM Reply Like
  • Plenty of cautionary posts & comments here on SA. Such as:


    "Review your portfolio, sell calls on positions that are extended, and trim holdings that u have garnered large gains in. In summary , play a little more defense . If you haven't done so already raise some cash that could be put to work in the future."



    "Since we should always be mindful "that anything can happen" and in practicing good risk management with this middle of the road approach I have garnered gains and chose to not "bet the ranch" no matter how good I perceive the market. I lean to adhere to the old saying "if you are going to be"all in" and "bet the ranch" , you better have two ranches.



    At this time my cautious stance comes from what may now ensue in the coming weeks, an intermediate top , and subsequent pullback .


    However, I maintain this position that I stated on July 5th.
    "Since we have not witnessed any major pullback to date I am maintaining a cautious view at this point in time but I will again state that i see no signs of a major top in place."


    My Long Term view is that we are in a secular bull market that will have its up & downs.


    Hope this helps in showing my view of the market.
    7 Aug 2013, 01:43 PM Reply Like
  • Author’s reply » Everyone really needs to see TAMPATS portfolio and where he would be had he not done that one penny trade !!


    He is my hero from now on ( well at least this week)
    7 Aug 2013, 01:48 PM Reply Like
  • Fear and I had a spat that carried over to today. No biggie, didn't mean to bring it to the blog.


    Fear - fair enough, I apologize and you are correct regarding your cautionary posts.
    7 Aug 2013, 01:58 PM Reply Like
  • Maverick,,


    no problem,, as IT mentioned , u are welcome to share your opinions..
    7 Aug 2013, 02:03 PM Reply Like
  • Author’s reply » @MAVERICK


    Trust me this isn't the first spat we had here nor the last. I hope you stay here posting and consider the portfolio challenge. WE have about 15 people so far. It's been fun ( well not for me as i am at the bottom) lol
    7 Aug 2013, 02:00 PM Reply Like
  • F&G,


    Thanks for the link to the spreadsheet.


    I just sent you a PM as the numbers for my trades from yesterday are incorrect, should be higher profit than shown. Somehow the wrong closing prices got entered in the spreadsheet than what I posted in my sell post yesterday.


    I just double checked them on Yahoo and Goog and the numbers I had posted were correct, the numbers in the sreadsheet are not.
    7 Aug 2013, 02:17 PM Reply Like
  • F&G or whomever is taking care of the spreadsheet, something to keep an eye on.


    Some quote tracking services continue posting the latest price after the market closes at 4 pm.
    In other words, they show the after hours price as the current price, instead of the 4 pm closing price.
    7 Aug 2013, 02:21 PM Reply Like
  • Tampat ,


    I replied to your PM and fixed the issue..


    For all that are updating , just keep in mind as trade closes to input the closing price as stated,, in tampats case the Google formula was being used to grab the latest price instead of the real closing price..


    He is running away from us !


    Anyway no harm, no foul.. - I did check other closed trades , they all look OK
    7 Aug 2013, 02:26 PM Reply Like
  • FWIW,,


    A potential "shopping list" - if we get some weakness here in the market.. -- Goldmans most undervalued

    7 Aug 2013, 02:59 PM Reply Like
  • Author’s reply » Man , what did Jamie do to pee off the FED ??


    JPMorgan under DOJ investigation over mortgages


    JPMorgan Chase (JPM) says it is being investigated by civil and criminal divisions of the U.S. Department of Justice over offerings of mortgage-backed securities, according to its latest 10-Q. JPM also raises its estimate of possible legal losses in excess of reserves to $6.8B at the end of June from $6B three months earlier. Shares -0.6% AH.
    7 Aug 2013, 06:22 PM Reply Like
  • Stanley Kowalski from the 38th floor will take the blame, jail time and fines. Nothing to see here.
    7 Aug 2013, 06:27 PM Reply Like
  • Author’s reply » Either this is a show or the wheels are falling off imo..
    7 Aug 2013, 06:30 PM Reply Like
  • I saw in this mornings paper Bank of America is being sued by the govt for fraud during the 2008 crisis.


    I think its a show, but we'll see.
    They will get a slap on the wrist, some fines will be dished out, then back to more of the same.


    But lets hope its more than that.
    7 Aug 2013, 06:45 PM Reply Like
  • Marc Faber doom and gloom report spouting doom (imagine that, lol)...but I've always liked him.

    8 Aug 2013, 09:56 PM Reply Like
  • A link to some interesting metrics regarding the present market valuation..

    9 Aug 2013, 10:35 AM Reply Like
  • F&G, question for you (opinion)...


    What percentage of the market run up do you believe is due to the Fed's policies of providing banks what they do whereby the banks then take the proceeds and invest where they see fit to make profit?


    How is it that most every news about the stock market these days is not about valuation, but what the Fed may or may not do (tapering)?


    Just curious...
    9 Aug 2013, 10:51 AM Reply Like
  • Doug,


    I don't believe I can honestly put a number on that -- & I haven't seen any data that can suggest how we can measure that .. whether one is a bull or a bear ..


    It's what makes the topic so controversial.. When the fed's action were announced and subsequently put in motion,, many decided to follow the trends- i.e. earnings , valuations, etc. as a guide to where equity prices were headed. So for me I tried to keep it simple., not get caught up in trying to figure out a "number' or a percentage value to place on the fed's interactions..


    Now as we move forward and we embark on the "tapering" and eventual end , I believe the markets and corp earnings will give us a clue as to what the next level of equity prices will be. I seriously doubt the fed will undo their efforts here with any quick or drastic measures.. It should be measured and completed in a way with the least disruption.. Another point of contention of course as many believe that is an impossible task.. As for now i will politely disagree.


    Some believe corp earnings can stand on their own as they have done in the past when there was no QE , others will dispute that ..
    Each side can give substantial reasons for their argument.


    Regarding the news - I agree with your observation. I call it "Fed obsession".. Every word, statement from any of the members is parsed , & put under a microscope. In my view its silly & just "noise".


    So for now it does come down to what one believes may take place. It 's all fed & will fall apart, (along with equity prices) or as the fed leaves the scene , other macro factors & trends start to take over and support corp earnings and growth..


    I have a 'feeling" it will be somewhere 'in between" , with a bumpy transition for sure . As of now I am in the camp that the equity market will improve with earnings and continue to follow the trends that indicate to me that we are in a secular bull market..


    my .02
    9 Aug 2013, 11:47 AM Reply Like
  • which is .04 after "real" inflation, haha..


    Thanks. Remember CNBC's comments about Greenspan's briefcase and what he would do with interest rates next? Really hasn't change, but they never talk about Bernanke's briefcase. Rates are already at their lowest ever (despite most recent bounce).


    The problem is, they can't have rates go higher. A simple return to the rates of 2008 of 4% puts the debt interest payment at over $400 billion. They are indeed stuck between a rock and a hard place to keep rates low.


    It is a Fed "obsession" and has been for too many years. The Fed, in their dual mandate, knows they are becoming too relevant to the markets and that is why you hear Fisher and others talk of tapering.


    Yes, valuations, and simple accounting formulas can tell an investor whether a stock is worth buying. But who even talks about this any longer? It's all about the Fed with the financial news media from what I see and hear and read.


    9 Aug 2013, 11:58 AM Reply Like
  • Author’s reply » All the chatter I heard now isn't Bernanke. It's how Interesting Times has bolted UP from 15th to 2nd in the challenge,


    "He's moving like a runaway train" someone was quoted as saying. Not sure if this is true or not.. just sayin>>
    9 Aug 2013, 12:48 PM Reply Like
  • Yes i do remember the Greenspan briefcase.. LOL


    Depending on what side of the fence one is on, a case can be made for whether we can slowly move to the 4% rate level you mentioned..


    I've seen and heard evidence to support both sides.. My take is that whatever one presents now as their argument pro or con , their "story" may never happen because there are so many factors that can take place in the interim to upset the best of forecasts and predictions. There may be plenty of issues that don't currently appear on anyone's radar screen that can change the outlook one may be subscribing to. Bull or Bear.


    I subscribe to the theory that the fed issue needs to be put in its proper place. First , i cannot change what they will or wont do.. so no need to obsess. I also maintain that if things change drastically & I am wrong in my assessment there is plenty of time to get defensive and employ "risk management" . It is a common belief of someone making a bear case that the bulls will be slaughtered here in a downturn and all of the gains that were achieved will be lost .. I disagree with anyone making that assessment. Best advice i ever received, manage your risk, your returns will take care of themselves..


    Your last paragraph is what is separating the portfolios that have showed gains in this rally vs. those that have been "obsessing'
    I have said it many times.. we need to pay attention to earnings & price action -- avoid the "noise". The portfolios that have paid undue attention to this "noise" have suffered.


    I can now add another "line" to my overall thesis, when the "noise" becomes "reality" and negatively impacts my position , there is plenty of time to take action.
    9 Aug 2013, 12:51 PM Reply Like
  • You would agree though F&G, that most advisors don't in fact get "defensive" with the strategies you have written about. Most are indeed "buy and hold" as that is what our industry has always preached.


    I agree with your stance and think one can get defensive and there will be a time for it. I lean at this point, for a stronger market and weaker gold and that's where my money is (against gold) at present. I know it's complete opposite of what I have written, but remember, I am out here in the desert and all I am doing is spending my time reading and analyzing and putting the pieces together.


    We'll see what shakes for the short term, and the long term.


    IT, better buy some DUST! lol nice comeback!
    9 Aug 2013, 01:00 PM Reply Like
  • Marc Faber's timing for me not good, lol


    He likes the miners.
    9 Aug 2013, 01:13 PM Reply Like
  • Author’s reply » Awful quiet on here huh?


    I guess people are gone for the weekend. Does ANYONE still see a market correction coming??
    9 Aug 2013, 01:17 PM Reply Like
  • Doug,


    yes I will agree that there are far too many that subscribe to "buy & hold" .. Many make their case using the div growth strategy to prove their case.. It sure can be a compelling story. However , as it has been stated here on SA many times, it depends on many factors, age, position in life . etc.. One size doesn't fit all , but many advisors still do that . Risk management has to be a part of the overall strategy.


    Defensive strategies saved my own personal portfolio during the crisis. That didn't mean selling out totally - but "keeping a 'core' , employing selective management of the remainder to have cash to invest for another day. I was fortunate to have a circle of friends , associates that I leaned on ( well, I guessed we leaned on each other for views, advice to take the "emotion " out of the picture) .
    That is another "key" to help one manage his/her own money whether it be gold, equities , etc.. keep emotion out of the equation. That is not EZ.


    As far as the market is concerned , at the moment,I am confused as i have ever been as to the direction of the next short to intermediate term move.. Usualy that is a signal that we may experience a range bound market.. Excellent to take small positions in a stock or two that u may like to add to your holdings. then sell calls. If market takes off u get the income, but lose the "huge" gain , if it pulls back u stil get the income and have added a stock that u are comfortable holding fo the LT.
    Presently that is what I am doing in my personal portfolio and selective accounts right now .
    9 Aug 2013, 01:28 PM Reply Like
  • Thanks F&G...I think we're on the same page with advisors. It is a little confusing right now on the markets. Dollar turned up today though, and interest rates coming down a bit. Gold finding it difficult to close above the $1,316 mark. If it does, I am out of my trade.
    9 Aug 2013, 02:59 PM Reply Like
  • F&G,
    I believe BSF hit the nail on the head in her comments about buying DG stocks when they are low. A good case in point was our discussion back in June about (FCX). Buying back at the June lows is really paying off now in total return.


    It is the same reason I bought (MSFT) after it's earnings came out and it took a 15% hit.


    As, to your and Doug's discussion. Advisors and more so managers of other peoples money kind of have their hands tied by US government regulations/regulators and the securities laws in the US. To keep from being sued into non existence by a client that loses money in the markets advisors and managers must make recommendations or make trades that are considered "safe" by the regulators. Even if what is considered "safe" is the worse move you could actually make. For example, if you bought US 10Y or 30Y treasuries last March for a client you would be safe from litigation from a client because the regulators consider US 10Y and 30Y treasuries "safe" investments. Even though the advisor KNOWS that the client is losing money with every tick up in interests rates since then. The only way the client does not lose any money is to hold the bonds to maturity, tying up those funds from investing in anything else for 10-30 years while collecting 2% or less in interest. Which over 10-30 years could lose severely to inflation.


    If the advisor/manager made a decision to use covered calls on a portfolio of DG stocks they would open themselves up to litigation from a client that loses money. Because options are NOT considered "safe" investments by regulators. Even though you and I both know that selling covered calls on our portfolio holdings is one the best ways to take the "emotions" out of investing. And, the only true risk is that we might cut our gains short by the stock being called during a rising price environment. Well, I guess there could be another risk, in that someone might not understand what they are doing and set a strike price that is below making a profit on their holdings???


    Anyway, an honest broker once explained this all to me. And, it the major reason I have gone to doing my own investing instead of using someone else. It isn't because they are bad or dishonest. It is because if they do what is necessary to CTA against litigation they will never have my best interest at heart. Plus, no one else will ever care as much as I do about what happens to my investments. So I figure it is worth putting the time and effort into educating myself and just taking care of business.
    10 Aug 2013, 07:53 AM Reply Like
  • Notrub,
    Thanks for the commentary.. In short you are correct in that financial advisors are “handcuffed” to some degree with all of the financial regulations that exist today .. Not to be taken as an “excuse” for poor or ill advised money managers to hide behind..


    The large firms of course have even more rules regulation that they are saddled with as each company has added their own forms of “policing” the advisors to the mix. I speak to a circle of friends that come from both worlds, corporate & independent, so I have an idea of what each is faced with. After i made my decision to pursue my CFP ( Cert. Fin. Planner) certification , i was fortunate to have the ability to be and stay independent.. Staying out of the “corporate world” allows me to be very selective in who I form a business relationship with.


    I have no corporate quotas to achieve. So, I’m not driven by corp goals , objectives, and all that goes with that. Instead my concerns are the clients bottom line. As their wealth grows , so does my income.. It doesn’t get any more black & white than that. No fess for trades , or other “charges” . Most independents that I deal with use the same approach.


    My comments shouldn't be construed to say that advisors with large firms are to be avoided, to the contrary, many bring a wealth of knowledge and their firm's research to the table an invaluable source of information.. Clients./investors need to realize that fact as well.


    When talking to someone “new” , if i don’t sense that “we are on the same page” (or have no chance of getting there) - i simply don’t want the exposure. The most difficult part is dealing with all of the different “personalities” i encounter, & that is the key to keeping harmony, - of course making money doesn’t hurt either.. - LOL. An example , u can make 5 great moves for a client then have one bad purchase , and when that person calls or sends an e-mail , it will most assuredly be that position that will be the topic. Its human nature. Your covered call example is a perfect example. After I explain the concept and provide examples , if the client doesn’t ‘get it” , I don’t employ that strategy for them..


    As you stated, there are many , like you and others here, that with some time & hard work can educate themselves to manage their own funds with success.
    One part of my reason to join SA was to be able to see an communicate with those that are here, those that are successful and those that don’t seem to have a grasp on the situation and are learning. This is the market psychology part that is key to understanding people and having more success.


    However there are many that simply don’t have the time, energy or aptitude to grasp what is involved . Managing your portfolio is work , , I tell anyone that wants to embark on that “ship” , that it is a “Job”. After all if u expect a paycheck from your investments , you better be equipped to put in the time.
    10 Aug 2013, 10:54 AM Reply Like
  • Author’s reply » What's next for MLPs?
    9:00 AM SXL
    Ned Davis' Warren Pies, in a Barron's Roundtable, is cautious on the sector as it will be forced to roll over debt into a higher rate environment. More bullish, Yorkville's James Hug reminds MLPs performed just fine in 5 of the 6 rising rate periods over the past two decades, and Tortoise Capital's James Mick says there isn't a lot of floating rate risk - 80% of MLP debt is fixed-rate.
    Mick also notes rates are rising not from inflation, but because the economy is improving, and this should mean more business. His favorite pipeline player is Sunoco Logistics (SXL), which has a big backlog of work to transport oil and gas from shale projects. Two other MLPs he owns have consistently boosted their distributions while maintaining reasonable coverage ratios - Magellan Midstream (MMP) and Enterprise Products (EPD)
    Some newer MLPs focus on "upstream" assets like exploration and production, meaning less reliable revenue and payouts. Hug likes Emerge Energy Services (EMES) as a pure play on the growth in fracking, and CVR Refining (CVRR) which gets its crude from Bakken and Canada at a discount to WTI. Pies urges caution, reminding non-infrastructure MLPs rely heavily on acquisitions for their distributions and are dependent on oil and gas prices.
    Two other Hug picks are notable for their high coverage ratios and low leverage - Access Midstream (ACMP) and Enterprise Products (EPD).
    The bearish Pies remains a long-term bull thanks to potential growth - he notes just 17% of crude oil coming out of North Dakota is transported by pipeline.


    Any opinions???
    10 Aug 2013, 09:11 AM Reply Like
  • Author’s reply » JP Morgue can't seem to stay out of the news lately..



    Baked in I am sure!!
    10 Aug 2013, 09:17 AM Reply Like
  • JP Morgue, I like it!


    Was listening to one of my FreedomFest panels talk about the markets and the moderator, Chris Versace, said "their is a lot of garbage being spewed there referencing Seeking Alpha;


    Interestingly enough, he has a proflile here:


    SA editors the other day allowed an article talking about ETF's to be published and there were about 5 times in the article, including the title where the author referenced EFT's instead of ETF's.


    I of course let the editors know and said, "come on editors" since they are not high on my list.


    One quote I liked from the panel was; "Buy and Manage" as opposed to "Buy and Hold." That was from Keith Fitz-Gerald.
    10 Aug 2013, 05:15 PM Reply Like
  • Agree with the "buy & mange" line - good stuff
    10 Aug 2013, 06:09 PM Reply Like
  • Thought you might like that F&G...
    10 Aug 2013, 06:40 PM Reply Like
  • ": Chris Versace, said "their is a lot of garbage being spewed there referencing Seeking Alpha; "


    And there isn't a lot of garbage everywhere else, lol?


    I've seen at least two article recently, selling retail investors that now is the time to get in the market. No hardcore data, just generalities. I'm interpreting... that bigger boys are getting out and need retail to come keep the market up while they do. So short term, it's a signal.
    10 Aug 2013, 05:30 PM Reply Like
  • Every time is a good time to get in the market, one way or another. ;)
    10 Aug 2013, 05:48 PM Reply Like
  • curls, yes, it's important to follow what the insiders are doing, and of course doing your own analysis.


    10 Aug 2013, 06:02 PM Reply Like
  • @ John


    This wasn't a general advice, it was rah, rah, look at the rally, don't miss out; it's only going up from here. It was from bigger firms.
    10 Aug 2013, 06:06 PM Reply Like
  • Author’s reply » So far it seems like everyone is ok letting ROS back in just to make his picks and maybe a polite question. So I am posting here for anyone who objects to let me know by tomorrow afternoon so that I can email him and let him know.


    BSF.. I suspect you will be watching your GMEN getting beat up tonight by PITT??
    10 Aug 2013, 06:10 PM Reply Like
  • Author’s reply » Oh also just as a reminder I did 3 trades on Friday ,not sure if the spreadsheet has been updated yet.


    Rumor has it CURLS invested all 100k ??? Nah....
    10 Aug 2013, 06:12 PM Reply Like
  • So what's the news for this week? Fed speakers or reports?


    Any notable earnings (I saw Macys and Walmart for this week I thought.)


    "I'm not taking on a lot of big share size here because I am just a little dubious, and honestly, am expecting summer profit-taking soon, unless we can get some really good news that will bring volume back in. Right now, investors are looking ahead to September, with the prospect of decreasing stimulus and the debt-ceiling battle in Congress." - See more at:
    12 Aug 2013, 10:00 AM Reply Like
  • Author’s reply » The big NEWS?? More money has flown into mutual funds then over the last 4 years. Last time that happened was 2008. Then KABOOM..


    The smart money is leaving imo. PLUS I made a booboo and played the wrong side of the gold trade today. Good for me personally but bad for me in the challenge..
    12 Aug 2013, 10:05 AM Reply Like
  • IT, so you bought something at close to a25% discount to last weeks price and because it fell 15% more its the wrong side? Add DUST! Just hold longer. Gold is at a double top and dollar stronger. I was waiting for $62 to add and it didn't get there. I am of course patient.
    12 Aug 2013, 10:30 AM Reply Like
  • Author’s reply » @DOUG


    No plan on selling it right now. I don't like day trading. But check back at 3.59
    12 Aug 2013, 10:32 AM Reply Like
  • I got 100 more at $61.82. Have enough powder dry to get 100 more if it dips to 54 for an overall average of $77.16.


    Good you can cut losses IT. Something I didn't do, so now am averaging my way to profit. Not the best way to go, but if what I see is going to happen happens, it will pay off nicely. $1,340 was the July 23 high for gold and I see where we are now as a double top with the test of the lows still to come again.


    What helps is the dollar is stronger.


    We'll see what shakes.
    12 Aug 2013, 11:21 AM Reply Like
  • Curls,


    one earnings report that i have some interest in this week is (CSCO).


    Earnings season winding down here , so I don't see any real catalysts to move the market higher in the near term. One of the reasons for my being cautious is what i mentioned in the last week or so . We will be hearing more & more from the "DC crowd".. They will continue to get more "air" time and that is rarely good for the market.


    Plenty of other indicators look"tired" to me. Leading groups (i.e. financials) are now slowing down , so we could see rotation into other sectors or just an old fashioned selloff. Short term ,while I can see a 2-3 % move higher from here the downside has a possibility of a 5-15% move. It just means that short term moves have to be pretty nimble to avoid being whipped around.. Long term players can pick & choose on stocks they like on weakness.


    This is the type of market situation to buy a stock u like & sell a call to get income. I'm looking at some candidates here to do just that.
    The positions I posted here on SA are doing well, stocks are just trading around , but the call income has been deposited.
    12 Aug 2013, 10:27 AM Reply Like
  • @ F&G


    I was thinking about call options that you and Notrub do, as possible good time for near term. For real to try for the first time. (Or pretend try and see if I like the way it goes.)


    Any specific stocks high on your list? (I'm being lazy to ask that, before I've done my own homework. Pops into my head are all tech's (MSFT), Intel, maybe IBM but less so on that. A few of the DGI's that Bluesky's invested in like (V).)
    12 Aug 2013, 10:53 AM Reply Like
  • curls,
    if interested,
    I added another position (RIG) to the call writing portfolio..



    possible 7% return for 3 months - IMO very little risk ..
    MSFT analysis also shows a good return for a 3 month period. and is even more conservative. Buy stock ,sell the Nov 33 call & collect a div. pmt while u wait.
    U will not hit any "homeruns" but the income is very nice. 
    13 Aug 2013, 10:46 AM Reply Like
  • Curls,


    I like all that u mentioned (MSFT), (INTC) , (IBM) & (V).
    (think Notrub has an open position on MSFT at present)
    If i find others I'll let u know ..


    I haven't done the analysis on any of those yet,. I just bought (V) both here in challenge & real portfolio . It may be a real good candidate.


    Here is the link to the three positions i posted here & have as a designated portion of my portfolio. (along with others)



    i'll update that later if i add another position.
    12 Aug 2013, 11:04 AM Reply Like
  • My only open covered calls are for 8/17 expirations (this Saturday)


    1 (INTC) @ 25 my purchase price was 24.25 back in May
    3 ( @ 33 my purchase price was 31.17 0n 17JUL
    1 ( @ 31 my purchase price was 28.77 in 3 trades over JUN/JUL


    I couldn't get a good premium or dividends dates were due on the rest of my holdings (GE), (KO), (MO), (ADM), (XRX), (JNJ), (XOM), (PPL), (PG), (GIS), (K), (PM), (KRFT) & (D)
    12 Aug 2013, 05:16 PM Reply Like
  • IT did you see Cruz doing his salsa moves in the endzone?? Ha!


    That is concerning that mutual funds are seeing historic inflows. Wow after 4 years of watching the market go up, they must be feeling left out. Expect some more downside until October. This market did get uber frothy this year. Can't keep going up at that pace. Sit on some cash or trim your winners.
    12 Aug 2013, 11:18 AM Reply Like
  • Author’s reply » @BSF


    Yeah, I also saw Manning throw 1 completed pass and that was it !!
    He was 1 for 8 I believe ??
    12 Aug 2013, 11:27 AM Reply Like
  • Da Bears Cutler's first pass was an interception!
    12 Aug 2013, 11:53 AM Reply Like
  • Author’s reply » Uh, My Sanchez not only threw an INT. is was returned for 6 points as well...
    12 Aug 2013, 12:29 PM Reply Like
  • Title of my next article I am writing today; F&G would approve!


    Double Top in Gold with Dollar Rebounding Spells More Trouble Ahead for the Bulls
    12 Aug 2013, 01:00 PM Reply Like
  • Finished the article:


    Double Top in Gold with Dollar Rebounding Spells More Trouble Ahead for the Bulls



    We shall see how I do on the timing and analysis. I sometimes am a day or two early on my gold calls.
    12 Aug 2013, 02:10 PM Reply Like
  • I guess timing ok on my article. Gold down $14 - $17 as we speak, depending on which website you view. Dollar up nicely. Silver just broker lower.


    Love to see the lows broken now. But for personal reasons, haha...
    13 Aug 2013, 11:37 AM Reply Like
  • Doug.
    Thanks for that commentary, I see u have the same issue i always deal with. I too seem to always be a day or two early on these short term calls. I'm inclined to agree that this may be a false breakout .. Next few days may tell the story.


    I can see GLD inching up to maybe $132, any decided break above that & i would have to assess my (DZZ) position ..


    Good Luck ...
    12 Aug 2013, 03:16 PM Reply Like
  • F&G, I agree. It wouldn't surprise me to take out the $130.10 in GLD. But the volume isn't there and the dollar is stronger. I have followed gold long enough to know the dollar still matters, and while you and I may disagree on Europe, as this represents the biggest make up of the dollar, the chart tells me we are close to bottoming out.


    These currencies are on a ship where they run from one side to the other. I listened to a couple more speakers from Europe and am all the more convinced Europe is in trouble.


    Even the country Croatia they just admitted into the European Union that didn't even meet the criteria required to enter.


    Deficits 4.7% when supposed to be 3% or less
    Dedb to gdp over 60%
    60 % work for govt.
    52% teens unemployed


    Sounds more like Spain! and this just doesn't make any sense at all.


    Banks are where I will be concentrating my research, which I had already written an article about 18 months ago that I simply need to update to today's data to see where we really are. Many say that the reason Greece wasn't let go was because of the ties they had to other European banks. Enter the IMF to smooth things over.


    Lots of issues in Europe where countries can't print their own money compared to here IMO. Not that we don't have our own. Sweden, not part of the Euro, seems to have done well so far though. I have to do more research on Sweden.


    If you have anything to say, I won't try and refute. I truly try and get what I can at this moment because I want what I write to tell the whole story. I actually have solutions for investors in each chapter!


    Good luck to you too!
    12 Aug 2013, 03:47 PM Reply Like
  • Doug, you appear to be confusing EU with EZ. Croatia has not yet applied for latter for all the reasons you've listed and more...
    14 Aug 2013, 05:20 PM Reply Like
  • Croatia:



    Requirements to enter the EU:



    Not sure what you are saying Freddy. But always have an ear.
    15 Aug 2013, 04:59 PM Reply Like
  • Doug.....I bet you were busy TODAY !!!
    15 Aug 2013, 06:28 PM Reply Like
  • Author’s reply » @WMARKW


    Doug had (DUST) calling for a double top! But I am happy I sold out of that one after a 30% drop in my portfolio challenge :)


    Thank god it is only a game! Real life I am smiling right now !!
    15 Aug 2013, 06:31 PM Reply Like
  • Doug, Turkey is the only jurisdiction having problems meeting EU membership requirements. To join the EU, one must agree to eventually set and meet targets to join the EZ as well. Croatia (and others) are miles away from those actions. With respect, your inference Croatia is abusing the process is a mistaken impression...
    16 Aug 2013, 12:40 PM Reply Like
  • Freddy, I said the European Union all along. I never mentioned Eurozone. I see what you're saying now regarding "converging criteria" is related to adopting the Euro. Thanks. The criteria is different for both and stricter for EZ, yet related when you look at the Chapters of the acquis for EU.
    19 Aug 2013, 02:29 PM Reply Like
  • Doug,


    I will defer to your expertise on currency issues, I will concur from what I have seen cross my computer screen that there are some who agree with your assessment of the dollar and the direction of the next move.


    Respect your work in analyzing the European situation especially the banks.


    I take my cue from what the markets may or may not be telling me. Of course that is always open to one's interpretation. While no expert on the European markets, It is necessary to at least pay attention to what is transpiring in other parts of the world given our global economy.


    If I take a quick look at the 3 main European markets FTSE,DAX, CAC, they are all coming off of their respective June lows, with some healthy advances. The CAC has now advanced above it's May highs,signaling a breakout & further advances. IF the other markets there continue to show that same strength the European markets may be signaling that the tide has in fact , turned. Keeping in mind that markets are forward looking this may be a clue that improvement has started just as we witnessed here in the U.S.
    Now if one takes the approach that all of the central bankers across the globe have manufactured this change , then I am on a different page. So I would respectfully disagree and move on rather than debate. :)


    I haven't looked at all of the charts of the large euro banks , one that does come to mind (SAN) ,Banco Santander of Spain . Now here again I look at that chart and if in fact the market is forward looking , the stock has just broken above a long resistance line , its 200 day MA and looks very positive..


    The bottom line is that these are the 'clues' I look for in trying to anticipate and react to if the market is indeed telling us something..
    Those same type of "price action" clues , signaled the turn in the U.S Market. Earnings indeed followed, and we have experienced nice gains. So while many negatives are surely present , the market wants and reacts to change , in this case it sees some positive signs in the eurozone. 
    12 Aug 2013, 06:17 PM Reply Like
  • Thanks F&G, the only potential statement that I would have more discourse with you on is if in fact the stock markets are forward looking today as much as they have been in the past for the same reasons. It seems they are more forward looking as to what the Fed will do than anything else.


    Reminds me of the last sentence in a verse in quotes below of a song I know you know...Papa Was a Rolling Stone...


    Hey, Mama, is it true what the say, that Papa never worked a day in his life?
    And Mama, they talk all around town say that
    Papa had three outside children and another wife
    "And that ain't right."
    12 Aug 2013, 08:35 PM Reply Like
  • Author’s reply » Well I can tell you BOTH what I saw on my computer screen today. It faded to black so I now need a new one! Using the wives now but ain't looking to trying to decide on a new one.


    My friends have different ideas on what I should buy. Since Windows 8 is now out they have touch screens. hell I still have a phone that just dials and texts. No smartphone for this ole geezer.


    Now , of course my geek friends want me to have all the bells and whistles. I just need ONE bell.. lol


    I am sure CURLS can direct me as to what to buy. I like to buy my stuff that you can spread out the payments over months interest free, like Best Buy. But NOOOOO, my buddies want the new improved stuff. Now I hear Windows 8 might have problems if you don't buy the touch screen.


    I am lost !!
    12 Aug 2013, 06:29 PM Reply Like
  • Who will be using it - you or your buddies? You can get a decent computer with either W7 or W8 (not a gaming rig or anything) for sub $300.


    P.S. - I use a Tracfone - $30 lasts me 3 months. I can check Marketwatch on it, too (any website that has a mobile version, I guess, but I use MW to check markets when I'm at work). I can put music and videos on it and everything - that's more than I need from a frickin' phone. :)
    12 Aug 2013, 06:41 PM Reply Like
  • Well, haven't been compt shopping for a while.


    I'd skip the netbooks (too underpowered for full use). Skip the traditional laptops. Too heavy and you can get enough in the apple airbook or samsung equivalent or a few competitors. (Heavilier than airbooks by a tad, but also a tad cheaper.)


    Go back to traditional laptop if price is an issue, and you really don't mind the added weight. On the airbook vs. competitor decision, the airbook isn't touchscreen and doesn't seem to plan to be (unless I'm not remembering correctly the release I read recently), but some of the competitors are.


    If you really don't want portability, a desktop has the most power for the buck. And future expandability (but by then you need to new computer.)


    Ipads are lovely and fun, but not really a computer replacement. It can be done, but well, by then you've added so many pieces...


    Once you know the "type." next they'll be pretty consistent on what it costs for what type of added feature. So an xxx processor will be about $x. Harddrive will be another price factor. So you figure out your price range, then what you can get in it and what computers are in it.


    Next... I'll go into what features....


    - Processor, you don't want bottom of the line. Medium is fine. Top is good if you want to spend on it.


    - Hardrive solidstate (same technology as in stick) is the new in thing. It's worth it, but I don't know if it's still pricey. If so, then get some solid, split with traditional (moving parts) harddrive.


    - Cache and RAM are by far the most important. So a great powerful machine that doesn't have the current market max on both, is to be passed up. Cache will be listed in the specs and is internal design. RAM is the memory, usually comes with some and you can add more. No need to get more now, but what's critical is the total upgrade ability should be top of what's offered in the market.


    - Various ports - check the lists and see if any are more important to you than others. USB (3.0 by now), Firewire, external video port, mic, card slot, bluetooth, infrared (for media remote), etc.. I don't remember what's current. As you read through specs you'll see what's out there.


    I can't remember what I saw about Windows 8. It was fine I think, but I don't remember? Windows 7 was okay. It's Vista that made people want to jump out windows, and MSFT quickly released Wins7, to cover for.


    Best Buy has Apple and lots of computer options, and you can order HP online from them. HP always has deals on their website, so payment plan may be one of them.


    You don't need enough whistles to do gaming. So the basic middle of the road or low middle road, will be more than fine.
    12 Aug 2013, 06:54 PM Reply Like
  • @ IT


    I forgot -- black might be a hardware part for the screen that's easy to replace. I replaced one once. I don't remember the name, but take it to Staples or Office Depot and they'll diagnose and tell you --- often without charge if it's obvious to them. The part was $60.
    12 Aug 2013, 06:56 PM Reply Like
  • PS


    On RAM, the new thing (not that new) is being able to access RAM off an add on data stick. So even that's not as critical as it was. But still RAM right on the board is a nice thing.
    12 Aug 2013, 07:04 PM Reply Like
  • @ IT


    and... did your harddrive die? Were you having trouble with freezing before this? Did it make a squeal noise? Or is it whirling and loading, but nothing on the screen (screen problem)? Plug a monitor into the external monitor port to be sure if it's the screen & hardware, or it's something else.


    If you get anything on the screen during startup, then try to open in safe mode.
    12 Aug 2013, 07:43 PM Reply Like
  • IT I've replaced the hard drive, mouse clicker pad & battery on my MacBook apple laptop. It has to be going on 4 years that I've had it.
    12 Aug 2013, 07:49 PM Reply Like
  • IT, word to the wise, make sure the RAM you buy is matched with the operating system. When I custom built mine a year or so ago, I kind of screwed up on that one by buying too much RAM for what the operating system could even use.


    BTW, since that time of buying an expensive HP, I bought my last two computers from a guy who builds them off of Craigslist for $200 each.
    12 Aug 2013, 08:36 PM Reply Like
  • That's true. I just built one and did not get the WEI scores I expected. I had the two RAM sticks installed in consecutive slots, and dual-channel will only be dual-channel if it's in alternating slots (at least on the MB I was working with). I'm way under max memory, though. :(
    12 Aug 2013, 08:42 PM Reply Like
  • Author’s reply » Wow, thanks for all the help. My screen was flickering for a couple of weeks now. I knew I was on borrowed time. Now because of my health condition I do not work except a few hours officiating still.


    The pain is still strong so I cannot stand for too long. I am happy with a laptop and honestly what most of you just said went over my head. Rams, memory, etc.


    I don't need anything special for spreadsheets anymore, just think of a retired person just emailing and surfing the net, That's me right now with what looks like another back surgery coming in November.


    Bit thanks for the advice all. I have to reread it all. John , you are right my friends won't be using it but they are always helpful.. Once I have a computer problem they both are in my house within a day.



    Not sure if this will open but one guy recommends this. Can use my daughter's college address as well.
    12 Aug 2013, 08:55 PM Reply Like
  • I3 core is the lowest currently out for a laptop. It works. But i5 will be faster, quieter, and keep up with functionality longer.


    Applications get bigger, and most impactive, internet pages have more pics and size and fancy stuff... that need more processor speed. Though at this point, I suspect it's what level of service you pay your provider for (regular, or higherspeed) that matters. Plus it's the doubleclick ads and things like that which slow down the download speeds -- and that has nothing to do with our end. It's there servers on their end that are slow.


    So that's my long winded way of saying, i'd buy i5, but nowadays a lower processor of i3 might be fine if it saves you a lot. i7 is the high end standard.


    I can't see if it's expandable on memory. And 4MB it has is okay, but you've got to be able to expand. That's the biggest speed pick up that can buy you a couple more years use out of it later down the road.
    12 Aug 2013, 09:26 PM Reply Like
  • He said he needs it for surfing the internet and email. An i3 can do mild gaming. Nothing the internet can throw at it will bog it down. Maybe an i5 if he's streaming HD video, but an i3 can do that, too, without a noticeable quality difference.
    12 Aug 2013, 10:32 PM Reply Like
  • I will admit I have had a few vodkas but let me pose a few questions...


    am I they only one that thinks our embassy in Benghazi was nothing more than a place to run guns for Syria and Egypt?


    Am I the only one that wonders why John Corzine is still a free man?


    Am I the only person that is amazed that wonders why after Saddam Hussien said he would take euros for oil we whacked him.?


    Am I the only one that wonders why Obama wont rerelease SPR today since oil is so high or only does he threaten it at electon time.


    ciao all.
    13 Aug 2013, 12:01 AM Reply Like
  • Deercreek shares your concerns as to the whereabouts of Mr. Corzine, I'm reasonably sure.


    The other questions posed are political hotbuttons, and can open cans of worms that usually result in posts getting moderated (although they are also suitable questions to be debated)...


    Alcohol is a good thing in moderation - it can grant lucidity. In abandon, it can cloud judgement.


    Have one for me - I have to go to the dentist early in the AM. :(
    13 Aug 2013, 12:13 AM Reply Like
  • Author’s reply » @FISH


    No time to join our portfolio chapter??
    13 Aug 2013, 12:35 AM Reply Like
  • Author’s reply » JOHN


    I contacted Fear to let him know that my dividends are off. (PSEC) and (FSC) are monthly and a lot higher then he has I believe. Plus (NTI) declared a dividend tonight as well.


    I THINK??


    No Vodka in me, just stupidity !!
    13 Aug 2013, 12:39 AM Reply Like
  • @ Fish, John


    There hasn't been any fighting on here for a few days, and I'm enjoying, so I'll decline on the politics today, interesting though it may be.


    I am inclined to notice & agree with Fear's point that politics will soon be gaining more stage, and that's never good for stocks. Now that he pointed it out, I see more politics is popping up. Just a little right now.


    Any tie ins on the politics you've listed, or anything new... and the market? I'm seeing more and more about Sinai being unregulated since Egypt's revolution. Result is militant terrorist types from Hamas et al. settling in, attacking Egyptian military stationed there. There's an edge to the articles that makes me wonder if this will be a new hot spot soon. It's not a big threat to Israel, but it would read as "oh my gosh" to the markets. So...


    ....How does one play political unrests? Buy defense?? What else??? Seems like a good time to. With Syria, even a bit with Turkey and Brazil, and with Iran still an issue. While I wouldn't bet on war (thank goodness), as politics in general gets more attention, this stuff will too...
    13 Aug 2013, 12:51 AM Reply Like
  • Did you hold any PSEC in the challenge prior to 7/29? Next ex-div is 8/28. The yearly div amounts on the sheet are correct. PSEC pays $0.11 monthly, and FSC pays $0.0958 monthly. I put NTI's dividend info into the sheet, too.
    13 Aug 2013, 07:47 AM Reply Like
  • Author’s reply » John


    PSEC.. I owned nothing in July since we started with the 31st closing price. My bad if I misunderstood the dividend sheet,
    13 Aug 2013, 10:34 AM Reply Like
  • fishfryer


    Hell yes I wonder about these concerns.


    Notice that no one even gave the time of day to your questions?


    Everyone is only absorbed with "investing" and not these kind of questions. As if these things will have nothing to do with our investments. People are not paying attention and are numbed to the shit that is going on. It's too uncomfortable for them to connect the dots. They just go with the "official" explanation and don't question anything.


    You didn't read our "Conspiracy" blog that IT put up when I went off on some similar tangents.


    Have some more vodka and read some of the conspiracy comments IT and myself posted, and how they were basically blown off by most everyone except Tampat and Coins. Here is the link:

    20 Aug 2013, 01:59 AM Reply Like
  • FG or JB,
    I had 3 go Xdividend today:


    1) (JE) .07 a share payable 8/31
    2) (CLM) .102 a share payable 8/31
    3) (ARR) .07 a share payable 8/29
    13 Aug 2013, 11:04 AM Reply Like
  • @ Notrub,


    How long have you owned the ARR? I'm asking because I'm curious if you've owned it a while and have gone through the dividend reductions and what the total return's been like for you. I own some preferred shares - rather have the lower dividend but the guarantee to get paid before the common.
    13 Aug 2013, 11:33 AM Reply Like
  • @User,
    Only since 8/9/13 so not long enough to know the ins and outs, yet.
    13 Aug 2013, 12:09 PM Reply Like
  • Can someone give me ideas on what common vs. preferred shares on stock ....are, and impact?


    Any personal experiences on when to own which one?


    I vaguely remember owning a preferred CEF, but never with stocks.
    13 Aug 2013, 12:09 PM Reply Like
  • @ Curls,


    I think the SA automated editor just eliminated some of your comment (which sucks because I like to use hyphens and slashes between words and on occasion SA has prevented me from making a dramatic effect in my own sentence construction).


    Think of preferred stock as more like a junk bond than the common stock. Legally, the preferred's dividend must be paid before the common stock's. So if the company is paying a dividend on the common, it must pay the preferred shareholders before the common shareholders get paid.


    What this does is allow me to invest in companies that I wouldn't invest in the common stock. Notrub owns ARR (I used to own the common). I own the B-series preferred. I do not like mreits. But they are mandated because of the reit structure to pay out at least 90% earnings to the shareholders. And most of them have a generous yield. Okay, but I still don't like what are essentially hyper-leveraged bond funds in what may end up being a rising-rate envirionment.


    So why own the preferred in a category I don't like? Because of the debt characteristics, I get paid before the common shareholders do. Most preferreds are callable at a certain price - ARR.PB is callable at $25. I bought it earlier this year at 24.50 or thereabouts. So if several years down the road, ARR decides that they can refinance with a new series of preferred shares and save money by taking the old shares away from me, I get a 50 cent per share capital gain plus the dividends I received along the way as my payout. Unlike most bonds, most preferreds have no maturity date, so if you buy them it should be at a yield that you will be happy with for a long time.


    The risk with preferreds is that the company will go bankrupt - you will get to collect much later than various bondholders but before the common share holders. In reality, you would only get pennies on the dollar.


    Another risk is call risk - if you buy the preferred above par and it's callable, the company WILL call it if conditions are favorable for them to do so. If you buy @ $26 a callable preferred and the company decides a few days later that they can refinance, they call it and you just lost a dollar a share. Case in point - bpop - bank in Puerto Rico is still in TARP - I owned bpopp earlier this year and stupidly had a limit order in place for the call price (the main reason for doing this was because I knew it would become callable in May). I made a few bucks and got a few dividends along the way.


    The other preferred share is bpopo (owned that one as well earlier this year and am waiting for it to fall back below $20). Has a lower yield, but is currently trading for a bit above $20. They are both callable. BPOP repeatedly has expressed it's interest in exiting tarp in it's conference calls. But the face value of bpopo (6.something percent) and the face value of bpopp (8.25%) end up being similar market yields for what the market is valuing the preferreds at.


    So why buy bpopp at par when it will be likely called by the company (the company is paying 8.25% yield per share vs. 6.something % per share) well before bpopo which is trading at a significant discount to the call price? This is something I don't understand.


    Bpopp has traded at above par value at various times since May even though it is callable. Bpopo has dropped back down to close to $20 at times. Both are yielding ball-park 8% dividends on the market price, yet if I could buy bpopo, I would rest easier that I would have a close to a five dollar capital gain per share if the bank decides to call it and I would rest easier knowing that if the bank decides to call shares it would call the higher yield ones first.


    That said, I would be quite willing to buy into bpopp if the price came back down into the $24 range.


    Another risk for preferred shares is interest rate risk. But hang tight - several of them are below par price and have better than 8% yields and the companies are actually making money. Think about that - what treasury note/bond is currently paying out that much? Actually, what junk bond is paying out that much? How much would interest rates have to rise for an 8% yield to be deemed not worth anything?


    Bankruptcy risk - that goes for any invesment.


    These are some of my criteria for thinking about buying a preferred:


    1. Price must be below par value.


    2. +PE or is paying dividends on common shares, or even better yet, both.


    3. The market yield must be 8% or better (adjustable for changable interest rate environments).


    4. Your own fundamental analysis, but I'm happy to have eps increasing year to year.


    5. Return is to be based on dividends - a capital gain is great, but not to be counted on.


    6. If the common shares approach a 0% yield, it is time to consider selling (ARR, I gots my eye on you, but not yet).


    7. If the dividends are suspended, you're screwed. The company is likely going bankrupt (should have kept an eye on them in the first place). So I don't place too much faith in the cumulative vs. non-cumulative debate.


    Here are some good resources for preferreds:


    Best free site on the internet:



    Best semi-free site on the internet (have to register and will get frowny faces until you throw money at them):



    Very good writers on SA:




    Curls, do you see what effort I will put into to avoid vacuuming the house and cleaning the dishes during my off week? :)


    edit - I should have mentioned that what I'm describing are only the basic preferreds - there are also convertibles and a bunch of other bizaare types as well.


    @ Notrub, I'm not picking at you - I have some of MORL which may be the most risky mreit play of all (nevermind the preferreds I have).
    13 Aug 2013, 02:50 PM Reply Like
  • BPOPO - up 8.49% about thirty minutes after writing the above.


    BPOPP - down 1 cent.


    BPOP - down 15 cents.


    Really? An unknown user and rank amateur inspires someone to buy a stock? Assuming that this was me and this was you, this is actually scary to me and would you please be more careful? Preferreds don't trade with much liquidity. And please put a stop-limit in for $20 so I can buy your shares. Thanks.


    All kidding aside, I hate you (whoever you are). Now I will have to wait a long time for the shares to drop back below $20. :)
    13 Aug 2013, 06:19 PM Reply Like
  • User7


    That's a really great explanation. The links too, look very helpful. So glad I could provide a positive way to avoid vacuuming. (Also currently left undone at my home.) Thank you very much :).


    So it's kind of like a junk bond. A way to raise $ without doing formal bonds, so they're easy to trade on the stock market; probably easier to get funds raised. It's similar to the way I thought of my CEF as a bond with a fancy title and setup. I learned a little about mreits in the process too.


    So now I have a clue - that's helpful.
    14 Aug 2013, 02:01 AM Reply Like
  • Curls,


    A couple of things I should have mentioned as well about preferreds - if you're thinking about buying one, always read the prospectus. Most of them are very similar but sometimes there's a nasty clause stuck in there that might surprise you.


    Another thing is many of them have low liquidity. That one bpopo that I have been so patiently waiting to buy only has an average daily volume of 900. Some days it doesn't even trade. So Satan or whoever it was that decided to drive up the price yesterday could have done that just by buying one or two hundred shares. This means that they don't tend to make good trading vehicles but are a bit easier to buy and sell than owning an individual bond.
    14 Aug 2013, 08:01 AM Reply Like
  • @User7


    Thanks for the heads up to look at prospectus and liquidity. That would mean, bankruptcy really would be a problem (not able to sell once warnings are obvious), which is nice to know up front.


    It helps specifically, to know to stop thinking of them as similar to common stock, and that they are a different concept... I've wondered for a while what they were about.
    14 Aug 2013, 08:52 AM Reply Like
  • Curls,


    Another thing to consider is that they also tend to have higher yields than the bonds issued by the same company. But in the case of the bond, you get guaranteed interest plus your principal back when the bond matures (and the company hasn't gone bankrupt - I have limited knowlege of bonds, so forgive me if what I'm telling you is incorrect).


    With the preferred, you get a dividend. And it's not really guaranteed (unless the company is paying a dividend on the common stock). A cumulative preferred usually has a clause in the prospectus that the company is obligated to make up missed dividends to the holder of the preferred.


    But if the company misses the dividend in the first place, their finances are likely in deep boo-boo and will be going bankrupt. The good news is that a company that misses a dividend will have it's reputation destroyed, so the companies usually are pretty good about making every effort to pay them.


    Bankruptcy - well, that's a problem for any investment. When I'm screening preferreds for a buy, I focus on researching the underlying company.
    14 Aug 2013, 09:10 AM Reply Like
  • Just wrote this reply to someone who was and has been negative on gold. He makes some good points, but the following sheds some light on how gold should be traded, invested and viewed.




    I am a gold bull (I sell it for a living) and have called tops and cautioned investors in gold since September of 2011 to dollar cost average into a position because of one thing you don't mention; the dollar bottomed in 2011 and has only gotten stronger since then. The article I wrote yesterday called a temporary top in gold and bottom in the dollar;


    Guess what today brought? Stronger dollar and weaker gold. They still do work opposite of each other and this trumps everything else.


    Gold is insurance and those who want to protect their dollar based assets (stocks, bonds, cash) can afford a little insurance to hedge what may or may not come from our Fed, banks, debt and economic future. Unlike other insurance, there will be a return of premium, higher or lower, at some point in the future."
    13 Aug 2013, 12:13 PM Reply Like
  • From someone I read regularly... Fed talking the talk, but reality will hit them square in the face here at some point.


    "Bloomberg reports Bernanke Seen Slowing QE to $65 Billion in September.


    Federal Reserve Chairman Ben S. Bernanke in September will trim the Fed’s monthly bond buying to $65 billion from the current pace of $85 billion, according to a growing number of economists surveyed by Bloomberg News.


    Half of economists held that view in the July 18-22 survey, up from 44 percent in last month’s poll.


    After today's rise in treasury yields, that number is likely more than 50% and/or the expected tapering amount greater than $20 billion.


    It will be interesting to watch the Fed's reaction when housing and autos slump, the stock market takes a hit, and treasury yields continue to rise in the next few months."
    13 Aug 2013, 05:13 PM Reply Like
  • Doug,
    Housing , autos & the market are all due for a "slump" or a pullback from their torrid upswing.. Nothing more should be read into any pullback that occurs. of course the Fed will be the "reason"..
    (I couldn't write a better script for a needed pullback.)


    Not prudent to sell LT positions on any of this tapering noise. Add equity exposure if the dips occur.
    13 Aug 2013, 05:55 PM Reply Like
  • Retail numbers sans auto weren't that great. I think the point the author was making was that one (traders) should take caution at "present" because, as you say, "autos & the market are all due for a slump."


    When you say "not prudent to sell LT positions," you are basically saying a buy and hold investor should hold through the assumed slump, correct? At least that is what most advisors would recommend.


    How do you distinguish between a slump and a reversal?


    One of the guys from the conference gave the number 25%. Just curious what your number is, and if you would have added at xx% as you said above, "add equity exposure if the dips occur." What percent or drop in points would that be?


    13 Aug 2013, 06:26 PM Reply Like
  • Doug,


    I will use charts to help me when it becomes time to get defensive, and will view a 20% decline as my first warning sign in determining a market reversal . Its my pivot point in trying to distinguish a slump (correction) or a true reversal of market direction.


    Yes i would advise LT holders here to ride out any corrective phase and use cash that was raised recently to add on those dips.. That is the tricky part. I did not play the last 7% dip (May - June) very well. I expected a bit more and was going to start deploying funds around S & P 1550 , but market rebounded so quickly I didn't do much of anything in the way of adding.


    Depending on how the situation develops , I will look to add around S & P 1590 -1600. I have a good shopping list and plan to add as individual names hit my target prices.. Last Time around they never got there.. S & P 1560 is the June low , I believe we can retest that before year end .
    13 Aug 2013, 07:54 PM Reply Like
  • The Holy Grail I am looking for is to cut losses sooner than 20% or 25%. I know I have my work cut out for me, but obviously if it goes in my book, I have to back it up with data to make my case.


    Thanks F&G. Was wondering what your line in the sand is. The nice thing about it is it keeps moving higher as the market moves higher. Meaning, the time to sell. Personally (part of the plan), I am looking at 2% to 2.5% as my cue, depending on what the Fed is doing.
    13 Aug 2013, 08:20 PM Reply Like
  • Doug,


    Anybody with an intermediate or LT view of the market shouldn't be concerned about 2-3% swings..You will lose all perspective and get caught up in the "whipsaw" of the markets. I Leave that for the traders.


    If one has that longer term mindset (doesn't have to be 20 yrs by the way) you have to put the noise like the fed in perspective,,


    Look at the recent few days weeks, taper , no taper, up down sideways,, what is the fed going to do, what are they not going to do sept, dec, next year ? Its meaningless noise. There actions aren't meaningless, but the markets will tell you if they sense a meaningful change in direction, Not the rhetoric, hype and silliness from the media types. Price action trumps all.


    None of this can be set in stone, its a dynamic plan that has to continually evolve.


    An example , fed starts taper. market nervous , volatility. Most will lose sight of earnings, like they do when all of the calamity is around.


    If earnings stay on the same trajectory and we do get that approx. $120 for next year.. Trading at 15-16 multiple gets us to 1800 or so on the S & P (those calcs are conservative) ... You can now see that if I get a correction from here , and I view the earnings story in tact , I'm buying the dip. regardless what the headlines read.


    That simple principle is how we got here today.


    14 Aug 2013, 09:22 AM Reply Like
  • Author’s reply » ok, new chapter !!

    13 Aug 2013, 11:38 PM Reply Like
  • To Gold bugs -


    I'm thinking it's a good day to buy (DUST). Down 14% now. For real, with my real money.


    Is this gold climb temporary with a bounce down coming?


    Or are we breaking out into better gold prices, as the markets start some deflating (or at least sideways moves) and investors "brace" themselves by buying gold? (I have no idea what the dollar is doing, but even after I look - I won't know what it means.)


    Any thoughts? Obvious opportunity, or still has some risk attached?


    (Pardon if you've seen the ques in more than one chapter--- I'm chapter chasing :). )
    14 Aug 2013, 02:39 PM Reply Like
  • Author’s reply » The Fed DID speak today but this time the markets sold off as Bullard MENTIONED inflation possibly being an issue, the economy being weak, and it flowed into the markets..


    I am learning how amazing the markets move on words!!
    14 Aug 2013, 02:46 PM Reply Like
  • @ IT-


    Started to rally, then pulled back from it. So either they saw it as bad for economy with tapering coming soon... or simply not effecting tapering coming soon.


    FOX guessed at tapering in Sept. CNBC guessed at tapering in Dec after the talk. I'm guessing CNBC was more busy trying to make noise, and move with the "perceived news" and make it "matter" than FOX, this time.
    14 Aug 2013, 03:28 PM Reply Like
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