AlexR

Mark-to-Market: The Bogeyman of the 1930s Is Back

Why not just make it mandatory for banks to report their balance sheets under both methods (Mark-to-Market and Mark-to-Model) and let the market decide which one is right?

Siegel vs. Standard & Poor's

The author writes:
> 1. Siegel may or may not be correct in asserting that there is a better way — we have not attempted to analyze that

Well Sir, please DO attempt to analyze it. Siegel's argument is self-evidently right.

Your Oil Stocks Aren't Coming Back

The key fact the bullish 'peak oil' theorists seem to miss is that without oil, the companies that produce oil will die. If you believe in peak oil, you should be bearish on oil companies. Just look at any other technology that has peaked. Only very rarely will a leader of a dead technology be able to adapt and survive.

On Feb 20 08:29 AM longoil wrote:

> Comparing oil services stocks and internet stocks is like comparing
> apples and oranges. The world can live without eBay or Amazon, but
> cannot live without oil and gas.
>
> Conventional oil production has peaked. This is why major oil companies
> are investing heavily in non-conventional projects like the oil sands,
> deep sea drilling and tight gas extraction. The current economic
> malaise has hidden the fact that peak oil is happening. The services
> companies RIG, DO, and NOV as well as producers CHK and COP are excellent
> long term plays when the economy (and oil demand) recovers.
>
> Alternative energy sources (solar, wind, hydro) currently makes up
> less than 5% of the world's energy mix. It will take at least 50
> years to get off of oil and gas. Oil and gas is king till the middle
> of this century.

Obama's Foreclosure Plan: A Closer Look

Neighbor A just needs to stop whining about inequity and understand the fact that if Neighbor B goes into foreclosure, that house will sell in auction for $100K or less. And as if that was not enough to bring Neighbor A's house price down with it, wait until the new investor-owner (as most foreclosure buyers are) rents it out. Once Neighbor B is gone Neighbor A will think geez, they were such nice neighbors. And when everyone around him are renters and empty houses, good luck selling, even for $100K.

This whole fairness outcry has really reached childish proportions. Just suck it up and look at the big picture.

The Mortgage Rescue Plan Needs to Differentiate Between Types of Borrower Trouble

A much better approach to this whole foreclosure crisis would be to force banks to respond to Short Sale (pre-foreclosure) offers within a set amount of time, like, 7 days or so. The banks currently take 1 to 3 months or more just to respond to an offer. That scares off most potential buyers, driving pre-foreclosure sale prices much lower than they need to be. The fair thing to do is to let a new buyer take the house at a newer, affordable, fair price, and let the troubled borrower walk away, as quickly and smoothly as possible. Current foreclosure and pre-foreclosure sales are a very messy process that aggravate everyone involved, and causes banks to leave money on the table (buyers who put up with the aggravation do get a great deal!).

To Monetize or Not to Monetize: Who Cares?

I believe the point missed here is a sort of "displacement" that occurs. When the Fed buys $100B worth of treasuries from the "public", that forces the public to find other places to invest $100B. Most of these displaced funds will go into bank balance sheets (FDIC insured deposits) and money market holdings, both of which do have a real economic effect: bank deposits increase the money supply; while money market influxes cause corporate short-term borrowing rates to go down.

Can Deflation Be Avoided?

If there is severe deflation in rich countries, what would keep emerging markets, which historically have no qualms about printing money, from buying up the world?

Hedge Fund Redemptions May Crash Q1 Markets

High-school Investment Club redemptions might have a bigger impact than Hedge Funds. Hedge Funds are far smaller than they used to be, and many have imposed redemption restrictions.

Deconstructing the Fed's Balance Sheet

Is the Fed making a mistake? If the money supply is really not increasing, what's the talk of quantitative easing all about?

High Yields with REITs and Junk Bond Funds

The real problem with REITs is that the leveraged ones go bankrupt in the second bad year, and will never see the recovery.

Let's Use the 30-Year Treasury Bond to Reignite the Mortgage Market

Low interest rates don't help too much if buyers are scared at the prospect of a potential loss from continuing price drops (people have a tendency to extrapolate). We need the Fed to start selling Puts on the Case-Shiller housing index. Then encourage banks to purchase these Puts and bundle them into "safe mortgages" which automatically reduce the principal by some amount if the homebuyers' regional market drops further over the first 3-5 years of the mortgage.

It's a Mad, Mad, Mad Madoff World

Too bad Madoff didn't buy a small bank and get some TARP funds.

Bill Gross: Welcome to a New Universe, Investors!

This doesn't sound right... "One only has to recognize that roughly 20% of bank capital is now owned by the U.S. government and that a near proportionate share of profits will flow in that direction as well."... the government only got Preferreds with a measly 5% return. Nowhere near 20% of bank profits will flow to the government.

More Fun with Levered ETFs

Some of these ETFs are subject to contango, backwardation, and good old "slippage" in the futures markets. The ones that buy options are also subject to time decay, a lose/lose proposition. One way to avoid these inefficiencies are the ETNs and the Paired Trusts like UOY / DOY. But those have their own issues. There is no free lunch. Really if you want very efficient leverage on the long side, just buy high-beta stocks without margin. On the short side, just forget it.

Are FAS Options Cheap With Implied Volatility of 232?

FAS options are very illiquid. I wonder if the low IV makes up for getting dinged on the bid/ask spread?