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Ohrama

Ohrama
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  • Barron's Calls a Bottom [View article]
    This may or may not be the bottom (markets don't go up or down monotonically, but is like a under-damped system, of course more complex nonlinear and time-varying, that keeps oscillating), but all the reasons given can be challenged easily:
    1. This is not 74, 82 or 87 to use the PEs from those times. During those times, the country was relatively affluent (was it 1982 when we moved from most prosperous nation to the net debtor nation status?), had better industrial and man-power base and very little outside competition. Now a majority of us seems to be working in retail, hamburger flipping or serving coffee, housing and related activities (how many times your house title got verified or insured or paid closing costs and real estate agent commissions?) and health-care, none of which adds to true wealth that could be sold to outsiders.
    2. The stock market might be cheaper with respect to the GDP, but a big chunk of it on useless work (you polish my shoe and I will polish yourself and both get paid. Perhaps I should not put this in writing and give new idea for the politicians to get extra tax - We should calculate the efforts by the housewives or husbands who work at home in terms of managing the house and bringing up the children, attach the proper cost to their efforts, and add it to our GDP!) and due to politicians with a law education (and who can't understand real manufacturing or economics) dictating that thou shall be paid a minimum of $8.00 per hour along with all the fringe benefits.
    3. Gold is higher with respect to the stock market perhaps because folks realize that a) we might not go back to the mass production (that reduces cost and increases profits) and consumption binge that we were in during the last 25 years, b) the politicians want to avoid pain when it is due (they did not want to interfere in the market when the bubbles were developing and everyone went on an orgy), and c) the enormous printing of paper money that is taking place (many argue that since so much money is lost, this is fine. But this makes the assumption that the rest of the world would be foolish for ever to trade their real goods of hard labor for our paper).
    I will be personally happy if we can recover from this mess and avoid a possible civil unrest (it is always easy to accept going from poverty to richness, but the reverse is not). As a professor of engineering, I tell my students that perhaps the 1970-2000 was the golden period of this country and they got to work their butts off so that their children when they grow up can talk of a similar period in the future. Perhaps I am wrong and we all can have a good time doing the easy things.
    Mar 8, 2009. 07:54 PM | 33 Likes Like |Link to Comment
  • Watching the USD Drop? Here's What You Should Really Be Watching [View article]
    It is not just the foreign debt to GDP that matters! It is more about what kind of GDP we really have!! In the last 30 years or so, our GDP has moved from a highly coveted (by the foreigners) one to a Hamburger GDP (you polish my shoes and I polish yours kind; I pay $7 to have my dog walked; to check if my car battery or the alternator has failed, the dealer wanted $85! 1/3 of the GDP is Government and health care; rest comprises Realtors etc.!). So, if you look at the percentage of GDP that can really be sold even to service (interest payment) and not pay off our debt, you will realize the bad situation we are in. Our country is like an engine with a large fly wheel. The stored energy is keeping that engine going, but when it stops it will be much more difficult to get it back to speed. Another factor which has been helping us (and could disappear pretty soon) is the lag between perception (that USA is great; it's streets are paved with gold etc.) and the reality (we moved from the richest nation in the world to a most debted nation which started in the early 1980's).
    A related article: www.nytimes.com/2009/1...
    Nov 9, 2009. 08:36 AM | 22 Likes Like |Link to Comment
  • Why Oil Will Sink to $20-$40 Per Barrel [View article]
    1.Our consumption went down by 2 mbpd (around 10%). How much further we can go without hurting ourselves or our productivity? I already see so many closed airline terminals across the country, for example.
    2. How much it has gone (and going up) in the most populous developing world during the same period?
    2. Most Indians (and I suppose true for Chinese too) are starting from ground zero. So, if their income (or buying power) starts going up (which it is), there will be a big upward push, almost an exponential growth (those who sat at home all the time doing some traveling; those who used bicycles use powered two wheelers; those who used two wheelers use simple cars; those who used those cars want luxury, all wheel drive gas guzzlers). Their need for almost everything (water, electricity) is going up, exponentially again.
    3. The OPEC surplus capacity you show is around 6% of the world oil consumption. You can't operate with just in time principles with commodities and need some surplus to prevent hoarding. If one nation gets into turmoil (Iran getting bombed?), all that surplus would be gone.
    4. It took millions of years for those energy reserves to form. If they don't run out immediately, they will if you give another 10 or 20 years (noise compared to time it took to form).
    5. If natural gas to oil ratio is small, it perhaps imply natural gas is under-priced and not the other way. Yes, in India etc. folks drive with natural gas tanks on their cars. Do you think that is feasible with all our safely conscious etc.?
    6. Even if everything remain unchanged, the possible dollar debasement could make the price skyrocket at least in dollar terms.
    7. If finding oil is that easy as you imply, BP would not have put itself in the position of loosing 1/3 of its value on one well some 2 miles below the surface.
    8. As you rightly pointed out, purchasing the assets at the right time at the right price is the key. But that applies to selling too. If I were the ruler of one of those oil producing countries, I would say, keep the oil on the ground for future appreciation than converting them to useless dollars and defense equipment and run the country lean or loans in the mean time (And I got the oil as collateral to get the loans needed). But again, some of those rulers won't be in power if they don't keep supplying their masters, the western powers, the goods at the prices deemed good for them.
    9. The U.S. government lifted sanctions on India on nuclear products, not out of concern for their need, but to prevent them from competing with us on oil etc.

    So, I am not saying your price is right or wrong. If you sit down and think carefully and not just draw conclusions from Newsweek articles etc. you will find innumerable reasons on both sides. Right now it is a tug of war between pull and push. But the laws of physics is clearly on the side of shortage and depletion.
    Sep 15, 2010. 09:00 AM | 21 Likes Like |Link to Comment
  • Don't Be Surprised if We See a 31% Correction [View article]
    The long explanation given by GreenRiverr can also be explained by simple but well known theory from (electrical engineering) information theory (by Shannon of MIT in the 1950's). Put simply, future information (what happens tomorrow or the next year) should always contains some new information that cannot be predicted from the old data. The predictable part (or the percentage) varies from very high (close to 100%) to very small, but might follow some distribution. Philosophically speaking the world would become too boring (or frightening or chaotic) if we can foresee what is going to happen tomorrow! That is why predictions like a crash (occurs very few times) becomes difficult. We adjust ourselves based on the scant information available (like the 1930 crash etc.) and it sneaks on us in a new form!
    May 20, 2010. 03:54 PM | 18 Likes Like |Link to Comment
  • U.S. Economic Pessimism Jumps [View article]
    "Things like funding the National Endowment for the Arts, The corporation for Public Broadcasting, Planned Parenthood, Cowboy Poetry festivals, High speed rail service from Tampa to Orlando, etc."
    Your examples gives the impression you are simply a right wing fanatic. Tell me how much elimination of these programs would save and after having accomplished your agenda, where would you put your hands for the extra cuts needed!
    Apr 22, 2011. 01:55 PM | 13 Likes Like |Link to Comment
  • 8 More Reasons Why a Double Dip Is Coming [View article]
    Well, a devalued dollar might force us to cut down on the junk imports without which most of us can survive!
    Jul 28, 2010. 12:43 PM | 11 Likes Like |Link to Comment
  • As Bank of America soared Thursday on chatter of a mass-refinancing plan, mortgage REITs slid on worries of prepayments slashing returns on their holdings of MBS. The trend was reversed Friday after an administration official denied the rumors, but mREIT investors remain wary as NY Fed chief Dudley suggests intervention to reduce obstacles to refinancing. For now, many continue to offer double-digit dividends.  [View news story]
    It is unfortunate that we cannot make a decision on investing based on fundamentals. This country has become another third world country or a banana republic (give loans and write it off to buy votes). But we all know where this will all end.
    Jan 7, 2012. 04:28 PM | 10 Likes Like |Link to Comment
  • Election Results: Big Win for GOP, Potential Loss for the Economy [View article]
    The last paragraph is based on thinking of the past. As a professor of engineering, I always think of the U.S. economy similar to a large flywheel that can store immense energy and hence takes long time to slow down or come to a stop even when the energy input is stopped (so, our past strength and perceptions about us keep us going and as the author says allows us to keep borrowing). And perceptions (that the streets of U.S.A. are paved in gold!) always lag reality. But unfortunately we are almost at the end of that perception. Further, once a big flywheel stops, it will be heck of a job to keep it moving and bring it to the original speed (or original glory). So, the mantra let us keep spending is not going to save us either.
    Nov 3, 2010. 07:30 AM | 10 Likes Like |Link to Comment
  • Under a little-noticed provision of the new financial legislation, the SEC no longer must comply with nearly all requests for information releases from the public, including those filed under the Freedom of Information Act. Congress and federal agencies can request information, but the public cannot.  [View news story]
    Instead of posting just comments perhaps we should come together as a group (of SA first and combine with others later) and start protesting legally. I am sure there are lawyers, engineers etc. commenting in this forum (I myself is a Ph.D. in engineering and good background in finance and entrepreneurship) and we can form out the work and make the legislatures afraid. I noticed the congresspersons etc. have made rules such that you have to jump the hoops to get to them. For example, recently I was infuriated by a remark from John Bohner of Ohio, a supposedly a republican, stating that those having other retirements or enough savings of their own should not be receiving social security or Medicare. (But then what happens to all my contributions? I was paying at the top income level all the time and Medicare tax on all my income! If this is the way they want to run it, call it an welfare and not some retirement scheme!!) and wanted to shoot an email. I found you cannot unless you are in his district.
    Jul 28, 2010. 08:09 PM | 10 Likes Like |Link to Comment
  • May Nonfarm Payrolls: +175K vs. consensus +170K, 149K previous (revised from +165K). Unemployment rate 7.6% vs. consensus 7.5%, 7.5% previous. [View news story]
    As an young professor in the late 1970's I remember reading a statement to the effect in a TI chip manual preface or so: "The best a Prof. can do is to teach the students to learn new things themselves". If it was true then it is much more so now. If you need to be going to classes all the time to learn, your education has failed you. And if the companies insist on that (paper), they have migrated from the vibrant U.S. enterprise of the 1980's to the third world country firms model (importance to the paper, scores in the exams etc.). Unfortunately both are happening in the country.
    Jun 7, 2013. 10:45 AM | 9 Likes Like |Link to Comment
  • The cost of the gifts in "The 12 Days of Christmas" - from the partridge in the pear tree to the 12 drummers drumming - jumped 9.2% this year, according to PNC Wealth Management. While PNC's index typically is close to the rise in the Consumer Price Index, this year there was a wide gulf, with the CPI rising only 1.1%.  [View news story]
    Well, the way our CPI is calculated resembles the (in)famous statement " If you can't afford to buy the bread, you can eat the cake". So, if we can't afford the traditional 12 days of Christmas gifts, I guess we can substitute them with modern gifts such as repossessed houses etc. whose prices have come down and keeps our CPI low.
    Dec 23, 2010. 06:33 PM | 9 Likes Like |Link to Comment
  • Chemical tests confirm parts of the Gulf floor show such heavy oil contamination that marine life may be threatened, and "there's no longer any action we can take" to remove that oil, says NOAA scientist Charlie Henry. BP's (BP) on the hook for damages, but calls the report good news for showing beaches and seafood are safe.  [View news story]
    Yes, nature can talk care of any excess in the form of cancer (due to eating the contaminated fish) etc as well.
    Dec 18, 2010. 04:03 PM | 9 Likes Like |Link to Comment
  • The U.S. may still have a triple-A rating, but its citizens aren't doing quite as well; 25% of Americans have a credit score below 600, up from just 15% before the recession. The spike represents a serious impediment to economic recovery.  [View news story]
    Is there any real proof the illegal immigrants (or those without proof of citizenship) caused all (or majority of) these problems? Or is it as Nobby73 says by those who did not know how to count 2 plus 2 and depended on the Realtors to learn if they can afford an house or not? Economic and financial analysis should be free from our personal biases.
    Jul 31, 2010. 07:18 PM | 9 Likes Like |Link to Comment
  • Perilous Practices of Public Pension Funds [View article]
    It is not surprising that this is happening. In my opinion (I have a Ph.D. in Electrical Engg with 30+ years of experience), most of the folks working in quants do not have enough mathematical background, intelligence or practical experience in nonlinear (the responses are not always proportionate to the actions) and time varying (due to human behavior in addition toothers) feedback (one action leads to another etc.) dynamics which characterize the world we live in (these folks who make billions etc. happen to be at the proper place at the proper time with proper connections!). Human greediness, inept politicians and economists etc. are distorting the situation (like keeping the interest rate low saying it is the cure for all. It is not since it is taking the money from the savers that includes pension funds and forcing them to do irrational things that they may not do otherwise), most of the folks running the system cannot think of the consequences (as I said, the whole economic and financial system is a NLTV feedback system - when we do something at one place or one time, it affects the other places and at other times) and use very simplistic models (in their calculations) to come to important decisions (such as to keep the interest rates low). Or it is also possible that these guys know what is going to happen (the pension funds or the retired folks are going to blow up for example) and decided that is the only way to take care of the excesses of the past! Whatever, we are in for a big bumpy ride!
    Jan 29, 2010. 08:45 AM | 9 Likes Like |Link to Comment
  • In Barron's 2011 stock market outlook, strategists expect to see an average 10% rise in the S&P 500 and a sustainable economic recovery taking root. Stocks will outperform bonds, especially Treasurys. Companies sitting on cash piles will look towards M&A, R&D and shareholder-friendly moves.  [View news story]
    The whole world has become so convoluted and complex due to all the manipulations and the resulting pull and push that my guess is going to be as good as their's. So, I will sit on my cash and wait for that once in a decade opportunity, aka crash (even if means waiting for another 5 years)!
    Dec 18, 2010. 04:01 PM | 8 Likes Like |Link to Comment
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