Send Message
View as an RSS Feed
  • The Time To Short Japanese Government Bonds Is Now  [View article]
    Logical Thought, thanks for the reply. You are right, the prospectus does say the exchange rate doesn't affect the principal, but I struggle to see how this is possible. Yes an ETN may be defined any way it wants to be, but the issuers of that ETN would want to hedge that risk somehow with real investments, and Japanese bonds would always be denoted in Yen. I can take the statement as fact, but I would like to understand the mechanics behind it if I could.
    As to "bleeding," as I mentioned the interest rate has fallen from roughly 1.0 to 0.7%, which should equate to a 0.3% drop. In reality JGBS has fallen 3%, which is ten times more. Neither the 0.5% annual fund fee nor currency distortions can explain that difference. A similar story goes for JGBD, it should have fallen roughly 0.9%, not 10%. However, let's talk about the JGBS since it takes all the leveraging effects out of play. Can you explain what might drive this discrepancy?
    Feb 26, 2013. 08:22 PM | Likes Like |Link to Comment
  • The Time To Short Japanese Government Bonds Is Now  [View article]
    Can someone explain why JGBS/JGBD have been bleeding value even though the Yen has dropped 20% in recent months? I would assume that the value of a bond would fall along with the currency it is denoted in. The interest rate has barely moved, from perhaps 1% to 0.7% so that is not a factor. With triple leverage the JGBD should have gone up 60%, not down 10%. I'm looking at you Logical Thought, you're the one who encouraged me into this trade a while ago.
    Feb 25, 2013. 01:31 PM | Likes Like |Link to Comment
  • How Congress Could Fix Its Budget Woes, Permanently  [View article]
    When Ben Bernanke says there should never be deflation because one could always drop cash out of a helicopter, he is right - but then he constrains himself to parking that helicopter over the Federal Reserve banks. If the economy needs to be stimulated, why give all new money to the banks and hope it trickles down to the rest of us? Because the banks are so powerful they would never allow this ...
    Feb 15, 2013. 06:50 PM | 1 Like Like |Link to Comment
  • The most exciting returns are to be had from an asset class where those who know it best love it least. What does it say when the first pick by Bill Gross at the Barron's Roundtable is gold? Gross isn't calling for an imminent bond bear market, but he doesn't see much upside either. For a fixed-income substitute, he recommends (what else) his BOND ETF, which trounced the competition in its first year and just added the use of derivatives to its toolbox.  [View news story]
    I read Bill Gross' speech and took away that bonds are way riskier than they are priced and to stay away. As in, please don't make me invest any more money in bonds because there is no place to put it! I had just bought a good amount of BOND and sold it after reading his column. Did I miss something?
    Feb 9, 2013. 01:44 PM | Likes Like |Link to Comment
  • The 3 Scariest Government Charts  [View article]
    The charts aren't right - if you look at defense spending, it has been rocketing upwards at a breakneck pace, far outstripping GDP
    If ever there was an item not worth borrowing from China, it's money for the military to spend on weapons of mass destruction.
    Furthermore the payments to individuals graph is patently misleading. People who've paid into social security all their life and get their "pension" back would make the chart look bad, even though they are not taking advantage of anything. Then you show income tax payers not payroll tax payers. The whole thing reeks of another Republican propaganda feed.
    Oct 10, 2012. 10:21 PM | Likes Like |Link to Comment
  • Essential Guide To Understanding And Forecasting The VIX And VXX  [View article]
    Brilliant advice, thank you third eye! VXX at $8.89 today.
    Sep 13, 2012. 07:06 PM | Likes Like |Link to Comment
  • Is Corning A Value Buy?  [View article]
    Where do you get a Price/Book ratio of 2.6? According to both Ameritrade and Yahoo finance, GLW trades at a ridiculous P/B of 0.94. If you are right I'm going to be very upset.
    May 22, 2012. 08:54 PM | Likes Like |Link to Comment
  • Why The Natural Gas ETN Is Broken  [View article]
    GAZ is completely detached from reality, it is a purely speculative equity caught between short squeezers and shorts hoping for more shares to issue.
    May 3, 2012. 09:38 PM | Likes Like |Link to Comment
  • Deer Consumer Products Better Positioned Than Competitors  [View article]
    Oscar, what is the source for the level of naked short selling? Also, there is no scale (Y axis) for the red curves.
    Apr 14, 2012. 04:54 PM | Likes Like |Link to Comment
  • VIX Premium To SPX Historical Volatility At Record High In Q1  [View article]
    In defense of Bill, he is claiming that the VIX/10 day volatility spread will narrow, most likely by the VIX (futures volatility) falling and the realized volatility rising.
    Interesting chart, showing that traders are always more fearful than reality warrants.
    Nonetheless, it takes a good bit of myopia to stare at the sub-10 30 day volatility and conclude all is rosy when there is a flotilla of black swans in the waters.
    Apr 6, 2012. 10:40 AM | 4 Likes Like |Link to Comment
  • Why Groupon Is Poised For Collapse  [View article]
    Great insights Rocky. I posted on Dr. Duru's article, but I'll ask the same question.
    Can you explain why Groupon's CFO got to dump 21,000 shares (at $17.72 no less!) on March 20? And their CAO sold over 6,000 shares on March 22 at $17.84? There are numerous other insider trading filings. I know Morgan Stanley has the privilege to sell their shares early, but why do these executives get to sell before the lockup? Should we expect a significant expansion in float from stock options with early "maturities"?
    Apr 1, 2012. 08:30 AM | Likes Like |Link to Comment
  • Brace For More Surprises: Groupon Restates Earnings, Reveals Weakness In Financial Controls  [View article]
    This is at least the second time Groupon has fudged its books - the first being double counting of revenue pre-IPO.

    Can you explain why Groupon's CFO got to dump 21,000 shares (at $17.72 no less!) on March 20? And their CAO sold over 6,000 shares on March 22 at $17.84? There are numerous other insider trading reports. I know Morgan Stanley has the privilege to sell their shares early, but why do these executives get exemptions?

    Any idea what the Faruqi & Faruqi investigation might end up costing Groupon?

    Thanks for pointing out the lockup extension - great information!
    Mar 30, 2012. 10:52 PM | Likes Like |Link to Comment
  • An Old School Look At The Zero Interest Rate, And Its Influence On Stock Investing  [View article]
    Good article, very well written. I would like to hear your responses to the following arguments:
    - do people really buy homes because they fear interest rates will go up? I would think it has much more to with available capital/credit, a belief that housing prices will appreciate, and family situations.
    - I agree that in a perfect world, fixing social security would stimulate spending. However, my view of human nature is deeply jaded even at my relatively young age. When a stimulus is announced, stock markets jump, without even a whisper of whether the short term benefit exceeds the long term cost. I have seen far too much short term thinking to believe politicians will have the political fortitude and/or backing to push through reforms.
    - Isn't it still rational to buy bonds even if interest rates are below inflation? What's the alternative? Cash will depreciate and gold is already in highly speculative territory. Every major economy has its question marks, oil futures suffer from contango and so forth ... nothing is safe.
    Mar 19, 2012. 03:20 AM | Likes Like |Link to Comment
  • Keep The Japanese Government Bond Market On Your Radar  [View article]
    Thanks Logical Thought, that is good to know. Can you also comment on the default or haircut scenario? Let's say Japan decided to only repay 50% of its obligations.
    Feb 24, 2012. 01:02 AM | Likes Like |Link to Comment
  • Keep The Japanese Government Bond Market On Your Radar  [View article]
    Nice article, I agree completely that Japan is in deep ... water. Can someone please explain how currency exchange rates play into JGBS? I understand the Yen has fallen 6% in the last 3 months, but JGBS barely moved (tracking only the inverse bond yield).

    Furthermore, if Japan were to default outright, what happens to JGBS?

    Finally, what is the risk that Deutsche Bank cannot hold up its end of the bargain? The money has to come from somewhere. Thanks!
    Feb 23, 2012. 01:06 AM | Likes Like |Link to Comment