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I learned to buy things "right" learning from being in real estate for a short period of time. Forget long and short term investing approaches and think more in terms of buying right which can be a combination of timing to find the best opportunity to buy or just the next to best chance you have to invest. Your fate as an investor is sealed once you have taken a position at that moment as to the probability of success or failure. It is not just luck. Buying right is buying when something is setting your eventual profit at the moment you make the purchase. You cannot exactly time every investment for perfection but you can make a purchase in a range of integral numbers where if you know the fundamentals of an
investment it should always be worth at least what you paid and a lot more. Your trading or purchasing assets is essentially an independent kind of decision making process because if what you are buying is really cheap and a bargain the crowd is going to be running away from it giving you the deal of a life time. Timing maters but not as much as figuring out what range of prices you would be willing to make the purchase. Often times that means a low enough price that there is much less downside risk than upside risk. Things won't look pretty when people are having a fire sale. The original fire sales I guess were by people who suffered a fire with out insurance to replace lost property. A sale by necessity can be a great bargain for a new incoming investor. My father always says ask why they are selling or try to figure out why. People selling in a panic or in pain are not thinking clearly. That is how value gets locked in at a low price. The original sales were ships having been in harbor for a long period of time and having sold as much of their cargo as they could hoping to unload that cargo to replace it with more lucrative new cargo from the port they are sitting in. When a cargo contents don't sell and the ship wants to get sailing again it has a sale "sets sale clearance sale." Ships might arrive in a harbor at the same time as the competition with the same import products only to see their prices drop because demand is too easily satisfied by all competitors. That gives captains several choices. They can put stuff on sale putting up a sign on the dock that they are "sailing away with discounts before they leave" or they can just head out to the next port to try again to sell the same inventory before the competition gets there. If it seems there is no more interest in the current cargo inventory deeper discounts at the sale are going to be required. big discounts take away capital from the ship. Did you know that ships were the original "stock portfolios as such?" A ship unable to sell inventory in port might not be able to re-supply and head off sailing on to the next port. It is not just re-supply of the expensive requirements for crew to eat and drink but restocking trade stock to take to the next port. Successful sea trading ships would attempt to successfully buy and then sell inventories port to port all the while attempting to collect low bulk high store of wealth gold and silver which would leave plenty of room for more cargo in the constant trading that worked out best from port to port. Smart ports welcomed too much competition because they would have the lowest dock side prices. When stock trading came on land and went into stock exchanges the shipping companies were no longer trading stocks but the way it worked remained pretty much the same and as stock markets became more abstract in terms of having derivative paper tab ownership of stocks and goods...representation of the articles traded of value rather than the real thing in the cargo hold the methods really remained quite the same. Trading ships mentality is over 6000 years old. Ships that bought right would always have margin of safety to unload the products they would purchase so they would not lose money but could gain it or retrieve their basic capital to try again with a new kind of cargo . Sometimes the shippers would be hired on contract just to transport goods but that is not the same as a trading ship or a trading portfolio. Trading goods, services and abstract things like stocks and bonds takes a bit of sea worthy street smart thinking because the goal often is just to buy and sell for more than you paid. Before the US dollar there was gold and silver coin and bullion to convert exchange rates into one common denominator currency worldwide. There were quirks in that in that tea could be purchased cheap and sold at very dear prices in distant ports. Tea could weigh less than a lot of other products and thus take up less cargo space than other more heavy objects lower net weight in value. So you see that gold and silver were really just a medium of exchange or maybe other commodities shipped could be nearly as good such as China tea. That tells you something about the thesis that the end of the US dollar is near. Surely the US dollar will continue to decline much the way it has and maybe at a more accelerated rate but like gold it is still just a medium or exchange. Unlike gold it has no alternative use as a commodity unless maybe it becomes recycled paper. It is a commodity in that it exchanges on the markets the same way physical goods trade. Should the US dollar ever become so much less accepted world wide than it is that hardly means that the economy will be trashed and the federal government bankrupt. That is because the US government has very significant natural resource and land assets among other forms of assets. The US owns an awful lot of fresh water. It owns millions of millions of acres of land including most of the western US and Alaska.
The US even owns so called intellectual property and the contents of libraries , museums, NASA and public right of ways. The United States may lose some temporary taxing power when a group like the tea party comes to office but in the long run virtually everything will be 100% taxed by the federal government by compounding income, estate, capital gains taxes, excise taxes and other taxes and fees. When government runs up a deficit it just takes longer for it to tax people to pay down or pay off the accrued debt. You give the citizens time to make more money and save more wealth and then well , later, the government has more to tax. What is all the fuss about? It is pretty stupid to worry about when the US can just print out its own fiat currency not linked to any commodity , gold included. The full faith and credit of the US is not just its massive physical assets but its future ability to tax the citizens as long as they are healthy enough to work hard enough and save enough for the government to take a big cut. Foreign governments and foreign investors being creditors to the US have a contract that limits what they are owed in dollars. It would be absurd for the US to change those existing contracts to send them gold in lieu of us dollars on some conversion ratio scale unless we suddenly found we had a great surplus of gold we could do with out. Where the dollar is going to find competition that could dethrone it is the ETF markets. Little do most people know that some of these ETF market baskets of stocks and commodities are going to trade like a currency over time in a manner that will consume and convert many dollars that used to be saved in dollar denominated bank accounts. It is only a matter of time that dollar denomination becomes primarily American corporate controlled ETF index units shares instead of US treasuries and bank accounts denominated in dollars. I am saying something you won't read elsewhere. Right now dollars are the de facto currency in places like Argentina because the Argentine peso is a scam no one wants to own. All over the world the US dollar might not be loved but it is loved more than a lot of other dangerous local fiat currencies. Well soon people from China and India to Argentina and Russia will be saying give me the dollars I want to buy dollar denominated ETF currency. If i were running the US treasury in say a Ron Paul Administration I would work to convince the president that the entire US treasury note and bill market should be trashed and replaced with government etf exchange traded program units. These could include federal land acres, water rights, timber rights and more backed by and represented but not immediately convertible. Inflation adjusted bonds issued by the US treasury hamper economic development because foreign holders of dollars don't put the money back into the us economy for importing us goods. In the not so distant future it is almost inevitable that the government will have to come up with a sort of GLD etf of its own or just buy into the EFT when shares come down in price by printing dollars. The markets are going to discover all of this without my help but to get the government to understand what is inevitably going to happen they will have to ask my advice or better yet make me the secretary of the US treasury. What will happen is that government will eventually have to cede the dollar over to a sort of etf instrument either it controls or the major etf firms control. Government will find it is not as sensible to tax dollars when the currency becomes ETF oriented. They will take share of etfs as tax and hold those shares in the US treasury. An interesting thing could happen which will force this upon big government. Imagine the price of gold collapsing from 1700 or something like that to $350 in a matter of of a few weeks. Theoretically the etf gold is going to remain on deposit in the nyc vault where it is stored. When that happens government could become the buyer of last resort. As it can hoard the gold longer than private mortal individuals can it can be selling the etfs at much higher prices later on. It would not be wise for the government treasury to be paying the etf management fees on the gold trust so it would evolve into a situation where the government collected the eft fee to maintain the fund for the public to invest in and as it were hold the gold in their own vaults. You can see where this discussion is going? It means gold can become a fiat currency the minute the government just starts printing up dollars to buy gold even at market low prices. It means that the US dollar fiat currency is perfectly as reasonable as having gold as the medium of exchange and just as effective. Don't believe much of anything you read about the federal reserve being anything other than incompetent. . Replacing the fed and the treasury with gold and silver fixed to the currency is really the same as doing nothing. The markets will find that ETFs are quite an advantage over US dollars and the government as the taxing authority will discover it can creater and manage etfs for a substantial fee and provide better protection against inflation by not having to create it. Watch and see. It will happen.
Full time investor.
Bonds, Dividend stock ideas & income, ETFs, Energy stocks, Foreign stocks, REITs, Stocks - long
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I try to predict what is inevitable when it comes to financial reality. I could not predict the big banking crisis nor the sub prime nonsense because these were unnatural events and media driven stories. Yes I knew housing was over priced and I knew what happens when wars start going when they push commodity
prices up. I could not predict the conspiracy to tell the Rubin story that went on nor could i have predicted how the federal reserve would panic after playing around with the too big to fail rules . The federal reserve and the US treasury had the power to nip the crisis in the bud from the very beginning without any crazy TARP funding or General Motors bail outs. Of course everyone knew which companies would be in trouble. Starting with Fannie Mae and Freddie Mac and GM of course. Bear Sterns, AIG, Washington Mutual and Lehman brothers, Indy Mac seemed all to be set up. Once you see that the guy who created the credit default investment vehicles made a lot of money on the collapse it is pretty clear that some people were planning the crash in advance. The media conspired with them with a lot of emphasis in dethroning hated "supply side economics" and putting Paul Krugman on a pedestal higher than his nobel prize. The Bush administration was absolutely clueless except for the Goldman people working the crisis there and bush went to Harvard Biz school!? The fed window for emergency borrowing should have been open to Bear Sterns and Lehman brothers and then after they let those failures blow up on them they should have worked to open the window for emergency borrowing to everyone and not just the banks. I am no occupy wall street person. What I suggested was pretty obvious. That people with much lesser means than the giant money center international banks and banking houses that got tarp should have been able to deffer taxes due to the government one or more years running out and should have been able to borrow money from the fed or the US treasury based on what their average 5 or 10 year taxes would be. The fed really does not understand how money works in this country as the US government eventually owns virtually the whole economy by compounding taxes the way interest compounds over the shorter lifespans of the people and companies that pay taxes compared to the life span the government has to operate. Bernanke knows that sooner or later we are all dead and owe estate taxes and until then we owe cap gains taxes and income taxes and we pay excise taxes and other taxes and this compounds to the governments accounts year after year until virtually everything is owned by the federal government. we are talking about compounding at real rates as high as 30 percent of legal economic activity a year in a well to do country of about 400 million people. The government loses no money on IRS and roth iras nor on 401k plans by deferring the taxes due. They know it because their accountant mathematician wonks calculated the net benefit to the government being a big piece of everyone's retirement assets and income over the long run. This is why the federal reserve just could not figure out how to open the window for emergency cash to virtually all businesses big and small. Deficits are really patent nonsense given the compounding tax rate of an average of something like 20% of a 10 going up to 20 trillion dollar a year economy. There is a huge difference in deficit spending by the forces of big self interested government central planning people like Obama and just opening that borrowing window to everyone in a democratic country the way i suggest they should have done to avert what was an unnecessary recession. It is not free money when a company or individual can defer paying taxes one or more yearswith that liability not accruing interest or just a very low nominal rate of interest like bank accounts are earning now at par. FDR had his banking holidays and that was a disaster because holidays are over at some point and what is bad going in is bad coming out. The government should have gone in debt to tax payers and should have allowed 401 k plans and IRAs to defer having to cash out minimum distributions when the stock markers tanked. John mcCain figured it out but Paulson and Bush and Bernanke were lost in space. A tax holiday would have grown the government debt but it would not have unfairly put tarp and later the obama stimulus in the hands of select people but would have rather allowed the crisis to evaporate instead of turn into a recession. Obama still goes on and on about how he averted the next great depression. There is no evidence of that. It seems TARP did a lot more than his stimulus. It is not at all clear that what happened with GM and Chrysler clears up their problems with pending pensions and health care plans due to retired and future retiring workers. This is actually the second time Chrysler failed and was bailed out and GM almost had to be bailed out once before around the same time period. Going back to the point where the federal reserve just let interest rates go down as much as they did in the first place to create the real estate bubble I was watching in disbelief and like everyone else i got used to it. Where I live the whole coast for second houses sold out when interest rates were something like 5% and people were buying them with adjustable rate mortgages. I feared banks would get in trouble if they were not selling the mortgages to fannie mae and freddie mac as they should have been doing to stay safe. It came as a surprise to find out they got greedy in the boom like so many others.. There was a problem but it was an engineered crisis that was designed to get out of control and sweep obama and his party into power which is exactly what happened. It was a great opportunity to take advantage of people selling in panic and loading up with worthless cash and government securities. I tried to tell people about what was real and what was a collective fantasy but few would listen. What is really cheap out there I theoretically want to buy all for myself as do the best market operators and not advertise the opportunity and when i want to sell out I really want the buyer to want what i have to sell out of at the highest possible price so I say you buy these magic beans, give me the cow and when you plant the beans they will grow to the sky and you will have giants and geese that lay solid gold eggs.
Infinite Lex Web
"The" very original.
is an excellent aquistion prospect for a company like Google. I also believe that Value Line is a google fit.
Aug 3, 2012
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