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  • Natural Gas ETF: Nowhere to Go but Up, Yet It Keeps Going Down [View article]
    Fantastic Post.

    But Natural Gas Isn't Oil. It's not as much directly effected by the rise and fall of the US Dollar as the supply and demand is domestic. Of course, if people have less to spend and less accessibility to borrowed money, they may not have as much discretionary and non-discretionary income; but I'd argue that the price people will pay to heat their home in winter will not decline at the pace of deflation - if that is the eventual macro-economic result.

    Lastly, deflationary forces would have to knock down the price of drilling by 50% before most drillers would be able to operate on any margin at all. This winter will find extractions down, with consumption likely to be up as prices are low. The eventual result could be a price spike with production stuck and demand fixed.

    On Jul 10 08:03 PM Did U Think The Ponzi Scheme Would Last? wrote:

    > Any of you guys ever hear about this thing called deflation that's
    > going around? If not, time to read up on Prechter who predicted
    > this would all happen well in advance. The money supply is the monetary
    > base that we all hear about the fed debasing but it is also credit
    > (and its brother, debt) that the fed HAS NOTHING TO DO WITH AND NO
    > Are you listening? The debt that the banks have been allowed to
    > push into the money supply has inflated it FAR more than the fed
    > could ever hope to. And now that debt is going bad. When the debt
    > is written off, the money supply shrinks. Period. The fed has no
    > control over it because the debt is a couple orders of magnitude
    > larger than what the fed can print up.
    > Some people think the fed can just print forever. China, apparently,
    > does not agree. They made it clear to Geithner recently that he would
    > not be allowed to do this without interest rates skyrocketing. If
    > that is allowed to happen, home sales will plummet and housing prices
    > will follow them down. This will trash the banks who are trying
    > to hold the debt associated with overpriced homes on their books
    > as if it will some day return to 2006 valuations. If interest rates
    > go to 10% or more, home prices could see 1985 values.
    > It's a catch 22 and the result is deflation. The fed is caught between
    > a rock and a hard case (China). Commodities have rolled over for
    > the next wave down.
    Jul 11, 2009. 03:02 AM | Likes Like |Link to Comment
  • Book Review: The House of Dimon, by Patricia Crisafulli [View article]
    I find this article chafes my spirit rather uncomfortably.

    All you have to do is look at JP Morgan's Balance Sheet. With a (miraculously rising?) current ratio of 1.08 and an indiscernible mix of debt, I don't trust Dimon and Co. at all.

    The next wave of credit problems is coming, and without the consistent and directed strategical planning of our money masters, JPM wouldn't survive the next wave - Along with every other highly leveraged megabank.
    Jul 11, 2009. 02:50 AM | 4 Likes Like |Link to Comment
  • Google's Eric Schmidt on the New World [View article]
    How about government not funding both "real innovation" AND ALSO not funding broken "traditional businesses". How about reverting back to nature's primal law; competition.

    It's not fair to anybody if the government helps fix an economic result.
    Jul 3, 2009. 09:18 PM | Likes Like |Link to Comment
  • No Bailout for the Governator: California's 'Fiscal Emergency' [View article]

    How do you run a state into the ground. It's basically a business which earns money for simply setting up shop and forcing you to pay them for doing nothing; for adding to absolutely no value. It's 100% pure profit.

    The only obligation is to redistribute the money inefficiently.

    It's a tough job, but somebody has got to do it.
    Jul 2, 2009. 03:20 PM | 3 Likes Like |Link to Comment
  • No Bailout for the Governator: California's 'Fiscal Emergency' [View article]
    Concept Wizard,

    California could put 128 billion in the bank if that was how much they were cash flowing each year.

    Problem is that they have expenses; teachers to pay, police to pay, health care costs, government programs, state welfare, debt to service etc.

    No business or state banks all its revenue. I think this goes without saying.
    Jul 2, 2009. 03:17 PM | 4 Likes Like |Link to Comment
  • Chart of the Day: Household Equity [View article]
    Although Felix Salmon tends to analyze the data fairly, the original creator of the chart, "WcW", appears to have implied that the homeowner's equity/National GDP (HE/GDP) returning to historically moderate numbers means housing demand will stabilize in the near to moderate term.

    The main message I take from the above visual is that superfluous savings got locked into homes, leaving many to tap their housing equity in order to have cash for their daily living expenses. Said from another angle, too many people bought too much home for too much and that is likely to be corrected by an inversion of the HE/GDP recent highs to the downside.
    Jun 9, 2009. 09:30 AM | 5 Likes Like |Link to Comment
  • Buffett Gets 'Comeuppance' After Gold Outperforms [View article]
    I worry about Gold when it appears historically overvalued vs. other commodities like Natural Gas and Agriculture.

    Although I'd be scared shitless shorting gold in the near term, I feel much more secure holding UNG or DBA than GLD.

    BTW, Natural gas just doubled bottomed on ridiculous volume.
    Jun 7, 2009. 05:16 AM | Likes Like |Link to Comment
  • Schadenfreude: Finally, Countrywide's CEO Getting What He Deserves [View article]
    Understanding these oft-neglected signals are what make the traders exceedingly wealthy.
    Jun 7, 2009. 05:01 AM | Likes Like |Link to Comment
  • Schadenfreude: Finally, Countrywide's CEO Getting What He Deserves [View article]
    Classic body language when a human being is clearly lying is the ol' finger over the mouth/nose.

    Check out what is being said and and the motion of Mozilo's hand in that video at the 7:22 mark on the embedded video above.
    Jun 7, 2009. 05:00 AM | 1 Like Like |Link to Comment
  • As the Dollar Continues to Collapse, Where Will You Put Your Money? [View article]
    I am not suggesting anybody do this, but if society brakes down via a dollar debacle or some other scenario; there will be nothing stopping you from growing some nice herb for you and your terrified friends and relatives. If you want, you could even exploit your ability to grow such herb by selling it, pocketing whatever people decide to exchange as a unit of currency.

    I don't think that is going to happen - but I don't think the people I know are ready for a man vs. man, woman vs. woman, man vs. child etc. internal warring for an extended period of time. Even if I have to eat the grass in my yard, I probably won't shoot my neighbor for his pinto beans he's been storing in the basement.
    May 25, 2009. 01:21 PM | 8 Likes Like |Link to Comment
  • The Bears' Skepticism Is Getting Old [View article]

    While it's impossible to argue against the idea that the masses opinion of the safety of equities is a strong negative indicator, I don't believe the seekingalpha community is representative of the average investor. Most people in this community actively follow the newscycle, and have healthy skepticism about whatever they hear on CNBC. Moreover, a significant amount of the posters here have some skill in doing their own research and due diligence.

    There are plenty of reasons to be bearish. The most significant one is that bear markets don't end at 22x projected year-end earnings. That's where we stand right now. A double from here would be valuing companies in a time of suspect growth at Internet Bubble PE's of 44x 2009 earnings! If valuations are halved from here because of the continued drag on earnings and the consequent weakness in investor sentiment, the market would be valued at a conservative, yet still fair, 11x 2009 earnings.

    I offer that as only one example of legitimate reasons to be prudently bearish. I also want to caution you to believe the seekingalpha community shares the same demographic as the CNBC Jim Cramerites who are much more reliable negative indicators.


    On May 17 12:28 PM InvestBaboo wrote:

    > This is very good. Almost all the comments here are bearish and many
    > extremely bearish in nature. By definition such overabundance of
    > bearish sentiment in the early stages of a bull market is good because
    > it helps sustain the rally and take the market to new heights.<br/>
    > As I have always said everytime I have tried to judge the direction
    > of the market based on my own anaysis I have been wrong. I just follow
    > the trend. We have had a negative week and yet the charts don't say
    > the trend has ended. If the trend does end I will jump ship and let
    > my bearish emotions come out in full swing and have a good cry with
    > all the bears. Meanwhile, I will finger those crispy currency notes
    > I have in my pocket thanks to the recent bull market which I benefited
    > from by just following the trend rather than sitting on the sidelines
    > like most bears shaking their heads in disbelief. Why people just
    > don't follow the market rather than sitting on the sidelines and
    > trying to second-guess is beyond me!
    May 17, 2009. 04:01 PM | 1 Like Like |Link to Comment
  • How Should We Improve Seeking Alpha's Comment Rating System? [View instapost]
    And we sometimes wonder why the tax code has to be so complicated! Look at how complicated properly structuring something as simple as a Seeking Alpha Commenter Reward System can be!

    I guess I'm not trying to say that our income taxes need to be as complicated as they are, but rather than it's best to find a simple, straightforward, user-friendly system than as "perfect" a system human minds can develop. At some logical point, there is a degree to which seeking perfection outweighs the benefits of a simple, yet slightly flawed system which everybody can understand.

    Personally, I feel that the current reward system could use a little fine-tuning. Perhaps a simple mathematical formula that combines Positive vs Negative Ratings as a percentage (which would reward quality posters who post less frequent but high-quality posts) and also as a sum total would work. The main point I'd like to emphasize though is err on the side of simplicity over erring on the side of complexity.

    May 15, 2009. 09:08 PM | 1 Like Like |Link to Comment
  • Dubai World sues MGM Mirage (MGM) to limit its exposure to the troubled $8.6B City Center project. Dubai World wants the court to free it from making future payments and meeting other obligations of its partnership deal. MGM -3.5% premarket.  [View news story]
    Whoever could have predicted building multi-billion dollar complexes to lure people from lush, beautiful countries into the middle of a glorified dust-bowl wouldn't work?
    Mar 24, 2009. 09:01 AM | 1 Like Like |Link to Comment
  • After today's 12%-or-so rally in bank stocks it may be time to unload, BofA analyst Richard Bernstein says. Soaking up toxic assets only delays the eventuality of consolidation, he says, and the government won't be able to prop-up sickly assets forever.  [View news story]
    I'm not sure if I agree with Bob Lobb that there are "tons of underpriced properties" available right now. It's hard to argue that any asset is priced too low when the unsold supply of that asset is reaching historic highs on a monthly basis.

    In a few months, after a few more housing inventory numbers come in, we may begin to postulate housing values may be bottoming. But for this theory to be viable in a few months, a steep drop in housing inventories MUST take place in the meantime. Even if that is to occur, remember that 2009 in the safest year for mortgage defaults as it is the year where subprime mortgage resets abate while Alt-A's and Option Adjustable Rate Mortages lurk in the shadows - the latter resetting in 2010 and 2011. If the USA is going to save itself from the subprime debacle, it will do it just in time to retrench for the next wave of housing specific weakness.

    To state that Geithner's plan is some kind of panacea, or to offer it as an argument that bank's will begin to reap in unencumbered profits because of this shows naivete, at best. Today's banking sector excitement is easily explained by modern man's propensity to stay enamored by fast moving, BlackBerry epitomizing, short-term thinking/gratification

    So although equities may very well be undervalued, as the housing inventory situation is very US specific, there is likely much more asset destruction and deflationary pressure ahead in the housing market, which should supress some sectors of the market - like those profiting of our ability to make our mortgage payments - ie the Banking Sector.
    Mar 24, 2009. 06:00 AM | 2 Likes Like |Link to Comment
  • Eclectica Asset Management's Hugh Hendry Is Wickedly Good: See for Yourself [View article]
    Its Hugh Hendry's certainty in his abilities which makes me cautious about heeding his advice. There are many places around the world who have been producing a lot and consuming very little of that. Betting in equities that will benefit from a rise in the producer nation's consumers would seem to be a very safe bet at a time when T-Bills and Savings Accounts offer almost no yield at all.

    The whole world won't stop consuming at the same time, because wealth and purchasing power is variable. One nation's currency depreciation is another's appreciation. Somewhere someone will be relatively better off than they were before in contrast to the global median, and unless the world's population goes on an ascetical binge all at the same time, there will be money to be made somewhere.

    Burying your money out of fear tends to be a self reinforcing feedback loop that is only going to be a profitable one if everybody agrees on it. And everybody right now seems to agree that this is, indeed, a time to bury -- from townies, to investment advisors, to Mayan prophecy interpretors of global doom.

    Hugh Hendry is bright, indeed, but he should be looking at the masses of common people around him who take the same position - albeit via more simplistic reasoning - and wonder if he's missing a clear negative indicator. Furthermore, his recommendation on gold should be taken with caution. The only demand driver for gold over the last year has been the ETF gold trading funds. Easy in, Easy Out.

    Pride comes before fall.
    Mar 22, 2009. 05:12 AM | Likes Like |Link to Comment