Arnold

http://www.sherrent.info/AskArnie.php
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    • Thu Jul 3rd 06:45 AM | Rating: 0 0
      Commented on:
      A Mid-Year Look at 2008 Predictions
      Tim, just a bit of sarcasm:

      Headline: "McCain wins the Presidency in a landslide."

      When asked how McCain pulled off his win he responded, "Some years ago I took a course in hypnotism, specifically aimed at inducing a hypnotic state when making speeches.
      Few realize the lack of voice modulation when I peak is intentional; audiences were unkowingly under my spell. I injected subliminal messages and directives that very few were able to resist. My main message was the name Obama is synonymous to the smell of lindberger cheese; who really likes Lindberger chesses?"

      Regards,
      Arnie Sherr
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    • Tue Dec 25th 14:31 PM | Rating: 0 0
      Commented on:
      In a Storm, Both the Good and Bad Get Hit
      Accued Interest; I agree with your assessments and as you allude these challenges are new navigations. And it is well to project cautions for investees and investors alike. However, there is an element whose genre you seem to ignore; the consumers who are in fact, infectees of this potentially sinuos financial delemma.

      The challenge of predicting positive or negative fallout would be more accurate if a study of affected mortgagees were made apart of the equation. Since, at least in my lifetime, nothing similar of this magnitude has occured within the mortgage industry, forecasting without consideration of affected and potential foreclosuree's causes accuracy to be more ellusive, at best. Here's why!

      Of the many ramifications caused by this ARM catastrophy is the realignement of mortgage credit approval criterium. For one thing beacon scores have a new threshold of 850 as against the old of 750. Whereas and since this new 'top-line' had widened mortgage credit models a change due to the ARM anomaly has up'd the 'good finance rate requirement' of a 600 score to 700; the number of potential mortgage approvals shall be restricted accordingly. In addition to that new criterium, many are suffering credit degradation which added the former increases the potential for additional mortgage application rejections, many of which are submitted seeking fixed-rate mortgage rescue from recent and near future ARM interest rate excess-ions.

      As a stock holder (fortunately, I am not), I would be even more cautios and maybe even a bit nervous of the future health of vested interests.
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    • Thu Dec 20th 05:45 AM | Rating: 0 0
      Commented on:
      Buffett on the Dollar: 'Our Present Over-Consumption is Unsustainable'
      "Arnie Sherr responds bravely to Warren Buffet"
      I ask, who am I to dare?

      As reported within ‘Seeking Alpha’ <seekingalpha.com>; Posted: December 14, 2007

      Buffett on the Dollar: 'Our Present Over-Consumption is Unsustainable'
      By Shai Dardashti <dardashticapital.com&g...;

      Warren Buffett appeared at a fundraiser for Hillary Clinton in San Francisco Tuesday. Here are excerpts of personal notes from Nick Nejad:

      Q: Your views on the US Dollar?

      A: The most important question to ask in economics is "X happens, and then what?” We are living prosperously, but every day we are sending 2 Billion dollars overseas because we consume more than we purchase. It is similar to if we owned, say, a large farm in Texas. We are extremely wealthy, but every year we mortgage a little bit of that farm in order to enjoy more of the present. And it is gradual, but then at some point you have to spend an hour or maybe two hours a week of your work to go towards servicing this debt. The problem is at some point either foreign investors will stop financing our consumption, or our future generations will be burdened with debt and have to work some X hours towards servicing the debt of the earlier generation. But the present over-consumption is unsustainable.

      Arnie Sherr responds: It is ever so enlightening when one among the wealthiest says we are living prosperously. Mr. Buffett refers to “X” as if he personally is affected by same. If in fact Mr. Buffett even operates his own vehicle filling his gas tank causes him not a wince, I am sure. Irrefutable and altruistic requests for and approval of home heating oil, natural gas, and electricity delivery increases pass through his ‘overfilled with personal corporate relevancy mind’ leaves little room for notice let alone real concern. He speaks ingenuously of trade imbalance, as if only he is aware. He even analogizes same with a Texas farm example! He refers to “we” or should I say “us” as wealthy. I read from his use of “we” that he believes “we” are all members within his aura of wealth. He also predicts countries like China will shut off the loan flow. Perhaps he’s correct; correct of it all. Where was Warren Buffett while all of this was developing? My word, isn’t hindsight overrated?

      Q: Your views on new products such as derivatives, SIVs, etc.?

      A: There's utility in securitizations. But the problem is these have become complex and the originators and investors have been stretched so far in part in the whole process.

      A Quote: "If you can't make money off the things you do understand, how do you expect to make money off the things you don't?" Warren Buffett

      Arnie Sherr responds: Derivatives are merely knockoffs (counterfeits), ideas, terms, or items that evolve from things similar or original to. Whereas SIVs are merely Structured Investment Vehicles; funds which borrow money by issuing short-term securities at low interest and then lending that money by buying long-term securities at higher interest, making a profit for investors from the difference. SIVs are a type of structured credit product; they are usually from $1bn to $30bn in size and invest in a range of asset-backed securities, as well as some financial corporate bonds. An SIV has an open-ended (or evergreen) structure; it plans to stay in business indefinitely by buying new assets as the old ones mature, and the SIV manager is allowed to exchange investments without providing investors transparency / the ability to look through to the structure.

      There are two inherent risks thereof. First, the solvency of the SIV may be at risk if the value of the long term security that the SIV has bought falls below the short term securities that the SIV has sold. Second, there is a liquidity risk, as the SIV borrows short term and invests long term; i.e., out-payments become due before the in-payments are due. Unless the borrower can refinance short-term at favorable rates, he may be forced to sell the asset into a depressed market.

      Mr. Buffett speaks of securitizations as though they offer utility. For now, his assertion may have substance, but predictably certain securitizations (i.e., credit card lenders) are facing economic divertive; otherwise, financial challenges un-witnessed in the banking industry since the great depression.

      As for his quote; I am not naïve enough to believe those from years past did not understand the ramifications to be dealt with hence. They from years past are those “Cashocrats” who manifest themselves as elected agents of “We the People” who have pushed and continue to push their altruistically self serving and special interest agenda in spite of the certain risk that SIVs, banking, and utilities destine for those who shall be inheritors of their greed-laden initiatives to be dealt with long after they have departed here from.

      Q: On Taxes.

      A: In the U.S., 2 Trillion out of 2.5 Trillion in taxes come from income and payroll taxes. Of those, 60% is income taxes, and 40% is payroll taxes. I [Buffett] did a survey at Berkshire HQ and the average worker paid 33.2%. I paid 17.7%.

      The worth of the Forbes 400 was 220 Billion in 1987, and for 2007 it is 1.5 trillion; a seven-fold increase. During the same period, wages went up only 80%.

      Q: Sense for the future of our country, Warren?

      A: In the 20th century, real standard of living increased seven-fold. That was unprecedented, and included the Great Depression and other scares. The American system has unleashed the greatest potential of its citizens. Back in 1790, China had 290 million people, and America had 4 million. But today look where we are at. We will be better off in the future, the real question is how it will be shared.

      Arnie Sherr asks Mr. Buffett:

      Q. Where were you while all of the above was growing slowly into the monster anomaly it has become? Certainly, one whose successes have become iconic to onlookers must have in some ways either benefited from that of which you seem to easily dichotomize as both misunderstood securitizations and a prediction that “we” will be better–off in the future or your evidenced success was simply accidental. If you don’t mind, I’ll adhere to the former!
      To summarize: It pains me to reward of and/or listen to those supposed knowledgeable who inhabit the top 3.4% (those who earn greater than $200k per year according to a US Census Bureau 2006 American Community Survey S1901) and more accurately those at the top of the mega-wealth pyramid about conjecture after the fact when the real truth is that because of their own greediness they purposely remained silent. Only after all is exposed do they seek accolades for standing tall; bountiful with explanation as though they were in no way part of its evolution or conversely part of its prevention.

      If what you sense is anger then you are very perceptive; and I have allayed my feelings well.

      Some may analyze me as jealous; perhaps, but not of the wealth. That of which I may be perceived as jealous is the ever lessening opportunities for reaching and sustaining successes within the top 3.4% for me and looking to the future, my son, daughter and theirs to follow. Mr. Buffet refers to wage growth over a period not delineated within his reference; it is apparent, however that he is not referenced today or times recent. Factually, incomes have raised little in comparison to this nation’s soon to end economic growth. Many attest it has continually fallen short of the CPI which for the sake of this illustration is for this past year 4.21 percent. Over the past five years the CPI has never dipped below four percent and more likely was a bit above. Mortgage companies who presented altruistically ARM mortgages are examples of corporate inhumanity; but then it is well to understand that corporations are not human; they are entities that exist only for profit and growth regardless of their order of achievement. Human consideration no longer fits within global initiative. The “Cashocrats” that we have elected to look out for “We the People” have selfishly opted to yield to the bribes of “Special Interests” rather than to promote the principles on which the great land was founded.

      After reading this you to may feel some emotion, of sorts! Here’s hopin’?



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