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  • How Much Will Elderly Austerity Affect Consumer Spending And The Economy [View article]
    Apr 28, 2013. 09:15 PM | Likes Like |Link to Comment
  • The Invidious 'Down Payment Requirement' Meme [View article]
    It may not be about default risk at all. Long rates are at government-forced artificially low levels. Maybe banks just don't want to end up long a bunch of low-interest rate loans when/if the lid finally blows. Their source of funds is generally of much shorter duration. Only the GSEs have an unlimited appetite to (have taxpayers) eat these losses.
    Apr 28, 2013. 08:49 PM | Likes Like |Link to Comment
  • This 'Cycle' Certainly Hasn't Been Super [View article]
    IT, while a lot of cash is being created by the Fed, it seems to be accumulating in the hands of entities that would rather invest it than consume it. Wouldn't you agree? Consumers have little pricing power w.r.t. wages. So, absent a government-sponsored feedback loop such as the ones driving higher ed, health care, and housing, it's unclear how prices for consumables could push higher. What's your thesis?
    Apr 15, 2013. 11:04 AM | Likes Like |Link to Comment
  • The 'Real' S&P 500 Index High [View article]
    How about benchmarking versus SF Bay Area real estate? Or would that be too depressing?
    Mar 31, 2013. 04:31 PM | Likes Like |Link to Comment
  • Warren Buffett And John Hussman On The Stock Market [View article]
    Well, I can't disagree that there's little room for improvement on profit margins. Still, the Fed seems hell bent on printing to cover the deficits while keeping interest rates at 0% - inflation be damned! The new money is, by and large, not ending up in Joe Sixpack's pocket. So it's hard to see a mechanism to ignite commodity inflation.

    From where I sit, the cash is ending up on corporate balance sheets or lining the pockets of well-heeled plutocrats and our political masters. Yes, these folks could buy up commodities and stockpile them (or buy futures), but...who would they ultimately sell to? Joe, who's still losing ground economically? My point is that ultimately, to make a profit in, say, oil futures, you'd have to turn the crude into gasoline and sell it to Joe, who can't pay. Since everyone knows this, finding a bigger fool may be difficult.

    This sets us up for a kind of tilted "inflation" in assets that are attractive to the moneyed set - high end houses, jewelry, cars, planes, boats, fine art, large tracts of land. What about corporations? They're not really in the market for that sort of bling. My speculation (for the past two years) is that they'll begin to feed on each other, buying out smaller companies, or even their own shares, as a way to use up the excess cash.

    Mar 26, 2013. 10:35 AM | 1 Like Like |Link to Comment
  • Warren Buffett And John Hussman On The Stock Market [View article]
    You mean those measures WERE predictive, don't you? The Feds money creation is completely unprecedented. Is there no amount of money they could print before you'd agree asset an asset price bubble was warranted?
    Mar 26, 2013. 12:01 AM | 2 Likes Like |Link to Comment
  • The Economy In The Plastic Bubble [View article]
    Another thought-provoking article. Re. Pompano's observation, I'll add this: home prices are set by marginal buyers and sellers. Example: here in the SF bay area, there must be 1000s of people who couldn't afford to buy the houses they're now living in on their current incomes. Every year a certain number of these people retire and leave the area, or pass on, and the homes are sold to the marginal buyers, who have lots of cash.

    The historic relationship between medians is interesting, but there are good reasons to think that the game has changed since the 1970s/1980s. The differential between wages earned by people with valuable skills and those whose skills must compete with those in low-wage countries has widened significantly. And, in some markets (e.g. here, Miami, New York, Vancouver) there's the added factor of wealthy foreign buyers.

    I think the main point you're making still stands up to this. Thanks for the article.
    Mar 22, 2013. 11:03 AM | 1 Like Like |Link to Comment
  • Millennials: The Next Push For A Long-Lasting Bull Market? [View article]
    I hope you're right. It's better to experience those bears when you're young. Experiencing the last 13 years of below-inflation returns from the markets after you've accumulated most of your retirement savings is a real bummer.
    Mar 13, 2013. 11:43 AM | Likes Like |Link to Comment
  • Some Useful Charts And Thoughts About Personal Investing [View article]
    Another terrific article.
    Mar 13, 2013. 11:26 AM | 1 Like Like |Link to Comment
  • Short But Sour [View article]
    A 2% real return seems a lot better than an expected -1% in bonds. Just sayin'
    Mar 12, 2013. 11:35 AM | 1 Like Like |Link to Comment
  • Limits On The 500-Pound Gorilla [View article]
    Thanks IT, I've long suspected this but it's good (if that's the right word) to see the actual analysis. I've tried making essentially the same point to the legions of Krugmanites I seem surrounded by, but they seem to think that because there's no inflation yet, all is well in the garden.
    Feb 11, 2013. 11:35 PM | Likes Like |Link to Comment
  • Learning The Wrong Lessons [View article]
    Well, cash seems even worse as an alternative, doesn't it? Estimates of sub-par equity returns, such as Hussman's, still put it at about 5% nominal over 10 years. That looks better than the 10-year. Hussman's waiting for a better entry point than current valuations - problem is, he's been waiting for some years now. He seems to think we're bound to have a large correction in valuations, at which point one will wish one had held cash to buy it. But it's also possible we'll just chum along with crummy risk-adjusted returns for years as the overvaluation is slowly unwound. To hold cash, you have to ascribe some sort of "opportunity value" to it - hard to quantify.
    Re. the 10-year, I think many buyers understand how poor an investment it is if held to maturity, but aren't necessarily trading them away either. Rather they are putting them by in the wine cellar to age for a while, then rolling them off with 5 years left on the clock. So long as ZIRP keeps the short end of the curve anchored at zero, they can expect a gain on their bonds even if nominal rates at the longer end rise somewhat. By my estimate they're adding about 100bp per year to their yield over a 5 year holding period, for about a 3% annual yield. Keeps working until it doesn't.
    Jan 23, 2013. 10:55 AM | Likes Like |Link to Comment
  • Greed Over Fear? [View article]
    Yes, it's the part about finding someone willing to take the other side of the trade I was worried about. What do I know that the seller (likely a pro) doesn't? The concern is that as people figure out that, really, Krugman et. al. haven't found a way to repeal the laws of supply and demand after all, prices spike as years of anticipated future inflation are priced in, leaving the potential buyer with poor prospects going forward, even if he/she is correct. Arguably this has already happened with gold and oil.
    Jan 21, 2013. 12:34 PM | Likes Like |Link to Comment
  • Greed Over Fear? [View article]
    IT, are the commodities markets large enough to handle the torrent of cash that will be looking for a new home if/when the bloom goes off the rose in the bond market? The equity market has size as one factor in its favor.
    Jan 19, 2013. 08:32 PM | Likes Like |Link to Comment
  • Who's Really Ignoring 47% Of Americans Today? [View article]
    I can't help thinking about what the democrats and the press would be saying about a republican president ruling by executive fiat, choosing which laws to enforce, using the machinery of government to punish political opponents, and bypassing congress' authority to control the purse strings. Think they'd just shrug it off because the hypothetical dictator was "just doing what he thought was best for the country".
    Jan 15, 2013. 12:56 AM | 2 Likes Like |Link to Comment