Wisdom-Seeker's Comments RSS Syndication from SeekingAlpha.com http://seekingalpha.comuser/141470/comments http://seekingalpha.com/article/73045-dow-theory-revisited?source=feed#comment-154488 154488 ]]> Tue, 22 Apr 2008 01:44:02 -0400 ]]> http://seekingalpha.com/article/73124-better-off-now-than-5-years-ago?source=feed#comment-154485 154485 Tue, 22 Apr 2008 01:36:18 -0400 http://seekingalpha.com/article/72255-what-credit-crunch?source=feed#comment-150853 150853
My take on this is that consumers, reaching the end of their rope in the mortgage, HELOC and refi arenas (not part of this data set), grasped at as much credit as they could in the 3rd quarter and then ran out of room to borrow in the 4th quarter (remember, Christmas retail sales were awful).

My prediction is that you'll see the credit crunch show up in your data in the next 2 quarters.]]> Tue, 15 Apr 2008 00:22:48 -0400
My take on this is that consumers, reaching the end of their rope in the mortgage, HELOC and refi arenas (not part of this data set), grasped at as much credit as they could in the 3rd quarter and then ran out of room to borrow in the 4th quarter (remember, Christmas retail sales were awful).

My prediction is that you'll see the credit crunch show up in your data in the next 2 quarters.]]> http://seekingalpha.com/article/72091-the-great-television-price-inflation-scam?source=feed#comment-150168 150168
"We now present the Consumer Price Index for all items, excluding food, clothing, shelter and transportation..."

BUT - 10 seconds on Google shows me 32" CRT TVs for $350. Prices for same-tech items HAVE come down, somewhat.

I'm waiting for the hedonic CPI adjustment to cable TV: higher prices, and since there's nothing much worth watching on TV that you can't get by other means, there should be *LESS HEDONIC VALUE*. So, this should drive the CPI through the roof!]]> Mon, 14 Apr 2008 02:06:06 -0400
"We now present the Consumer Price Index for all items, excluding food, clothing, shelter and transportation..."

BUT - 10 seconds on Google shows me 32" CRT TVs for $350. Prices for same-tech items HAVE come down, somewhat.

I'm waiting for the hedonic CPI adjustment to cable TV: higher prices, and since there's nothing much worth watching on TV that you can't get by other means, there should be *LESS HEDONIC VALUE*. So, this should drive the CPI through the roof!]]> http://seekingalpha.com/article/72123-ge-s-earnings-miss-what-ever-happened-to-warning-investors-first?source=feed#comment-150166 150166
Why is it that everyone is focusing on the "lack of advance warning", and then on the "Bear Stearns connection"? Sure, maybe they could have met their guidance if they'd gotten the magic pixie dust on some key asset sales in March, but that's not why the earnings sucked.

The ACTUAL EARNINGS REPORT shows BROAD-BASED WEAKNESS across many of GE's lines of business! This is a recession-induced earnings miss, spread systemically across the company - not just a subprime / financial crisis-induced miss.]]> Mon, 14 Apr 2008 01:55:44 -0400
Why is it that everyone is focusing on the "lack of advance warning", and then on the "Bear Stearns connection"? Sure, maybe they could have met their guidance if they'd gotten the magic pixie dust on some key asset sales in March, but that's not why the earnings sucked.

The ACTUAL EARNINGS REPORT shows BROAD-BASED WEAKNESS across many of GE's lines of business! This is a recession-induced earnings miss, spread systemically across the company - not just a subprime / financial crisis-induced miss.]]> http://seekingalpha.com/article/71966-7-reasons-march-was-not-the-bottom?source=feed#comment-149284 149284 Fri, 11 Apr 2008 19:30:21 -0400 http://seekingalpha.com/article/71945-value-traps-and-market-bottoms?source=feed#comment-149265 149265
Your prediction about the earnings of XYZ will look a lot different if your macro forecast anticipates a recession with 5% less GDP than if you anticipate a growth period of 5% more GDP. Remember, net earnings are a derivative quantity - revenue minus expenses - and we can have a lot of GDP with zero net corporate earnings.

And don't forget the black swans that you can't anticipate at all!

That forward earnings analysis is the same analysis, with the same sorts of assumptions/forecasts, currently being used by those trying to call a bottom in the market. The only difference is the size of the business being analyzed. There are some things that get more complex at the macro level but also many that get simpler.

But either way, picking "good stocks at a cheap price" or picking "the index at a cheap price", you are bottom-picking. The only difference I see is that with individual companies you might get some benefits from simplicity (especially if you're Warren Buffett, but not if you're Bill Miller right now) and you also get the benefit of averaging over a lot of picks.

You might counter that you don't have to be exactly right, you just have to make some money over the long term. To which I'll counter that the bottom-pickers don't need to be right either, they just have to be in for the eventual recovery, to make moeny over the long term.]]> Fri, 11 Apr 2008 19:07:46 -0400
Your prediction about the earnings of XYZ will look a lot different if your macro forecast anticipates a recession with 5% less GDP than if you anticipate a growth period of 5% more GDP. Remember, net earnings are a derivative quantity - revenue minus expenses - and we can have a lot of GDP with zero net corporate earnings.

And don't forget the black swans that you can't anticipate at all!

That forward earnings analysis is the same analysis, with the same sorts of assumptions/forecasts, currently being used by those trying to call a bottom in the market. The only difference is the size of the business being analyzed. There are some things that get more complex at the macro level but also many that get simpler.

But either way, picking "good stocks at a cheap price" or picking "the index at a cheap price", you are bottom-picking. The only difference I see is that with individual companies you might get some benefits from simplicity (especially if you're Warren Buffett, but not if you're Bill Miller right now) and you also get the benefit of averaging over a lot of picks.

You might counter that you don't have to be exactly right, you just have to make some money over the long term. To which I'll counter that the bottom-pickers don't need to be right either, they just have to be in for the eventual recovery, to make moeny over the long term.]]> http://seekingalpha.com/article/71958-a-tale-of-two-coasts?source=feed#comment-149259 149259
Article should be retitled "tale of two cities", but oops, that was already taken 150 years ago.

Bigger question is, will New York really come out okay, or are they just going to be a late bloomer? ]]> Fri, 11 Apr 2008 18:50:35 -0400
Article should be retitled "tale of two cities", but oops, that was already taken 150 years ago.

Bigger question is, will New York really come out okay, or are they just going to be a late bloomer? ]]> http://seekingalpha.com/article/71110-brace-yourself-for-the-payrolls-number?source=feed#comment-136204 136204 Thu, 03 Apr 2008 17:42:46 -0400 http://seekingalpha.com/article/70944-my-way-or-the-highway?source=feed#comment-135699 135699
Private gain, socialized pain is grossly unfair and threatens both capitalism and democracy by encouraging moral hazard. The handout to save Bear Stearns may be only the beginning of a long slippery slope to higher taxes for all, fascism, or worse. Fight against it! www.financialpetition....]]> Wed, 02 Apr 2008 23:43:52 -0400
Private gain, socialized pain is grossly unfair and threatens both capitalism and democracy by encouraging moral hazard. The handout to save Bear Stearns may be only the beginning of a long slippery slope to higher taxes for all, fascism, or worse. Fight against it! www.financialpetition....]]> http://seekingalpha.com/article/70962-the-ben-is-my-friend-trade?source=feed#comment-135694 135694 Wed, 02 Apr 2008 23:30:27 -0400 http://seekingalpha.com/article/70910-chart-of-the-day-credit-equity-divergence?source=feed#comment-135466 135466
Plots of yield spreads from the 1929-1938 period show much wider divergences, with Treasury yields below 3% and investment-grade corporate yields above 6% for extended stretches.


]]> Wed, 02 Apr 2008 16:08:00 -0400
Plots of yield spreads from the 1929-1938 period show much wider divergences, with Treasury yields below 3% and investment-grade corporate yields above 6% for extended stretches.


]]> http://seekingalpha.com/article/70921-apple-s-iphone-shortage-is-probably-just-that?source=feed#comment-135463 135463 Wed, 02 Apr 2008 15:59:53 -0400 http://seekingalpha.com/article/70797-news-that-moved-tuesday-s-market?source=feed#comment-134869 134869
In other words, the U.S. Taxpayer is paying for any losses the Federal Reserve takes on the Bear Stearns "loan". Which is a no-recourse loan. So there's no reason for anyone to pay it back. That means the financial markets have just picked the taxpayer's pocket for a bailout of $100 for every man woman and child in the United States. And, this sets a whale of a precedent!

THE MARKET IS HAPPY BECAUSE THE TAXPAYERS ARE NOW ON THE HOOK FOR BAILING OUT THE BIG BAD BANKS. WOULDN'T YOU BE HAPPY IF YOU COULD KEEP ALL YOUR PROFITS, AND DUMP ALL YOUR HUGE LOSSES OFF ONTO THE TAXPAYERS?

By the way, this is blatantly unconstitutional - only the House of Representatives is allowed to decide Federal spending. Somehow Paulson and Bernanke and Bush have decided that they can spend taxpayer money "on the sly" as long as they make it look like a "loan".
This is IMPEACHABLE. But Congress needs a "spine transplant" from unhappy voters.

The citizens of this country should be ashamed of themselves if they don't protest this one. Or, if you'd like, just open up your wallet and send in your $100 checks. Per person. And be prepared to do it again and again as the dominos continue to fall...

Protest here: www.financialpetition....
Learn more here: market-ticker.denninge...]]> Tue, 01 Apr 2008 19:43:34 -0400
In other words, the U.S. Taxpayer is paying for any losses the Federal Reserve takes on the Bear Stearns "loan". Which is a no-recourse loan. So there's no reason for anyone to pay it back. That means the financial markets have just picked the taxpayer's pocket for a bailout of $100 for every man woman and child in the United States. And, this sets a whale of a precedent!

THE MARKET IS HAPPY BECAUSE THE TAXPAYERS ARE NOW ON THE HOOK FOR BAILING OUT THE BIG BAD BANKS. WOULDN'T YOU BE HAPPY IF YOU COULD KEEP ALL YOUR PROFITS, AND DUMP ALL YOUR HUGE LOSSES OFF ONTO THE TAXPAYERS?

By the way, this is blatantly unconstitutional - only the House of Representatives is allowed to decide Federal spending. Somehow Paulson and Bernanke and Bush have decided that they can spend taxpayer money "on the sly" as long as they make it look like a "loan".
This is IMPEACHABLE. But Congress needs a "spine transplant" from unhappy voters.

The citizens of this country should be ashamed of themselves if they don't protest this one. Or, if you'd like, just open up your wallet and send in your $100 checks. Per person. And be prepared to do it again and again as the dominos continue to fall...

Protest here: www.financialpetition....
Learn more here: market-ticker.denninge...]]> http://seekingalpha.com/article/70777-ism-manufacturing-index-rebounds?source=feed#comment-134862 134862
The graph shows a convincing trend of lower highs and lower lows: it's still going down.

]]> Tue, 01 Apr 2008 19:30:42 -0400
The graph shows a convincing trend of lower highs and lower lows: it's still going down.

]]> http://seekingalpha.com/article/70471-a-far-cry-from-hooverville?source=feed#comment-134288 134288 Mon, 31 Mar 2008 17:47:12 -0400 http://seekingalpha.com/article/70347-u-s-long-bonds-be-careful-we-re-in-injury-time?source=feed#comment-133487 133487
Although bond yields can't stay low forever, it's historical fact that the 10-year Treasury yield did stay very low, and I think didn't cross above 5% at all from about 1930 to about 1966). The stock market of course doesn't behave like that.

In any case, there's a significant probability of a deflationary scenario playing out (e.g. Great Depression, Japan 1990s, and plenty of other countries historically) in which case long bonds will do very well, while TIP will get crushed since the return will be exactly zero. Conversely, in an inflationary crisis, the long treasuries will get crushed (as in the 1970s) but TIP will lag since government will have strong incentives to continue to suppress the CPI readings, to avoid a medicare/social security death spiral. If you believe in inflation, equities or hard commodities could do better.]]> Sat, 29 Mar 2008 17:10:59 -0400
Although bond yields can't stay low forever, it's historical fact that the 10-year Treasury yield did stay very low, and I think didn't cross above 5% at all from about 1930 to about 1966). The stock market of course doesn't behave like that.

In any case, there's a significant probability of a deflationary scenario playing out (e.g. Great Depression, Japan 1990s, and plenty of other countries historically) in which case long bonds will do very well, while TIP will get crushed since the return will be exactly zero. Conversely, in an inflationary crisis, the long treasuries will get crushed (as in the 1970s) but TIP will lag since government will have strong incentives to continue to suppress the CPI readings, to avoid a medicare/social security death spiral. If you believe in inflation, equities or hard commodities could do better.]]> http://seekingalpha.com/article/70307-crises-averted-not-crises-solved?source=feed#comment-133482 133482
There's a petition circulating to get Congress to take a really close look at this deal. There will be hearings next week. Get your voice heard and help give the Senate a spine transplant! I'm not thrilled with the phrasing of the petition, but at least someone is doing something:

financialpetition.org/...

]]> Sat, 29 Mar 2008 16:45:57 -0400
There's a petition circulating to get Congress to take a really close look at this deal. There will be hearings next week. Get your voice heard and help give the Senate a spine transplant! I'm not thrilled with the phrasing of the petition, but at least someone is doing something:

financialpetition.org/...

]]> http://seekingalpha.com/article/70162-where-are-treasury-securities?source=feed#comment-132656 132656 Thu, 27 Mar 2008 17:34:58 -0400 http://seekingalpha.com/article/70134-thursday-outlook-commodities-emerging-markets?source=feed#comment-132638 132638 ]]> Thu, 27 Mar 2008 17:10:42 -0400 ]]> http://seekingalpha.com/article/70115-have-recent-crises-blown-a-hole-through-modern-financial-theory?source=feed#comment-132630 132630
But I think the prescription at the end is incorrect. Less important than building a more sophisticated academic-intellectual model is getting back to basics in the real world. The less information is needed to understand something, the more continuity of liquidity will be improved. What we need are simpler and more transparent real-world securities, so that (a) less information is required for buyers to establish pricing points, (b) it's harder to commit fraud because everyone can see what they're getting, and (c) it will be harder to lose investor confidence in the next panic. The current bubble was built on the antithesis of all three of these points, and the global investing community, having been burned badly in so many ways, is now holding Wall Street's feet to the fire until it gets what it wants. I suspect the first major financial company that "gets" this will have a huge competitive advantage for the next decade.]]> Thu, 27 Mar 2008 16:59:39 -0400
But I think the prescription at the end is incorrect. Less important than building a more sophisticated academic-intellectual model is getting back to basics in the real world. The less information is needed to understand something, the more continuity of liquidity will be improved. What we need are simpler and more transparent real-world securities, so that (a) less information is required for buyers to establish pricing points, (b) it's harder to commit fraud because everyone can see what they're getting, and (c) it will be harder to lose investor confidence in the next panic. The current bubble was built on the antithesis of all three of these points, and the global investing community, having been burned badly in so many ways, is now holding Wall Street's feet to the fire until it gets what it wants. I suspect the first major financial company that "gets" this will have a huge competitive advantage for the next decade.]]> http://seekingalpha.com/article/70117-updated-january-08-case-shiller-housing-data?source=feed#comment-132623 132623 Thu, 27 Mar 2008 16:43:51 -0400 http://seekingalpha.com/article/69050-mark-to-no-market?source=feed#comment-128554 128554
1) Rational Economic Actor: "Hmm, my home is declining in value. There's a recession on, and my job (and/or my spouse's job) is at risk. How am I gonna keep my house and provide for my kids if something bad happens? I better save more money and spend less."
Net Result: Amplification of Recession (short term) as there is less borrow-and-spend and more save-and-invest. But, if the "invest" part is done wisely, the economy grows again later.

2) Joe Six-Pack (no rich Grandpa): "Everything is more expensive! But I can't borrow any more against my house, and they won't give me any more credit cards, and I'm drowning in bills! Oh, no, I just lost my job too!" Result: either (a) default, foreclosure, and possibly homelessness, or (b) scrimp like mad and hope things get better before the Repo Men find you.

3) Grandpa Baby-Boomer: "This new home in Florida (Arizona, Las Vegas...) is great, but that mortgage is sure costing me, and damn, those life-sustaining medicines are expensive! Social security won't cover all this! And I sure don't get much out of my pension that got frozen in the 1990s. Ack, now my 401k fund is going down! I shouldn't have retired in (1997, 1998, 1999, 2000, 2001, 2002, 2003, 2004, 2005, 2006, 2007, 2008) with the market like this.... Crap, I can't even sell this damn House and get any money back! I gotta get a job! What do you mean, there aren't any jobs out there right now? I NEED A JOB!"

Bottom Line: "Mark-to-Market" on that declining home price is damn real (on the margins, where it matters), not "something no one's gonna notice". It means NO MORE SPARE CASH TO BURN. It means Credit Crunched Consumer Spending is Contracting...

This, by the way, is a vicious circle with a high risk of "lollapalooza" (Charlie Munger's term for nonlinear amplification) effects. The real question that the bulls should be asking is, what emerging fundamentals will break the vicious circle? (Unfortunately, the price of oil has to be pretty damn high before a home is worth more as firewood than as a home, so that's NOT gonna be the price floor on all that surplus housing...)]]> Tue, 18 Mar 2008 21:58:03 -0400
1) Rational Economic Actor: "Hmm, my home is declining in value. There's a recession on, and my job (and/or my spouse's job) is at risk. How am I gonna keep my house and provide for my kids if something bad happens? I better save more money and spend less."
Net Result: Amplification of Recession (short term) as there is less borrow-and-spend and more save-and-invest. But, if the "invest" part is done wisely, the economy grows again later.

2) Joe Six-Pack (no rich Grandpa): "Everything is more expensive! But I can't borrow any more against my house, and they won't give me any more credit cards, and I'm drowning in bills! Oh, no, I just lost my job too!" Result: either (a) default, foreclosure, and possibly homelessness, or (b) scrimp like mad and hope things get better before the Repo Men find you.

3) Grandpa Baby-Boomer: "This new home in Florida (Arizona, Las Vegas...) is great, but that mortgage is sure costing me, and damn, those life-sustaining medicines are expensive! Social security won't cover all this! And I sure don't get much out of my pension that got frozen in the 1990s. Ack, now my 401k fund is going down! I shouldn't have retired in (1997, 1998, 1999, 2000, 2001, 2002, 2003, 2004, 2005, 2006, 2007, 2008) with the market like this.... Crap, I can't even sell this damn House and get any money back! I gotta get a job! What do you mean, there aren't any jobs out there right now? I NEED A JOB!"

Bottom Line: "Mark-to-Market" on that declining home price is damn real (on the margins, where it matters), not "something no one's gonna notice". It means NO MORE SPARE CASH TO BURN. It means Credit Crunched Consumer Spending is Contracting...

This, by the way, is a vicious circle with a high risk of "lollapalooza" (Charlie Munger's term for nonlinear amplification) effects. The real question that the bulls should be asking is, what emerging fundamentals will break the vicious circle? (Unfortunately, the price of oil has to be pretty damn high before a home is worth more as firewood than as a home, so that's NOT gonna be the price floor on all that surplus housing...)]]> http://seekingalpha.com/article/68544-where-s-the-bottom?source=feed#comment-126530 126530
For instance, the Michigan and Ohio markets aren't getting clobbered because the homes are too expensive ($70,000 is a recent median home price in Youngstown Ohio!); they're getting clobbered because they're on the leading wave of the recession and people don't have jobs.
]]> Fri, 14 Mar 2008 11:56:55 -0400
For instance, the Michigan and Ohio markets aren't getting clobbered because the homes are too expensive ($70,000 is a recent median home price in Youngstown Ohio!); they're getting clobbered because they're on the leading wave of the recession and people don't have jobs.
]]> http://seekingalpha.com/article/68564-the-prius-conundrum?source=feed#comment-126520 126520
BTW, the same arguments FS made also apply for energy infrastructure (power plants, transmission lines...): there are cases where it's clearly in the public interest to go with a more expensive (short-term) option that has better long-term economics (and externals).

The trouble in all of these cases is that once the government gets involved, they don't stop, and then all sorts of unintended consequences pop up... (And one might say the same about the Fed these past couple of weeks!)]]> Fri, 14 Mar 2008 11:50:05 -0400
BTW, the same arguments FS made also apply for energy infrastructure (power plants, transmission lines...): there are cases where it's clearly in the public interest to go with a more expensive (short-term) option that has better long-term economics (and externals).

The trouble in all of these cases is that once the government gets involved, they don't stop, and then all sorts of unintended consequences pop up... (And one might say the same about the Fed these past couple of weeks!)]]> http://seekingalpha.com/article/68538-bloomberg-updated-consensus-estimates-weaker-than-expected?source=feed#comment-126326 126326 Fri, 14 Mar 2008 05:04:31 -0400 http://seekingalpha.com/article/68071-central-banks-in-panic-mode-announce-large-auction?source=feed#comment-125036 125036 Tue, 11 Mar 2008 09:54:39 -0400 http://seekingalpha.com/article/67420-the-10-largest-trading-losses-in-history?source=feed#comment-123181 123181
And that with 4 of the 10 cases occurring within the last 2 years, it's clear that the organizations still haven't learned how to tame their risks, despite the 6 big cases from the 1990s.

Which makes another reason to be fearful rather than greedy just now - with the market just a few ticks from having the bottom fall out again, the risk of another "rogue trading" scandal playing into a market panic is still there.

P.S. If you count up the 'non-rogue' derivatives trading losses, what do you get?? :) The lower tranches of all the securitized debt vehicles are essentially derivatives too. ]]> Thu, 06 Mar 2008 16:55:57 -0500
And that with 4 of the 10 cases occurring within the last 2 years, it's clear that the organizations still haven't learned how to tame their risks, despite the 6 big cases from the 1990s.

Which makes another reason to be fearful rather than greedy just now - with the market just a few ticks from having the bottom fall out again, the risk of another "rogue trading" scandal playing into a market panic is still there.

P.S. If you count up the 'non-rogue' derivatives trading losses, what do you get?? :) The lower tranches of all the securitized debt vehicles are essentially derivatives too. ]]> http://seekingalpha.com/article/67000-fun-with-numbers-dow-2-100-c-e?source=feed#comment-122239 122239 Wed, 05 Mar 2008 01:21:15 -0500 http://seekingalpha.com/article/66629-why-aren-t-housing-derivatives-more-popular?source=feed#comment-120984 120984 Sat, 01 Mar 2008 18:00:20 -0500