Fabien Hug

Schwab's Commission-Free ETFs: A Watershed Event

It good to have a new low cost opportunity. However, I doubt it will drastically change the industry. These non performing high load funds are still around even if you already much cheaper alternatives for some time now.

Has the Market Already Hit Its High for the Year?

Straight to the point. Too many people attach a morale value to the present conditions (read Mr. J. Grantham comments for the quarter) which, even if correct on a moral point of view, is irrelevant for investment decisions.

S&P500 Trend Line Support Broken: What's Next?

This market is "polluted" by government interventions, massive liquidity injections and guaranteed FED put option. You must look more at Washington than at the trend lines. Furthermore, I think that starting the trendline at March low gives a biased image. It was clearly an exceptional event and the trendline is too steep.

It's Good to Be Goldman: Part 64

Rotten to the core, but do they hire by any chance?

Stunning Facts About Public Sector Unions

In all fairness, home value assessments for tax purposes have been revised downward generously in CA. A house that sold for $ 1,1 mio in 2006 is now valued $ 765K for tax purposes.
This being said, prepare to vote with your feet. Running always beats democracy.

The Secret to the Banking Sector's Success

OK, the FED lends money at 0% to the banks. The banks buy Treasuries yielding 3 % from the FED. So far, so good, let's face it.
Those who didn't sell the market in a panic have almost been made whole. Others can refi on their mortgage at a great rate and, slowly but surely, banks' losses on assets are reduced by the profits made thanks to this little trick described above.
Now, why and how will this miracle end? Because it will end like the Chinese seller / lender virtuous circle ended. That's the questions we should ask ourselves.

Forecaster Gerald Celente: 'There Is No Economic Recovery'

I don't think a revolution is in the cards. Unless mothers see their children starving and even (look at Somalia). People don't like conflicts and hope for the best, until it's too late (look at Jewish people during WWII).

Whose Face Should Grace the $1 Million Bill?

Tim Iacono, for warning us.

U.S. Empire In Decline, Makes Way for China

Poor bloke. Tahiti is French and French women, they are something...


On Oct 25 10:35 AM Mad Hedge Fund Trader wrote:

> bdt The US is turning into Europe. Think high taxes, chronic high
> unemployment, more government involvement in everything, less innovation,
> and much lower growth, in exchange for a social safety net and better
> coffee. That is the message the markets told us by retreating to
> the 6,000 handle in March, levels not seen since 1996, and down 54%
> from the 2007 peak. Equity prices will shrink to multiples, in line
> with permanently lower long term growth rates of maybe 1%-2%, a shadow
> of the 5% rate seen for much of this decade. Hint: that’s a lot lower
> than here. Perhaps this is what mature economies are supposed to
> look like. If someone is holding a gun to your head and you must
> buy American stocks, only select names that get the bulk of their
> earnings from overseas. Microsoft (seekingalpha.com/symbo...),
> Intel (seekingalpha.com/symbo...), Oracle, (seekingalpha.com/symbo...),
> Cisco (seekingalpha.com/symbo...) all get 60%-70% of their
> profits from overseas, where up to 90% of the real economic growth
> will come from for the next decade. Commodity, agricultural companies,
> and their ETF’s also fit this picture. As for me, I think I’ll move
> to Tahiti and live off of coconuts and freshly speared fish, wearing
> only a loin cloth. Anything is better than becoming French.

How Apple's Market Share Will Propel Stock to $500, Part 1

Since I live in the US, I bought an Imac. It's a superb machine and I truly like it. Bit more expensive than a PC but well worth the difference imo (it runs Windows Office great). Back in Switzerland in January my mom wanted to buy her first PC with me teaching her. I told her get a Mac and you'll be running smoothly in 1 one day. The prices were crazy. Not worth it. The cheapest Mac laptop was selling for $1,400 vs $ 850 in the US! I don't understand how they can increase market share with such prices.

Scary Labor Market Chart of the Day

Innovation doesn't provide jobs or prosperity to the masses. Since 1990 we got PC revolution, Internet, mobile phones, Internet on mobile phones. Try to remember life before that. As a whole the US society is not in a better shape 20 years after. Only those who are able to originate innovation profit of it. I don't mean that innovation is bad, to the contrary, but it is not the solution.

Why the Home Buyer Tax Credit Is a Bad Idea

If they expend it to $ 15,000, all those who rushed to buy with a $ 8,000 tax credit are right away short with $ 7,000. That was a good deal. As Mr. Petrosky suggested, I'm waiting for a $ 25,000 tax credit before I buy, $ 100,000 would be too much. Let's not be greedy.

Real Cause of This Financial Crisis? Global Hunger for Savings Instruments

The point is well mentioned; we have a demographic problem. Few people stand behind the baby boomers in our Western societies.
That's the cause of the crisis, nothing else. If interest rates would be kept high, we would face a growth problem and there would be no savings to be fed with these high interest rates anyway. What should we do? Less growth, higher interest rates? That would profit the retired generation. Do they need it? Certainly, but they have the baby boomers to back them up for the moment (Soc Sec). Low interest rates, higher growth? That profits the workforce and the biggest demographic mass (it worked so far but the machine seems to be rusted). Is there a way to balance this out? Certainly, but that will involve a lot of politics and government interference so forget about for the moment. The solution for baby boomers? Profit from growth when you can and save. In Switzerland, the actuarial pension rate is 6.5% down from 7.5% earlier in the decade. This rate is an official rate that includes life expectancy and return on investment. It is used to compute the reserve level of pension funds. Many say that it's still too high (pension funds have real a problem to get returns that allow to reach this technical rate). What it means, is that if you have $ 1 mil in savings at retirement, you get $ 65,000/year in pension money. $ 1 mil is still a lot of money but $ 65,000 doesn't bring you far in a big US or European city. As far as I can see, baby boomers have nobody to cover their backs.

L.A. Commercial Real Estate: No Signs of Life

In West San Fernando Valley, they try to rent a 3+2 single story family house for $ 2.500, since July. Still empty. Houses are selling well (public schools are very good in this area) at about $ 700.000 for a 4+2 1/2 two stories family house. Two years ago you would have gotten the rental above for that price. I still think it's very expensive but a couple active in teaching can easily make about $ 180.000 a year in LA. They can afford that without problems.

How Galleon Got (and Lost) Its Edge

What is amazing in this story is the level that corruption has reached. You have very high paid executives at Intel, Mc. Kinsey and more who are involved in this pocket change business (for them). This is worrisome to say the least.