Adam Pawling

Manufacturing Collapse Reminiscent of Great Depression's Beginning

Good article Edward. I'm glad someone is discussing the manufacturing report.

Data points between Krugman's and JP Morgan would be interesting to see: from 1940 to 1980. I'm wondering how manufacturing fared in the 70s oil shock.

I'd also be curious to see data on inventory levels. One point I'm optimistic on is inventories are being drastically slashed- unlike in 2000 when firms were slow to respond. Even a slight pickup in demand may give a good bounce to manufacturing if inventories are very low.

Stick with Covered Calls

Jeff,

Excellent writeup on covered calls. I see another benefit of the strategy you describe as being volatility affecting premiums- so risk profile of a covered call portfolio remains relatively stable against a backdrop of a whipsaw market. Stocks bounce around more but premiums increase to compensate.

I agree with Tom on LEAPS. LEAPS DITM, at around 50% of stock price can be a nice way to introduce a prudent level of leverage safely into a covered call strategy. The time decay involved is usually no worse than margin rates over the life of the position.

I find LEAPS on indexes (I.e. DIA, FXI, IWM) particularly compelling - often the same premium as conservative stocks such as what Tom mentioned but with no security risk.

15 Key Types of Bond ETFs: 2008 Review

Hey Steve,

check this link- I think you might see some ETFs that match what you are looking for.

finance.yahoo.com/etf/...


On Dec 23 10:05 AM SteveTN wrote:

> There is just not enough corporate bond ETFs available. I own the
> LQD which is a long-term ETF - I want to own an intermediate-term
> bond ETF. Sorry, none are available for sale. In the equity world,
> there are hundreds of ETFs for all categories, but not so in the
> bond area. Please iShare, ProShares, or whoever, let's have some
> more corporate bond ETFs!

The Reality of Government Spending and Money Supply

Govt. spending can be saluatory when its used to stimulate demand during a downturn (Kenynsian fiscal policy) or invest in PRODUCTIVE assets-say, infrastructure projects, like the highways mentioned in the article. On the other hand, if govt. spending is used for CONSUMPTION and not INVESTMENT then its nothing better than debasing the currency by printing money and sooner or later the chickens come home to roost- probably in the form of higher real inflation. It happened under Johnson and we felt it in the 70s/early 80s, and its happening again now. The way that the govt. will "recapture" its base money is by paying bondholders with dollar bills worth 50 cents several years from now.

Buffett Likes to Be Early; Don't Rush to Follow

Great article to put Buffett's buy orders in perspective. Buffett has a time frame for investing that is so long that even a market cycle is short for him. He'll watch a company for 10 or 20 years and then pile in when he sees the P/E look attractive for his expectations in the next 10 or 20 (i.e. his big ventures into Coke and American Express) . Its encouraging to hear he's buying but sticking a toe in the water at this stage is probably prudent for most of us, even if Warren is diving in the deep end of the pool.

Berkshire Hathaway's Derivative Play

Great write up- Its nice to see something on Buffett's activity in options, as he usually pooh-poohs them in his public statements. Although to interpret his activivty as speculation seems so out of character as to be unlikely.

Dave, have you seen any details on what the strike prices/indexes are for these puts? I would guess this is either a risk management move, generating cash for a big purchase, or a sign Buffett is changing tactics because he can't find anything compelling big enough to buy -something he complains about often.