Abe Mishima

SunPower's Rose: How Important Is High Efficiency in PV?

I see several market tiers in my state (Hawaii). Consumers with money opt for Sunpower, sold here locally through Suntech, no relation to STP. SPWR is a US company, and many Hawaii residents are patriotic, buying the best the US has to offer. Home builders, on the other hand, may use modules sourced from China. The lower end the house is, the more likely the builders are to buy the cheapest part available. This is not good for Sunpower, although some builders do pay more to install Sunpower, banking on brand name recognition. Next, the utilities (namely Hawaiian Electric), should be a big buyer of panels in the next decade. Their decision process is secret, but life cycle costs will figure into their negotiations with suppliers. SPWR is best positioned from that perspective. (Note: many government installations only buy from a US manufacturer, for precisely that reason, and security). Last but not least is the end retail market, which will include Home Depot, Lowes, and Costco. This is the wild card, because a homeowner who can do it yourself, can make a vast difference in the marketplace. In every business, there are very few best of breed. Honda is the best (imho) for garden power equipment. People pay more for a Honda. Although dozens of manufacturers make lawn mowers, it is not a commodity product. Sunpower has to position itself as the best in its field, to distinguish itself from those who would commoditize the solar module field.

China's New Purchasing Powerhouse: Women

Shaun, we need more articles like this. Investment firms should commission a survey of Chinese female consumers, to determine if they prefer Tiffany to Fuqi, BMW to GM, etc. Guo Jingjing, Gong Li, etc., have always been an enigma to me. Much to be learned, and earned.

Thursday Outlook: Commodities, Global Markets

UNG hit an intraday 52-week low for the second time this year. It looks like a 3rd 52-week low will be made in the next week, and if a 4th one is made, then this ETF is history. In spite of this, the volume is there and traders are still buying. Don Dion is signaling DUMP, DUMP, DUMP, as though Mr. Smarty Pants is doing us a favor. I won't be dumb enough to go out on a limb and predict how this is going to resolve itself. A NAV that is 10-12% below share price is not going to curry favor, but what's the big deal? At the gambling table, you pay a premium to play the game. UNG's long term fate could be as follows. CFTC tells all commodity etf's to limit the number of contracts they can hold. The LP redeems some shares at NAV and the longs take a short term hit. UNG rewrites its charter to trade in short and long term ng positions. That one move could remove the overhead and volatility of month-to-month rollovers. Bingo, that's the reason to stay in the fund. Wishful thinking? Yes. But most investing is based on a certain degree of faith.

VIX / Futures: A Rare Situation

Let's hope the MSFT and AMZN earnings reports hose down the market. Art Cashin and many others have repeated the phrase about the train leaving the station. Money managers bought into the fear of being left behind.

My money bags are still sitting in the locker. SPWRA is getting away from me AH. Drats! Tomorrow, the high flyers in the Chinese ADR/ADP market should retrace. FUQI, TSL, BIDU. Good. The Q's need a breather. Fourteen straight up days. Mad Hedge, what are you looking to buy?

NPD Group cites a remarkable split in the PC market: For computers over $1,000, 91% of the spending goes to Apple (AAPL). That could be good news/bad news - despite COO Tim Cook saying Apple doesn't think it could make a good cheap computer, that's where the growth may be.

Only trouble with $1K personal computers is that there aren't very many of them. Thus, HPQ, DELL, etc., have ceded that market to Apple. Nevertheless, if you have a couple of grand to spare, the Apple products are a great buy. Sleek, reliable, and a great status symbol. I bought my Apples based on reason #2. And dual boot capability. That was the clincher. One day of lost trading and tens of thousands of dollars could evaporate. That is reason #4 or #5, since I can't count.

Today in Commodities: The Commodity Train Is Leaving the Station

David: NGAS is not an etf. "NGAS Resources, Inc., is an independent exploration and production company focused on unconventional natural gas plays in the eastern United States, principally in the southern portion of the Appalachian Basin."

Matt and others: End users of natural gas have been burned before. First, homeowners who switched to NG during the oil embargo, found themselves paying more for energy when heating oil prices fell. Electric companies are aware of the old swicheroo effect as well. Now the industry is trying to sucker in users with stories of massive new NG finds. Plentiful energy for 100 years. Be patriotic, buy natural gas! Yada, yada. We need a change of tack. Index your product to oil and coal, i.e., by BTU. Sign 10 year contracts, both assuring supply and competitive pricing. This is why people hate commodities. Buyers always have the feeling of being ripped off by the suppliers.

House Prices: Two Views

I know of Optimus Prime and Albert Einstein, and Optimized Prime, you are neither. It appears you are a renter, not a homeowner. Because, if you were an owner, it would be a contradiction to your narrow views.

1. You stated that rental rates reflect the true value of a property. B.S. Rents only apply to the rental market. Not all property is up for rent. Rents may reflect the utility value of a home, but not its desirability to a willing buyer.

2. People do not necessarily buy into your theory that property is primarily an "investment." It is not a stock. It is not a bond. I'd agree with your implicit assumption that houses are an impulse or emotional buy. The same, possibly, as fashion, jewelry, or art. People (hopefully) enjoy their homes. They may buy it as a status symbol. Or, for privacy. The reason does not matter, and it certainly does not have to be rational. If I choose to live on a Malibu or Diamond Head oceanfront property, what concern is it of yours? For the use and/or pleasure, the expense is worth it. Thirty years from now, when I pass away, I won't be worrying about the ten million I spent on a prime property. I won't say to myself -- I should have listened to OP and lived in a dump. For what? Don't live your life as a penny-pinching millionaire. If you have relatives who need your money, tell them to earn it, the hard way. Like I did.

3. The link you posted about 1 in 9 homes being vacant is misleading. "This unprecedented glut of vacant homes — one in nine homes across the USA, according to the Census Bureau — will change the real estate landscape for years." Nowhere in the article do you see this statement qualified. All homes or homes for sale? It makes a big difference.

4. The housing depression will end. Too bad, I know you don't want to hear the news.

finance.yahoo.com/news...=

It's a free country, and you're entitled to be anti-real estate. But don't deny the rest of us the right to be enamored of luxury homes, prime office buildings, and oceanfront property. I have had more fun in beautiful surroundings than I ever had in holding stock and option investments. Because, as long as you can make money, you can spend it. Both Bill Gates and Warren Buffett do not live in dumps. Why should they?

House Prices: Two Views

No one view is correct, whether that of Ritholtz or Wheaton. Those with skin in the game, either investment property or a home they need to sell, can tell you a thousand different stories based on the microcosmic market they happen to be in. What has always been true will always be true. The three most important things about a property are neighborhood, neighborhood, neighborhood. If you want to be in a good neighborhood, with a good school, you have to pay a premium over a comparable house elsewhere. Also, if you desire to live in a desirable climate, such as that in Hawaii, you have to pay the piper. Therefore, land has a value and a well-built house has value. Statistics, be damned. It is silly to compare houses as boxes of wood. As silly as comparing guitars that are made of wood. Savvy investors know what will sell a few years from now. They are diving into distressed properties, which they feel strongly they can flip for a profit.

www.msnbc.msn.com/id/3...

This is a great time to be a buyer, if you know the local market, and are a shrewd bargainer. If you are a seller, then you need to hold out if you think you can beat the odds (carrying costs vs. price appreciation). It takes guts of steel or a suicidal complex if housing prices are still eroding where you live. Big game. Real estate poker!

China's Stimulus Takes a Page out of Greenspan's Book

Glen, we have to blame the intellectual laziness of bankers, ratings firms, and wealthy investors who fueled the real estate craze. My own lack of due diligence (PhD and all) is something I'll have to live with for a long time. Greenspan may have knowingly contributed to the bubble, or possibly, he was just stupid. History has to decide that. Joe 6P was merely on the bottom grabbing bananas made available to him by the above. Joe was just a pawn in the game of life.

China's Stimulus Takes a Page out of Greenspan's Book

The bubbles in the US and Japan were promulgated by overpaid people with an false sense of wealth. Who were the overpaid? Real estate brokers acting like hogs, brokers pumping worthless stocks, tech workers with low productivity and exaggerated salaries, and high school graduates who thought they should be paid more than college grads. Now that the recession has forced people to look in the mirror and face the fact that they are replaceable/expendable in the grand scheme of things, the entire foundation of our consumer economy has been undermined. There are fewer fools to purchase that which is overpriced or unnecessary. China may crash eventually, but not like us. Hopefully the citizens still have a work ethic. In America, only the illegal Mexicans work their butt off. Until we get rid of the slacker mentality in our society, and the "something for nothing" attitude that afflicts our workers, this will not be our last bubble. Lazy is as lazy does. Every bubble is due to mental laziness. Think about it.

China: A Look at the Real Estate Picture

In the US, as a result of the great society program of LBJ, the government subsidized public housing, and hundreds of thousands of units were built. This could be the blueprint for China. As an incentive for low income families to work harder or increase their education/skill level, the government could be providing economic incentives to people to move into these buildings. A sense of ownership encourages the populace to accept steady work, make payments on mortgages, and spend money responsibly. Unlike the US, where public housing abetted welfare, China is probably writing contracts to evict deadbeats asap should the unit owner default on payments. Does this mean that China can avoid the bubble that has enveloped real estate in democratic nations? Sure. If the owners cause a bubble, there will be consequences, e.g., relocation to farms and "re-education" per Chairman Mao's cultural revolution. Where does China get the money to prime their real-estate market? Simple, use the trade surplus. The US dollar still buys plenty of useful items, such as construction equipment, building materials, etc.

Wednesday Outlook: Commodities, Global Markets

David, I look forward to your comments after an ugly extended trading session on July 2, where the traders kept taking down many stocks, including big oil, gas, and commodities. The fear of being long has seized investors again. IYR, an ETF I have been watching, got slapped on the face today. I just can't get myself to push the buy button on this one. As for EFA, if you just close your eyes and buy it, it will produce double digit gains by 2010. But that is just my intuition. Every good card player has to have a sense of intuition and timing. And be blessed with (lady) luck. POT was a rollercoaster on Thursdays. Where it stops, nobody knows.

The Whitney Ratings

The Whitney scorecard on Q1 EPS:

WFC est. 0.06 actual 0.56
BAC est. 0.04 actual 0.44
C est -1.14 actual -0.18
COF est -0.02 actual -0.45

Figures are from marketwatch.com. A dart-throwing monkey could make more accurate predictions.

How AIG FP Brought Down the World

The financial history of the late 20th and early 21st centuries will be analyzed thusly. We trusted the stability of our financial system to complex pieces of software, written by PhDs and Masters holders who had not one bit of common sense. They gave these programs to nitwits who had no idea of how to use them. The kind of people who brush off technicalities with statements like, "Don't bother me with the details." Imagine Homer Simpson at the helm of a control board in a nuclear power plant. Makes you shudder, doesn't it? It shouldn't. The software for controlling a nuclear power plant is idiot proof. CDO and CDS modeling software is not. To the extent the NRC regulates nuclear power, there should be a Department of Homeland Financial Security that controls the investment industry. What a shame the disaster had to happen!

California's Default Is Certain

Sewn has to do with sewing, Sown is what you do with seed. I hate to nitpick, but let's get the high school spelling out of the way. If it take $20 billion to save California, then I vote to use TARP money. Float CA a loan at 1% interest, and demand the money back in 5 years. If the government and residents of CA can't pay the loan back, then the Feds can increase the Federal income tax rate for CA citizens and companies by whatever it takes, to retrieve the money. Simple and sweet. Only hitch: wealthy residents will vote with their feet, and move to a lower taxed state.