Abe Mishima

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!

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.

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.

How We Could Let AIG Fail, Sort Of

Analyze the books? Are you loopy? CDS contracts are written in legal mumbo jumbo language which few auditors can understand. Even a Harvard MBA and JD major could not figure these out. When Humpty Dumpty and Rube Goldberg set up a wall of bailing wire and chewing gum, there was no wizard who could figure out how to deconstruct the wall. The swaps should be settled for 20 cents on the dollar, and let Uncle Sam take over the mortgage notes. With most of the mortgages hopefully in the USA, they'll be able to slap liens on the properties left and right.

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.

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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 Concerns, Crashing Currencies and the Future of Gold Purchases

Gold is as artificial as currency. Unlike paper money, gold is fairly illiquid. Want a demonstration? Put two kilotons up for sale on the open market, and see the price plummet to $500/oz. The author indicated that the retail demand fell when the price went above $750/oz. With extraction costs amounting to $400/oz, what is the impetus for increasing supply? If not for jewelry and electronic plating, what use does gold have? Gold bugs have got to stop being enamored by this shiny asset. In a Great Depression, gold is no more valuable than a loaf of bread. As a hard asset, the utility is less than land (another finite, tangible asset). With value so dependent on "perception", all that glitters is not goog.

The Whitney Ratings

Merideath has got her math wrong. Q1 earnings of WFC before any adjustments should exceed 10 cents/sh easily. That is my estimate. When WFC reduced its dividend, that left more margin for earnings growth in Q2. So why the sell rating?

China's Solar Stock Rally: Avoid Being Burned

Here is a short list of solar stocks that have at least doubled off their 52-wk lows: CSIQ, CSUN, ESLR, JASO, STP, TSL, and YGE. A number of stocks not on this list are also poised to cross the 2X milestone. LDK is doing fine, and so is SPWRB. Show me a blog writer who nailed these picks on the head. We should be listening to these authors, not the guru who wrote this article. Nice to be cautious every now and then, but any "expert" who missed SEVEN potential DOUBLES has got to be a blind bat.

Why I'm Exiting Financials

Bold move or a prudent one? Everyone who says they plan to kick the habit of trading volatile stocks, gets back in the game eventually. Whether directly investing in GS, WFC, BAC, C, FNM/FRE, or taking positons via FAS/FAZ, it's hard to stay away when there is money to be made. I'd like to get out of UYG, one of the most unproductive investments I hold. But the slightest hint of a rally keeps me in this dog. Human nature, I suppose. And the inability to right a wrong decision, made in the foggy past.

Going Green: Not as Easy as It Seems

Wasn't the time spread from early concept to realization almost as large as the gap between Arpanet and Internet? Anyway, the breakthroughs we need to get alternative energy on the same playing field as oil and gas are pretty daunting, and infrastructure is just one of many major hurdles. The important thing is not to give up. Take the first step, America. Electric cars, solar generation, wind power, whatever.

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.

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?

Why I'm Replacing Lennar for Meritage Home

The 5.5% rates will only apply to FICO 720 and higher borrowers. That's the lesson banks have learned from their near-death experience. They have religion, and it will take too many years for them to dip their toes into the subprime ocean. Possibly the subprime lake, but not the big waters. MTH is a good investment because of management. Their execs sound better on conference calls, more educated and aware of accounting and the economy. Whether this translates into actual profits remains to be seen. Trend trade in the meanwhile. Buy on any pullbacks to the 18's.

Bear Market Rally Getting Some Leadership?

If this is a new bull market, let's give credit where credit is due. John Roque was the second to call it. The first was who?