Afamiii

Sentiment Data Shows This Dip Is a Buying Opportunity

History shows that the no other stimulus package has been successful.

The argument being bandied about in 08 that this would be the exception because it is bigger and being applied faster has always been suspect.

The argument that will come up soon: Let have another one will be even more suspect.

I for one will be surprised if a credit induced bubble (in both asset prices and the general economy) that lasted over 24 quarter will be unwound in just seven quarters.

smartinvestorafrica.com

Why Crude Oil Traders Should Care About Wheat

Not sure why the article is against speculators, at the other end of every hedger (someone trying to reduce risk) there is a speculator (someone trying to assume more risk). Hedgers can't make a market on their own.

As for commodities being an asset class: At our farm here in Nigeria we used to (in my parents generation) store about a third to half of our harvest to eat and sell during the year. If we needed money or if prices went up we would increase our selling. There is no CPA who wouldn't book it as an asset? Whether or not it belongs to an 'asset class' I defer to the author. smartinvestorafrica.com

More than anyone else, Ben Bernanke saved the U.S. from a second Great Depression, Jim Cramer says. "Bernanke learned the lessons of history and refused to let it repeat itself. Bernanke once seemed Lilliputian compared to Greenspan. Now their statures have been reversed."

Judged as the politician he is, he has won this round, he postponed the crisis by flooding the system with cash and getting the tax payer pick up the tab.

Unfortunately, the other politician is creating a new crisis with a stimulus package that will not stimulate and will be a drag on growth. This stimulus package will mean tighter money in the future (if Bernanke cares about long term prosperity) or higher inflation (if he doesn't) or possibly both (if he's as incompetent as his predecessor.) smartinvestorafrica.com

Lessons from Benjamin Graham, Part 1

Deflation, inflation, hyperinflation, recession one thing I have learn't in life is that it is very difficult to predict the future. The 3 body problem and the whole of chaos theory and fractal algebra is sufficient proof for me that the complex interactions of more than 3 players cannot be predicted with any degree of certainty.

So if we must look to the future we are left only with probabilities and the probability is that over the next five years (and that is really the only practical time period to look at - whilst 10 years is the longest time period that has real meaning) there will be either inflation or deflation.

Which ever we have, I doubt if it will spare any asset class (definately not stocks, nor real estate, even bonds will be hurt by deflation as well as inflation) the real questions are which asset classes will be punished the least AND as an investor do I want to be focused on income or capital gains.

Funnily enough the answer to the investors dilema has not changed from what it would have been 24 months ago. Have a good balance between quality stocks, quality bonds, quality real estate and cash - bought at fair prices. And at the end of the day you will come out with most of your capital intact and if things don't get too bad with a reasonable gain.

In all labour there is profit (proverbs 14:23.)

It is not our investments that will make us rich they only sustain and multiply the wealth which emanates from our labour. smartinvestorafrica.co...

Lessons from Benjamin Graham, Part 1

This is perhaps the other reason that the customers (of Wall Street) don't have yachts.

On Mar 12 02:02 PM Afamiii wrote:

>
> In all labour there is profit (proverbs 14:23.)
>
> It is not our investments that will make us rich they only sustain
> and multiply the wealth which emanates from our labour. smartinvestorafrica.co...

General Electric: Genuine Risk of Collapse?

My first lesson (at any rate an early lesson) as a manager (at a Dow 30 company) went thus, "You've done very well this year, but don't expect every year to be this good, you need to put a bit away for a rainy day . . . investors don't really understand business, they expect profits to grow smoothly, but business is not like that, so you have to help them sleep well at night.'

Rightly or wrongly Jeff Imeldt is paying the price of keeping them awake.


On Nov 18 12:34 AM Osterix wrote:

> James: You convinced me. I am going to short GE. Why dont you short
>
> GE? According to the Disclosure, you have no position in GE. Why
> would you do all that research and then not act on it? It was particulary
> informative when you explained how GE manipulates reserves at the
> end of each quarter to hit its guidance. I thought I knew a lot but
> that was new to me. I bet GE is not the only one who pulls that stunt.
> What a bunch of suckers these analysts are who make a big deal out
> of corporate guidances. Just another Wall Street scam to fleece the
> suckers. I can see GE hitting 10 or below. Where is AIG right now?
>
>
> To gabe b.- How can you say GE is a "well diversified company?" In
> 2007 42% of its business was in lending and 30.7% was in infrastructure
> sales which is highly dependent on sales to developing countries
> which are highly unstable as a market. That is a total of 72.7% in
> just two business categories which currently have a very high level
> of risk. You either have an unusual definition of "diversified"...
> or a very subtle sense of humor that is beyond my comprehension.

Why Did Natural Gas Spike?

Everyone is looking out for the bottom, because no one wants to hit it. IMHO the bottom was touched during the first week of Sep, of course I tend to be wrong up to 50% of the time. But I am trading the belief that, that was the bottom.

Regardless, costs are sitting at +$6 and prices are hovering around that (for July deliveries.) Supply (though not yet inventory) is dropping. At some point supply will drop below demand and prices will higher.

Is this the rally that will take us there? Who knows? If it is we will profit, if its not then we will try again the next time.

Why Natural Gas ETF Has Resumed Its Climb

I'm yet to meet anyone who can consistently predict a market bottom. Even though, even I can predict it with hindsight.

What I can say with confidence is that Gas prices are currently below marginal cost for a majority of producers. And shutdowns will continue until prices are above $5.00 and by then there will be insufficient supply (whether or not their is an economic recovery, cold winter or hurricane Batty - of which nobody can accurately predict) at which point prices will over correct on the upside. When will this happen? Who knows, just keep your eyes on the market and you will know after it has happened.

New High Yield Bond ETF Available From Barclays

Visit the web site of the ETF issuer in the case of HYG it is ishares.com. Alternately there is also info available on finance.yahoo.com and google finance


On Apr 12 03:34 PM Bermuda Benny wrote:

> How do I find the yields on these new bond funds.

Jim Rogers Speaks Out - Where Is He Putting His Money?

My portfolio is currently 30% (i.e. overweight and some) in gold (GLD) and I was quite taken aback when I saw todays sell off (all of a months gains wiped out in a day.) I am now in the grip of fear, thinking about selling before I loose all my gains completly. But every grain of my fibre tells me that we are entering a period of stagnant growth and high inflation (70s revisited.) and that Gold should be a good investment. The thrill continues.

Options Trader: Monday Outlook

Markets will always missprice stocks, particularly at times of high fear or high greed. This is NOT a deficiency of the market.

Financials and real estate companies are at all times highly leveraged (and in this cycle even more highly leveraged than normal) such that small changes in asset value can deliver large changes in shareholder value.

The average investor (and I include large institutional investors), who might be following dozens of stocks, has very little real understanding of the value of these assets (by now it should be obvious that even the managers of the assets have less understanding of their value - certainly not within +/- 10%.) And therefore little understanding of the value of the company (certainly not within +/- 50%.)

So owners play safe and sell rather than risk permanent capital loss, whilst the average buyer also stays clear.

Giving room for the super investor who has superior knowledge and understanding of the asset to deploy (smart) capital and make a superior return.

For sure many financial institutions will not survive this cycle downturn and those (minority of) investors who do have superior understanding must be compensated for deploying capital (and expertise) in a high risk environment. smartinvestorafrica.co...

Diversification Can Be Everything

It takes for the tide to go out to see who's swimming naked. smartinvestorafrica.co...

Comfort Level with Procter & Gamble on the Rise

I've owned P&G since 1993 when I bought at 12, and I haven't looked back. It has delivered 11% compounded average appreciation + a nice dividend.

At the time I bought it I knew nothing about stocks, DCF, EV, EBITDA and certainly didn't value it. At the time it was 100% of my portfolio (I was a young man and didn't really understand the types of risks I should be taking.)

Though it's now less than 2% of my portfolio (and to be honest it doesn't offer the type of performance that I look for now) it's better than money in the bank and I expect it will be one of those that my children will inherit. smartinvestorafrica.co...

Consumption, Cacophony and Clarity

How did we get here?

Mismanagement and misfortune

The money supply has been increasing too rapidly for many years.

In normal times 'inflation' as defined by CPI would have increased and central planners would have had to tighten (either via interest rates or the reserve ratio.)

The misfortune (which was mistaken as fortune by people who should know better) is that CPI has remained low due to increased trade with low wage Asia. So tightening never happened. And the printing presses/credit engines rolled on.

And instead of the excess money going into CPI, it went into assets.

US Central Planners should have know better, they have economists (some of them are economists). Historically, there has been the debate amongst economists as to what inflation is. One camp defines inflation as increase in money supply faster than increase in goods and services and the too smart by far camp (and CNBC) defines it is the economy growing faster than natural capacity.

In hindsight it is obvious that more money was created but no more goods/services (other than those bought from asia) and the excess did not go into CPI but into asset prices (real estate and shares) and that the central planners were naïve in believing that it was not distorting resource allocation and that it did not matter.

So the first red flag (tightening labour markets) was removed, the second red flag (tightening asset markets i.e. soaring prices) was ignored, we are now having to deal with the next red flag (tightening natural resource markets), some would like to ignore this too and blame the speculators. Whilst they cheer lead Ben to keep printing?

So where is the US now?

It is certainly NOT collapsing, there are real people (with real skills, knowledge and experience) doing real work, utilising real capital to produce real goods and services.

All that is happening is that the economy is trying to purge the excesses (i.e. the fake people, doing fake work, selling things at fake prices, but getting real money) through a recession (recessions are as old as history, starting from Joseph the dream reader in Pharaoh’s time), they should not be feared and certainly not fought in the way that Bernanke and Greenspan have done, they are a time of belt tightening, and elimination of the excess (people and orgs who are not really contributing.)

They come as does winter and things are better in the spring.

What prevents the US (govn) doing the same (investing in the right things)?
A broken political system, which makes it difficult for leaders to make tough calls and take unpopular decisions. That is why politics really is the master science. smartinvestorafrica.co...

Consumption, Cacophony and Clarity

Invest in real stuff.

Commodities - Precious Metals, none precious metals, agricultural produce, timber, energy (uranium, oil, natural gas and King Coal.) Either directly (if you have skill) or by buying natural resource companies. Buy companies that have 'growing reserves' rather than depleting reserves.

Things that Americans make better than anyone else (and the chinese can't make) - technology - aircraft, machine tools, computer equip, hi tech electronic compenents.

Take a look at the US trade figures and focus on the industries where exports are rising.

Buy Asia and the middle east (the money is moving east.) Vietnam, China, India, etc.

Why
i) These economies are growing fast, they are raising productivity, making signficant business capital and infrastructure investment (25% of GDP) they have significant population.

They will i) consume more real stuff, ii) buy the stuff from America that they can't make themselves and iii) appreciate their currencies against the dollar as they get rich.

Energy (particularly nuclear,solar and wind), Technology, Asia, Agric, Metals and other real stuff.