tomc368

Freddie and Fannie: The Case Against Hybrids

What is lost in all the discussion is the role that the unregulated and non-transparent hedge funds played in the demise of the stocks of these entities and, consequently, their severally injured ability to raise additional capital so they could solve their own problems. The elimination of the 'uptick' rule and the vast ballooning of naked shorting since then has contributed more to their problems than the any other thing.

Which Solar Stocks Will Continue To Shine?

When this was written YGE was at 23. It is now at 19. It is trading at less than 6x2008 and 1,5x2009 earnings. It is now the best buy in solar, a very compeling story. Also it is building a new manufacturing facility with the someone else's money. Very undervalued. Check it out.

How Much Can We Blame the Uptick Rule?

Short selling creates an increase in volatility because it undercuts the supply side of the equation by increase the amount of sellers. This lowers the price and reduces the demand as the price drops. If the short sellers are in knowledge of margin loans on the stock, then they can keep dumping stock onto the market until the margin call is triggered, generating more supply and allowing the them to leave their positions cheaply.

The very essence of short selling goes against all principals of any market. In an apple market, have you ever seen a grocer sell 100 apples to someone and he didn't have the apples to give? Maybe he can borrow the apples from someone else to sell? Well if he can, he damn well better deliver those apples upon sale. Maybe he can borrow the apples from someone else who does not even know that he is borrowing the apples from him! (aka stealing).

Shorting on downtick would be OK if you had to borrow the shares to do it. The problem is naked shorting on the downtick where you don’t have to borrow shares first. Guess if you have the financial backing of hedge funds it is OK. They can throw massive amounts of naked shorts on a stock, and cover shorts along the way. End of day, they have covered their short position and laugh all the way to the bank.

The theory of the short sale is acceptable. The problem is that the theory and fact are not the same. The locate and settlement processes do not work and are not controllable. The theory of short action is to offest long action. The problem is the current system allows shorts more time and leeway than longs so the process is unbalanced. It is not the theory of shorting that is the problem, it is the locate and settlement proccedures that are the problem. The shorts and longs are not equal as the theory would have us believe. Naked short selling is being done all of the time and it is unfettered. Hedge funds with loads of money can throw it at a stock and overwhelm the longs. They can affect their play and settle before it can ever be noticed a naked short sale took place. Until you can get fact and theory to be the same, short sales will be a problem to the stability of the market. I only wish more people would speak out on the issue. Since most people do not short, they are not aware of the problems or how they are being affected by them.

Home Prices Fall 11.4% in January: A Chance to Hit Bottom?

Though the situation can be involved, there are 2 important issues we need to rememeber. The number of households is increasing every year so the demand for houses will continue to rise. Currently there are a number of potential buyers sitting on the sidelines waiting for the "bottom" before jumping in, but they will eventually jump in. The demand for housing may have temporarily subsided, creating a glut, but it hasn't abated. Also, those that are losing their home thru foreclosure will still need a place to live and will become renters...from somebody. Secondly, every material and commodity used in building new homes, including labor, has gone up. In addition, farmers are now making a profit from farming their land so they will charge more to developers to sell that land for new housing. Once the "glut" of new homes has dissipated, builders will refuse to bring any new homes to market until they can make a profit in doing so, therefore the replacement cost of new housing will increase to profitable levels....and ultimately, the cost of used housing is influenced by the cost of new housing. Our free market society and the laws of supply and demand will drive the housing market if we can get thru this temporary crisis; and solve the problems of the people who need, and want, to refinance their homes but cannot get the appraisal values to justify the loan amounts they need. Maybe if the government would guarentee the mortgage companies the difference between the appraisal value and the refinance value, people could afford to refiance and would want to avoid foreclosure. Then everyone is a winner.

Working Off Excess Housing Inventory

Though the situation can be involved, there are 2 important issues we need to rememeber. The number of households is increasing every year so the demand for houses will continue to rise. Currently there are a number of potential buyers sitting on the sidelines waiting for the "bottom" before jumping in, but they will eventually jump in. The demand for housing may have temporarily subsided, creating a glut, but it hasn't abated. Also, those that are losing their home thru foreclosure will still need a place to live and will become renters...from somebody. Secondly, every material and commodity used in building new homes, including labor, has gone up. In addition, farmers are now making a profit from farming their land so they will charge more to developers to sell that land for new housing. Once the "glut" of new homes has dissipated, builders will refuse to bring any new homes to market until they can make a profit in doing so, therefore the replacement cost of new housing will increase to profitable levels....and ultimately, the cost of used housing is influenced by the cost of new housing. Our free market society and the laws of supply and demand will drive the housing market if we can get thru this temporary crisis; and solve the problems of the people who need, and want, to refinance their homes but cannot get the appraisal values to justify the loan amounts they need. Maybe if the government would guarentee the mortgage companies the difference between the appraisal value and the refinance value, people could afford to refiance and would want to avoid foreclosure. Then everyone is a winner.

Allis-Chalmers Post Earnings Analysis

Allis Chalmers has been hammered far more than the news justifies. I agree with the writer of this article that ALY is a buy at these levels. It is in a good sector and has some great upside with the revenue increases it has been able to generate. The issues that caused it to under report profits are one time issues and shouldn't re-occur going forward.