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  • The Marginal Cost Of Gold/Silver Production (2012)  [View instapost]
    Nicely written article. I think in general, the author makes a very common and potentially fatal mistake. Those who are predisposed towards precious metals tend to focus on the all in costs of production to opine that Gold should trade at $1500 (or more) and Silver at $22 (or more). Their analyses of costs is well thought out but they make a mistake in assuming that market prices gravitate or tend towards all in costs or average costs. This is flawed thinking. Market prices historically gravitate towards marginal production costs. This is the reason why pure commodity business (like airlines) are lousy businesses to own for the long term.
    Whats more, Gold operations have rising marginal production costs as less efficient mines are brought online with rising prices. (And vice versa). As Gold drops and less efficient mines are closed, the marginal costs will decline.
    The more important (from an investor standpoint) marginal production cost of Gold is likely $650-$700. With this in mind we believe Gold's tendency is towards those numbers. Finally, we think Gold would not provide attractive risk/reward until its price drops below (well below) marginal production costs.
    Apr 21, 2014. 02:20 PM | Likes Like |Link to Comment
  • Why I'm Bullish on Homebuilders  [View article]
    I have to agree with you on this one. Nice post. Another beaten down inflation sensitive play is REITS (ICF). Obviously there is serious fundamental issues but those seem more than fully reflected in this ETF's price. What are your thoughts there?

    Herb Morgan
    Efficient Market Advisors, LLC
    Apr 7, 2009. 10:37 AM | 1 Like Like |Link to Comment
  • How to End the Credit Crisis  [View article]
    I subscribe more to Milton Friedman's philosophy on the trade deficit. A trade deficit is balanced by the investment surplus. In this case we are selling bonds at 2%. I don't see any hard evidence either that the US is not competitive at manufacturing.

    On Mar 30 11:45 AM Responsibility wrote:

    > Don't forget the trade deficit. The challenges in re-building and
    > reinforcing industries should be on high priorities. Incentives are
    > needed for other industries on scales as high as, if not more than,
    > those for the financial industry.
    Apr 3, 2009. 06:03 PM | Likes Like |Link to Comment
  • We're in Danger of Being Blinded by Market Bottom Predictions  [View article]
    Hmm, this one is good, very good. My view is that bottoms are made at the peak of pessimism. Conversely tops are made at the height of optimism. It's difficult though not impossible to imagine pessimism being greater than that of October 10, 2008. (The internal bottom). The fear that day was of financial system collapse. A severe recession is certainly less pessimistic than a financial system collapse leading to depression. Of course, political unrest would again raise the level of pessimism to a measure that perhaps aproach that of October 10.
    Mar 26, 2009. 11:12 AM | 4 Likes Like |Link to Comment
  • Today's Data: Are Economists Too Bearish?  [View article]
    Good post, thanks. I'd be interested for you to expand on your biotech thesis, perhaps in another post.
    Mar 26, 2009. 11:03 AM | Likes Like |Link to Comment
  • 'Painting the Tape' - Wednesday's Suspicious Trading Pattern  [View article]
    I'm thinking manipulating the price of one of the five most actively traded securities would be a bit of a challenge. We are talking about the SPY after all, not some podunk startup biotech with an early stage drug that has not a hint of chance to make it to market. Whether or not we retest the lows (October 10, Nov 21, March 6) is anybody's guess, but I don't think it has anything to do with trading in SPY.
    Mar 26, 2009. 10:57 AM | Likes Like |Link to Comment
  • Time to Buy the Homebuilders  [View article]
    Thank you all for your comments. I'm honored somebody reads my posts. I find buying when fundamentals are poor based on conviction they will ultimately improve has rewarded investors over and over again. In fact, the only way things get really cheap is for fundamentals to get very bad. I expect the homebuilders to rise substantially well in advance of significant improvement in their fortunes. Two to three years from now when business is booming, I will recommend exit from this trade. Finally, my skin is thick but still this site's value would impove if more participants would express their opposiving viewpoints in a more civil tone.
    Mar 26, 2009. 10:40 AM | Likes Like |Link to Comment
  • The NAR's Latest Housing Numbers: Cutting Through the Bull  [View article]
    Mr. Lee,

    Interesting interpretation of the data. I'm happy to take the other side of that trade. You may want to look deeper at the inventory data. The inventory rose 5.1% from January to February, however inventory is down 17% from its high of 4.575mm units in July.

    Herb W. Morgan
    Efficient Market Advisors, LLC

    Mar 25, 2009. 10:25 AM | 1 Like Like |Link to Comment
  • Geithner's Plan May Not Be So Bad  [View article]
    Thanks for a good post. I agree, that Krugman seems too bias and rigid ideaologically to be taken seriously here. There is no doubt the man is bright academically, but I'm unconvinced of his street credentials in this matter. The PPIF looks sound to me, but I have yet to talk one on one with folks in that space.
    Mar 23, 2009. 02:25 PM | 2 Likes Like |Link to Comment
  • Bowling Ball Bounce for Markets  [View article]
    Never too pedantic, thanks for the fine tuning!


    On Mar 20 01:01 PM THofler wrote:

    > Mr. Morgan,
    > Loved the article. But allowed me to be pedantic about one point.
    > Any good physical scientist will tell you that "negative feedback"
    > leads to stability, whereas "positive feedback" causes instability
    > and oscillations. The serious economists use the terms "procyclical"
    > and "countercyclical." The dumb procyclical effects we have built
    > into our financial system will generate both the booms and the busts.
    > The term you meant to use in the above piece is "procyclical feedback"
    > or maybe "adverse feedback." Thanks again for providing some wheat
    > to SA and not more chaff.
    Mar 20, 2009. 06:34 PM | Likes Like |Link to Comment
  • Bowling Ball Bounce for Markets  [View article]
    Thanks, I don't know what happened to the format but the article was submitted with tables. I'll check with SA editorial to see if there is a better way to keep the formatting next time.


    On Mar 20 06:17 PM betweenthenumbers wrote:

    > I greatly appreciate the tone of this article, that of a humble commentator
    > trying to present facts, regardless of the actual content. I'm not
    > so keen myself on the Fed's actions - they are literally the most
    > powerful organization in the world now, completely on tilt, trying
    > to make drastic interventionism the solution to all problems, and
    > growing their balance sheet to the size of France's GDP ($2.5T) in
    > 6 weeks...but I digress. I can respect his points, and like the way
    > they are presented (maybe some tables instead of data points in a
    > list).
    > I really liked the statement "...getting tired of the financial news
    > media selecting guests based on their ability to spew extreme and
    > absolute clairvoyance about the direction of markets." That shrill
    > screaming does nothing but prevent the measured discussion that is
    > necessary given the current circumstances. I would even end my months
    > long MSNBC boycott to watch a show if they would bring Mr. Morgan
    > on.
    Mar 20, 2009. 06:32 PM | Likes Like |Link to Comment
  • Why This Downturn Won't Be Like 1929  [View article]
    I really enjoyed this article! I am wondering your source on the following data: (I'd like to do some follow up work)

    "Because of that, even though we're seeing rising unemployment, foreclosures in these four states rose 46% over the past year while foreclosures in the remaining 46 states fell, in the aggregate, by 2%.

    (These statistics reflect foreclosure filings, default notices, auction sale notices, and bank repossessions."

    Herb Morgan

    Mar 9, 2009. 09:30 PM | Likes Like |Link to Comment
  • Shadow Banking System: Death from Nowhere  [View article]
    This is a well reasoned article. What is your opinion on the viability of TALF and its likely impact on restarting the issuance of ABS?
    Mar 3, 2009. 06:26 AM | 1 Like Like |Link to Comment
  • John Hussman: Lower Valuations Imply Higher Long-Term Returns  [View article]
    Very good post. Thank you.
    Feb 24, 2009. 12:41 PM | Likes Like |Link to Comment
  • Five Opportunities To Consider Amidst This Selloff  [View article]
    In structured finance, the word tranche (sometimes traunche) refers to......
    Aug 7, 2007. 12:11 AM | Likes Like |Link to Comment