Vladimir Senkov

China: Exactly Where Japan Was in the 1980s?

Vitaly,
While I agree with several points you made and China is by no means "perfect", there are huge differences between China and Japan, so I have to disagree with your conclusions.

It's going to take a long time to compare China to Japan in any reasonable level of detail, but 50000ft view is:

Japan: imports substantially all commodities that it consumes.
China: has natural resources of its own

Japan: expensive labor
China: plenty of cheap labor

Japan: limited geographically
China: plenty of space to grow

Japan: limited militarily, must rely on the US to trade
China: has means to control seas and ports that it needs to control in order to trade

This Is Just the Beginning

Peter, for as long as I can remember, you were predicting "the crash". And I actually agreed with you, I was as sure as you were that the crash is going to come. What I didn't know and I believe neither did you, is exactly how bad the crash was going to be and exactly when it was going to happen.
I was assuming that the public generally disagreed with your views and invested in the market, so I was expecting your clients to outperform the average joe when this crisis you were predicting was finally beginning to unfold. I guess I was wrong.

What you say makes a lot of sense, but it doesn't have much predictive power.
I hereby predict two things:
1) "the market" will reach new highs
2) "the market" will crash to new lows
Both statements are true because i haven' told you how i define and measure "the market" and when 1 and/or 2 is going to happen.
However, neither statement has any predictive power.
The only real test of predictive power is long (as in forever) term return. IMHO, Buffet stands up to this test so far, but recent performance of some of your clients casts doubt on your ability to stand up to this test.
Although these recently publicized returns do not prove anything, neither do your attempts to rationalize them.

I guess for a money manager it's not nearly as important to be factually right as it is to be able to convince other people that you may be right, otherwise one would just manage his/her own money and not have any clients. I guess that's why so much energy and time is spent constantly debating if Peter is right and when and how it may be considered "proven" :)
This is where PR comes in. This imho explains that predictions need to be as bold as possible. No, it's not just a market crash, it's an Armageddon! Otherwise who would be interested, how would the celebrity status be obtained? Where will the new clients come from?
I believe some of your "predictions" are influenced by the this conflict of interest. Please correct me if I'm wrong.

The Final Hours of GM?

Larry,

is wall st. to blame for GM's inability to become a profitable and sustainable business?
even if what you say is true, and I don't care if it is or isn't, what does it have to do with the simple fact that GM wasn't able to be and remain profitable?
who's fault is that?
GM's management for sure.
UAW leadership - maybe.
wall st? give me a break.

On May 22 05:33 PM Larry M. wrote:

> To GM's Bond Holders
>
> Ya know ........ the Various Wall Street Investment Banks Ratings
> Agencies have been Waging a WAR (Agains) GM for Years. There have
> been Endless Lies about the Wage Levels of UAW Represented Employees
> and in general the Public has Believed those LIES put out by various
> Wall Street Banks. Even the UAW Represented Skilled Tradesmen at
> GM peaked out at around $30 an Hour. Even if you count the Benefits
> of Hourly Wage Earners a Top of the Line Skilled Tradesman earned
> at most $45 an hour and Non-Skilled earned less than that. What did
> Toyota Employees Earn per Hour. About $45 an hour. And so the Wall
> Street Investment Banks and their Ratings Agencies Lied and Lied
> and Lied and Lied. These Banks stood by their belief that "If you
> tell a Lie often enough and Long enough the Public will eventually
> Believe the Lie."
> Sooooooooo Bond Holders .... you have the Wall Street Investment
> Banks to Blame for the Demise of your Bond Losses. IF it had not
> been for 30 years of Lies from Wall Street there is a Good Chance
> that GM would Not be in this Bankruptcy Situation that it is Currently
> in.
>
> Put the BLAME where it Belongs. On Wall Street.

The Geithner Plan FAQ

I don't know why, but i'm shocked. How stupid do they think we are?
Well, I guess . . .

Perhaps I shouldn't be shocked at all.
Perhaps it should have been obvious that a GOOD hedge fund manager knows
how to do two things . . . how to leverage and how to be
"too big to fail".
What's the ideal way to do that?

Here is how I understood Geithner's Plan:
1) You come up with a little money of your own, or maybe not your own, the money you embezzled from your clients earlier or are in
the process of embezzling.
2) You make US Treasury your partner and yes, you get money from them
too. You have to. This is how you start getting too big to fail.
3) You take the resulting sum ("your money" + the US Treasury's money) and
leverage it about 6.66X using . . . hmm . . . FDIC. FDIC knows US
Treasury is good for it, so you get a free ride here. And by the way,
this leverage is free or almost free. You don't pay interest that anyone else would have to pay if they wanted this kind of a leverage for this kind of a risky and for this long a term (potentially indefinite). And yes, this is how
you get bigger than "too big to fail".
4) You take the most insane risks you can come up with. You are too
big to fail, after all. You are in the position to change any rules here! The f'ing treasury and the FDIC are in on it!

I think this plan puts Meriwether to shame.

Outspoken market strategist David Rosenberg laughs off the idea that Thursday's weak employment numbers were a one-off: "At no time in the 1990 or 2001 recessions did we ever come close to seeing such a detonating jobs figure, not even at the depths of those downturns, and yet we have a whole industry of ‘green shoot’ advocates today telling us that the recovery has already arrived."

Yoda,
I was with you almost 100% all the way untill you said "The markets have ...".
Market is trying to predict the future and so is everyone else. Everyone who pretends to have knowledge about what market has already discounted, what it still has to discount and where it will go from here, and what "magic levels" it has to "test" is looking increasingly silly these days.

There are many numbers and stats one could point to and argue that they have predictive power.
For example, I could argue that market moves are generally self re-enforcing and we had a significant move upward over the last few months, so we should expect that to continue unless some new information surfaces.
I don't think unemployment numbers are new information. I think we all heard officials warning that it will get worse before it gets better.
I could also argue that one should not fight the fed and should get with the program.

I'm glad you brought up Peter Schiff. In my opinion, he is a perfect example of an economist who analyzes well, comes up with conclusions that are mostly correct and then . . . still manages to lose money in the market :)

On Jul 03 05:01 PM Fighting Yoda wrote:

> David is on the money, he has been in the same leage as Meredith
> Whitney and Peter Schiff about this crisis:
> - diffusion index fell to 28.6 from 31, which means that nearly three-quarters
> of the corporate sector is still in the process of shedding jobs.
>
> - we should expect that the trauma exerted on household balance sheets
> will have triggered a long wave of attitudinal shifts toward consumer
> discretionary spending, homeownership and credit. The markets have
> a long way to go in terms of discounting that prospect.
>
> Yes the markets will fall a lot more highly likely to test the March
> lows

The Final Hours of GM?

they care about votes. that's why UAW gets 40% while bond holders get shafted and screamed at.

On May 22 04:18 PM Karen Consumer wrote:

> "Remember, it is the bondholders who are supposed to be paid first
> during a bankruptcy, they should have the right to protect their
> property given the fifth amendment right to due process under the
> law."
>
> You remember that, I remember that, but the administration doesn't
> care about that. But whom they do care about seems to be in doubt.
>

McClatchy's Greg Gordon goes to great lengths to document how Goldman Sachs (GS) peddled over $40B in new mortgage-backed securities even as it secretly placed bets on a collapse.

Sure let's hang them, what's the charge? Unethical hedging?
It is obvious today that financial well being of virtually everyone is dependent on US housing prices.
Wasn't it a good idea to hedge against those prices collapsing?
I think in this particular instance Goldman has demonstrated that risk management can actually work sometimes.

Yeah, I realize this comment will not be very popular and will probably bring plenty of "thumb downs", but grow up people! Goldman is well "connected" to say the least, is hated for that and it's fine.
But blaming them for hedging their bets? I think this is just too much BS.

"Anyone advising clients to 'buy the dip' based on sideline cash shows a fundamental lack of knowledge about how markets work," Mike 'Mish' Shedlock says, noting retail investors' "have to get in" attitude is nearing panic level. "Risk is not high," he says, "it is extreme."

Anyone who claims they can reliably time markets shows a fundamental lack of knowledge about how markets work.
This isn't specific to cheer leaders. It applies to fear mongers just as well.

I'm not sure exactly where "have to get in" attitude panic level measurement is coming from, but when I often flip through CNBC and Bloomberg while in the gym and I must say during the last 3 weeks I hear nothing but constant warnings from folks who believe the march lows are coming. This sounds like someone with a "have to get in" but at march prices :)

I guess liquidity has improved and all this "extra money" is looking to be invested into something, anything. It could be dangerous, but it could also be "just the beginning" of a new bubble that won't blow up for a while. Bailouts always lead to bubbles. Unless liquidity goes away I'm not sure why this would stop now. There will always be corrections but people will seek to get a better return than the money market. Did I mention that money markets are a little bit riskier also, now that there is no government backing? Some of that money might flow into the equity markets as well.

Intel announces it's wildly overvalued: Why would a company with $13B in cash file to sell $1B in shares at a discount to its current price?

en.wikipedia.org/wiki/...

The most likely possibility is that Intel anticipates that market conditions may improve in the next 2 years such that it will make sense to sell additional shares at that point of time. The price that Intel will sell those additional shares isn't determined at the moment and the shelf filing says nothing about the company thinking that the shares are overvalued or undervalued.
It is also not clear how the proceeds may be used. It could be for acquisitions or for anything else for that matter.

The article clearly makes several false claims:
1) States that the shares will be sold below current market value at a price that is determined now.
2) Draws incorrect conclusion from the filing and makes a shiny headline.

Basically an author just made a fool out of himself and should withdraw the article or issue a correction. It's great that we have freedom of speech in this country but I wish people would come out and apologize when they realized that they were speaking out of their A a little more often.
Otherwise it's a lot of "drive by shooting" in the media and the blog-o-sphere and you have to research every single thing everybody says before actually believing what they say. Makes a cynic like myself even more cynical, if that's even possible :)

On Mar 29 01:28 PM Ichsala wrote:

> Help me out here Vladimir - not following.

Paulson Throws Bernanke Under the Bus, Backs Ken Lewis

If Merrill was a large counter party to Goldman, I would suspect that Paulson would orchestrate the deal and strong arm Bank of America into buying Merrill so it would be able to make good on the trades and Goldman would win again.
Then, Paulson would set everything up such that everybody would blame the whole thing on some glasses wearing guy from the academia.
I'm not saying it's true or false as I don't know if Merrill was as large a counter party to Goldman as say AIG was.

China: Exactly Where Japan Was in the 1980s?

On Aug 23 10:23 PM Jolly_Rancher wrote:

> Yes, you hit the main points to contradict the article. But the main
> point to contradict your comment is that the Chinese government
> is not stable. They are creating a mess and therefore in for much
> pain, just not the kind of pain Japan is going through -- somewhat
> more intense short term pain.

Mess is a relative term. What happened in USSR when it attempted to transition from a planned economy (although not well planned) to a market one, that was a real mess and still is, btw. Chinese are doing much better, in my opinion.
You have to remember it's incredibly difficult to transition from a communist police state to an open society. It can't be done overnight, it will take a long time and it won't be done perfectly. And nobody can teach the Chinese how to do it. They'll have to do it on their own and then maybe they could teach others how to do it.

There is truth to what you are saying, but let's look at our own fiscal policies. China don't look all that crazy now does it?

Bank of America: A Risky Bet That May Be Worth It - Barron's

Rachael,
As long as banks keep doing stupid things there will be no point in making a long term investment into them.
As you mentioned, there is massive dilution coming, so buying common shares before that dilution is over with is very risky even in the short term.
One might be able to purchase some shares on speculation and sell them to the greater fool later. This is not much different from putting some money on red except it may make you feel as if you did "something intelligent".

11 Stocks Selling Below Cash

If you learn ONE THING from this crisis . . . please learn this:
excel junkies can not be trusted!
And by the way, I assume there is no fraud.

They will always tell you one thing: we are not subject matter experts, we are excel experts! Apparently they really believe that 6figure salaries are justified by that skill alone.
They also know how to copy&paste.

So when they tell you how much cash YCZ has per share, or any other company, please make sure you understand where they got the data they plugged into their excel "models".
when they tell you "from finance.yahoo.com" then HANG UP and stop wasting your time on them.
You know how much crap data is "out there on the internet"? a lot.
it is very difficult to get error free data. everybody is guilty. I once wrote to a person who worked at Forbes and asked him why he wrote that a certain fund paid a dividend of X% in his article. You know what he said? He said "because I got that from finance.yahoo.com. When i explained to him how wrong that data was he asked me if I WANTED him to post a correction.
I of course just wanted to know if I could trust data i got from Forbes articles. Now i knew that I couldn't. Forbes of course isn't alone. So when Moody's tells you that a certain pile of paper is AAA you MUST ask where the inputs came from. You'll be surprised! Or (I hope) maybe not so much.

So, whoever actually ANALYZED (by that i don't mean running bogus screener on bogus data) Yazhou Coal Mining, would you PLEASE come out and tell us where the data came from?
If you are silent I'm going to assume that it came from finance.yahoo.com and that you are also extremely proud of 1850% institutional ownership :))))

Investing in Natural Gas: It's Time

John,

I agree natural gas trades at a good risk/reward at the moment. One might even say that it's cheap. However, I wouldn't call FSYS cheap. At almost 14% premium, I wouldn't call UNG cheap either.
If situation around UNG gets resolved, it may very well drop 14% in one day. You may argue that it's insignificant because you already set your sights on making 50% in six months, but I think it would be a mistake to pay for a remote possibility of 50% in six months with almost certainty of losing 14% in the next few weeks.
Why not open a futures account and setup a position in nat gas futures instead of gambling with UNG?
Is "convenience" really worth 14%?
Or are you a believer in the efficient market hypothesis according to which paying 14% premium must be a good deal?
If so, please consider the efficient life hypothesis :)

Why Selling Your GM Stock Makes Sense, Even If Bankruptcy Is Averted

theoretically (and only theoretically) if obama puts 100B into new GM and new GM has no debt, it could have a market cap of 80B.
in reality, we all know that to end up with a million you have to start with two. so it will be more like 50B.
then you get the UAW strings attached and market cap goes straight to 1B.
stock is trading where it's at for a simple reason: pump and dump is going on. it's the usual penny stock game some people play.