rigel

15 Comments

    • ON: Fri Sep 5th 11:20 AM
      Commented on:
      Not Much Meat on Pilgrim's Pride's Bones
      I'd love to see some analysis on CALM, even if you are biased. Are people expecting a dividend cut?
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    • ON: Fri Aug 22nd 16:12 PM
      Commented on:
      Peak Theory, Applied To Inflation
      Chris B, have the credit markets not been "crashing" enough for you? Spreads have been monotonically increasing (though slowly, hence the quotes). Certainly there are companies you feel are going to survive? Why not park some of that money in corporate debt and earn a healthy interest rate?

      I'll answer that question for you: because you feel like waiting for prices to come down more. Is that accurate?

      Your desire to wait for a crash somewhere is a sign that you think asset prices are going to continue falling. That's a defining characteristic of deflationary times, not inflationary.
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    • ON: Fri Aug 22nd 14:52 PM
      Commented on:
      The Strange Case of Dr. GLD & Mr. Bullion
      otbricki, the problem is that there's nothing contrarian here. Just because there is a physical shortage of gold doesn't mean that the market is overly bullish on gold. From the information given, it could be that a very small portion of the market is bullish on gold. Given that the physical gold market is illiquid, shortages are bound to occur in even moderately bullish conditions, particularly if those holding the asset don't see a price worth entering the market for. The gold trade is quite dominated by GLD right now.

      I'm not making a bullish case for gold, but I am saying that you shouldn't read too much into a small (volume wise) and illiquid market. The headlines for gold are mixed, making a claim of a "contrarian" play simply a rationalization for a gamble. If you have other fundamental or technical reasons to be bearish on gold, that's fine, but let those be the justification for your trade. Here, I'll give you some reasons:

      Bearish: Dollar has been declining for a while under the perception that other currencies would be shielded from the US decline. Decoupling was fantasy, the whole world is going to hell, so on a relative basis, the dollar is going to rise. Also, those invested in gold were over-leveraged, and the de-leveraging process is going to sink gold further.

      Bullish: All currencies are going to hell, so even if the dollar outperforms relative to other fiat currencies, its purchasing power relative to commodities is going to be weaker (after the painful de-leveraging runs its course). Commodities are in a long secular bull market, and this is only a pothole in the road up. Furthermore, gold can be treated as a currency that can't be weakened by fiat.

      Personally, I think that demand for gold will increase. The supply side of gold is well understood (close enough to constant).
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    • ON: Mon Jul 14th 19:19 PM
      Commented on:
      The Case for Wiping Out Fannie and Freddie Shareholders
      Waverly, given the volume on Fannie's stock recently, only truly stubborn investors lost 80% of their wealth. Instead, bottom fishers came in a various (wrong) points. So do *you* believe that the bottom fishers should be rewarded by a government bailout that doesn't wipe out their equity? Taking away the last few dollars does teach them a lesson: don't expect privatization of profit and socialization of loss.
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    • ON: Fri Jul 11th 18:31 PM
      Commented on:
      Putting $1T Subprime Mortgage Losses in Perspective
      The linked article mentions that the credit default market is worth $45T, and there is doubt about counterparties meeting their obligations. That doesn't look small compared to the household wealth. It looks equal.

      That said, subprime is a small fraction of real estate. Prime defaults are currently on the rise. When you add everything up (all housing losses, stock losses, and government debt used in bailouts), we'll see how things compare. In the end, it's pretty obvious that $1T really is a drop in the bucket.
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    • ON: Mon Jun 30th 12:53 PM
      Commented on:
      Did the E*Trade Baby Pay Off?
      I'm long ETrade, and don't worry about the solvency. HOWEVER, shares below $5 that sustain it for any lengthy period rarely recover. This is due to a number of reasons, but one reason in particular is that mutual funds tend to stop investing in a stock once it crosses below a threshold. I would like to see some analysis on big fund outflows on ETrade before I grow my position.
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    • ON: Tue Jun 24th 01:40 AM
      Commented on:
      Will Gold Break Out?
      Iowa515, to my knowledge, the government is actually not greatly increasing the dollar supply right now. However, you are right, the government is issuing debt, which is just as bad as issuing dollars to pay for things.
      The monetary policy of the fed is almost irrelevant without any fiscal restraint in the legislative and executive branches. I wonder if the taxpayers would be willing to pay extra taxes this year to fund accounting classes for the government?
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    • ON: Tue Jun 24th 01:13 AM
      Commented on:
      U.S. Markets: A Ton of Doubt Calls for Caution
      Le French, while you are quite possibly (maybe even probably) right, how much upside do you think there will be in the bounce before the next leg lower? Also, which sectors are the best plays? I'm staying out if this one. I have a few long positions. However, I'm even worse at picking a top as I am a bottom, and I'm afraid the next move up (if it happens) will be followed by a dramatic and rapid turn down.
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    • ON: Tue Jun 10th 13:25 PM
      Commented on:
      Options Trader: Tuesday Outlook
      Your argument is not consistent. You first state that our real inflation is almost 12 percent, then you say that since our official growth is 0.9 that we are not in a real recession? The deflator on that GDP report was less than 2. It should have been 12 according to your own assertion. That puts us in a fairly deep recession, even compared to the 1980 one.
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    • ON: Tue Jun 10th 12:50 PM
      Commented on:
      The Reverse Wealth Effect
      Jerbear, while they arguably could do it, there's very little incentive for them to do so. Sovereign wealth largely funded the booms in the US. If they tried to manipulate oil prices to tank the US economy, those investments would be lost. In fact, as the recent bust happened, foreign dollars stepped in (arguably too early). If you were manipulating a downfall, you might be more careful about picking the bottom.

      China has a lot of US treasuries and manufactures a lot of US goods. It's certainly not in their best interest to help orchestrate a US downfall.
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    • ON: Thu May 29th 13:34 PM
      Commented on:
      The Online Brokerage Wars: E*Trade Offers Compelling Risk/Reward
      SteveJ, while you may disagree with jbmaria, there is absolutely no evidence that the rebate checks are going to help ETFC. If someone can't afford their payments, I don't see how a one-time bonus of 600 bucks is going to make a lick of difference in the long run.

      Just because you are long ETFC doesn't mean you have to make irrational arguments to make you feel better about your position. If you don't understand the risk (and are certain that it's a "sure thing"), assume you are missing something.

      Disclosure: Long ETFC
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    • ON: Thu May 29th 12:41 PM
      Commented on:
      E*Trade Covered Call Idea
      jbmaria, you raise interesting points. Instead of accusing you as a short shill, I'll accuse you as a long shill who wants time to acquire more stock (no, not seriously). The price of a troubled company can be thought of as the fair value * (1 - percent likelihood of insolvency). This is just expectation value. If people are convinced that there's a 25% chance of insolvency, then the stock will be at 75% of it's fair value. If the perceived risk of insolvency goes away, you can expect a pop in the price. A lot of people are convinced that insolvency is no longer an issue, but people like jbmaria are (apparently) not. If you are in the first camp, be happy that people like jbmaria exist. As time moves on and their insolvency fears are proven wrong, there will be a greater upswing than what would have occured if everything was priced at fair value the entire time.

      Of course, jbmaria may be voicing legitimate concerns. It doesn't really matter (well, unless the insolvency thing carries out). As long as people are afraid, the Longs can pick up ETFC at a discount. However, if you are looking for a pop, it has to come from something that significantly alters the perception of insolvency risk.

      Yes, I am greatly simplifying the problem (jbmaria may be concerned about losses, not insolvency), but it's a lot harder to discuss this point using probability densities than it is to use a simple solvent/insolvent perception model.

      Oh, and I am long ETFC and bought additional Jan 10 ITM LEAPS. I'm obviously a believer in their solvency. I won't do a covered call right now because I am not looking to cut my risk on the position.
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    • ON: Thu May 15th 14:18 PM
      Commented on:
      Will Apple Be Dragged Kicking and Screaming to the Business Market?
      Pk,

      I am a programmer. I've done programming on many platforms, but have the longest run on windows. That said, I use a MacBook (which replaced a powerbook before it) every day now, even though I am doing consulting for a windows business. XCode is easy enough to use for C and C++ work, but not as good as Visual Studio. On the other hand, for Objective C, it's an absolute dream, better than Visual Basic or C# environments. That's my opinion. Remember, Objective C came from the NeXT boxes, and was designed for enterprise applications.

      I've also done some Java work, but don't use XCode for that. I use Eclipse, which doesn't seem to run as well on a mac as on windows, but it is the same environment. I've recently done Ruby on Rails work, for which the Mac is the development platform of choice.

      Oh, and a friend of mine that works for a network security research company says his shop is all Macs for developer machines (Linux servers, though).
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    • ON: Tue May 6th 14:27 PM
      Commented on:
      Liquidity Isn't Apple Pie
      Interesting article. I've always thought of liquidity as a good thing, letting the market find the optimal price faster.

      In response to iThinkBig, I don't see how your interactions with VC firms is a liquidity issue. So many "sure thing" investments existed in the last couple years, that your risk/reward profile wasn't competitive. Now it's obviously quite attractice, as your risk has dropped and many of those "sure things" have soured.
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    • ON: Tue May 6th 14:00 PM
      Commented on:
      Regulation Fever and the Banking Sector
      I have full faith that the government can figure out banking better than anyone. Just look at the successful track record the government has with managing its own spending and investing. Or look at the quality of reporting figures by the government (GDP, CPI, employement, etc). Businesses should be held to the same standards.
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