sgt.red.blue.red

Buffett's Burlington Buy Is Really a Bet on China

Why BNI as opposed to UNP?

TLT Options: Taking Advantage of Interest Rates

Thanks, ST. Will review.


On Nov 02 09:14 AM Surly Trader wrote:

> <img class="authors_reply" src="static.seekingalpha.co...">
>
>
> Futures are generally the most efficient way to hedge. When you buy
> or sell a leverage ETF they are often using futures as part of their
> investment program. You do not have a perfect hedging vehicle for
> your situation available. Two year treasury futures would be the
> closest match to your 1 year UST exposure (TUZ9). Euro$ futures are
> probably your best way to hedge your prime (typically fed funds +3%).
> Basically you need to figure out how much the value of your loans
> increase against you for every basis point increase in rates, then
> short the appropriate number of Euro$ and two year futures. The problem
> is that you end up with a liquidity issue because the futures are
> mark to market and your loan is not. Plus you technically need to
> hedge each cash flow in the future, so you should be using a string
> of Euro$ futures, but that's probably not practical for you.
>
> On the flip side, if your loans are very small then it might make
> more sense to use ETF's such as the barclays short treasury (SHV)
> or 1-3YR treasury bond (SHY)

TLT Options: Taking Advantage of Interest Rates

I’ve got a couple of commercial real estate loans. Both are adjustable interest rate loans. I elected to go with adjustable rate loans for several reasons; 1) where we were in the interest rate/business cycle when I put the loans in place, 2) in that the spreads over the underlying indices, in the case of the Treasury adjusted loans, were the same spread no matter the maturity of the underlying index ), and, as such, 3) most of the time during the interest rate cycle there is a positive yield curve, not a negative one, tipped the scales in favor of the adjustable.

I have 2 loans;

The first loan adjusts annually with one year U.S Treasury (adjusted for constant maturity) index. Index available on H.15, in IBD or WSJ (Tuesday). 1 year UST + 2.625%. So every year, this adjusts.

The second loan adjusts with prime (prime + zero) as change in prime changes (instantaneous).

I would like to know BEST way to hedge against rate increases, $ for $, for each of these loans (short side ETF’s, options, LEAP’s, futures. etc.). In that they are not large loans, the scalability of the hedge (frictional cost) must be considered.

I don’t have any real fear on these things jumping, as I am in the money on both loans now. However, if I can find the optimal “hedging” instrument (e.g. a 3x short ETF), it would be money in the bank.

Ackman Explains Pairs Play: Corrections Corp and Realty Income

What does it mean that CXW doesn't have a strong technical correlation to other stocks when it has a .79 correlation to O, a stock he shorted
see: www.invescopowershares... ...plug in o and cxw
disclosure: long O. looked at CXW a few years ago, passed. No yield. Stock price has not tracked O for ten years, even after not distributing any dividends.

jmann83 said 'very interesting stock, doesn't have a strong fundamental or technical correlation to many other stocks, which is usually a trait of an outperformer,'

Credit Policies Still Threaten Recovery

CAP, Dec. 17 was about three months out from the date of the Graham Summers article.


On Sep 19 12:01 AM CAPITALIZER wrote:

> Why Dec. 17 though?

Credit Policies Still Threaten Recovery

I will be checking back on or around Dec 17 2009 to check on your forecast. I am 77 percent in equities, 17 percent in cash. I will not be selling.

James O'Shaughnessy: Market Returning to Rationality

Buffett has said the same...over the next 10 years, it will be equities not government debt.

Portfolio Management - Wise to Keep Some Cash

Warren has had 20 to 40 billion in cash over the recent past several years.

Abby Joseph Cohen's Bullish Calls

Abby was predicting SP move to 1675 one year out from when it was 1463. Go and see when the SP was at 1463 and plot out one year, then check her predictive ability.

15 Stocks You May Want to Keep Out of Your Portfolio

You asked the question I was going to ask. Good thing I read through all the Comments first. These blogsters have not responded very often (that I can see) to counterpoints raised, which may indicate a lack of confidence in their arqument, or insufficient analysis in the first place.


On Jul 10 01:44 PM ERCaptain wrote:

> I have one question --
> How often have companies that have received the "<1.8 – Likely to
> Go Bankrupt in the Next 2 Years" rating actually gone bankrupt within
> 2 years?
> Give us some historical data!

Lessons on a Busted Move in Bonds

If you're looking for a short term trade on TLT, it might be coming soon. But the real time to buy TLT is when the stock market is peaking, like, say June, 2007, when, nobody in his right mind would (sic) would want to be sacrificing 'upside' for something like 5.25+ % yield.

PIMCO's Bill Gross Sees a Bleak Future

I think in June early July 2007 on CNBC Bill said we are bear market bond managers now (I believe he was referring to the long down trend of Treasuries) and lo, a few months later, bond prices rallied. So he was bearish, but wrong then.


On May 31 01:41 PM Michael Young wrote:

> Excellent thread. I always wonder if Bill Gross is a little more
> pessimistic than he could/should be. Has he ever been bearish on
> bonds?

Not So Easy to Follow Buffett's Picks

This is true. Some deals you can't buy as "good" as Warren. But both GE and GS he got 11 percent to wait and options to convert to common at prices much higher than both commons fell to just a couple of months later. You could have put your dollars very advantageously in Nov thru Jan. Buffett at the time said he doesn't try to time the market on purchases, but when good franchises come available at good prices he buys.

In any event, if you think he gets better deals than can you, you can buy his expertise by buying brka or brkb.

Disclosure: Long BRKA BRKB

Open Letter to SEC: Wall Street's REIT Bait-and-Switch

In the author's opinion, what are the 'top quality' r.e.i.t.'s? We get the rundown on the 'marginal quality' one, WRI, KIM, PLD, DRE? I would be interested in his take.

Personally, I own O and VNQ.

Most Likely Scenario for the U.S.: Decade-Long Recession

So, what is the author Martin Hutchinson buying with his money? Or what is he selling now? How about your idea of what to invest in going forward.

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