JCC

The Secret Paulson-Goldman Meeting

So what!! Goldman is amazingly successful, and so is Paulson. You make this sound horrible. It's just a meeting.

The whining can continue, and the others will make profits.

Battery Investing for Beginners, Part 4

Taylor - Great point on Lithium Air - I followed the link and think that this provides hope for a PHEV future. Our investment in battery technology will eventually lead to breakthroughs that will make significant improvement. Maybe Lithium Air will be the enabler.

John - Your articles greatly appreciated and they have brought clarity to use of existing technologies. I recently read that Toyota agrees with you analysis on Lithium ION.


On Oct 04 10:37 AM William Taylor wrote:

> John, do you have any comment on this article about IBM and lithium-air-oxygen
> batteries? They seem like a real game changer!
>
>
> www.mobilemag.com/2009.../

How Much Natural Gas Remains in the USA?

You can choose to ignore the accessibility of natural gas from shale at your own peril. When you fracture shale the vicuous oil stays in place. When you fracture shale the natural gas flows naturally.,

In the exploration for oil, we learned these lessons. The resulting natural gas flow has been huge, and we have quit exploring because of over-supply.

If we ever learned how to economically extract oil from shale, we would have a 500 years supply. Unfortunately this has not occurred.

We have learned how to economically extract gas from shale, and that is the origin of the 100 years estimate.

No Chance of a 'V' Recovery

Agreed - Furthermore ECRI predicted the current mess a little late in March 2008, which was plenty of time to get out and preserver your capital.

ECRI has done pretty well in the economic prediction business.


On Oct 03 07:43 PM Owen B wrote:

> You wrote, "ECRI has been wrong before and they were in 2007 about
> the strength of our economy"
>
> But I've heard ECRI state that GDP growth reached a 4-year high in
> mid-2007. Is that not true?

No Chance of a 'V' Recovery

Again - 80% of consumer spending is from the 20% that is the most wealthy. This concept (Pareto Principal) is one that is well known to those manufacturing and economics, but somehow is not well known in many other fields.

Again, this why you will start to see recovery in consumer spending before unemployment shows significant reduction.


On Oct 02 06:42 PM bottoms-up wrote:

> Usually it would be a lagging indicator, but nobody factored in the
> percent of the economy based on consumer spending. That is the new
> kid in town and nobody can predict how this consumer society can
> spend without jobs and/or the abuse of credit.

No Chance of a 'V' Recovery

One other important point often forgotten is the Pareto principal or law of large numbers. With this principal we find that in any large group 20% of the members create 80% of the results. So in a company 20% of the parts equate to 80% of inventory value. In an economy 20% of the members hold 80% of the the wealth. So when that wealthy 20% starts to spend, we can start a recovery.

That is one reason why unemployment is a lagging indicator. Because of this, recovery starts in advance of employment recovery.

No Chance of a 'V' Recovery

You raise some interesting arguments, but there is other important data:

1. ECRI's WLI is pointing to a robust recovery.
2. The housing market often leads us out of recession and the housing market is showing signs of recovery.
3. Developing economies in India and East Asia are recovering nicely.
4. The Atlanta Fed reports that Global Trade increased at it's fastest pace in 5 years.
5. Foreign demand is expected to add ~1.3% to US GDP in 2010

Could it be that proponents of a "ready-aim-fire" economic theory might be upset by the the "ready-fire-aim" approach? If we end up with a strong V shape, will you change your minds?

Why E*Trade Is a Must Buy

With the takeover possibility this looks like a good bet to become a 4 bagger.

Time to Call Out Wells Fargo's Balance Sheet

Your analysis is thought provoking. Warren Buffett was quoted as referring to Wells Fargo with the following:

"If I had to put all of my net worth into one stock, that would be the stock."

Of course, that was when WFC was ~$9 per share. Today it is close to $30. That aside, he has invested ~20% of Berkshires portfolio in WFC. Probably very few know more about WFC's balance sheet than does Warren. As far as I know Berkshire is holding tight on WFC, and I really think based upon this, that it is still a great investment.

If the Recession Is Over, What Now, Ben?

In the last 3 recessions the FED has waited for lengthy periods before they started to tighten. In todays economy, there is no reason to think that they will engineer a quick exit strategy.

Lakshman Achuthan's ECRI WLI (weekly leading index) has reached the highest level since August 29th 2008. This interesting index is pointing to a recovery that is expected to be fairly robust and with no indication of double dip.

www.rubbernet.com.sg/e...

I will watch carefully to see what type of exit strategy the FED develops, but I don't expect to see much indication for one to two years.

In the meantime, from an investment perspective, this run looks like it has a ways to go, and I will continue to take advantage with profits to the bank.

Pundits Are Wrong: Healthcare Reform Will Increase Profits

Guitanguran - I agree with you that free markets might work in healthcare, but not under the current situations. For a free market to work, you would need to get rid of the FDA and all of the regulation. Let the buyer beware and let capitalism do it's thing!! If someone can't afford care they pay the price. If a treatment fails, they buyer loses it all.

The problem is that this will never occur, and furthermore our moral constraints would never allow us to go to this extreme.

Competition on healthcare in the USA is a non-achievable pipedream.


On Sep 18 01:19 PM Guitanguran wrote:

> two things:
>
> Free markets can work in healthcare. Consider Lasik surgery. As out
> of pocket expense, the consumer (patient) has to choose wisely. The
> result is that technology, efficacy, and choices have gone up, and
> prices have gone down. Why? Because the person getting the procedure
> has to pay for it. And, the person providing the procedure has to
> compete with other providers.
>
> Why not take the tax break now given to employers on health insurance,
> have them pay the employees the equivalent difference of healthcare
> cost to them as salary, give the tax break to the employee, and open
> up insurance options across the country? Indigents, widows, and orphans
> can be taken care of by tax credits on 'pro-bono' care. Portability
> and pre-existing issues could be dealt with by letting the individual
> buy and keep their policy forever if they like.

Pundits Are Wrong: Healthcare Reform Will Increase Profits

OK Wisdom - In the US the government currently pays ~50% of healthcare costs. Insurance companies pay 35%. The rest is out of pocket. Our regulations are onerous and certainly support high profit for healthcare providers.

So in case you didn't notice, we already have a quasi-socialist system without competition and rising prices of ~10% per year. What makes you think that this is sustainable? What makes you think that the current US system is capitalist? Our healthcare results are comparatively inferior to countries!

So what are you defending, except for an unsustainable system that does not provide adequate care and will strangle the USA with rising costs!!


On Sep 17 07:00 PM Wisdom vs. Information wrote:

> check the scoreboard: european standard of living has steadily been
> falling behind the US since we pulled the defense nurse bottle away
> and is now 30% lower; japan has been in recession since 1990, same
> time frame. what do you socialist not get about 'does not work'?
> you have the evidence in your face and you just keep plowing along
> with your head in sand, loving the taste of dirt
>
> if socialized medicine is so great, why can't euro and japanese corps
> compete with US corps? not only is your theory ridiculous on its
> face, evidence directly contradicts you. embarrassing

There Are No Good Choices for the Fed

I am a long time reader of Charles Mauldin, and find that his work and writing are generally excellent. Furthermore his record have pretty good.

That aside, in recent correspondence with Lakshman Achuthan he indicated that there was a chance of a double dip, but that during the last two recoveries the Fed waited quite a while before pulling back. He indicated that we should keep an eye on the ECRI WLI (weekly leading index), and if it backs off sharply then buckle up. For now though things look to get better. Look at the chart in ECRI and you will see that it is moving up.

'Bad Money' by Kevin Phillips: A Terrific Primer on Today's Issues

I read bad money about one year ago, and was very impressed. The book goes a lot into the the description of an almost natural evolution of capitalist economies, and as well comments significantly with lots of facts on various types of derivatives.

I agree that it is time for an update and will certainly purchase a followon.

My recommendation is to to read this book and put into perspective with all that has occurred in the last year. As a matter of fact, I think that I will read it again.


On Sep 12 04:53 PM yblarrr wrote:

> A little out dated. Pub. 2008 a lot has happened since then. May
>
> be time for an update.

Rough Times Ahead for Natural Gas

Interesting to read this article and the various comments. Natural gas is down, because supply is up dramatically. We found that when we tried to extract shale oil, we did not get much oil, but we ended up with a lot of natural gas. So with the increased supply and the fact that there is plenty more to extract prices will be down until we increase usage.

This of course has changed the equation, and it makes a lot of sense to start a gradual shift to using LNG as a transporation fuel. This would dramatically reduce oil imports, and we would be burning a cleaner fuel. This makes so much sense, that I am hopeful that the markets will eventually lead us in this direction.