glendokid

Premier Exhibitions: The Turnaround Marches on

Darn, Jeff! Couldn't you have waited until Friday when I'll have filled out my position in PRXI. Nice of it to go down so much lately. :)

cheers,

tas

P.S. Won't be seeing you this weekend, but I'll be watching the webcast.

Avoiding the Pitfalls of Confirmation Bias

Enigmaman,

I voted FOR your comment even though I don't agree with it's conclusion because you said a whole lot of things with which I agree and can't believe more individual investors don't know.

The premise of the CGI article was that we all have to be careful of confirmation bias. It's a great point. If you haven't done it, I suspect you haven't bought a lot of stocks on your own judgement.

However, it has a huge flaw in that you only catch yourself when you lose! What about all the times you got a winner - did you look to see if your hypothesis was wrong but you got lucky?

Your point - that if you want to beat the market you have to beat all of the analysts and Wall Street (think about all the smart folks at GS!) and the CGI stock pickers, isn't that going to be hard? IS A WONDERFUL POINT.

If you don't have a good answer to this question, my advice is:

1: Don't feel bad. There are lots of very smart folks in that club.
2. go to Lazy portfolios. They beat the vast majority of "professional" stock investors (read: Mutual Fund Managers)

Good luck hunting for the answer.


On Oct 19 02:46 PM enigmaman wrote:

> Seems to me you cannot trust the fundamental approach because its
> all biased, the company telling you why they are as good as they
> are even when they are not, then you have the big analysis company
> following the corp every move who explains why the negative you think
> you see isnt what you think it is, and not at all negative, then
> you have the other financial companies come in behind the first few
> jumping on the band wagon, cheering the numbers reported, then you
> have CNBC chiming in as well finding green shoots all over the place
> and then you have little old main street investor who isnt sure,
> nervous but then says, who am I to fight those who know more then
> I, that have direct access to the corp any and all info, have the
> best financial minds doing their own research and issuing their own
> reports and charts, little old main street investor working with
> Fidelity doing his own research and to expect him to come up with
> the true story seem a bit presumptive, except if he also an expert
> in forensic accounting. Sounds like your asking way to much of main
> street, after all most on Wall Street with all their financial and
> accounting degrees, years of experience and hot line to the boss,
> most of them got it wrong. So while I agree with the articles premise
> it seems impossible to attain

In the Commercial Banking Sector, No Green Shoots Yet

I can decide if you believe this stuff or if you are purposely misrepresenting the data.

You said that "cash assets" of banks are up to 749B from 340B a year ago. That's true. But you neglected to state two things:

1. Total loans of these banks exceeds 19 TRILLION dollars. Thus their cash reserves are less than 1% of their loans.

2. The 340 number was a one time exception.

These numbers are all on the same page, you couldn't have missed them. Perhaps you can't add.

10 Reasons Apple Will Sell iPhone Via More U.S. Telcos

That Apple would love to have other carriers, especially Verizon, carry the IPhone seems so obvious as not to require comment.

As I understand it, Apple would have preferred to have been with Verizon to begin with, but Verizon was unwilling to give up its iron clad control over downloads and pricing plans.

Thus, it seems to this observer, that the real question is whether Verizon has changed their mind given the success of the IPhone.

I recently switched to AT&T solely to get an IPhone and noted that Verizon sent a multiple choice poll asking about my experience. There were 5 or 6 questions, but they seemed clearly to want to know if I switched because of the IPhone and whether I would return under any circumstances other than their offering an IPhone. That at least hints that they are mulling over the idea.

Canadian Superior Energy: On the Brink of Hitting the Jackpot?

You seem to be confused about the difference between oil, LNG, and natural gas.

"2+ trillion cubic feet of liquified natural gas."

Really? that's a lot. Equivalent to all of the known reserves of OIL in the world.

Friday's Market Action: Parabolic Move on No Volume

people who do not know the difference between parabolic and exponential are not in high demand in the quant field.

Friday's Market Action: Parabolic Move on No Volume

people who do not know the difference between parabolic and exponential are not in high demand in the quant field.

Just How Big is the China Bubble?

1. Nice that you didn't monkey with the vertical scale.
2. Because of technological change, the time period 2004-2007 is not comparable to the time period 1997-2000. If you wish, the FXI is actually growing much slower than the Nasdaq did. Things happen faster now.
3. If you want to see if the FXI is in a bubble, you have to use log log vertical scales, not linear. See next comment.
4. For a real test of whether a market is in a bubble, see the book:
"Why Stock Markets Crash", Didier Sornette, Princeton University Press, 2003

A nice review of the book is here:

www.ess.ucla.edu/facul...

5. It seems obvious that the quants at large financial institutions are using all of these techniques.

Why FreightCar America is Still Temptingly Cheap

Re: feelings of uncertainty about the coal industry.

I assume you mean that coal is among the worst energy sources for CO2 emissions hence there will be pressure to reduce its use.

that can be read as a negative. Obviously.

But it can also be a positive if you judge that the market is wrong in its assessment of this risk.

Efficient Market Hypothesis: The Home Builders

While it's always fun to bash academics (and I'm often guilty of it), I don't think any of them believe that the EMH says that the market action PREDICTS the future. I think it says that the price of a stock on a given day is a really good estimate of the value of the stock given the public information. And you're absolutely correct to observe that the value is tied up with the probabilities of various future outcomes. So when the price went down it didn't predict a collapse of the housing market, rather it reflected that the probability distribution was worse - higher probabilities of larger declines. Note that even in July 05, the P/E's were low, reflecting the markets estimate that those levels of return would decline. By July, the market just read the information to mean that the decline would be sooner and longer. By mid summer, the market wasn't saying that there would not be a decline, only that the probabilities seemed to be lower for the dreadful outcomes than they had been earlier, based on later information.

So, if the EMH is correct, the market will still often be "wrong" in that it bad things will not come to pass or that they will be less bad than the price indicated on a given day. If the EMH is correct, the prices will only be correct ON AVERAGE. And the variance will be random (sorry, couldn't resist).

Finally, there seems to be a lot of beta in these charts as well (some price changes are caused by things external to the specific stock or sector or stocks in general).

John Hussman: Debunking the 'Global Liquidity' Myth

I believe that you have made the mistake of assuming that the amount of money is constant. If the Chinese government lowers reserve requirements, the amount of money in China increases. Some of that is, say, invested in US stocks. Does this mean the the Chinese claim on American production has thus increased? No, the Chinese purchaser bought American dollars, thus some entity in the US now has Chinese currency (or equivalents) and thus the US claim on Chinese production equals the claim in the previous sentence.

International economics is hard. The real problem, I think (but not confidently) is that the Chinese government is keeping huge foreign reserves (US treasuries mainly) and thus artificially preventing the Chinese currency from moving higher versus the dollar. they CANNOT present this "claim on US production" else the Chinese currency will go way up and stop their economy because of the loss of exports. See the famous story about John Maynard Keynes and the attempt to make Germany pay reparations after WW I.

Two Key Charts The Fed's Watching Today

The rise in employment rate starting in 2002 stopped sooner than the previous two cycles and has plateaued in a way that seems unprecedented. doubtless globalization, oil price shock, and earlier increases by the FED all contributed. So one could argue that we've still got a ways to go on the upside. Perhaps the chart isn't illuminating.

The Long and Short of Idearc

The comment that the $900M cash flow will pay for the company in 15 years overlooks the fact that the cash flow is rapidly declining! - look at the old Q's. In five years my guess is that the cash flow will be $400M. then it'll take 25 more years to pay for the company IF IT DOESN'T KEEP DECLINING.

Folks are also overlooking the following issues with the online business:

A. It is still a small part of revenue and income
B. It's growth rate is declining: 26.0%, 9.2% increases in revenue (YoY) in 2005, 2006 respectively. Twas growing at 80% per year in 2002.
C. Cost cutting has already been done in the on line search area, so there may not be saving to be had there.
D. There are major competitors to their on line search. Who do you think of when one says, "on line search" ?

The leverage is attractive, but this sure looks like the newspaper business to me.

Vonage: Headed For the Auction Block?

I've been a huge fan and customer of Vonage from the beginning, but I think that they are doomed. Their model only made good sense for people with a cable modem - if you're using DSL, you already have a phone and most phone companies won't sell you DSL without a phone. But now all of the cable companies are offering VOIP phones. The (not too distant) future is that both phone companies and cable companies will have high speed digital connections to homes and will offer digital TV, phone, and internet service. Where's Vonage in this picture?

The only hope would be a skype like model where one could use their mobile computers as phones everywhere - but Vonage made that their mobile service too pricey.

In short, VOIP for a person with a home or mobile high speed internet connection is just software and some infrastructure at the back end. So there's no barrier to entry for big players like the new Verizon and the old cable companies. Moreover, these players do not have the high acquisition costs of a Vonage - they are selling to existing customers through existing channels (e.g. in the monthly billing).

cheers,

tas

Which Party Is Better For the Market?

Well, the same size is too small for any meaning, but I'm tickled that the study agrees with Greenspan who said (I think) that it's better to have a congress controlled by the party NOT in the White House - that way the government interferes less with the function of the country.