kevinm

Betting on Stagflation

Comparing total SS obligations to one year's GDP is erroneous. You have to match assets to liabilities. The reality is that many years of future payments by younger workers must pay for the benefits promised retirees. Sounding the alarm bell for SS on this basis is like saying 'my mortgage is way more than I earn in a year, so I must be insolvent!' No...I have 30 years to pay it off...

However, you can still make a strong case that SS is a mess without using any red herring arguments.

It should be privatized, so that individual responsibility and property rights are restored to the American taxpayer.

Short Selling CME Group

When a stock is down 80% from its high, you usually need to have solvency issues to make it go lower. An EPS slowdown is probably not good enough. Lower earnings is probably not good enough. Losses may not even be good enough. You need solvency issues.

Beating the Quants at Their Own Game

Excellent article.

Reversion to the Mean for Equities

Total market cap is a function of stock prices as well as the proportion of companies that are public.

I've never been too fond of this 'indicator,' since it can go up just because more companies are going public, as in the tech IPO boom, and go down during an IPO slow period. How many IPO's are being done now?

Two Economic Triggers for Recovery

And if pigs could fly...

The GOVERNMENT is our last hope!

What happens when the Obama non-stimulus "stimulus" plan fails? Calling a new welfare plan 'tax cuts' and initiating long-tail pork and green projects will NOT pull the economy out of the tailspin!

What happens after the 'stimulus' fails, and we are still left with all the national debt? Then they will compound the error by raising taxes! And, BTW, violating legal mortgage contracts, which will NOT make housing prices go up...

Yet Another Gruesome Employment Report

Hmmm, Felix. Methinks you are drinking the Koolaid...

Why do you think "stimulus" needs to be rushed out the door? Did the "stimulus" package rushed out the door last year do any good?

It would be fine if what Obama calls "stimulus" really was stimulus, and not just big government handouts in drag. Why not just cut marginal tax rates permanently, and let the market decide the best use for the capital? Of course, this is not what Obama is suggesting.

He is creating an aura of panic and false urgency--'the economy is even worse than we thought (look how much Bush and friends messed up!), so you have to pass my stimulus now or the world comes to an end--and if you don't pass it instantly, it is not my fault!' This is what manipulative pols do--create a crisis to ramrod through their pet plans.

This is not, of course, to deny that things are ugly. It is just that the Obama plan, such as it can be discerned, does not look like it will help. And it may well hurt by growing the size of the most unproductive segment of society--government--w... increasing the deficit (and future taxes on the MOST productive segment of society).

So, in order of effectiveness, here are the alternatives:

1) Marginal, permanent, across the board tax cuts for businesses and individuals. This would expand the economy most efficiently, and eventually decrease the deficit as tax receipts increase.

2) Rather than increasing govt spending and waste, CUT government spending.

3) Do nothing. Let the market cleanse itself. At least you avoid the waste and long term harm of....

4) The Obama big government, unproductive, non-stimulus 'stimulus' plan, which is really welfare for those who do not pay taxes, and Chicago-style giveaways to those businesses that would get the infastructure goodies. It will also balloon the deficit.

Obama's Tax Cut: A 'Mustard Seed' of Hope for Investors

Tax cuts are far preferable to spending increases, because people operating in free markets are far more efficient in putting money to productive use than governments.

HOWEVER, the Obama 'tax cuts' are really not tax cuts, but welfare, as they put income caps on the 'tax cuts'-- meaning the upper end actually shoulder MORE of the tax burden--and the lower earners receive 'refunds' of money they never paid--socialist redistribution or welfare.

True tax cuts would be great. That would involve letting everyone participate and cutting MARGINAL tax rates PERMANENTLY. Somehow, I do not think that is what Obama and the dems have in mind.

Social Security: A Ponzi Scheme?

It is amazing to me how many posters believe that Social Security should be defended.

It is insolvent. It is dishonest. It is government coercion, limiting our freedom.

Why does the government not put future Social Security obligations on its balance sheet? Why is the current "surplus" spent, rather than invested in real assets? Why are citizens not allowed to opt out and elect to provide for their own retirements? If we must have it, why are the benefits not guaranteed by law?

Cramer is not right very often, but he could not be more correct about this one.

Another Big Bank Failure: More Likely Than Not to Occur

Some of you would benefit from learning some manners.

Reggie has been consistently bearish on the financial stocks for many months. I, for, one, am appreciative of his insights and articles, and have made a lot of money following many of his short recommendations. I would have done even better if I had followed them more aggressively!

Given government backing of the banks, he may now be overplaying his hand. Or maybe not. I don't have the stomach to short them any more. However, his research is incredibly detailed and has been insightful. He is consistently one of the most worthwhile posters.

Macy's' Goodwill Is a Red Flag

Goodwill is an accounting construct that reflects past acquisitions. The markets look forward. What matters is cash flow, which in the case of Macy's, is very strong. Look at the EV/EBITDA ratio. Owners care about cash, not accounting constructs.

Say Goodbye to a Bear Market Rally after Madoff's Ponzi Scheme

Why the gratuitous Bush bashing? Dems carried the water for Fannie and Freddie. Rubin pulled down obscene salaries while Citi rotted away. Bush tried to reform Social Security, but was shot down. Clinton presided over the tech bubble, but is remembered as having engineered great prosperity...even though it was mostly an illusion...just like the "peace" before 9/11.

At least you are right about the bailouts...

Sentiment Overview: Selling Pressure Still Has the Upper Hand

"Right now selling pressure has the upper hand (after jumping to an extreme level). Until it subsides and buying pressure takes over, the market isn’t going to go up."

Really? Now THAT's the kind of insight I expect when I read Seeking Alpha!

Testing the TARP: PNC and NCC

NCC was a $3 stock BEFORE the deal. So enough of the conspiracy theories and blame game!

NCC shareholders will have a much better chance of recouping some of their losses via PNC stock than they would have independently. If you rode it all the way down and were still holding it at $3 blame yourself, and no one else!

Fundamental Valuation: How Low Could We Go?

Is 2008 exactly like 1982? Or the early 70s?

There were no PCs then. No internet. Communism had not yet fallen, and we were in a Cold War. No China and India opening up and growing rapidly. Is medical technology better now or then? Were there cell phones? Automatic garage door openers?

Yes, things are ugly now, and will be for a while. I am no bullish polyanna. But there is no reason that we have to go to 400 on the S & P just because PEs used to be 8 or that stocks once sold for book value.

It is also true that things happen much faster now than then. The 40% drop we have seen in the past year might have taken five or ten years back then. For that matter, every day presents as many trading opportunities as you would typically get in a month, or three, or a year!

Gloom and doom does no one any good, especially after already taking a 40% hit. And black box magic formulas are more what has gotten the market INTO this trouble than what will help get out.

Morgan Stanley: Exploding the Short-Seller Myth

Suppose MS is worth $50 a share--you are absolutely sure or it. Suppose a short seller sells a million shares at the open and the stock drops a buck. Now suppose you buy 2 million shares at the market and the stock rises two bucks, going from down a buck to up a buck. The short seller panics and closes his position, driving the stock up yet another buck.

It is all psychology. The problem is, few "investors" really know what a stock is worth, and most of those lack courage in their convictions. If the stock is down, they freak out and want to sell. If it is up, they are giddy and want to buy. It is exactly the opposite of what good investors do. It really has little to do with short sellers. The same thing happens the opposite way when momentum stocks go up.