Dave P

One Way to Invest in Social Unrest

SWHC issued 5.5 million new shares (about 10% of its capitalization) last week, and is now trading at a discount to the offering price of $6.25. Good move on their part, taking advantage of the firmness in their stock price to put about $34 million in their coffers. With guns selling like crazy, I am sure they can put that money to good use, and even if the market slows down, they can make out well by applying it in reduction of their debt.

What's Behind Slim's Times Bailout?

Maybe Slim can knock some sense into the Times' management. And if not, then get rid of them.

Wednesday Market Outlook: What Is the Fed Hoping to Achieve?

The Fed needs to stop buying t-bills and start buying illiquid assets like real estate and automobiles. T-bills are liquid, so trading them for money does little to increase the liquidity of the economy. Buy apartment complexes, office towers, and other income producing real estate. That would put money directly into the economy, bypassing the banks, who are too scared to lend, and they can sell them back to the private sector at a profit when the economy rebounds. Buy a few thousand cars from Detroit, with newly minted money. That would put money directly into the economy, get the inventory off the Big 3's books, and you can be certain that the cash starved automakers would spend the money as soon as they got it, which would boost the economy. Sure, it would be better if consumers bought those cars, but that won't happen for a long time. Have the Fed buy them and turn the cars over to the US government. If the US government can't use them all, they can divide them up among the state governments.

Ethanol, Farm Industries Split Over Which Candidate Is Best

VRNM is pretty cheap right now, too, though it is a very speculative stock.

Supply and Demand Have Little Relevance in Commodities Prices

Of course, the price of a commodity is governed by the laws of supply and demand. And yes, it also has to do with speculation. The two ideas are not mutually exclusive.

Speculative demand is part of the demand for a commodity. Similarly, when a speculator decides to hold onto his inventory of a commodity because he thinks the price might go higher, that has an impact on supply. I will grant you that speculative demand is very volatile compared to other parts of the demand, but it is still part of the demand.

I thought your argument was going to be somewhat different when I saw the title. What a lot of folks find perplexing is that the price of a commodity might go up even though INVENTORIES are higher. I've heard a lot of pundits claim that proves that supply and demand do not work in the oil industry, for example. Bill O'Reilly is one.

What they are ignoring is that inventories are not the same thing as supply. If you have an econ degree, then you know that mathematically, supply is a CURVE, while inventories are not. Inventories is simply a number.

Supply is a relationship between the price of a product and the quantity that suppliers are willing to supply. The higher the price, the more they are willing to supply. The folks who erroneously equate inventory to supply, however, are effectively assuming that all of the inventories are available for sale at any given time at the market price, whatever it might be. And that is simply not the case. People who hold inventories look for the best price they can get, and they are willing to continue holding them if they are not satisfied with the price that is available. In order to determine what the supply is, you can't just look at the inventories. You've got to get inside the inventory holder's head to find out what his price is. The market system is what does that.

New Economic World Order: U.S. No Longer On Top

The world economic leader is not going to be a socialist nation. Political systems simply do not adjust fast enough to the changing economic climate. Free market economies take the lead, even when there are huge market disruptions--in fact, ESPECIALLY when there are huge market disruptions.

Natural Gas Bargain Justifies Obama's Stance

I don't think that when Barack Obama was talking about "clean energy" he meant natural gas. Obama opposes increased drilling. If you want natural gas, you've got to drill.

Wachovia Stanley? Really?!

I guess MS has some banking operations, and WB has some securities operations, but it is difficult to see significant synergy, unless they are thinking that a combination will give them an opportunity to market to each other's customer base. Maybe the real savings are in taxes?

Don't Believe the Lies: Ride the Bank Stocks Bull

I think there will be more write offs and more losses in the banking industry, but the market is way ahead of the auditors on that. The market has already discounted those future losses, and yes, I do think the bottom is largely in. It may be a few months though before we start to see any significant upward movement.

The proof of that is to look at how far the banks have already fallen. Wachovia, for example, was a company with a $120 billion capitalization a year ago. Now it's at $32 billion. They haven't lost $88 billion since then. Not even close. Less than $10 billion. The reason the capitalization has fallen by $88 billion is that the market is assuming that they will ultimately lose that much. If they can beat that number, then it is gravy for investors at these prices.