jmorace's Comments RSS Syndication from SeekingAlpha.com http://seekingalpha.comuser/244827/comments http://seekingalpha.com/article/147474-s-p-tests-may-lows?source=feed#comment-578754 578754
I have never seen a technical pattern so much bally-hooed. Bloomberg commentators, CAPS folks even CNBC anchor people are chattering away about neck lines and head and shoulders with such convincing authority. If this market tanks it will be the most discussed and predicted move I can remember.

Nice to see this could be a bear trap. It smells that way to me too. And today the market opens firm.

Well, we will see!]]> Wed, 08 Jul 2009 10:08:29 -0400
I have never seen a technical pattern so much bally-hooed. Bloomberg commentators, CAPS folks even CNBC anchor people are chattering away about neck lines and head and shoulders with such convincing authority. If this market tanks it will be the most discussed and predicted move I can remember.

Nice to see this could be a bear trap. It smells that way to me too. And today the market opens firm.

Well, we will see!]]> http://seekingalpha.com/article/120564-fair-value-for-the-s-p-it-s-not-440?source=feed#comment-387633 387633
]]> Fri, 13 Feb 2009 15:19:01 -0500
]]> http://seekingalpha.com/article/120547-why-china-can-t-dump-u-s-treasuries?source=feed#comment-387624 387624 Fri, 13 Feb 2009 15:14:36 -0500 http://seekingalpha.com/article/115193-what-s-the-good-of-hedge-fund-indexes-and-fund-of-funds?source=feed#comment-359199 359199
I am a dissatisfied investor in a Goldman Sachs fund of funds. I was always dubious of it, even from the stat, considering the giant fees being skimmed off the top, but besides that point, there is a key issue for individuals ignored by the peddlers of these 'investments.'

That is: tax consequence. A buy an hold investor is, of course, taxed only at the time of the sale of a security, and dividends are taxed at a 15% rate. Virtually all gains in my fund of funds, even in the best years, were taxed at full tilt boogie. So, the real net return to me never beat a municiple bond in the best years.

Am I alone in this? Have others have had positive experiences with fund of funds? I would love to hear about them.

Regards,

JMorace

]]> Sun, 18 Jan 2009 15:10:52 -0500
I am a dissatisfied investor in a Goldman Sachs fund of funds. I was always dubious of it, even from the stat, considering the giant fees being skimmed off the top, but besides that point, there is a key issue for individuals ignored by the peddlers of these 'investments.'

That is: tax consequence. A buy an hold investor is, of course, taxed only at the time of the sale of a security, and dividends are taxed at a 15% rate. Virtually all gains in my fund of funds, even in the best years, were taxed at full tilt boogie. So, the real net return to me never beat a municiple bond in the best years.

Am I alone in this? Have others have had positive experiences with fund of funds? I would love to hear about them.

Regards,

JMorace

]]> http://seekingalpha.com/article/114093-citi-off-the-banking-reservation?source=feed#comment-352362 352362
For capitalism to thrive there needs to be fair play. We are so far from that in the US that its hard to use the word 'capitalism' to describe what we've got going on even modified with "crony" or "gangster".

Look out below.
]]> Sun, 11 Jan 2009 11:20:31 -0500
For capitalism to thrive there needs to be fair play. We are so far from that in the US that its hard to use the word 'capitalism' to describe what we've got going on even modified with "crony" or "gangster".

Look out below.
]]> http://seekingalpha.com/article/112571-bond-expert-monday-wrap?source=feed#comment-341420 341420
Thanks for your thoughts.

jmorace]]> Tue, 30 Dec 2008 10:44:12 -0500
Thanks for your thoughts.

jmorace]]> http://seekingalpha.com/article/112254-short-sale-ban-learning-from-mistakes?source=feed#comment-338203 338203
So, it continues now, as it was at the time of the corrective wave of regulations in the '30s, to be in the interests of individual investors to have restrictions on institutional short sellers.

It is always in the interests of individual investors to have robust regulations that prohibit the nonsense of these rumor mongering, tail-wagging, over-leveraged, cry-baby, self-important, big shots swinging other peoples money around. Remember, unlike individuals, there is no cost to them if they lose l money (they can get another job in a snap as they are considered "talent" on Wall Street), but great bonuses if they should luck out and make some.

The structural advantages of the institutional players must be reduced to allow the average guy to have a fiar shot. We are so far from that now --- America IS gangland Chicago.

Put the criminals in jail. Start over clean.

]]> Thu, 25 Dec 2008 13:12:40 -0500
So, it continues now, as it was at the time of the corrective wave of regulations in the '30s, to be in the interests of individual investors to have restrictions on institutional short sellers.

It is always in the interests of individual investors to have robust regulations that prohibit the nonsense of these rumor mongering, tail-wagging, over-leveraged, cry-baby, self-important, big shots swinging other peoples money around. Remember, unlike individuals, there is no cost to them if they lose l money (they can get another job in a snap as they are considered "talent" on Wall Street), but great bonuses if they should luck out and make some.

The structural advantages of the institutional players must be reduced to allow the average guy to have a fiar shot. We are so far from that now --- America IS gangland Chicago.

Put the criminals in jail. Start over clean.

]]> http://seekingalpha.com/article/110645-why-the-muni-bond-market-is-in-decline?source=feed#comment-330071 330071
Without these guarantees, it's treacherous work to figure out the specifics of each muni bond and make a selection.

Too bad the boneheaded execs at MBIA and AMBAC weren't former Goldman employees, then they'd have all the money in the world from their pal Paulson.]]> Mon, 15 Dec 2008 12:55:33 -0500
Without these guarantees, it's treacherous work to figure out the specifics of each muni bond and make a selection.

Too bad the boneheaded execs at MBIA and AMBAC weren't former Goldman employees, then they'd have all the money in the world from their pal Paulson.]]> http://seekingalpha.com/article/108458-are-liquidations-profitable-capital-crossing-preferred-vs-healthshares?source=feed#comment-317659 317659 waddaya tink u tradn' here...... MO??? 'bout 2000 shares traded friday.
good luck chum!]]> Sun, 30 Nov 2008 15:02:16 -0500 waddaya tink u tradn' here...... MO??? 'bout 2000 shares traded friday.
good luck chum!]]> http://seekingalpha.com/article/100533-fundamental-valuation-how-low-could-we-go?source=feed#comment-285197 285197
Aslo of note is that the credit markets are pricing in severe economic weakness. There is a mismatch between what they are saying to us, with some AAA corporates trading 600-700 basis points over treasuries.

To me that is already saying 550 - 600 is pretty certain. It takes time for a giant whale the global equity markets to get to their trough valuations during this adjustment. perhaps another year or two of downward action to do so.

just my thoughts,
jmorace]]> Sat, 18 Oct 2008 12:02:05 -0400
Aslo of note is that the credit markets are pricing in severe economic weakness. There is a mismatch between what they are saying to us, with some AAA corporates trading 600-700 basis points over treasuries.

To me that is already saying 550 - 600 is pretty certain. It takes time for a giant whale the global equity markets to get to their trough valuations during this adjustment. perhaps another year or two of downward action to do so.

just my thoughts,
jmorace]]> http://seekingalpha.com/article/99727-julian-robertson-some-buying-but-bearish-on-the-economy?source=feed#comment-281767 281767 Mon, 13 Oct 2008 22:24:28 -0400 http://seekingalpha.com/article/99453-decades-of-negative-returns-a-long-term-look-at-the-dow?source=feed#comment-280001 280001
I remember in Jesse Livermoore's book about the 20s run up and subsequent crash, it ain't over until the big boys puke. We need to see panic selling from Calpers and Goldman and Citadel and Harvard. Not there yet.

Jmorace]]> Sat, 11 Oct 2008 16:52:55 -0400
I remember in Jesse Livermoore's book about the 20s run up and subsequent crash, it ain't over until the big boys puke. We need to see panic selling from Calpers and Goldman and Citadel and Harvard. Not there yet.

Jmorace]]> http://seekingalpha.com/article/98570-relax-basel-ii-s-bank-capital-adequacy-requirements?source=feed#comment-274250 274250
Although, many small/mid regional/domestic banks have very high loan quality standards and these folks can still get credit now (I think....) So, maybe it wouldn't help, but it can't hurt.

JMorace]]> Sun, 05 Oct 2008 19:07:14 -0400
Although, many small/mid regional/domestic banks have very high loan quality standards and these folks can still get credit now (I think....) So, maybe it wouldn't help, but it can't hurt.

JMorace]]> http://seekingalpha.com/article/98555-fear-creates-unexpected-bargain-in-cd-market?source=feed#comment-274245 274245 Sun, 05 Oct 2008 18:59:36 -0400 http://seekingalpha.com/article/98399-inflation-deflation-and-the-u-s-china-relationship?source=feed#comment-273995 273995
]]> Sun, 05 Oct 2008 12:24:09 -0400
]]> http://seekingalpha.com/article/98440-bailout-datapoint-of-the-day-aig-edition?source=feed#comment-273433 273433
JMorace]]> Sat, 04 Oct 2008 11:49:51 -0400
JMorace]]> http://seekingalpha.com/article/98456-a-look-at-a-market-that-punishes-risk?source=feed#comment-273061 273061
But in terms of the junk bonds, with closed end funds trading at a 20% discount to NAV and yields of 15ish %, it seems that it might be worth scaling into a few of these dogs that everyone is throwing out. Same might be said for closed end, investment grade, muni bond funds with 6.5-7 tax free payouts.

I'm thinking here that even if these things collapse another 10 or 15 percent, if you scale in, and you're collecting the coupon as you go, you have a pretty good chance of beating 3month t-bills in a year. Of course, if you belive the world is coming to an end, well, then t-bills are probablly the best choice.

]]> Fri, 03 Oct 2008 17:31:58 -0400
But in terms of the junk bonds, with closed end funds trading at a 20% discount to NAV and yields of 15ish %, it seems that it might be worth scaling into a few of these dogs that everyone is throwing out. Same might be said for closed end, investment grade, muni bond funds with 6.5-7 tax free payouts.

I'm thinking here that even if these things collapse another 10 or 15 percent, if you scale in, and you're collecting the coupon as you go, you have a pretty good chance of beating 3month t-bills in a year. Of course, if you belive the world is coming to an end, well, then t-bills are probablly the best choice.

]]> http://seekingalpha.com/article/97860-tactical-asset-allocation-part-i?source=feed#comment-271734 271734 Thu, 02 Oct 2008 12:53:38 -0400 http://seekingalpha.com/article/97860-tactical-asset-allocation-part-i?source=feed#comment-271733 271733
Another interesting and informative piece.

Regarding the internet etf, IHH, I notice that there was an odd downward move in the price of the index on one day in May. There was barely a corresponding volume blip or even the typical explosion in volatility one typically sees after a movement of this size. Of course, arbs sometimes come in to exploit the premiums or discounts on these etfs, but then you see the volume spikes and volatility. There are 14 stocks in the index and I looked at the price action of the top 10 of them on that day. There was no corresponding price move in any of them. Perhaps the etf was either restructured, reorganized or split.

In any case, there are odd changes in securities prices because of cap distributions and reorganization, spin outs and what not. I’m wondering how qpp deals with these odd events to ensure robust and accurate data in the program?

Thank you,

JMorace]]> Thu, 02 Oct 2008 12:53:11 -0400
Another interesting and informative piece.

Regarding the internet etf, IHH, I notice that there was an odd downward move in the price of the index on one day in May. There was barely a corresponding volume blip or even the typical explosion in volatility one typically sees after a movement of this size. Of course, arbs sometimes come in to exploit the premiums or discounts on these etfs, but then you see the volume spikes and volatility. There are 14 stocks in the index and I looked at the price action of the top 10 of them on that day. There was no corresponding price move in any of them. Perhaps the etf was either restructured, reorganized or split.

In any case, there are odd changes in securities prices because of cap distributions and reorganization, spin outs and what not. I’m wondering how qpp deals with these odd events to ensure robust and accurate data in the program?

Thank you,

JMorace]]> http://seekingalpha.com/article/96787-the-broken-state-of-corporate-bonds?source=feed#comment-262064 262064 Mon, 22 Sep 2008 22:24:14 -0400 http://seekingalpha.com/article/96712-risk-management-and-concentrated-positions?source=feed#comment-261869 261869
It appears so many of these investment firms were not really using the tools available for modern portfolio management. Of course, the two that seem to be standing out for using them correctly are Pimco and GoldmanSachs. Gs is forever talking about value at risk and pimco seems to have a strong investment thesis for what's going on.

Be that as it may, I've been following your articles and theory for some time now. You've really been right on and laser like in your articles. Congrats.

What would be helpful to me at this point, as an individual investor, is some insight into a few basics. Perhaps you could point me in the right direction to find some information on them. For instance, how is it best to enter into and adjust a modeled portfolio? Does one leg into this? Or just jump in 100 percent? Perhaps average in over the course of 3 months or something else? Also, what are the options in terms of rebalancing the portfolio allocations? Once a year? Every quarter? How does this work?

Finally, some insight into the tax consequences of Tips held in taxable accounts would be great.

Thanks again for the great work,

jmorace ]]> Mon, 22 Sep 2008 16:47:51 -0400
It appears so many of these investment firms were not really using the tools available for modern portfolio management. Of course, the two that seem to be standing out for using them correctly are Pimco and GoldmanSachs. Gs is forever talking about value at risk and pimco seems to have a strong investment thesis for what's going on.

Be that as it may, I've been following your articles and theory for some time now. You've really been right on and laser like in your articles. Congrats.

What would be helpful to me at this point, as an individual investor, is some insight into a few basics. Perhaps you could point me in the right direction to find some information on them. For instance, how is it best to enter into and adjust a modeled portfolio? Does one leg into this? Or just jump in 100 percent? Perhaps average in over the course of 3 months or something else? Also, what are the options in terms of rebalancing the portfolio allocations? Once a year? Every quarter? How does this work?

Finally, some insight into the tax consequences of Tips held in taxable accounts would be great.

Thanks again for the great work,

jmorace ]]> http://seekingalpha.com/article/96500-morgan-stanley-exploding-the-short-seller-myth?source=feed#comment-260986 260986
I bet a cds market is thin and illiquid. Much easier to push around than a stock market. So, what happens when a Credit default swap rate blows out? Does it create forced hedging sell volume in the stocks?

If you're a market maker in london and somebody comes in and buys a hundred million bucks of cds's from you, it seems one of the ways to hedge this position would be to short a hundred million dollars of the stock, buying puts, selling calls, or outright shorting.

If the premium paid for the cds's seemed particularly high at the time you wrote them, then it would be very easy to aggressively sell the underlying collateral. After all, in a corporate wrap up, the bond holder is paid in full before the equity holders get a dime.

So, could this have something to do with the unusual option volume and share trading volume happening to these stocks on these grand falls we have seen? Could it be one of the causes? The CDS buyer, of course, is planning on attacking the stock from the short side, but it seems like the cds seller MUST ALSO ATTACK to hedge his exposure.

Is this right? Anybody?






Jmorace]]> Sun, 21 Sep 2008 21:31:55 -0400
I bet a cds market is thin and illiquid. Much easier to push around than a stock market. So, what happens when a Credit default swap rate blows out? Does it create forced hedging sell volume in the stocks?

If you're a market maker in london and somebody comes in and buys a hundred million bucks of cds's from you, it seems one of the ways to hedge this position would be to short a hundred million dollars of the stock, buying puts, selling calls, or outright shorting.

If the premium paid for the cds's seemed particularly high at the time you wrote them, then it would be very easy to aggressively sell the underlying collateral. After all, in a corporate wrap up, the bond holder is paid in full before the equity holders get a dime.

So, could this have something to do with the unusual option volume and share trading volume happening to these stocks on these grand falls we have seen? Could it be one of the causes? The CDS buyer, of course, is planning on attacking the stock from the short side, but it seems like the cds seller MUST ALSO ATTACK to hedge his exposure.

Is this right? Anybody?






Jmorace]]> http://seekingalpha.com/article/95061-the-nature-of-risk?source=feed#comment-252867 252867
To pick an individual equity implies a process of selection -- so even if everyone's selection process is different, some reasoning has occurred involving fundamental, technical, random or combination of reasoning schemes. But hand in hand with that selection has to be a system of rules as to how to mange these individual selections.

I see it breaking down into two areas: First, a change in the investment reasoning and second a robust system of cash management. So, if an individual equity is selected for a fundamental (or technical or combination of) reason(s), and one of those reason changes, the equity should be sold. (Note this is completely different than liquidating an asset class.)

In terms of cash management, it’s interesting to note that if a stock declines 50% it takes a 100% gain on it to get you back to zero, which is pretty hard (if not impossible) to do. So the stock should be sold well before it gets this damaged. If s/he has a coherent system of selling (and buying) rules in place, the individual equity holder will not have to confront this ugly situation. Which also precludes having a total loss (for the former owner, since they've already sold), even if the stock goes bankrupt.

That said, I do think running the stocks through the qpp program can be a useful screen to use in addition to other selection rules.

best,

JMorace

]]> Fri, 12 Sep 2008 13:16:16 -0400
To pick an individual equity implies a process of selection -- so even if everyone's selection process is different, some reasoning has occurred involving fundamental, technical, random or combination of reasoning schemes. But hand in hand with that selection has to be a system of rules as to how to mange these individual selections.

I see it breaking down into two areas: First, a change in the investment reasoning and second a robust system of cash management. So, if an individual equity is selected for a fundamental (or technical or combination of) reason(s), and one of those reason changes, the equity should be sold. (Note this is completely different than liquidating an asset class.)

In terms of cash management, it’s interesting to note that if a stock declines 50% it takes a 100% gain on it to get you back to zero, which is pretty hard (if not impossible) to do. So the stock should be sold well before it gets this damaged. If s/he has a coherent system of selling (and buying) rules in place, the individual equity holder will not have to confront this ugly situation. Which also precludes having a total loss (for the former owner, since they've already sold), even if the stock goes bankrupt.

That said, I do think running the stocks through the qpp program can be a useful screen to use in addition to other selection rules.

best,

JMorace

]]> http://seekingalpha.com/article/93756-more-thoughts-on-mohamed-el-erian-s-when-markets-collide?source=feed#comment-246717 246717
Sorry to disagree with you Goeff but there is no incentive to jump back in because these declines feed on themselves. Sales push asset prices down forcing assets to be marked to market forcing more asset sales to meet capitalization requirements.....

The only possible way out is a Minsky moment.... which seems to be at hand! (RE: Paulson and Freddie and Fannie this weekend.) It is our first this cycle. Minsky moment, that is. May it be the only one we need. We will see if it is enough.

Check out the literature on Japan and their real estate bubble if you want to see how long this can take when its handeled badly. Of course as a percentage of gdp, this real estate bubble seems to be a bit smaller than monseter the land of the rising sun created, so maybe we'll get out of it sooner.......and can happily return to our inflationary modeling. I hope so.]]> Sat, 06 Sep 2008 00:49:49 -0400
Sorry to disagree with you Goeff but there is no incentive to jump back in because these declines feed on themselves. Sales push asset prices down forcing assets to be marked to market forcing more asset sales to meet capitalization requirements.....

The only possible way out is a Minsky moment.... which seems to be at hand! (RE: Paulson and Freddie and Fannie this weekend.) It is our first this cycle. Minsky moment, that is. May it be the only one we need. We will see if it is enough.

Check out the literature on Japan and their real estate bubble if you want to see how long this can take when its handeled badly. Of course as a percentage of gdp, this real estate bubble seems to be a bit smaller than monseter the land of the rising sun created, so maybe we'll get out of it sooner.......and can happily return to our inflationary modeling. I hope so.]]> http://seekingalpha.com/article/93756-more-thoughts-on-mohamed-el-erian-s-when-markets-collide?source=feed#comment-246339 246339
But here we are in a situation where 'liquidity' is contracting in spite of central bank action (or error in the case of the ECB.) All the institutions are delevering. El Erian discusses this. Of course it becomes a vicious cycle. And it is a key question for the moment. What happens to the QPP modeler in a deflationary environment when prices of all assets go down? Granted these periods are rare, but that's because the central banks have inflated each and every asset (financial or hard) they can, now there are none left to expand. Maybe they can get them to expand again. But it is just as likely that they will fail in this effort So we must think through the possibility of asset prices deflation on our portfolios.

Sounds crazy, I know but deflation is not a rare thing. It’s rare just in our lifetimes. The thirties, post panic of 1907, civil war period. There are many other examples. So it can happen, and it is a not a ’black swan’ and how do we model for this possibility now?]]> Fri, 05 Sep 2008 12:30:18 -0400
But here we are in a situation where 'liquidity' is contracting in spite of central bank action (or error in the case of the ECB.) All the institutions are delevering. El Erian discusses this. Of course it becomes a vicious cycle. And it is a key question for the moment. What happens to the QPP modeler in a deflationary environment when prices of all assets go down? Granted these periods are rare, but that's because the central banks have inflated each and every asset (financial or hard) they can, now there are none left to expand. Maybe they can get them to expand again. But it is just as likely that they will fail in this effort So we must think through the possibility of asset prices deflation on our portfolios.

Sounds crazy, I know but deflation is not a rare thing. It’s rare just in our lifetimes. The thirties, post panic of 1907, civil war period. There are many other examples. So it can happen, and it is a not a ’black swan’ and how do we model for this possibility now?]]> http://seekingalpha.com/article/93756-more-thoughts-on-mohamed-el-erian-s-when-markets-collide?source=feed#comment-246338 246338
But here we are in a situation where 'liquidity' is contracting in spite of central bank action (or error in the case of the ECB.) All the institutions are delevering. El Erian discusses this. Of course it becomes a vicious cycle. And it is a key question for the moment. What happens to the QPP modeler in a deflationary environment when prices of all assets go down? Granted these periods are rare, but that's because the central banks have inflated each and every asset (financial or hard) they can, now there are none left to expand. Maybe they can get them to expand again. But it is just as likely that they will fail in this effort So we must think through the possibility of asset prices deflation on our portfolios.

Sounds crazy, I know but deflation is not a rare thing. It’s rare just in our lifetimes. The thirties, post panic of 1907, civil war period. There are many other examples. So it can happen, and it is a not a ’black swan’ and how do we model for this possibility now?]]> Fri, 05 Sep 2008 12:30:09 -0400
But here we are in a situation where 'liquidity' is contracting in spite of central bank action (or error in the case of the ECB.) All the institutions are delevering. El Erian discusses this. Of course it becomes a vicious cycle. And it is a key question for the moment. What happens to the QPP modeler in a deflationary environment when prices of all assets go down? Granted these periods are rare, but that's because the central banks have inflated each and every asset (financial or hard) they can, now there are none left to expand. Maybe they can get them to expand again. But it is just as likely that they will fail in this effort So we must think through the possibility of asset prices deflation on our portfolios.

Sounds crazy, I know but deflation is not a rare thing. It’s rare just in our lifetimes. The thirties, post panic of 1907, civil war period. There are many other examples. So it can happen, and it is a not a ’black swan’ and how do we model for this possibility now?]]> http://seekingalpha.com/article/90746-defining-a-set-of-core-asset-classes?source=feed#comment-232873 232873
I great, helpful article. Thank you for it.

I have a question about core asset classes. I see that you have used the DJ Utilities index as a surrogate for what El-Erian terms as the infrastructure asset class allocation. What other etfs do you see as adequate surrogates? Would railroads or natural gas pipelines count? Should this infrastructure investment be international or domestic etc.

A second question: I notice that pimco has a bond fund that invests in emerging market debt denominated in local currencies. Would participation in this constitute a different asset class or would it be a subset of the bond portion of the portfolio?

Thank you,

null]]> Mon, 18 Aug 2008 07:32:12 -0400
I great, helpful article. Thank you for it.

I have a question about core asset classes. I see that you have used the DJ Utilities index as a surrogate for what El-Erian terms as the infrastructure asset class allocation. What other etfs do you see as adequate surrogates? Would railroads or natural gas pipelines count? Should this infrastructure investment be international or domestic etc.

A second question: I notice that pimco has a bond fund that invests in emerging market debt denominated in local currencies. Would participation in this constitute a different asset class or would it be a subset of the bond portion of the portfolio?

Thank you,

null]]>