Caveat M. Tor

VW as a Home Energy Provider

An early-stage pure play with excellent prospects in this area is Ceramic Fuel Cells (CFU on Australia & London, CEFLF on the U.S. pink sheets.) Its power generating products offer higher efficiency than conventional power plants or generators. While its stock has had a terrific runup from its lows a few months ago (due to the resolution of a serious problem with financing,) it still offers the potential of very high returns, for investors who are not risk-averse.

Note: I own some CFU stock.

7 Myths About Gold Debunked: Bubble Warning; $600 Target?

You're right about them, but they're both correct ONLY if all four events are uncorrelated with each other, that is, they're all completely independent events. If the occurrence of any one event changes the probability of another, then both authors are wrong. This world is a more complex place than most people think!


On Jul 21 10:55 AM Whippet wrote:

> Actually, everything you both said is correct. The author is just
> incapable of accurately reading a comment... it carries more weight
> to blast off in error.

386,395 Reasons to Work for Goldman Sachs

Alex G: This is not a matter of jealousy, it's a matter of fairness. The first two posts aren't about Warren Buffett or Bill Gates. They're about a company which, with inside connections in the administration, received billions in bailout funds from the taxpayers when needed last year, and is now, just months later, giving each employee more than 20 times what the average, hard-working full-time employee in this country earns. Those other employee-taxpayers were forced to pay for the bailout.

U.S. Economy Mending Faster than Expected

As you note, Case Shiller, being based on repeated sales, wouldn't be biased by a change in the mix of homes being sold. However, it doesn't account for upgrades and additions to existing homes before resale. In recent years, such upgrades (hot tubs, granite kitchen counters, sunroom additions, lavish landscaping, etc.) have become increasingly common.

When Black Swans Happen Twice

Moves in prices within equities markets do not conform to the "bell curve" distribution that is the foundation for parametric statistical inference, which is used today for assessing risk. In essence, the tails of these distributions are "fatter" than in a classic bell curve, that is, there are more extreme movements than predicted. This means that risks are greater than generally recognized by most experts. These extreme movements correspond to the idea of "black swans."

So, for example, the Black-Scholes equation, which is usually used by companies for pricing options, is inaccurate. Similarly, investors are typically told by their advisors that their investments carry less risk than is actually the case.

This has been well-documented in Benoit Mandelbrot's book (written with Richard Hudson,) "The (Mis) Behavior of Markets." (Mandelbrot is best known as the originator of fractal analysis.)

Latest Outrage: Citi Increases Salaries to Circumvent Bonus Restrictions

It's easy to understand why the politicians do what they do: Just look at where their campaign funds come from; which lobbyists treat them to meals, high-end tickets to sporting events, concerts, etc.; who pays them ridiculous amounts for speeches, and who's likely to put them on the payroll as consultants or lobbyists after they're no longer in office. We have the best government money can buy!

How Short Term Supply Constraints Will Impact Booming HEV Markets

You note: "Adding micro hybrid capabilities at the factory typically costs less than $1,000 per vehicle and improves fuel efficiency by an estimated 5% to 8%."

This is not a cost-effective add-on for vehicles which are already relatively fuel-efficient. If a car gets 35 mpg and is driven 15,000 miles per year, at $4.00 per gallon, it will take a good 10 years to make up the cost of the add-on, not including the time value of money. Most consumers would rather have $1,000 in their pocket now, rather than get a payout of less than $100 per year.

Social Security - At the Crossroad?

Wakeup, while I agree with you about the bankers, my point is valid. The fact is that every company making payments into its retirement fund, counts those payments as an expense, not as income. Only the US government treats payments into its pension fund (i.e., SS tax receipts) as income.


On May 18 02:46 PM WAKEUP wrote:

> "This is, essentially, one big Ponzi scheme. If a private company
> were to handle its bookkeeping related to its retirement fund this
> way, its executives would be thrown into jail." {Quote, from Caveat
> M. Tor, today} Oh, REALLY??? Then why are America's bankers and other
> assorted flim-flammers not in jail, hmmmmm???

Social Security - At the Crossroad?

Excellent article. The SS system has not been on an actuarially sound basis since Congress began diddling with it, just a few years after it was originally passed. The income from the tax is used by the federal government as received, and the additional accrued liability to pay future benefits isn't included in the official figures for the national debt.

This is, essentially, one big Ponzi scheme. If a private company were to handle its bookkeeping related to its retirement fund this way, its executives would be thrown into jail.

Economist Catfight!

I you want to get four different economic opinions, just ask any two economists what they think!

Yes, The Market Is Overbought, But...

You state, "Now is the time to be selective in the stocks that are being purchased. There are companies trading at attractive values, but paying attention to stock fundamentals and dividend characteristics are important at this juncture in the market."

Is there any time when this ISN'T true?

Valuations Alone Don't End Bear Markets

Most investors acknowledge that exact timing of markets is impossible - No one has 20-20 foresight. However, we do have 20-20 hindsight, and we know that we're nowhere near a market top, since that was about 50% higher. We're quite possibly very close to a market bottom. While we certainly could see an additional 20% drop in the markets, we could also see a gain of 50% or more. A significant proportion of funds parked in short-term treasuries could easily return to investments in stocks. The potential gain/loss ratio is looking good for common stocks in favored industries.

Certain companies, such as many clean energy-related firms (among others,) are profitable and will continue to reap profits and expand regardless of how bad the recession/depression is. That hasn't protected most of them from having their prices beaten down in this market.

Stock prices are leading indicators of economic conditions. Investors who wait until the outlook gets better, will miss out on the large gains which typically occur early in stock market recoveries.

Fed: Inflate Already, Would Ya?!

Mr. Merkel parenthetically mentions harm to those on fixed incomes as if that's just a minor glitch in his plan. Many retirees refused to gamble on stocks or derivatives, never took on much debt, and now have their life savings in fixed-income investments. They've tried to do everything to be financially responsible, avoid risk and build a secure nest-egg. Do we really want to punish them for this?

When Bonuses Aren't Discretionary

1) Base pay in this industry is already several times higher than in most other industries where workers are just as well-educated, just as smart, and just as hard-working.

2) Workers deserve bonuses when they do an exceptionally good job, as defined by profits. No profits = no bonus and your job is in jeopardy. Net loss = You're fired!!

3) The idea that excess compensation is needed in order to retain workers who are LOSING money for the firm is moronic and absurd. Managers who think this is true, deserve to be fired, YESTERDAY!!

AIG's at It Again with Ludicrous $450M 'Retention Pay' Scheme

For just $50 million, I'd be willing to take over the whole unit and manage it with people hired by me, paid out of the $50 million. Furthermore, I will personally guarantee NO new writedowns (except for those related to what my predecessors have done.) If I have net losses, I'm fired after my first year. AIG will save $400 million in bonuses, who knows how much in salaries, and billions due to the fact that I'll have some idea what I'm doing and won't blow billions.

This is the sort of deal AIG should take. What they're doing - retaining people who LOST $34 billion, and actually paying them millions (each!) in compensation - is, given the bailot, theft of taxpayer money. The management who want to do this should be immediately fired, and sued by the shareholders and taxpayers for breach of their fiduciary responsibility.