antiquary

Are the Dry Shippers Value Traps?

Good analysis. There's a point I'd like to make, though. There are long runs, and there are longer runs. Even if EXM slashes its dividend, and even though some of the other shippers have already, even to zero, these are companies in the dividend habit. They produce boatloads of cash, if you'll excuse the pun. Buying a dividend company for prices that don't reflect investors who would be in it for the immediate payout is the way to get paid back in only two or three years once the economy recovers-- as it will-- and they start paying again. Now, there's an astounding opportunity.

Let's Just Say It: Print More Money

It's true that one of the causes of the minirecession from 1937 to 1938 was that they allowed the money supply to contract, but this doesn't mean that the reverse is necessarily true today.

On the other hand, if you could know that printing more money would allow banks and individuals and so on to get out of their preexisting contracts by paying them off (at a discount, of course, in dollars that are worth less, but that has to be better than defaulting would be), so that they then could move on to loans and other contracts entered into based on today's economic reality, not yesterday's, then much of the stress on the system would evaporate. It would be like removing a single domino from the middle of a chain. Essentially, it would be like an evenly spread tax on all holders of dollars, to restore flexibility and fluidity. But how you could know that that move would have that effect, I don't know.

Economic Crisis Is Largely a Problem of Confidence

I agree this is at least in part a crisis of confidence. We see these things which have rarely or never happened before and suddenly we come to think anything is possible; that nothing can be counted upon. The one thing we can be sure of is that if we freeze like a deer in the headlights, dithering, uncertain and terrified of losing anything by making a move, we're gonna get hit, and lose everything. We have to keep moving.

Predictably, the Dow Crashed Again

This kind of thing always reminds me of the Y2K scare, mocked in The Simpsons by showing quarts of milk springing leaks. It's astounding to me how you can possibly not see that talk like this is a self-encouraging prophecy. We can, literally, talk a recession into a depression which is not necessary. The world is not coming to an end, and I'm disgusted at people who act as though it is.

Tim Geithner vs. The American Banking Elite

I hope if nothing else happens people will at least stop quacking about "elites." Calling 'em vested interests is fine. Apart from the root word being an adjective and not a noun, "elites" is jargon, and jargon is something used mainly by one of the demons of modern life-- activists who are essentially uninterested in thinking. Elites, fundies, tree-huggers-- all excuses to turn off your brain.

Buffett Metric Doesn't Say It's Time to Buy

"Buffett's preferred purchases are not an endorsement of cheap U.S. equities. If anything, it says he would rather be a bondholder than an equity one... for now."

Bad analysis, because he got the rates he did because of the same general level of investor sentiment which the inexpensiveness of U.S. equities is merely another reflection of, and because in this environment the risk is the same either way. We just call it default on a bond rather than bankruptcy, and you haven't made the case that this distinction in looking at Buffett's investment should be important to the rest of us.

A Fair Appraisal of TARP

Axelrod, from the standpoint of argument, things that happened and quotes about them in the financial environment of the 1930s are highly distinguishable from the present situation for any number of reasons, first and foremost being our far more activist and rapid response to the crisis.

From the standpoint of experience, this kind of thing-- doing things and see if they work-- is how we learn to deal with an advanced financial system. It might or might not work, but we have the profit of experience either way. Most people saved or paid down debt when they received the first economic stimulus, but we'd be wrong to think that had no beneficial effect just because people didn't spend it. At a certain point of general financial strength, people will start spending again. Distributing money to keep things flowing will have a tipping point we haven't reached yet.

Markets Plunge Following Geithner's Plan - And That's Not a Bad Thing

Accountant, your point about mark-to-market is a valid one, but it assumes the market undervalues assets intended to be held for a long time. The point of view taken these days about banks' health is not their long-term profitability, but whether they'll survive at all. Liquidity is the first question about any asset in these illiquid times.

Add to that the fact that allowing the banks to value their own assets encourages asset inflation because so many other things of political and investor-relations significance, like leverage ratios, depend on the balance sheet. It's like getting an appraisal for insurance purposes-- it'll be a bit different than an appraisal for auction purposes, when what you actually want is something much closer to the true market value. We can't let banks control how they appear by oodging their numbers around with creative accounting, equivocation and outright lies; allowing corporations to out-complex regulators is part of how we got into this mess in the first place.

Our Deflationary Mindset Is the Most Concerning

"The current dire warnings perpetrated by our president and media that are predicting economic catastrophe are NOT promoting a quick recovery."

Absolutely right. Why the hell is Wall Street always so manic-depressive? But unlike with a manic-depressive person, what's being said about the situation can indeed change the mood. We shouldn't lie about the situation, but there are aspects of it which are scabs we shouldn't pick at, since that way they'll only take longer to heal.

Stimulus Should Be 2009's Buzzword

My mind always boggles at the peasants with torches and pitchforks who look at the problems too much credit caused and shout about what an awful thing credit is and how crazy it is to want to get credit flowing again as part of the solution to the problems. Does the phrase "matter of degree" mean anything to them? Do they really think it's possible to get only the baby back, the sensible, worthwhile credit, and none of the bathwater?

Think about this: credit literally means "belief." Uncertainty and belief are polar opposites. The more uncertainty people perceive, the less faith they have and the less credit they give. We've reached the point at which we need to start asking ourselves how much good dwelling on and wailing about how bad the numbers are is doing. Yes, we're in a shitstorm. Thanks loads for continuing to describe the quality of the precipitation.

The Heisenberg Uncertainty Principle has come to apply in its broader meaning, which is that sometimes you can't examine a situation without the examination itself affecting what there is to be seen. Telling these truths is making tomorrow's truths worse. Should we tell lies? No. But stop being so relentlessly depressive.

Sorkin's Questions to Bank CEOs, Answered

"Pandit has no moral obligation to buy stock in an insolvent bank just because he's its CEO."

And it shouldn't raise eyebrows if a newly hired chef is never seen eating his own cooking.

Why We Need Federal Insurance Regulation Now

"Companies like Allstate will go regulator-shopping."

Exactly so. The robber barons did it back in the 19th century when Kentucky had the laxest railroad laws and the credit card companies did it in the 1980s with North Dakota. It's an accident of federalism.

Casinos and gambling work the same way; states can't afford to be outcompeted by other states that permit them, for they can't bar their own citizens from participating, with the result that a giant sucking sound occurs of their money.

If nothing else comes from this downturn, I hope this does-- that we always analyze any situation with a weather eye for the public appearance of being outcompeted by those who'll indulge in unhealthy, short-term expedience.

Has the Economic Crisis Wrought a Permanent Change in Consumers?

It's true that those old enough to remember it will never forget it. Which means that its effects will be around for the next sixty years or so. On the other hand, I wonder whether the really profligate consumers weren't merely the icing on the cake. If nothing else, this crisis will have done us all a service by providing us with hard and fast numbers for future analysis so that we know what actually means what. For example, how much being visibly outcompeted by those using high leverage is worth being alarmed about.

How to Profit from a Housing Recovery Without Buying Homebuilders

"All I care about on this specific thesis is homes are changing hands - if they sell for $1 or $1 million, it is irrelevent to me."

Exactly right. The more activity there is, the more the current lot of mortgages out there will reflect current economic conditions, which is what's required for recovery.

Now's the Time for Buy-and-Hold

I'm with you, Matt. It's true that buy-and-hold doesn't work that well if you run with the crowd, buying at the peaks, but it works unbelievably when you use the margin-of-safety approach, which we're in the middle of an ideal time for right now.

Let's remember that most people seem to be calling for the economy to start recovering toward the end of this year, and that the stock market usually sees it coming and moves six months in advance. That would make this, eight to ten months before the end of the year, the last great time to buy. For long-term investors the returns on their investments made right now will probably cornerstone all their returns for decades to come.

The problem with active trading is not that it's never possible to do it profitably, any more than it's never possible to make enormous profits on microcaps. It's that if it were possible to tell which traders (or microcaps) are the ones whose approach is perfect for the times, everyone would pile on and there wouldn't be any advantage. No one sufficiently encompasses the world's myriad factors to be able to make short-term predictions reliably, over many years. Long-term predictions are easier, but patience is boring and unsexy, which is the advantage of we buy-and-holders.