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  • Eur-eversals [View article]
    Interesting article, IT, but quite uneven. Other than as a piece of pure satire, the TF Market Advisors' analysis is complete nonsense, though. Utter rubbish, which doesn't deserve serious commentary.

    "The main takeaway here is that it is probably not the case that leaving the eurozone leads to a new Ice Age."

    Seriously? I hope you don't base this opinion on the pathetic piece by TF Market Advisors.

    "I am amazed that the referendum, which seemed like a masterstroke from Papandreou, was canceled – and I can’t imagine that normal people in Greece are particularly pleased about having a voice in the matter snatched away by the eurozone elites."

    The referendum was a political plot to align internal forces with the government and the bail out. It turned out to be be a gross miscalculation both internally and externally. Besides, Greece hasn't had a referendum since the 1970s and it is unconstitutional to call one on fiscal matters.

    ...“see what happens when we put an Italian in charge of the central bank?”

    I am glad it is not you thinking this because this is a cheap stereotype of the worst kind. Why not ask instead: “see what happens when we put a US (MIT) trained economist in charge of the European central bank?”

    "To be sure, Trichet’s policy to tighten into a recession and sovereign/banking crisis was absurd,..."

    Absolutely correct. Besides, Trichet had a dual mandate but, as it often happens with central banks, unemployment doesn't seem to factor into the equation.
    Nov 4 11:34 AM | Likes Like |Link to Comment
  • Ben Bernanke's response (video) to a question on low interest rates isn't likely to give a warm fuzzy to savers stuck with sub-1% rates. He argues savers would miss out on improved stock market returns without an ultra-low interest rate policy in place to hold off a recession. The pickle: The answer doesn't quite cover the millions of retirees who rely on CDs, Treasurys, and savings accounts to cover their cost of living.  [View news story]
    If you think the market is a casino you are in the wrong website.
    Nov 2 05:38 PM | 2 Likes Like |Link to Comment
  • Those Millimeters Do Add Up [View article]
    The FT has recently turned markedly to an anti-european and, most especially, anti-euro stance. Often have the markets gone down lately after the FT has published some rumor harmful to the pan-european project. This is why, I suppose, that continental europeans may have turned to other newspapers such as the Guardian.
    Oct 19 02:31 PM | Likes Like |Link to Comment
  • Those Millimeters Do Add Up [View article]
    I think your overall assessment is correct, IT. Nevertheless, the main point is to restore confidence and lower fear, escape the vicious circle and reenter the virtuous circle.

    People would like to believe that markets are fully rational and have the ability to instantly price in available relevant information. Perhaps in the very long term but certainly not so in the short to medium term.

    Markets, especially equity markets, trade on perception. So if the markets believe that the actions taken move the economies away from certain catastrophe, they will react positively, relieving pressure on companies and individuals whom, in turn, will most likely invest and spend more than before, helping the real economy and restarting the virtuous circle (moving the markets higher up, and so on).
    Oct 19 08:57 AM | 1 Like Like |Link to Comment
  • Catching Falling Knives With A Pillow [View article]
    Great. Thank you DT. Very much appreciate it.
    Oct 12 12:38 PM | Likes Like |Link to Comment
  • The Only Investing Strategy That Always Works [View article]
    Good first article, Tyler.

    I have only one suggestion, which I believe would prove much safer and fruitful in the long run for retail investors: when the markets are down, especially if they are down big, it makes sense to buy equities but not individual stocks. This is important because down markets usually come with extreme volatility and very high uncertainty when buying individual stocks can prove disastrous.

    So instead of buying individual stocks buy the overall market (plus international ones) through market-wide ETFs such as SPY, DIA, IWM, EEM, EFA, FXI or EWZ. This way you make sure you can always participate and, most importantly, since individual companies go bankrupt but the entire market never could, you can keep on buying and buying even if the markets continue to go down.

    The overall markets will, sooner or later, come back up. An individual stock, on the other hand, may never come back (i.e. Lehman, Wamu, Bear Stearns, Tyco, Enron, etc.)
    Oct 11 05:08 PM | 2 Likes Like |Link to Comment
  • Catching Falling Knives With A Pillow [View article]
    Very interesting. Thank you.

    Would you advise doing this trade with broad ETFs such as SPY, DIA, or QQQ? What about broad and leveraged ETFs such as SSO, DDM or TNA?

    I suppose the advantage these types of ETFs share is the fact that they are market-wide ETFs, which carry less stock specific risk than an individual stock and, hence one might want to own, at any rate. On the other hand, the leverage ETFs have added volatility inherent in their leverage (would this help?).

    If you would indeed trade them, would you be kind enough to provide a sample trade as you have done with the individual stocks? Thanks.
    Oct 10 03:49 PM | Likes Like |Link to Comment
  • Fire Hoses Pumping Again [View article]
    You are correct in that it may be difficult to achieve both with the economy stalling. Nevertheless, there ought to be a balance and priorities established depending on the circumstances and the economic cycles.

    When the economy stalls, inflation is usually not the main problem, unemployment is. At this point of the cycle the FED should tackle unemployment by promoting economic growth (naturally, I am not suggesting that the FED is the only government entity that ought to do this, all other relevant ones should do it, as well. Nevertheless, were are solely discussing the FED's role right now).

    Once growth comes and inflation starts to pick up the FED can switch to tightening and controlling it. The FED has decades of experience doing this and controlling inflation is far easier to do, for the FED, at any rate.
    Oct 7 04:27 PM | Likes Like |Link to Comment
  • Fire Hoses Pumping Again [View article]
    Would that person rather have a job to pay for the pricier milk and gas or stay unemployed and pay for the cheaper ones? Not much hope there without a job Joe, is there?
    Oct 7 04:10 PM | 1 Like Like |Link to Comment
  • Fire Hoses Pumping Again [View article]
    Up to now the ECB and BOE had been tightening, while British and European policy makers had been pushing austerity measures, which where squishing the growth out of the economy. Meanwhile Geitner and the U.S. had repeatedly asked the Europeans to loosen up monetary policy and austerity measures to support markets and aid growth. Well, Europe is finally listening and these actions should help confidence and help stabilize markets. Confidence, more than ever, underpins the movements of the markets nowadays.

    The FED has a double mandate, which is supposed to deal with inflation and unemployment, but seems to have done little to truly help the latter. Inflation maybe the lesser of two evils in this case, at this stage of the cycle. The U.S. could easily live with a bit more inflation and lower unemployment.
    Oct 7 06:53 AM | 6 Likes Like |Link to Comment
  • Making Things Worse [View article]
    Very good article. I confess I usually enjoy your articles. They are very well written, thoughtful and meaningful.

    Sometimes, though, I wish you would follow your thought process all the way through to an actionable conclusion (or various possibilities if necessary). I realize this implies somewhat committing yourself (you can always use common disclaimers) but, although there is clear value in untangling the macroeconomic web, if you truly believe in your ideas, distilling them to one or more tradable conclusions would truly set you apart.

    In this case, for instance, it may as simple as stating something like: "as soon as there is evidence that the FED is forced to sell long term debt into the market, short long-dated treasuries."

    Just an idea.
    Oct 6 08:24 AM | 5 Likes Like |Link to Comment
  • Euro TARP: Definitely Not Stimulative [View article]
    You are correct, Cullen, but markets are historically well positioned to deal, one way or another, with slow growth scenarios and other regular economic uncertainties. So they will manage to move forward as they have done before. Markets are not, however, positioned to deal with complete political chaos and total economic collapse.

    At it's most basic, what European and U.S. leaders need to do is make sure to avoid political chaos and economic collapse and let the markets deal with "normal" (albeit weak) economic circumstances from there on.
    Sep 28 07:29 AM | 1 Like Like |Link to Comment
  • Euro Tarp: Why It Will Be A Screaming Failure [View article]
    "The European banks, which are already undercapitalized and on the brink of failure, will buy bonds issued by the SPV that is full of bonds issued by broke countries. The banks will then used these bonds as collateral to borrow money from the ECB. The ECB winds up with loans to broke banks and holding bonds backed by debt issued by broke countries as collateral."

    Oh, please. Such loose use of adjectives. Just because you can write it doesn't make it true!

    There are only 16 European banks that are undercapitalized and will received the necessary funding soon. The rest of the European banks are, in fact, better capitalized than their U.S. counter parties as the stress test with which they have to comply are much stricter. This is specially true of Spanish banks.

    Which are the "broke" countries? Do you mean Greece, which is receiving help (admittedly, in a difficult process)? Which are the other "broke" countries?
    Sep 28 07:17 AM | Likes Like |Link to Comment
  • Safe Havens In A Storm [View article]
    " 1. US Treasury bonds (long Treasuries if you want to be aggressive);
    2. Gold, but avoid gold stocks."

    I am sorry Mr. Hui but, unless you are thinking about a very short term trading period, this is some of the worse investment advice one can give at this moment. You are beyond late on both US Treasuries and gold and, should you get in right now, chances are you will get little upside and a whole lot of downside potential.

    This is typically what small retail clients end up doing: getting in very late at the top, or very close to the top, of the market (top for treasuries and gold), while the institutions are working to unload their positions, and losing a ton when the market turns.

    Most treasuries rates are already incredibly low (the ten year just made a new low today) and can't get lower much lower. In fact, all up to the ten year already show negative real rates. As for gold, where do you expect it to go before the bubble bursts? And where do you think it will end up once it does burst?

    You call these trades "safe havens"? I wonder, then, what you dare to call "risk"!
    Sep 6 11:49 AM | 1 Like Like |Link to Comment
  • Schwab Competes for More ETF Market Share [View article]
    I have been using Schwab's ETFs from inception and I believe that Schwab has been implementing the right strategy for their ETF growth. Besides the points you have already mentioned, they have chosen to make their individual ETF coverage wider and more representative of the markets than their competitors. That is very useful.

    The one missing and very important factor to make Schwab's ETFs truly successful is developing the options' markets for them. Without a liquid and functional option's market is very difficult to properly hedge while using their ETFs.
    Aug 6 05:23 PM | Likes Like |Link to Comment